Decade of Daddy Mirror Fund Q4 Report

Now that the highly respected CNBC is giving regular air time to our man Kevin O’Leary, perhaps his inability to pick stocks will start to gain attention south of the 49th parallel. Thanks to the Decade of Daddy Mirror Fund, CNBC has more than five years of results to compare against KO’s own track record.

With Q4 behind us, the Mirror Fund continues to dominate OGE.UN:TSX and its successor mutual funds (aka the O’Leary Global Equity Yield Fund aka the O’Leary Global Dividend Fund; 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 original and brutal performer called the O’Leary Global Equity Income Fund.)

How does a 94% return compare to Kevin’s 4% net performance? Ouch.

The lack of a daily OGE quote on the TSX makes it somewhat harder to track, but the replacement mutual fund has a NAV and distributions to monitor against our own amateur stock-picking track record.

In the Mirror Fund, we’re making money in Berkshire Hathaway (+25%), BCE (+34%), BMO (+27%), BNS (+29%), Bristol Myers (+147%), Constellation Software (+83%), Goldman Sachs 2037 Subdebt (+64%), Duke Energy (+27%), JP Morgan (+42%), Merck (+50%), Royal Bank (+26%), Spectra Energy (+61%), TD Bank (+35%), Thomson Reuters (+12%), BOLIVARIAN REPUBLIC VENEZUELA AMORTIZING BD REG S 2022-08-23 12.7500% (+16%), and PETROLEOS DE VENEZU NOTE 2014-10-28 4.9000% (+42%).

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, Discovery Air bonds and Eli Lilly.

We hold nothing in the portfolio that’s currently in the red column (likely ’cause I’ve been ditching the odd dog over the years).

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 $75.8 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 94%, a decent improvement of 4.5% during Q4.

During the same timeframe post-launch (which was Canada Day 2008), the Dow is up 45.6% and the S&P 500 has risen 46.5%.

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 continues to hover at a tiny $12 million, reflecting its horrific performance as the mutual fund traded from an initial $10 NAV (post conversion) down to a NAV of $8.42. It now has a NAV $9.45 for the A series.

Distributions on the replacement O’Leary mutual fund have totalled $1.15 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 have made all of just 52 cents when you look at your current mutual fund NAV plus all of your distributons since 2008.

Five and a half years of “investment guru” Kevin O’Leary’s prowess has generated a gain of just 4.3% in total. Not annually. 4%. In total. Before tax. About 1/11th the basic return of the S&P500, before dividends, over the same timeframe.

One has to assume CNBC has no idea.

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)