Decade of Daddy Mirror Fund goes to cash
It has been more than seven years, and the strategy of the Decade of Daddy Mirror Fund has served us very well (see prior post “Decade of Daddy Mirror Fund Q4 Report” Jan. 16-14). Starting with $40 million of play money on July 1, 2008, the fund has more than doubled to date. That’s right: a gain of 100%. Unlike the original O’Leary Global Equity Income Fund, which has generated a return of barely more than 4% since inception (including its successor funds the O’Leary Global Equity Yield Fund and the O’Leary Global Dividend Fund). That’s not an annual return figure — that’s the entire gain, including distributions.
The Yahoo Finance account I used began making errors in the cash balances starting around March, and I’ve been unable to accurately track dividends and cash levels ever since. That’s why I’ve not done updates for the first, second or third quarters of 2014. The Mirror Fund’s positions have done just fine, mind you, just the same.
As of the last trade, here’s where they stood:
Berkshire Hathaway (+48%), BCE (+37%), BMO (+44%), BNS (+38%), Bristol Myers (+122%), Constellation Software (+126%), Goldman Sachs 2037 Subdebt (+67%), Duke Energy (+46%), JP Morgan (+40%), Merck (+60%), Royal Bank (+42%), Spectra Energy (+67%), TD Bank (+48%), Thomson Reuters (+11%).
As I reported in February, we exited our two Venezuelan bond positions when things looked tough there. The BOLIVARIAN REPUBLIC VENEZUELA AMORTIZING BD REG S 2022-08-23 12.7500% went out for US$81, while the PETROLEOS DE VENEZU NOTE 2014-10-28 4.9000% realized US$89 — including accrued interest. In the end, we earned 5.6% on the face value of the Republic one ($95k), and 50.5% on the Petroleos version ($859k).
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. Not that I see a 50% sell-off over the coming weeks and months, but since I went to 50% cash in my own RRSP on Oct. 3rd., I figured that I should take the ultimate step with our Daddy funds.
After all, as KO reminds us, money is the “only thing” that matters. And if you don’t have it, you can’t spend it.
Having never made such a move on the personal side during 2007 or 2008, I’m not sure what you should take from it. The Decade of Daddy Mirror Fund definitely traded during that time (sold one Canadian bank in the high $40s and bought back at $30), but I didn’t lift a finger on the personal side; never got scared, even as we blogged away about the Armageddon that was underway. Rode it right down and then right back up again.
The futures are up this morning, and I remember some nice market tops (ie. head fakes) in April and August 2008. too. It’s not just economic challenges in Europe, the inexplicable drop in oil prices, or the potential black swan represented by Ebola; it’s all of the above, demonstrated by the pounding 250-300 point down days that usually foreshadow a tough time.
(disclosure: this post, like all blogs is an Opinion Piece; it is not meant to represent investment advice and should not be taken as such)