Hello Partners,
The year 2023 marks the 10th year of our partnership. We started the partnership as an experiment of several simple ideas:
- A focused, disciplined, long-term, low trade investment approach based on business fundamentals can outperform the S&P 500 over time.
- This type of outperformance can be achieved without wealth management professionals, financial experts, professional investment managers or any specific credentialing.
- Returns to the investment manager (the general partner) should be based on true outperformance of a general, single, market barometer like the S&P 500.
- A partnership that earns negative returns or does not exceed a general, single market barometer over time warrants no payment to the investment manager.
- Such an agreement over time, if employed in the fashion above, will return satisfactory compensation to the investment manager
We feel gratified by our results over the past decade and that our experiment has provided valuable insight into how an investor may achieve results over time that can surpass most professionals. We also feel grateful to you, our partners, who have trusted us in this endeavor. We feel we are getting better as we go along and we hope you are as happy with the partnership results as we are!
We stated last year in summary of our 2022 year results, a very difficult year, that we were optimistic of the unique opportunities available to us at that time. The exceptional results of 2023 are the result of taking advantage of those opportunities in the following ways:
- The economic experts predicting a recession (that still has not come) beat down the general stock market
- Meta/Facebook presented a very unique and obvious value opportunity
- We focused our available funds on our best ideas, in other words we do not diversify or sell a position just because it goes up or reaches some arbitrary percentage of our total portfolio
- We used long term call options to make the most of our Meta/Facebook opportunity
The following table are annual returns of the partnership (RACP) vs those reported for the Vanguard 500 Index (VFINX). Outperformance years are highlighted green.
| Year |
VFINX |
RACP |
| 2014 |
13.51% |
8.7% |
| 2015 |
1.25% |
0.2% |
| 2016 |
11.82% |
13.5% |
| 2017 |
21.67% |
24.5% |
| 2018 |
-4.52% |
-14% |
| 2019 |
31.33% |
35.6% |
| 2020 |
18.25% |
30.1% |
| 2021 |
28.53% |
34.6% |
| 2022 |
-18.23% |
-27.7% |
| 2023 |
26.11% |
65.3% |
Partnership returns achieved both absolute and relative goals for the calendar year in dramatic fashion notching our best annual returns since inception.
Attached are a list of 2023 Year End Reports for your reference:
- Total Partnership Valuation at year end was $1,316,802.96; $36.50 per Unit (Units started at $10 per Unit on 01/01/2014)
- Performance of investments held at year end
- TSM and HBI-Jan25-3-Call annualized returns are not accurate as they have not been held a full year
- This report shows how we achieved a 65% return in 2023!
- Partnership returns vs Vanguard 500 Index our benchmark (2023)
- Compare the partnership return of 65% to your other 2023 investments
- Partnership returns vs Vanguard 500 Index our benchmark (All Dates)
- Compare the 15.2% annual return since inception to your other investments.
Other 2023 Activity to Note:
- We exited our position in Enbridge (ENB) to free up funds for better opportunity. We held ENB primarily for the high yield dividend as an alternate to cash.
- We sold Meta Platforms Inc; Call Jan 24 200 and Call Jan 24 150 both held more than 12 months for a net capital gain of $36,433.12 which will flow through as income to our partner K1s roughly equivalent to your partnership percentage
K1s for 2023 Taxes are due to you by March 15 and we will work to get those to you as soon as we can.
Please feel free to email if you have questions.
Happy New Year!
Randall Alan Capital
rac.llc@outlook.com
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