Last time you heard news from the portfolio was during the outbreak of the COVID-19 crisis in USA and Europe, and many stocks turned out to be close to the bottom level. It’s been rougly a half year since then, so it’s time for an update on the portfolio!
So far you’ve learned that the biggest holding of Philosophers’ Legacy was the company Costco Wholesale Corporation. I’ll share with you now that my entry price was close to $299 per share.
I had wanted to buy the stock for a long time, since reading about it, and learning from Charlie Munger and Warren Buffett who love the company. I almost bought it at the stock market correction at the end of 2018, but it turned out I was to cheap and in at a too low price. The stock didn’t fall lower than $197. However, I got another stock instead at that market low for the portfolio on the other hand, which I’ll share with you later. Buying Costco in 2018 would have been a great move in hindsight. Nevertheless the portfolio gained rougly 50% during 2019 without holding it most of the year, and the price stayed around the cost basis. Seeing the stock only climbing higher and higher, I decided that it was still worth a buy for the long term, because the value per share had climbed along with it.
Today there doesn’t seem to be anything that can stop Costco from marching forward in 2020. During the year of the crisis sales and net profits grew by close to 15%. So far in 2020 the stock has reached $380.
Currency effects
The performance of the Philosophers’ Legacy is however measured in the Norwegian currency, NOK, while most of the holdings are listed in USD. Over the last year we see large fluctuations in the ratio of USD/NOK, but the ratio is about the same today as it was 12 months ago, as you can see in the picture below.
I did add to several positions during the peak for the crisis. The prices of the companies were favorable in dollar terms compared to dollar earnings, but the purchase power of the Norwegian Krone was much lower than usual during the COVID outbreak in Europe. That meant that much of what I bought during March and April had great gains in dollars, but I added at a time of unfavorable exchange rates, so the result was poorer in NOK terms.
Despite the factor of not getting much value from the Norwegian currency when I needed it the most, the portfolio has still gained a satisfactory return over the last 12 months. The trailing 12 months have had a gain of 15.6% as of today, vs 7.8% for the DJIA index.
Happy with an overall good gain so far
With this result I consider myself lucky. Not only because every stock in the portfolio has held it’s value, but I’ve also been lucky to see a gain overall despite that the second largest holding has barely moved in price. My belief is that it’s quite undervalued now, and we might see gains in price there sooner or later. I’ve not revealed the name of that holding yet, so stay tuned!
The S&P500 has gained rougly 19% over the same period as we’ve reported now, and we aim to beat it over the long run. My broker doesn’t show the S&P500 index in my graphs, but it’s nice to have beaten the Dow Jones Index at least.