VMG (velocity made good) STRATEGY PERFORMANCE Overview
Updated: Feb 1
2020 proved to be a year full of unexpected hurdles in the economic conditions. VMG has had to adapt to all of those and pull through financial success.
Below are our metrics as compared to the HFR Absolute Return Index.
Our Focus Fund Strategy
+13.3% Gross Return 2020 YTD December 31, 2020
+ 4.4% Gross Return 2021 YTD January 29, 2021
outperformed Berkshire Hathaway Cl A fund by +547 bp YTD January 29, 2021
For example, in ’05, ’06, ’08, ’09, ’10, ’11, ’12, ’13, ’14, ’20, our Focus Fund Strategy was focused, liquid, hedged, and growth-oriented with controlled risk:
consider HFR Absolute Return Index +4.4% YTD December 27, 2019
vs Focus Fund Strategy Return Gross +11.8% YTD December 31, 2019
Focus Fund outperformed HFR Absolute Return Index since Inception 3/31/09
143 MONTHS in historic, difficult investment periods
Now, looking back: in March ‘09-Dec ‘19, our Focus Fund Strategy yielded a return of far exceeding the HFR Absolute Return Index. Both strive for attractive absolute returns with controlled risk. VMG launched in March of 2009 when we told clients march could be the best equity opportunity in a generation.
Upon an extensive analysis of 1929 conditions, we concluded that 2008 was quite different. Recovery could be very rapid. That day, we deployed all USD Cash, held since early ’08. We launched on March 31, 2009. VMG is always ready to act when we see opportunity.
Fast forward to another economic decline. In February 2019, our research concluded that it would benefit clients to increase risk control now, global equities are too expensive.
In November 2019, we reached fully invested. We continued to overweight tech by buying Boeing too early, stopped out, current weighted avg cost $132.99 per share as of June 3, 2020. We expected a 5-year hold horizon.
In April 2020, our research concluded the depression risk has passed. More aggressive adds included Airlines. VMG added Atlas at $25.45 a share and Barclays ADRS at $4.29 a share. We favor continued overweight tech, underweight emerging markets, and now reduced bonds. We added certain REITS including the Retail Mall operator Macerich, and began adding in April at $6.76 a share (it closed June 3, 2020 at $11.16 a share).
In June 2020, we were concerned the market outpaced reality, just as we expect in all V shape recoveries like 2009. We protected gains early and finished the year at +13.3%
In the 2nd half of 2020, we continued to protect the portfolio, expecting significant volatility win Q4. Cash levels through to February were significant.
Back to stock picking for February, favoring energy and tech. We hope to soon see further buying opportunities in equities and real-estate bonds as we did in April.
VMG has been working to constantly adapt to the market in the wake of COVID-19. We are constantly updating our public metrics on our website, and alway glad to discuss.