Decade of Daddy Mirror Fund Bi-weekly Report
Here is the bi-weekly report, and we are surviving. Since our Decade of Daddy Mirror Fund™ began on July 2nd, we are still showing a positive return of 2.3%; over the same period, the Dow Jones is off 9.3%.
As you will recall, we are gauging our Mirror Fund’s notional performance against that of the O’Leary Global Equity Income Fund (OGE.UN:TSX) and the overall stock market. Over at Decade of Daddy Central, the Net Asset Value of OGE (aka the Decade of Daddy Fund™) has finally fallen into single digits: $9.93 in fact. With a $12 IPO price, 17.3% of the original investment has “gone down the drain” in the space of three months – at least on paper.
What was that about “getting paid while you wait”? Obviously, three months is a very short timeframe. But the market is extremely short-sighted right now.
The OGE units themselves, however, are trading at $12.14, which is a stunning 22.2% premium to the NAV – up from a 16.9% premium in just two weeks (the NAV is the actual value of the stocks in the portfolio that the fund has acquired, and whatever cash has come in from dividends or interest on those investments). Which means that retail investors are paying a 22% premium to the underlying value of the Decade of Daddy portfolio just for the right to say that CBC Dragon O’Leary manages their life savings. If you’d like KO to take you on a similar voyage with infrastructure stocks, KO has recently launched an Infrastructure Fund on the heels of his early success with equity investing.
In the Mirror Fund, we’ve made money in:
BCE (+0.4%), BNS (+5%), BRK-A (flat), Duke (flat), JP Morgan (+44%), Merrill Lynch (+47%), MKS (+19%) and Teranet (+26%).
Since the fund began we’ve locked in our profits on BMO ($775k, plus $87.5k divi) and CIBC ($242k) as you’ve read in prior reports.
In the red column:
Bristol Myers (-4%), CDN Oil Sands Trust (-37%), Eli Lilly (-12%), Merck (-16%); Spectra Energy (-15%) and Thomson Reuters (-20%).
Since we launched the mirror fund, the Dow Jones Index is down 1,057 points, with more to come. Based upon the theory espoused in a recent post (see prior post “TARP passes, but brace yourself for the second shoe to drop” October 3-08), we are exiting Merrill Lynch at US$26.67 – a decent gain on the original US$18.18 cost (MER now largely tracks Bank of America shares given the pending takeover). And I’m worried about more writedowns at the big U.S. banks.
But you have to hide somewhere, and I’m not worried about Goldman debt. So we are going to buy $2.5MM market value of the Goldman Sachs A-rated 2037 subordinated debt at $72.011. With a stated yield of 6.75%, these bonds are actually yielding 9.37% at this price. This paper ranks above Warren Buffet’s prefs (see prior post “Life imitates art as Buffett invests in Goldman” September 24-08) btw.
MRM
(disclosure – I own GS sub debt)
Sorry but it has to be said…
I am just a regular Joe, know nothing kinda guy doing some research into dividend paying investments. And I keep running across your blogs on O’Leary’s fund. While there are many things to debate with you about your various proofs about how useless Kevin is – I’ll just say this:
For the little fund that you make fun of him for being a part of, you seem to spend an inordinate amount of time trying to put him and his fund down. One, maybe two “opinion” pieces – ok but come on, move on man – whatever he did to you should be forgotten or forgiven.
gg
Yup, feel free to make fun of me and my post.
Gg
Point taken. I suspect Google generates many citations for this blog in relation to the Decade of Daddy Fund given the absence of any real coverage from the mainstream media.
One in ten of our last posts touched on Mr. O’Leary, and I conscious as I am about being a one trick pony…I didn’t even bother to blog that he made an entrepreneur cry (so I’m told) on CBC the other evening.
The fact that I’ve got this Mirror Fund going means that the OGE topic will come up more frequently than I’d otherwise like.
If you haven’t found any of the OGE information useful, than I’m sincerely sorry. Based upon the comments and emails to date, a majority of our readers have found it to be more enlightening than you may have.
To put your mind at rest, KO has never done anything to me by the way. I think he’s a very talented TV personality.
MRM
Please, it’s obvious there’s a link between you (MRM) and KO. I can’t imagine the CEO of a firm spending that much time blogging to put down another businessman only to provide “real coverage” of his business activities…
If you want to do some real coverage of recently hyped Canadian IPO’s, how about you cover two IPOs that I recall you writing about.. Sprott and Coxe… (Sprott: SII.to, Coxe: cox-un.to). If I remember correctly, you valued these two IPOs as much better investment vehicles than the O’Leary fund, given the successful track record of their respective portfolio managers, and so forth…
Let’s see where they’re at now…
Sprott IPO’ed at 10, last traded at 3.30 today, down 67%.
Coxe Commodity fund IPO’ed at 10, last traded at 5.00 today (down 50% on the market), and its NAV on last Friday was 7.0250 (down 29.75%, which doesn’t include this week’s selloff on the TSX).
OGE down 17% on paper, and 4% on the market (last traded at 11.52 today, it IPO’ed at 12).
Considering how you strongly suggested investing in Coxe or Sprott over OGE (KO), I actually don’t feel so bad having some of my money in OGE…
Richard
Welcome back to my friends from Montreal. Let’s get some facts straight at the outset. I didn’t recommend the Sprott fund, what I posted on May 8 and June 1, 2008 was a simple observation that Sprott Asset Management had disclosed a track record in their IPO filing, unlike Kevin O’Leary.
I also didn’t recommend that investors put their money with Don Coxe. I merely noted in our published comment exchange on June 2nd that Mr. Coxe had raised almost $300 million for his fund, while you and KO had raised $40 million; “the market had spoken as to the attractions of the two strategies”. And that if investors were looking for a multifaceted resource strategy, then the Coxe structure could be for them based upon his 2 decades of Brendan Woods rankings. You are right to point out that since oil and most other resources are down, so is his fund.
I’ve never “strongly recommended” investing in either of Sprott or Coxe; I’m not licenced to give advice to investors and am careful not to do so. Please don’t twist my words or pretend my observations were anything more than the benign observations that they were.
Since you are interested in disclosure, I really, truly, have nothing to disclose. I think you are throwing that accusation my way in an effort to undermine the merit of the analysis that has been done here in the past on OGE.
The reason why we’ve put up a few posts on the topic is simple. I’m not a fan of this investment vehicle and have outlined why that is; and I’ve taken all of ten minutes to set up a Mirror Fund to see if Joe Shmoe (that’s me) can outperform the net returns that Mr. O’Leary has promised to retail investors without the large investment staff and travel budget.
If you ignore the bi-weekly Mirror Fund reports, we’ve done 7 posts where Mr. O’Leary featured as the main thread. We’ve posted more than 40 different times on the BCE LBO, for example, and almost that many on the BDC.
Since we are talking about facts…. The question for you is about disclosure. Do you have “your money” with the OGE fund, or is the relationship closer than that?
Nice uptick and highclose on OGE at 3:56 p.m. today, btw.
MRM