2020 Performace

(Sorry for the delay on this one. Lot of folks messaged me about this but I’ve been swamped w/ the tax deadline and just got freed up now.)

2020 was a career year. It feels strange writing those 5 words. The truth is 2017 and 2018 were the career years, it is just that 2020 was the manifestation of it. It is like the Cleveland Cavaliers saying 2016 was a franchise making year, when it really was 2003 (when they drafted LeBron James).

It was in late 2017 that I started buying Oroco and in 2018 I made it a much bigger position. It was these purchases that had the impact on 2020 results. More on this later, lets get to the numbers.

2020 was a really good year. I was up 292% for the year, compared to 15.76% for the S&P 500. Since inception, 2009, I have performed 42.49% annualized, compared to 14.57% annualized for S&P 500.

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%)
2019	129.94%	31.50%
2020	292%	15.76%
Cumulative	6920.79%	411.92%
Annualized	42.49%	14.57%

The results from 2020 were a product of buying something (Oroco) in 2017 and then incrementally buying it up as other ideas worked out. Outsized returns are made by concentration not by holding 30 or 50 positions. Infact, if we had made Oroco at 5% position then we would likely have lagged the S&P 500. Even though Oroco has been a 50x (based on current prices in 2021) since our first buy. Wealth it made by concentration. If you look at the richest 20 people in the world, their wealth is tied to one or a handful of businesses.

We still see many fund managers wanting to limit their position to 5% of capital. For all the managers, that focus on small caps, that have I seen that typically hold 20/30/50 positions, they all have underperformed or barely beat the S&P 500. The ones that I have been that have beaten the market, it has been by the slimmest margins. The reliance on over-diversification will lead to mediocre results.

So far in 2021 the results have been exemplary. We are already up 150% as of early May 2021. I don’t like to make prediction on short-term performance but I think these numbers will hold or be better for the entire 2021 year.

Finding Ideas

Since start of 2018, I have grown the capital base by 12x. If you take the current 2021 results and were to call it a year, it would be 30x return in 4 years. Although these results look absurd and definitely unlikely to be repeated, I think I should see triple digit returns in 2021 an 2022. Going forward, I think we can still compound at a rate that will easily beat the S&P 500 index.

As the capital has grown substantially over the last 4 years, one of the big changes I’ve seen is in my approach of finding ideas. When I had a smaller capital base, I would constantly search for ideas. It was much easier to get excited about a new idea and to move capital to new ideas. It is like a kid who keeps jumping from one toy to another, never really fully enjoying a single toy. Now that the capital is much larger, it is much easier to say ‘no’ to ideas. The urge to get to a certain capital is no longer there, you have already reached it. So it is much easier to be a true ‘men of leisure’ (as Pabrai likes to describe it).

I have been looking for new ideas and have invested in companies in 2021. I still have the same hunger to find the next good idea. Although it is much harder to find in this frothy market and I’ve gotten lot more picky with which ideas I really decide to invest in.

Portfolio

The portfolio that I’ve been tracking and discussing in my performance is one account, my Roth IRA account. I have a few other brokerage accounts in which I do trading. For the most part the other brokerage accounts have the same positions as the Roth IRA account. The other accounts also have many positions that previously were not disclosed here. Going forward, I will share those positions here. Although the performance of these other accounts will not be shared (to avoid confusion), the positions will be listed below.

Current Positions

Oroco Resources

Voxtur Analytics Corp

Techprecision

MIND Technology

Diversicare Healthcare Services

AltiGen Communications

Undisclosed position

Mercer Park Brand Warrants

Current holdings

Oroco Resources: There isn’t much to add that hasn’t already been shared by me. The company has put behind all the legal issues related to the Santo Tomas property. The company is very close to finishing the 3D IP and starting the drilling. The drilling will prove the Santo Tomas project is one of the top M&A available copper projects, in the hands of a junior minor, in the world.

Also another tailwind for Oroco is copper prices. Copper Prices have been on a tear in 2021 and that doesn’t look to slow down anytime soon. The transformation of the transportation industry to EV is happening at rapid speed. The demand for copper is only going to grow as the EV growth picks up steam.

Voxtur Analytics: Gary Yeoman is quietly putting together a complete real estate technology company. The market has been mostly sleeping on what Gary has been doing. The Q3 financials should start showing how these pieces fit together and the progress from all the acquisitions he has been doing. If Gary is able to execute the company is likely going to sport a valuation multiples of current price.

Techprecision: Again, I don’t have much to add. I’ve already shared my thoughts on the blog. The US Navy is moving forward with its oders of the Virginia-class and Colombia class. These orders will trickle down to TPCS. So far we haven’t seen the results materialize on the financials. So we are patiently waiting for the backlog and sales to increase.

MIND Technology: Similar to TPCS, MIND has its future tied to Navy orders for UUVs. MIND has many new products that the Navy is really keen on using. The orders from Navy have been delayed due to COVID and Navy wrapping up its testing. Although the stock languish at these prices, I think once the Navy contracts come it will be super hard to build a complete solution like MIND.

Mercer Park Brand: This is a SPAC that is bringing together multiple CA businesses in the cannibas space. The entity is acquiring Glass House Group, Element 77, a large production plant, and some brands. The combined entity will likely be the biggest player in cannibas market in CA. The combined company will have the biggest cannibas production site in CA. The company has a superb management team, with the right culture, and in a market that is growing like crazy.

I own the warrants that are 6 years out. This gives me a way to play the combined entity over a long term period. Also it allows me free options on the multi-state commerce.