Recap 2024
Reflection and thoughts about my investment year 2024
Disclaimer: The following is no investment advice. The author may own, buy and sell securities mentioned in this post. Please always do your own due diligence! Some companies are micro-caps. Keep in mind that even a small investment from your side can move the share price due to the low liquidity of shares. It's not easy to liquidate if you want to get out.
Welcome,
in this post, I want to share some of my thoughts and learnings regarding the investment year 2024. Although I think that it doesn't really make sense to evaluate performance on just one date in a 12-month period, year-end is always a good time for some reflection.
Portfolio Recap
I started investing in 2016 and at the end of 2023, I finally felt comfortable enough with my investment skills, to completely focus on small/micro caps as this was always my passion. So 2024 was the first year in which I only took new positions in small or micro caps. I still own one mega-cap (Amazon) and one mid-cap (Evolution). When I think the time is right, these positions will probably also be sold, so my portfolio will only consist of small and micro caps (excluding some index funds).
I can say that I still feel much more comfortable with relatively unknown companies in my portfolio. So currently I can say that the decision to solely focus on small unknown companies was the right one for me. Although there have been positions that haven’t performed that well or that experienced a bigger drawdown, I was always able to sleep very well and this aspect is one of the most important for me. Investing is a highly psychological game in my opinion, so staying psychologically healthy is one of my main goals. In 2023, I made one of my biggest gains with META, a contrarian meca cap investment. But as everyone (especially on social media) had an opinion on this stock (which was mostly negative in 2023), I realized that although I made a big gain, I had to pay with mental distraction for this gain and that this is not the investment style I want to focus on in the long term. So in this aspect, I definitely improved in 2024.
Psychological health is highly important, but real financial performance is of course also important, as consistently losing money would probably also not be helpful for psychological health :D
From my point of view, the performance of my individual stock portfolio, which I share every month here, was good. The true-time-weighted rate of return (TTWROR) was 23 % and the IRR was 22 %.
I know that many investors have published much more impressive performance figures for 2024, but I prefer to focus on myself instead of constantly comparing with others. My goal is to beat the indices (a mix of a World and Emerging Markets ETF) in the long term as this passive investment style would be the alternative for me, when I realize that I can’t beat the broad market with my investment style. In 2024 this benchmark increased by 22.6 %, so I was on par with this benchmark.
I haven’t reached the goal to beat my benchmark this year. So why do I still say that I’m happy with my results?
To answer this, I come back to the beginning of this post. Why should I evaluate my performance on this one 12-month period? Underperforming in such a time frame is not a reason to change the investment style. US mega caps significantly outperformed probably the majority of investors in 2024. Will this repeat in 2025? I don’t know. But I do think that adjusting your investment style every year of underperformance to the style that worked the best in the year before is not a clever option. As long as you still outperform your benchmark in the longer term, there is no reason to worry and I am happy to say that I still outperformed my benchmark with my individual stocks since I started investing.
So at the moment I don’t see a reason why I should change my investment style of finding underfollowed, small, high-quality companies that are growing, have a healthy balance sheet and are currently undervalued. Just the first two aspects (underfollowed & small) exclude nearly all the stocks that are included in my benchmark of the largest companies in the world. The correlation between my portfolio and my benchmark is probably pretty low.
The majority of my portfolio companies are small caps. The MSCI World Small Cap ETF made around 15 % in 2024. In addition, the vast majority of picks are European companies. The MSCI Europe Small Cap ETF only made around 6 % in 2024. So by looking at the pond I am fishing in, I can say that I picked the better options and outperformed in this specific market.
That’s why I am still very happy with my performance of over 20 %. I know that 20 % in a year is a very good result for an average investor. The average return of the MSCI World is around 9 % per year. I know that I am not the next Warren Buffet (or any other famous super investor). I simply believe that I am capable of beating the market if I put in some work. This extra work must of course be rewarded accordingly. I call this the return-on-time-invested. In my opinion, a full-time investor who spends 40 hours a week on investing must aim for a much higher return than someone who is just spending 5 hours a week. As I am just a hobby investor, the time I want to spend on investing is limited. That’s also why I mostly try to pick small, high-quality companies I want to own for some years. This kind of company typically needs much less time to follow. Some companies I own only report two times a year and also don’t publish that much additional information during the year. In addition, I slightly reduced the number of stocks I own. This has significantly reduced the time I spend on following the companies I already own and allowed me to spend more time searching for new ideas. Of course, I also spend a lot of time writing up these ideas and all the portfolio updates, but this is just partially related to the investment style. So all in all I can say, that the return I achieved in 2024 is very good for me, especially considering the time I invested in following and researching the stocks I owned.
Let’s have a closer look at what stocks have been the best and worst performers in my portfolio in 2024 and what potential learnings could be.
Winner
Transense Technologies (+73 %)
Lindbergh (+59 %)
Amazon (+53 %)
It is funny that the only mega-cap that is left in my portfolio is among my top 3 performers. But let's be honest. How likely is it that the stock price of a company with a market cap of over 2 billion dollars will increase by over 50% in a year and continue to perform like that in the next year?
I am all the more pleased that there are two more companies in the top 3 that I wrote extensively about on this blog and I can say that another one with Toyokumo (+47 %) is in fourth place.
