2018 was a superb year that ended up being a good year due to one mistake.
My portfolio returned 33.80% in 2018, compared to a loss of (6.25%) for S&P 500. The big winners in 2018 were Oroco Resources, HemaCare and Valeura Energy. Out of these holdings, we sold out of all except Oroco Resources.
| Year | Performance | S&P 500 |
| 2009 | 128.75% | 26.46% |
| 2010 | 8.85% | 15.05% |
| 2011 | (20.57%) | 2.1% |
| 2012 | 11.7% | 16.0% |
| 2013 | 19.46% | 31.90% |
| 2014 | 46.61% | 11.39% |
| 2015 | (52.91%) | (0.73%) |
| 2016 | 33.18% | 9.53% |
| 2017 | 139.91% | 21.83% |
| 2018 | 33.80% | (6.25%) |
| Cumulative | 678.91% | 236.30% |
| Annualized | 22.78% | 12.89% |
Although we beat the market handedly in 2018, the results could have been much better. We made an investment in Aegean Marine in 2018. That investment ended up as a 0 in 2018. The mistake with Aegean Marine was the same mistake we have made in the past, investing in a leveraged play. The upside on the investment was huge but the debt killed the company. The most painful part about Aegean was a friend that we shared the idea with mentioned exactly what could happen w/ the company. We listened to the entire argument but were not able to act, the greed from the upside blinded us to the risk that the debt created.
Going forward we are going to stay away from companies with debt. Our past performance has shown we can get superb return by investing in companies that have no debt. These companies are hard to find but patience gets rewarded.
We ended the year with 2 position on our portfolio. It is really just one position, as Oroco Resource is a vast majority of the portfolio. TechPrecision, the other position, is a smaller position that we have owned in the past and like going forward. But Oroco Resource has lot more upside and we expect to allocate all cash toward Oroco.
Current holdings:
Oroco Resources (OCO): This is our biggest position. We mentioned two years ago that we think this company has huge upside (10-30 bagger). In 2018 the company was making progress on getting the legal issues resolved around the Santo Tomas property. Most recently in May 2019, the company issued a press release mentioning that the Mexican court has ruled in their favor on the legal case that Oroco had filed. Also, the company is working via a receiver to get its majority ownership of Aztec Copper (the legal adversary in the Mexican lawsuit). The Arizona court has appointed a receiver and its is only a matter of time before Oroco ends up taking control of Aztec. So the Mexican court ruling takes care of the transfer of the asset and the control of Aztec ensures no future drama.
This clears the road for the unlocking of the value of the Santo Tomas asset. Next steps will be getting funding for doing an initial drilling and then based on the drilling results selling the asset. It has already been an eventful 2019, the stock is up 112% YTD (our portfolio is up triple digits as well). We think there is lot more upside to come in 2019.
TechPrecision (TPCS): This company I’ve owned in the past and had really good returns. We got back into it in 2018 as the backlog is really strong. The company is working on some really large orders that will have huge impact on revenue and profits. The CEO has been fairly coy about these orders but is slowly starting to discuss more. We think the coming quarters in 2019 will start showing the increase in revenue and profits.
Although I’m concentrated in Oroco Resources, I feel that the risk is extremely low that I can lose. With the legals now resolved, Oroco can move forward with unlocking the value of the Santo Tomas asset. The company’s stock price has appreciated a lot since I started buying. But I think a lot more upside is still left as the key catalyst will get unlocked in the remaining 2019 and 2020.