This is a short update on how the model portfolios of the exclusive research service The Black Swan Portfolio have been doing. I will also briefly discuss some of our favorite holdings within the portfolio. You can read more about the methodology used here.
Within the service there are two model portfolios:
- The Black Swan Portfolio which is a very aggressive portfolio. (Very aggressive equity investments but no options.)
- The Numeraire which is a very defensive portfolio. (Think a cash alternative.)
The aggressive The Black Swan Portfolio is what I’ve been running since inception of the service in 2015. It exceeded all expectations and shows a 29.66% annualized gross return. I expect this performance to come down to earth over time.
There’s no doubt there have been some lucky events like the acquisition of Dreamworks Animation (DWA) and the reverse merger involving Magellan Petroleum (MPET), which we bought when it was a sub <$20 million market cap near bankrupt pre-revenue Exploration & Production company.
It went up 1380% at one point. It only added up to a 350% return for our portfolio, albeit within a few months, because I missed the fantasy required to perceive value beyond that point. Meanwhile, the company transformed from a below $20 million near-bankrupt company into a $1.7 billion powerhouse chaired by ex-Cheniere Energy (LNG) celebrity CEO Charif Souki and became backed by major oil corporations.
That’s how a 350% gain can be a huge mistake at the same time.
TELL Total Return Price data by YCharts
Year to date the aggressive portfolio returned 17.96% gross which is still very strong. If we could manage to generate something along those lines over the next decade I would be extremely content.
Interesting small-cap
One of our interesting large positions is a small-cap called Psychemedics Corporation (PMD). A hair-testing company that profited off new regulation in Brazil that forces every truck driver in the country to get a hair test every 5 years if they want to renew their license. Â I first wrote about it in 2013 and it beat the S&P 500 since.
