Decade of Daddy Mirror Fundâ„¢ Annual Report

Another year has come to a close for the Decade of Daddy Mirror Fundâ„¢. Our third in fact. And the fund is thriving.

Our two Venezuelan bonds have done well in recent weeks, but the big hit came when MKS was acquired by Parametric for $26.20 a share. MKS was an original 2008 Fund holding (at $7.05/share), and we added some more a while ago at $12.19. We held the 180,000 shares for the 7% dividend, but making 209% on the position wasn’t too shabby either.

Our Mirror Fund also added some of the new Discovery Air 8.35% unsecured converts, which were recently issued to replace the 2011 version that were about to come due. Other than that, we’ve just let the sleeping dogs lie, although they’ve had to pay us to do so.

It should come as no surprise to regular site visitors that we continue to beat the key indicies and our true benchmark: OGE.UN:TSX. Although it will now be much harder to figure that last part out. You see, KO terminated the OGE Fund a few months ago. Things had become so uneconomic that it was rolled into a different vehicle. Gone is the daily quote, and we are left with some new Global Equity Yield mutual fund to use as our benchmark.

At last count, as of March 8th, OGE was up a grand sum of 17 basis points from the 2008 IPO (including distributions). With an additional special distribution of 20.5 cents in March, the 2.5 year OGE investor experience looks to have wound up with a gain of ~35 basis points. Sounds as though the outcome was about as predicted back in 2008 (see prior post “O’Leary Fund promises to share the wealth and wisdom” May 8-08).

Our Mirror Fund was up 6.8% to $42.7 million as of the one year mark, and is now up 32.6% to $53 million as of the Canada Day close. During the same timeframe post-launch (which was Canada Day 2008), the Dow is up 10.6% and the S&P 500 is up 4.8%.

In the Mirror Fund, we’re making money in BCE (+9.2%), BMO (+9.8%), BNS (+18%), Bristol Myers (+31.6%), Goldman Sachs 2037 Subdebt (+33.7%), Duke Energy (+9%), Merck (+1.4%), Spectra Energy (+28%), TD Bank (+25%), , BOLIVARIAN REPUBLIC VENEZUELA AMORTIZING BD REG S 2022-08-23 12.7500% (+6%), and PETROLEOS DE VENEZU NOTE 2014-10-28 4.9000% (+13%).

Since the fund began we’ve locked in our gains on BMO ($775k and $1.133MM but we are back in again), BNS ($136k but are back in again), CIBC ($242k), JP Morgan ($1MM but are back in again), Merrill Lynch ($799k), MKS ($3.19MM), Royal Bank ($566k but are back in again) and Teranet ($307k plus distributions) as you’ve read in prior reports. We’ve also taken losses on Canadian Oilsands and Eli Lilly.

In the red column: Berkshire Hathaway (-15.6%), JPM (-0.2%) and Thomson Reuters (-1.4%).

Over at OGE.UN:TSX, the trading price of the fund (plus distributions) trailed the S&P, Dow Jones and our little test fund during the entire experiment. But the fund manager earned over $2.5 million in fees during the period; so that’s something, I guess.

MRM
(disclosure: this post, like all blogs, is an Opinion Piece; we own BCE, BMO, BMY, BNS, GS sub debt, RY, SE, TD and those Venezuelan bonds in our household)