Introducing the Blueberry Portfolio

May 21st, 2012 by Potato

A little while ago I was approached with a unique opportunity: to actively manage an investment portfolio for someone else, which we named the Blueberry Portfolio. For this, I’ve been writing monthly letters about what has been happening in the portfolio, which gives me a bit of pre-written content to post here when I get busy in RL. At first the letters will be coming in with a 7-8 month lag, but I anticipate I’ll post them more than once a month, letting you catch up to near-real-time.

At the time I started, it was my understanding that this investor had a balanced and well-diversified portfolio, and that the Blueberry portfolio was free to invest somewhat aggressively without paying much heed to diversification. The goal was to use a value style with a fair bit of concentration. My idea going in was to have about 5 “core” positions with weightings of about 10% each, and another 10-15 smaller positions.

In the way of fees, I was to share in the profits (after trading fees) in a manner that can only be described as generous, with no fees for under-performance [it is at this point that you probably realize the owner of the Blueberry portfolio is a relation, and the fee structure is a convoluted gift]. The initial benchmark was absolute – comparing performance to a HISA, but at my suggestion we also compared relative performance to the Canadian Index ETF XIU (since that’s where this money would have gone otherwise).

The initial core positions identified were Berkshire Hathaway, Capital Power Income Fund, Chemtrade Income Fund, Daylight Energy, and Google. Almost immediately, I ran into an embarrassing problem: I couldn’t figure out how to execute trades on US securities in the portfolio. So the portfolio became Canadian-only; Canexus was bumped up to “core” weighting, and only 4 stocks had that high a weighting. The smaller positions were built as opportunities presented themselves — which didn’t take long in the summer of 2011.

Hopefully you’ll find these letters worth your time: they’re not Buffett partnership quality, but they will give you some insight into my thought processes, and allow you to follow along (with a time lag) with actual portfolio performance.

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