Value Strategies Performance Review: NCAV Up 30%, Bloodbath For The Rest
This Tiger Cub Giant Is Betting On Banks And Tech Stocks In The Recovery
The first two months of the third quarter were the best months for D1 Capital Partners' public portfolio since inception, that's according to a copy of the firm's August update, which ValueWalk has been able to review. Q2 2020 hedge fund letters, conferences and more According to the update, D1's public portfolio returned 20.1% gross Read More
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Results are in.
2015 was a horrid year for the value strategies I publish at the free value screener section.
On a personal note, my overall performance across the 4 portfolios I manage ended the year +6.34%.
Value Strategies Performance – Thoughts on Measuring Performance
Not losing money is something that I’m pleased about because my focus is to protect the downside and to limit any damage so that I can live to invest another day.
My core goal is for long term wealth creation – not market relative performance or comparing results with others.
Beating the market is nice and if I was in the money managing business, I’m sure I’ll be focusing on it too. After all, that’s the nature of the game.
However, as a small investor, that’s not the rules that I want to play by.
It’s a losers game because once you start comparing your results with someone else, it’s a vicious cycle of envy, lack of confidence and over trying.
It just leads to further under performance as you start to do things like:
- increasing activity
- listening to herd behavior
- buying things you normally wouldn’t touch
- going for short term gains to try and boost returns
I had a couple of rough years where I just wanted to do better than anyone else. In the end I probably did the worst out of anyone.
That’s why I’m pleased with how 2015 turned out because it shows that I’ve turned the page from the bad habits and years.
Or maybe I’m getting wiser?
At the start of 2015, I switched brokers to Interactive Brokers and that took around one and a half months due to a lot of issues. That helped with a slow start (trading wise) to the year and the trend of low activity continued throughout the year because I’m still finding it tedious to use the Interactive Brokers software to put in trades.
Another reason for ending with positive results is a result of active value investing. I made a conscious effort to constantly think about risk and portfolio management.
Usually, I just hold onto my position and only add if it drops. But this year, I’ve been on my toes monitoring my intrinsic value calculations and selling on strength and buying on weakness.
And it helped that I was able to reduce big positions and go to cash to soften the whiplash the market was going through around August and September.
While the market was dropping 6-7%, my portfolio dropped 2-3%. On the flipside, when the market was zooming back up, I was going up a little, but I’ll sacrifice the upside to protect the downside anyday.
Definitely a change in mindset compared to few years back where I was focused on beating the market on the upside.
That’s why the 2015 OSV Value Screener Results are very disappointing because it lost a lot of money.
All of them.
Value Strategies Performance – 2015 OSV Value Strategy Results
Except for the NCAV strategy, it was a bloodbath. But then again, the 2015 NCAV portfolio only had 8 stocks which I doubt anyone would follow in real life.
Here’s what the 2015 NCAV portfolio looked like.
You also wouldn’t be able to buy enough of the stock without moving it, so that’s why with the NCAV or NNWC screener, the results aren’t as good as it seems.
The strategy itself works, but if you are hoping to replicate the results, it will be much lower.
Thus, my current stance is to ignore the 2015 NCAV results and just consider that every strategy lost money in 2015.
Here’s a detailed look of the performance of each value strategy ending each quarter.
These are cumulative results at the end of each quarter and not quarterly results.
The year started out ok but by the last quarter, everything got hit hard. I’ve seen this in my screens for a while.
If value is out for a particular year, then everything across the board is hammered.
This is why I’m combining quality and growth along with value in the new QVG rating system that I’m developing. By combining all three and looking for the stocks that score the highest across all three, it won’t be subject to drastic falls like this.
3 Year, 5 Year, 10 Year and 17 Year Results
The full table of results has been updated and is now live on the value screener page.
Here’s how it looks.
3 year, 5 year and 10 year CAGR numbers have been included to give more perspective.
I was disappointed with the performance since inception of some strategies and wanted to see which ones need to be discontinued, replaced or adjusted.
For example, the “Piotroski Best” is a fan favorite but with an 6.66% CAGR since inception, I was considering removing it. But after seeing the 3, 5 and 10 year performance, it’s too early to pull the plug.
The opposite of this is the negative enterprise screen. Sure it’s beating the market over a 17 year span, but for the past 10 years, it’s done a horrific job.
There are 5 screens like this which are now on the chopping block.
- NNWC increasing – created to find turnaround stocks using signs from the balance sheet
- Insider buys – designed to go after stocks with high ownership and high insider buys
- Graham checklist – an adjusted version based on an old Graham paper of what he looked for in a stock
- Low expectations – the idea was that stocks with low expectations don’t go down as much
- Negative enterprise – cash box companies for explosive returns
Ideas for New Stock Screens?
With 5 potentially new screens to create, what are some screeners you want to see?
Leave a comment with an idea that you have or a paper that you’ve read.
The more detailed with reasoning the better as it will help to formulate a thesis and to test it.
Lastly, with 2016 under way, I’ll be posting a mega list of 2016 value stocks for you to download as well as sharing some behind the scenes stuff at old school value and what’s to come.
Additional Articles I Recommend
- What’s Working in 2015?
- 2012 OSV Value Screener Results
- 2015 Q1 Stock Screener Performance and the Best Stocks So…
- How My Value Screeners Performed in 2014
- Achieving 16.7% Returns with the Value Score
- The 2013 Value Stock Screen Performances
This post was first published at old school value.