Nobody’s Blowing Out Lights In Quarterly Portfolio Reports

Here today, gone tomorrow best depicts how active portfolio managers failed to deliver the goods past March quarter. Or, as my old partner,  Milt,  would proclaim, “Nobody promised you a rose garden.” Nevertheless, I added 100 shares of Disney in each of my grandchildren’s portfolios. After all, Disney is in the mood to build new theme parks abroad. They could buzz and humm next 50 years. 

Once, I owned Polaroid and Xerox for over 20 years. But, they succumbed to the advances of Nikon and Canon in photography. Even Buffett had to check out of the Times Mirror. No longer a publication fortress. The internet then arrived, reaching households throughout the world. 

Don’t allow Donald Trump to get in your hair. Does anybody but me remember how spectacularly Trump failed in the casino gaming business? Not just in Vegas but in Atlantic City as well. He overbuilt a casino there which he couldn’t fill with gaming players and their guests. Today, I view Trump as wielding a wrecking ball with limited staying power. 

When I read money manager’s quarterly reports you wonder why they don’t imitate Buffett’s “buy and hold” construct for a portfolio. Instead, dozens pursue a jitterbugging methodology of frenetic activity. There are many at 100 percent quarterly turnover with no positive results. Such operators rack-up commission for the brokerage houses that sponsor them. Do they deem Buffett too old-fashioned with his buy and hold schematic? 

Sadly, gunslingers lost traction past decades. Even this phrase is scarcely in use any longer. Where I depart from Buffett is I'm a more ready seller. I held American Express for maybe a decade. I don’t see Polaroid and Xerox in Buffett’s holdings. After all, they too, ran true for over 20 years (but not 50). I found Coca-Cola too boring a holding, but I was wrong, It rang the register year after year despite the heady valuation. 

The Appaloosa house is a good example of a medium-sized fund, $55 billion, which turned itself over nearly 100% in the first quarter with a growth stock construct.  Amazon showed at 8,5% but overshadowed by Alibaba at 21%, followed by PDD holdings at 9%. Microsoft just at 3.4%.. A total turnover for the quarter with a decline of $88 million, high teens on its market cap. In sum, investors are paying sizable fees on portfolios that turn over deconstructed 1 quarter. Meanwhile, brokerage is most considerable and management fee sizable. Dozens of funds use this construct.

Contrastingly, Berkshire Hathaway showed a market value of $258 billion with a change in value of $8.4 billion and a turnover ratio of just 35%. Historically on the high side. Three positions,  Apple, American Express and Coca-Cola comprise over half the portfolio. Fund’s loss was a minimal 3%, hardly mentionable, on a base of $259 billion. In a shabby quarter for money managers, Buffett delivered.

Citadel Advisors, over a hundred billion, dropped only 5%, too, with a minimal static ratio. This is a totally diversified portfolio with average positions under 1%. Heavy in energy and financials, favoring growth stocks, but no over-concentrations. Couldn’t find any industrials here. Quarterly another 100% turnover of positions.

The Coatue Management Fund, a house of $22 billion, pretty much turned over 100% of assets during the quarter. They chopped off nearly a third of capital value. Lots of tech here. Two stocks, Meta and Amazon carried over 18% of assets. Low static ratio, but little to write home about. 

So far,  I’m not finding generally acceptable performance from near trillion dollar asset players with high turnover. Buffett and a few others are keeping up to benchmarks. It’s a death sentence if you're a trader or heavy in tech.

Citadel Advisors with $102 billion in assets took the broadly based concept portfolio to heart. Average-sized positions mainly under 1 percent. Losses totted up to 5%. I tried hard but couldn’t find any theme here. 

Although I was finding high profile movers like Meta Platforms, Amazon and Microsoft, average size was around 5% of assets, nothing too frothy in size concentration. Tesla, Netflix and Alibaba totaling just 6%. 

Surprised when I turned to Carl Icahn’s holdings. Here, a light turnover ratio for this $7.5 billion house. Still an energy player. If you want a high intensity operator in oil and gas, Carl is your man. He does the research on his stocks. But, maybe a little overdriven. 

When I turned to Lone Pines Capital,  I saw another high turnover trading house deep into tech. Lone Pines turned over its portfolio during the March quarter with typically poor results entailed.  Equity assets declined nearly 20% in all too familiar names, Meta Platforms, Intuit, Amazon, Microsoft, et al. 

By now, dear reader, you see how difficult the money management game gets, particularly in a bear market. Underperformance can ring 20% or more. Few escape through good stock selection. Aside from Buffett, few players keep portfolios intact. In a bear market, individuals can easily outperform professional counterparts. 

Nobody’s there to criticize for going into cash or concentration in a single sector like oils, tech, and financials. Some 63% of Berkshire’s portfolio remained in place past quarter. Sell offs were just 5.6%. Apple, Amazon, American Express, Coca-Cola and Bank of America totted up to 62% of managed assets. Unless you possess such gumption, don’t play in the money game. They’ll take your pants down, tout de suite. 

The Soros Fund actually posted a positive quarterly performance on its $5.6 billion in assets. The turnover ratio looked like mid-nineties. Well diversified with an average sized stock position under 2%. Smurfit Westrock, its biggest position at 5.5%. Soros sold out 35% of assets, but didn’t lose money in the opening quarter. Go get 'em, George!

Lemme end with T. Rowe Price at $811 billion, a biggie. They’ve dealt with their girth by asset diversification mostly in 1% positions.  Microsoft, Apple, Amazon and Nvidia comprise 20% of assets. The fund lost 7% in the quarter. It coulda been much worse. All positions are visibly seasoned names. Let’s give 'em credit for not getting carried away. They’ll be around but not treading in dust 100 more years.