- http://www.etf.com/RSP This ETF tracks S&P 500 companies in an equally weighted manner (TER of 0.2%). According to Joel Greenblatt (in this book) it has overperformed the S&P500 by 1-2% annually. Stockcharts website seems to confirm that. since 2004 the performance is the double of the S&P500.
1 Like
Today I sold my position on Richardson Electronics (RELL) at a price of 9.4 USD/share. I had opened the position in July 2016 at 5.25 USD. That makes a performance of 80% in two years, or 34% per year.
1 Like
What motivated you to sell and not to hodl? 
First and main reason :
The stock price has reached the Net Tangible Asset Value of the company (i.e : tangible assets minus liabilities) so there is no more margin of safety.
Second reason :
Sometimes if the stock price has a positive momentum I will wait a little more to profit from the momemtum with a trailing stop order, but here it was not the case. The momentum seems to have stopped and the price becomes volatile. Without any collateral in the net tangible assets of the company, i think it is risky to hold the stock (i.e more downside than upside).
Third reason :
The company does not have a great record of earning power, so ciao.
1 Like
Letās us know if you find a new bargain! Iād like to allocate small percentage of my portfolio to get such nice returns. 
Maybe he will open a fund āBerkshire Julianekā and for a mere 1% he will do it for you 
1% is bit high, but sure, why not, Iām ok with allocating small proportion of my portfolio in @Julianekās hands.
As I said in my journal, currently markets are quite expensive and it is getting more difficult to find cheap assets. That is why i have 40% of my portfolio sitting in cash waiting for occasions. On the other hand, most of the companies listed previously here are still in my portfolio, except Velcan(sold at 11,15 EUR) and Sanshin Electronics (sold at 2049 JPY). This does not mean that I still consider them cheap nowadays.
Wow I wasnāt expecting this kind of compliment, that is nice to hear 
Although letās be realistic : If i ever was to manage someone else money, I would like the fees structure to reflect what investors are expecting from me: beating the market! (else, indexing is the way to go).
Therefore, I think that a structure like the Buffett parterships in the 50s is the fairest to everyone:
- No fixed yearly management fee (so the manager is not paid to do nothing)
- A performance fee that would look like the following :
- Since the market return historically on the long term around 6% per year, the manager would not be paid if he does not return at least 6% every year. This hurdle is of course compounded every year.
- However, as soon as the hurdle is reached, the manager would take 25% of the over-performance. This looks like a lot for mustachians, but it aligns the incentives of everybody :
- The investor does beat the market. A guy like Buffett did 19% during 50 years. Sure, after his cut there is only 15,75% left for the final investor, but that his still way better than what an index fund can historically provide.
- The manager is fairly compensated for a skill that very few can provide; if he fails to beat the market he is not paid at all.
Buffett, Mohnish Pabrai and Guy Spier are good example of fund managers having this structure and providing excellent results.
But this was a digression. I am currently nowhere near the place where I would have the legal infrastructure to manage other peopleās money. Of course if enough people were interested i would start looking into it, but so far it is only a very very remote hypothesis.
1 Like
Iād be comfortable with investing in your fund few percent of my portfolio.
1 Like
sure, a fee like this is fair, because then the goals of the investor and the fund manager are aligned.
2 Likes
So, just a follow up
I have been researching what would be the legal business structure to adapt if I was to manage other peopleās money, and it is not very encouragingā¦
- As mentioned somewhere else on the forum, the lightest structure is the āinvestment clubā (up to 20 members), but investors have to make investment decisions together (i.e, there is no manager managing other peopleās money)
- then there is the equivalent of the Limited Partnership (i.e Kommanditgesellschaften fĆ¼r kollektive Kapitalanlagen), but it is very quickly regulated by FINMA. Moreover, it has big fixed costs (i.e compliance, regulatory and accounting) that are very unlikely to be covered by my fees if I only manage money on a small scale.
