New Chapter
Portfolio 2.0—follow what he did, not what he does.
Over the past 6 months, I have amassed a long-term-oriented community of more than 620 members. We have explored beautiful quality compounders that have been outstanding stewards of shareholder capital over the years. Nevertheless, I think it’s time for me to continue learning (and share that with you).
Most quality/value investors nowadays seem to try to copy today’s Buffet (or any other kind of prominent hedge fund investor, i.e. Klarman, Rochon, Dalio, etc.) to achieve outstanding results. Truth be told, I am/was no exception, and I believe that this investing style is outstanding for most investors who wish to outperform the market over the long term by 2-4%.
Obviously, 11-14% p.a. is an incredible goal that most people would dream of achieving, but:
a. My primary goal with investing at a very young age is to learn and make mistakes;
b. I believe that with strong conviction, deep research and a bit of luck, great(er) outperformance can happen.
Most investors mentioned above would probably invest in very small companies if their AUM allowed it (high AUM—hard to navigate in a low-volume market). An obvious example is the famous Buffett quote:
The highest rates of return I’ve ever achieved were in the 1950s. I killed the Dow. You ought to see the numbers. But I was investing peanuts then. It’s a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that.
I’m no Buffett, nor do I expect such results, but I believe that achieving an uncorrelated 20% IRR with less downside risk is possible. With the right strategy… Therefore, I am announcing a slight shift in my upcoming content/portfolio moves.
My new strategy will consist of 3ish kinds of plays:
1. Special situations (litigations, liquidations, spin-offs, restructurings, etc.);
2. Inflections (mostly microcaps inflecting to profitability but also some hidden catalyst plays);
3. Quality micro/small-caps with high potential, great capital allocation and superb financials.
As we wander into small companies, we will sometimes become investors in firms that don’t even have an institutional following or big investors. Having smaller portfolios will benefit us and, hopefully, add alpha.
My content will have a slight shift, too:
1. More concise, dense writeups (no more checklists of what to write about or information not crucial to the investing thesis). This will allow me more time to focus on research and better results versus covering every detail of an investment;
2. Less educational content and more investment ideas. I believe that accounts like “Compounding Quality”, “The Dutch Investors”, and “Invest In Quality“ are great for newish investors and can provide a high volume of superb learning materials for investors better than I can.
3. I will post more informally/frequently on X and then have the longer writeups here. For complete coverage of the companies mentioned from now on, I recommend you follow me on X, too.
I will additionally continue to cover new compounders for my existing subscribers as I discover them occasionally.
I began testing the new strategy in September, and the initial results (with proof at the end of this post) are promising. However, looking at a 60-day performance is not my goal, nor can it be trusted.
My new portfolio consists of 18 positions. I will reveal them when/if they reach a good entry point in the coming months.
Important notice: I will keep and add to my long-term compounders portfolio that I have covered extensively here since they work best when left alone. I don’t know if my new strategy will outperform the old one, but it is worth trying.
I am excited to embark on this new journey, and I genuinely believe it can bring value to you, my readers.
See you soon!
Returns proof:
Blue line — new portfolio
Red line — S&P Technology Index
Yellow line — S&P 500
Green line — Small Cap Index
Statistics proof:
Returns distribution:
