Decade of Daddy Mirror Fund Q2 report

Happy fifth anniversary, KO!

Our Decade of Daddy Mirror Fund is in good shape as we pass a major milestone. I’m sorry about the reporting delay, but I don’t think the three week lag had much of a net impact as some of our stocks went up while others are down so far this month.

Unfortunately for his investors and their real life savings, the Mirror Fund continues to outperform Kevin O’Leary’s stock picks in OGE.UN:TSX (and its successor mutual funds). We are now past the fifth anniversary of the Decade of Daddy Fund’s IPO, in fact (aka the O’Leary Global Equity Yield Fund aka the O’Leary Global Dividend Fund). That’s right, what was once a mutual fund called the O’Leary Global Equity Yield Fund is now the O’Leary Global Dividend Fund; which replaced the O’Leary Global Equity Income Fund. The lack of a daily OGE quote on the TSX takes away a bit of the fun, but the replacement mutual fund has a NAV and distributions to monitor against our own amateur stock-picking track record.

Incredibly, O’Leary’s first fund investors are still losing money, leaving aside the pain of inflation, when you net everything out on the original OGE investment; and we’re talking $40 million of real investor capital. Unlike the $40 million of Monopoly money we started with five years ago.

In the Mirror Fund, we’re making money in Berkshire Hathaway (+25%), BCE (+24%), BMO (+14%), BNS (+19%), Bristol Myers (+96%), Constellation Software (+19%), Goldman Sachs 2037 Subdebt (+55%), Duke Energy (+35%), JP Morgan (+33%), Merck (+37%), Royal Bank (+15%), Spectra Energy (+67%), TD Bank (+21%), BOLIVARIAN REPUBLIC VENEZUELA AMORTIZING BD REG S 2022-08-23 12.7500% (+38%), and PETROLEOS DE VENEZU NOTE 2014-10-28 4.9000% (+43%).

Since the fund began we’ve locked in our gains on BMO ($775k and $1.133MM but we are back in again), BNS ($136k but are back in again), CIBC ($242k plus dividends), JP Morgan ($1MM but are back in again), Merrill Lynch ($799k), MKS ($3.19MM plus dividends), Royal Bank ($566k but are back in again) and Teranet ($307k plus distributions) as you’ve read in prior reports. We’ve also realized losses on Canadian Oilsands and Eli Lilly.

In the red column: Discovery Air 2016 8.35% Unsecured Convertible Debentures (-4%), and Thomson Reuters (-4%).

Our Decade of Daddy Mirror Fund was up 6.8% to $42.7 million as of the one year mark (July 1, 2009), and is now worth $70.4 million in total, thanks to a few great stocks and bonds and the wonders of the ongoing dividend and income stream. Since inception, we are now up 76%.

During the same timeframe post-launch (which was Canada Day 2008), the Dow is up 36.4% and the S&P 500 has risen 33.6%.

Over at OGE.UN:TSX, the trading price of the original KO fund (inc. distributions) trailed the S&P, Dow Jones and our little test fund during the entire experiment, ending at a NAV of $10.13 plus distributions of $1.92 as compared to a $12 IPO price. The OGE mutual fund initially kept about $26 million of OGE’s $40 million of initial assets when it converted in March 2011 from a Closed-End fund to a mutual fund product. That asset figure has slipped to a tiny $10.4 million, reflecting its mismanagement as the mutual fund traded from an initial $10 NAV (post conversion) down to a NAV of $8.42. It now has a NAV $8.73 for the X series.

Distributions on the replacement(s) O’Leary mutual fund have totalled $1.0806 so far, but if you’d bought the original OGE IPO in 2008 at $12 and agreed to roll into the new mutual fund in March 2011, you’ve still lost money when you look at your current mutual fund NAV plus all of the distributons since 2008; which is telling when the S&P 500 is up 34% (plus dividends) over the same time period.

How did Kevin miss that market run? You’d have been better off putting your money under the mattress than jumping on board the O’Leary Global Equity Income Fund aka the O’Leary Global Equity Yield Fund aka the O’Leary Global Dividend Fund.

MRM
(disclosure: this post, like all blogs, is an Opinion Piece; we own BMO, BMY, BNS, CSU, GS sub debt, MRK, RY, SE, TD and a few lots of those Venezuelan bonds in our household)