- or if I want to be shielded from personal liability I could as well create an AG or a GmBH, but fixed costs increase a lot as well.
I found as well this document from Guy Spier (Aquamarine Fund) making a study on which funds do not charge management fees, and the underlying reality even with the best intentions, a fund still has a lot of operational overhead costs to cover.
So in conclusion, if you want to manage money for others :
- You need to manage a lot of assets
- If you charge management fees, you should be able to survive; but if you do not, pray to have a very good first year and no bear market, or your costs are likely to make you close the shop.
TLDR : Managing a small amount of money for friends and acquaintances does not look like a good idea from a legal point of viewā¦
That might be interestingā¦ who else would be interested?
1 Like
<-
Think about it. I think there might be some people here interested in allocating part of their portfolio in high-quality small/micro-cap value stocks. We could structure the club to make you CIO of the club formally (if the law allows for that) or informally (by for example naming it āJulianekās value investing clubā).
isnāt enough to create a category of the forum which is invite only?
I thought a lot about it and I have created another thread on the forum where I expose what I have in mind. @1000000CHF, @nugget, @bojack, @ma0, if you are still interested by the concept feel free to apply!
1 Like
Just to add something: there is a quite easy way to manage other peopleās money. Donāt commit me to this but as farbas I remember there is a possibility on IB for a āfriends and familyā account. Each investor has their own account and you are authorized to manage it. All accounts are combined thus as a small fund. Then you can instruct IB with your fee structure et voila, you are managing money. I checked this by myself some years ago so probably still valid. And the best thing, you are not required to provide any reportings.
On the other side it has became much easier to set up a fund/investment structure in recent years. In my office we have several funds (only own money) which are even x-traded.
2 Likes
Hi @Julianek
Thank you so much for this post - you explain everything very clearly.I found it really very interesting.
I would very much like to do Net Net investing eventually, however at the moment I lack the confidence because I am a novice (the five step process which you provide, while it very clear and well set out, it is very intimidating for a guy like me who has no IT background, no investing background, and has no experience in investing). So I have been searching for an alternative - and I came across Value ETFs such as, for example, VTV (TER 0.05%) from vanguard. For someone like me, who is just a beginner, and who lacks the confidence and experience to be able to their own Net Net investing well, would such Value ETFs be a good alternative?
Do you see any disadvantages for Swiss investors with such Value ETFs? (besides not having control over when to sell and buy shares in a particular company)
Hi @Runner, thanks for your interest.
My only problem with Value ETFs is that nowadays āValueā can mean a lot of different things.
For some people āValueā means buying something cheap on an absolute basis (i.e figuring how much a business is worth and then paying a lot less for it), for instance:
- Buying cheap assets (example : Net-Nets, Hidden Real Estateā¦)
- Debt Capacity bargains
- Sum-of-the-parts bargains
- Buying a wonderful predictible business at a fair price and let it compound
For others, āValueā means buying buying cheap stuff on a relative basis (i.e compared to the market)
- Buying stocks with lowest earnings multiple
- Buying low Price to Book, low EV/EBIT, ā¦
For others, āValueā is just a marketing sticker that the fund and ETF industry will put on a ETF to help sell it. Looking at the main holdings of the ETF/fund, you can see that there are stocks that should not be there (ex: not long ego Exxon Mobile was in almost in a lot of ETFs, it could be considered a value stock, a growth stock, a high yield stock, a quality stock, or what else; the label was in the eye of the beholder). Another alarm would be if the ETF hold so many holdings that there is no way it could have a performance sensibly different from the market (in that case, make yourself a favor and fallback to VT).
As for being a beginner, I had no background in investing three years ago, i mainly got all of this from reading
and being interested. If thatās your case, i advice you to start with accounting. I wrote a five-part guide of accounting for beginners here.. Then, you can find another longer article I wrote on Net-Nets. And finally, you can find there good recommendations of books on value investing.
Feel free to contact me if you have other questions.
2 Likes