Portfolio Performance Update: December and Full Year 2010

by: Jae Jun

2010 results are in and you could say I am proud to be in the same crowd as Jeremy Grantham, Bill Miller and Legg Mason for my 2010 performance… by underperforming 99% of the funds out there. It isn’t easy to get in the 1% percentile...
The numbers you see are all total returns. My portfolio returns also include fees.

Thanks to the bull’s rush the last couple of months, I did achieve positive returns but was unable to beat the index this time around.

Unfortunately December ended lukewarm while the market kept its upward movement.

December Portfolio News

The new Sun Healthcare (NASDAQ:SUNH) after the spinoff went on a tear before giving me the chance the add more. There have been several posts from fool.com arguing that SUNH is overvalued, which I do not agree with at all. SUNH now only makes up 2.45% of my portfolio. Hopefully there will be a chance to add more.

My top 3 holdings, General Growth Properties (NYSE:GGP), Gravity (NASDAQ:GRVY) and The Howard Hughes Corp. (NYSE:HHC) were all flat in December, which added to the flat results. These 3 positions alone make up 47.4% of my portfolio.

With GGP set to start distributing dividends this month, it makes holding my position worthwhile as my cost basis ensures I receive a dividend yield on cost equating to just above 11%.

GRVY will continue to be my big bet this year. The sequel to its first successful game was once again delayed throughout 2010, but 2011 looks to be the big year.

Adobe (NASDAQ:ADBE) was probably the highest mover in December as the company reported quarterly revenue exceeding $1b for the first time since 1982. Again, ADBE has shown that there is nothing to be worried about with Apple (NASDAQ:AAPL) discriminating against flash or the threat supposed to come from HTML5.

Mastech Holdings (NYSEMKT:MHH) moved up considerably on news of share buybacks, but I had sold out a couple of days earlier.

December Transactions

Sold Insmed (NASDAQ:INSM) for a -34% loss.

A disappointing end to INSM for my portfolio. INSM ended up purchasing another small bio-pharmaceutical company by diluting itself. It brought the NNWC down from the 90c range to about 60c, if I remember correctly. One of the cardinal rules of selling is to do so when your thesis changes. Not only did the thesis change, management lost my trust. Peter Lynch was right.

“Go for a business that any idiot can run – because sooner or later, any idiot probably is going to run it.”
Sold Mastech Holdings (MHH) for a -15% loss.

Although MHH is a great company, my initial thesis also didn’t play out as well. I was expecting the unemployment rate to recover, even slowly, but that wasn’t to be and it does not look like the picture is getting any better.

With that I sold my position and assigned the money to other opportunities. I was unlucky that MHH announced a share buyback program a couple of days after I sold.

Bought China MediaExpress Holdings (OTCPK:CCME).

I’ve taken a big position in CCME-- 4th largest position. I still need to write about this but there is enough information at the CCME forum where there is a discussion and some links to good analysis.

2010 Overview, Reflections and Lessons Coming Soon

I spent a lot of a time updating and getting the latest 2011 stock valuation spreadsheets. You can view a live demo of the latest spreadsheets by downloading the demo stock valuation spreadsheet directly.

Disclosure: Long all stocks except sold positions.