Loser
B3 Consulting Group (-43 %) - *sold*
Evolution (-20 %)
Leatt (-17 %)
On the other hand, two companies I wrote about here extensively are among the losers and this really hurts me. So take this as a reminder that you should never blindly follow any of my ideas. With B3 and Leatt, I made multiple mistakes, but one thing both have in common. When the share price started to fall, I tried to catch the knife too early and too often instead of just waiting and re-evaluating the situation later. This was particularly stupid, as I never invested in these industries before. So I had no clue about the industrial cycle of these businesses, which makes it nearly impossible to try to time this market. Especially for B3 I made the mistake that there is no real moat in the consulting business, so it is unsure if B3 can come back stronger after the downturn. There were other warning signs (e.g. change of CEO) that should have led to a sale sooner. I also learned that consulting businesses is not an industry with which I feel comfortable with in my portfolio.
Compared to B3, I still think that Leatt has a good chance to come back stronger after the industry-wide drawdown. But what I definitely underestimated was the time frame of this drawdown. First, the management was talking about some quarters to digest the inventory, but now it’s been nearly 2 years of declining revenues. Some numbers are now finally starting to indicate that an end could be near, but this can still take some time. Now Leatt has to prove that they really have superior products and that there still is demand for them. But when I re-read this at the end of 2025, and I still see the same problems at Leatt, this should be a friendly reminder for me to finally cut the losses.
For Evolution, 2024 was a year with a perfect storm of bad news which resulted in a bad sentiment for the stock, while in the past years, the sentiment was very good. I don’t want to go into detail on a specific stock in this recap, but the most important points for Evolution are how the Asian and North American revenues are continuing to perform. Currently, Evolution trades at the lowest multiple since 2015 while continuing to be highly profitable and returning cash to its shareholders via dividends and buybacks. Nevertheless, Evolution doesn’t fit (anymore) my criteria of being small and underfollowed. So Evolution has been a selling candidate for me just due to this reason, but not as long as I still see a good upside in the near term.
All in all, I think that I (again) learned a lot in 2024 and also improved my investing skills. I mainly learn by making mistakes and then trying not to repeat them. By doing so, I hope that I can improve my skills and investment framework from year to year. I only started investing in 2016 which is not a long time for an investor. I never experienced a long-lasting bear market and a lot of other things. This means I will continue to make mistakes in 2025 and beyond, but I try to make less mistakes every year and I will use this little blog as my investment diary.
Under-Followed-Stocks Recap
The year 2024 started for the blog with 2,013 subscribers & 2,043 followers and ended with 3,953 subscribers & 5,324 followers. I am very happy with this progress as this was the fastest growth of subscribers & followers since I started this blog in 2022. I know that there are also many other (newer) substacks out there with much more subscribers & faster growth. But here applies the same as for my investing performance. I don’t want to compare myself with others as long as I am happy with my own results. And I can say that I feel very well in my small niche ;-)
In 2024 I published 4 long-form company write-ups (Civitanavi Systems, Toyokumo, Powersoft & Arcure). It takes me a lot of time to write these long-form write-ups, so I currently don’t plan to publish more than 4 of these per year. As long as I am not able to publish these write-ups more regularly, these will also continue to stay completely free to read for everyone. I don’t want to have the pressure to publish an idea just because someone is paying and expecting me to do so, which could have a negative effect on the quality of the write-ups.
As a complement to the long-form write-ups, I also tried the AI-generated podcast format, which summarizes the investment thesis of the company write-ups into an entertaining podcast conversation. I would love to get some feedback on how you think about this additional offer. I know that there could be some mistakes in the conversations as the AI is not perfect, but this is the only way for me to offer such in a time efficient way. So if you have an opinion on this topic, please leave a comment below or DM me directly ;-)
2024 was also the first year with additional content for my paying subscribers. I published a Portfolio Update at the end of each month with my current portfolio, the stocks I newly added or sold, all the news about my portfolio companies during the month and detailed earnings reviews. During the months I realized that these monthly update posts became too long, especially during earnings seasons with a lot of detailed earnings reviews. That’s why I decided to spin out some of the longer earnings reviews. So besides the 12 monthly portfolio updates, I also published 5 earnings updates and I think these separate earnings update posts are a better solution as you can get my impressions of the earnings faster after the earnings release and the monthly update posts can focus on all the other news & information during a month.
In November I also published a first long update post on a company I previously covered in a long-form write-up (Shelly Group/Allterco). This is also an option going forward for companies that managed to stay for a very long time in my portfolio, which I already wrote about extensively and where significant changes to the investment thesis occurred since the initial write-up.
So the paying subscribers received 16 additional posts and I think this number should increase in 2025 due to more separate earnings update posts.
During the year, I realized that the monthly subscriptions result in much more back-office work for me compared to annual subscriptions. As I want to spend as much time as I can on more qualitative content, I decided to give an incentive to choose the annual plan over the monthly plan. By using the link below you can get 10 % off of the annual subscription plan for the next 12 months, reducing the price to only ~7 € per month.
In addition, I would also like to note that the prices for the monthly plan will increase to 12 €, starting from January 15, 2025. So with the annual plan, you can save a lot of money.
In the end, I can only say thank you for reading, subscribing and especially supporting this little project. The main reason why I started this blog was to get feedback to my stock ideas, to discuss the positive things, but even more the negative things. The investment community thrives on constructive exchange so that we can improve together. Therefore, I kindly ask that you to get in touch with me if you have any suggestions for improvement.
All the best,
Mavix
Thanks for the Candide article. Very much enjoyed reading it!
„I was always able to sleep very well and this aspect is one of the most important for me.“ - a simple truth and often ignored when investing.