Kontrarian Korner: Year In Review

The One Year Performance Update & What's In Store For The Rest Of 2024

Kontrarian Korner: Year One

When I started writing Kontrarian Korner about a year ago, I wanted to write something that I would read. Something that included deep dives on individual stocks and a focus on sectors of interest, with a little bit of personality and a sense of humor. The reason I chose the name Kontrarian Korner is that I typically look for opportunities ignored by most of the market, where there is a mismatch in sentiment and my estimate of fair value.

That’s what led me to South American energy stocks like Petrobras PBR 0.00%↑, coal stocks like Warrior Met Coal HCC 0.00%↑, and offshore oil services stocks like Tidewater TDW 0.00%↑. I’m admittedly cherrypicking some of my biggest winners, but this week I will be doing a full Year In Review to look at how things have gone. I’ll be looking at what went went right, what went wrong, and what I have learned over the last year.

I’ll also be talking a bit about the Substack. To say that I’m excited about the way things have gone with Kontrarian Korner would be a huge understatement. If you told me a year ago that I would have more than 800 subscribers and over a thousand followers on Twitter, I would have told you that you were crazy. Subscriber growth has picked up in recent months, and I’m hoping that it will continue in the second half of 2024.

I want to say thank you to all my subscribers, especially the paid subscribers. I appreciate that you find my work valuable enough to support me, and I hope you found a profitable idea or two that appealed to you over the last year. The Substack isn’t paying the bills yet, but I like the way things have gone to start 2024. Last December, I was starting to get to a point where I was thinking “Do I really have to start looking for a job in finance? Or even worse, go back to accounting?”

I don’t think I will have to dust off my CPA, but I learned a lot from my time in public accounting that set me up for what I’m doing now. While it was a good experience, I don’t miss the countless Zoom meetings or ridiculous hours. We will see what happens with the Substack, but I enjoy this a lot more than being buried in spreadsheets for 50 or 60 hours a week. If my subscriber base continues to grow, and the portfolio performs like I think it could, I’m looking forward to the next couple years.

Portfolio Returns

Over the last twelve months, my portfolio is up just over 64%. Returns have been good so far, but it hasn’t been without drawdowns. I can’t complain, but my mind goes back to the mistakes I have made over the last year, some of which should have been avoidable. I will talk more about the mistakes over the rest of the week, but it’s just the way my mind works. This is a levered return, which is why you haven’t seen cash as a portion of my portfolio weights. The amount of leverage has fluctuated over the last year, but I’m planning on reducing margin over the next couple years. It’s been a volatile ride, but if I’m right about the direction of portfolio holdings, I think it’s more likely to be volatile on the upside. I’m actually down a little over 10% YTD, but I think things are headed in the right direction for all of the businesses in the portfolio.

Different stocks in the portfolio took turns punching me in the gut for the first four months of the year, but I wouldn’t own any of them if I didn’t think long-term fair value was higher. I have talked about having more ideas than money, and I think that will probably be the case for a while, but my best ideas will continue to be outsized positions in the portfolio. Concentrated positions, like leverage, is a double-edged sword. When it works, it really works, like it has with Petrobras. When it doesn’t, it’s more frustrating, even if you think it’s just a short-term blip for that company.

For me, that’s been Borr Drilling BORR 0.00%↑. I still think the market is missing the forest for the trees on this one, but that hasn’t made the drawdown any more enjoyable. I don’t know what returns will look like moving forward, but if some of the laggards in the portfolio start to catch up, I think the next couple years could be fun. There will be a couple changes for Kontrarian Korner in Year Two, ones that I hope will provide more value for subscribers.

Kontrarian Korner: Year Two

Moving forward, there are going to be some changes for Kontrarian Korner. I will continue to do the Videos & Podcasts of the Week post for all subscribers. For readers following markets, I think these are valuable for insight on what I’m watching on a weekly basis regarding a variety of topics. On another front, you might have noticed I have been more active with Substack threads recently. That is going to continue if any news comes out on one of my holdings that doesn’t require a full length post. Moving forward, these will be for paid subscribers.

I will also continue to do at least one other post each week. The single stock deep dives, sector updates, and the trade updates and portfolio weights will continue to be for paid subscribers. If I’m covering other topics, these posts might be for all subscribers, like my comparison of the coal sector to the tobacco sector.

The biggest change will be the addition of a Podcast and YouTube channel. It will mostly be focused on finance, markets, and current events, but I will probably do the occasional detour into health or other topics that interest me. Some of these might be behind the Substack paywall (like the podcast on Borr with

Ferg

), but most will be free for everyone. I will be working on getting guests on, so if you have any suggestions for guests, feel free to leave a comment below.

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Another change for Kontrarian Korner will be the change in the price of the subscription. On May 12, the price for new subscriptions will increase to $50 per month or $500 per year. If you are already subscribed (or subscribe this week), you will be locked in at the current price. As long as you continue to renew your subscription, the price increase will have no impact on you.

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Conclusion

Overall, it’s been a good year for the portfolio and the Substack, and I’m excited about the next couple years. Over the rest of the week, I’ll be going through each stock in the portfolio and decisions I made over the last year, talking about what went right and what went wrong. When I started this post, I was thinking I would do a full breakdown today, but that post would be far too long to do it right. I have decided to break it down into several themes so I can do each one justice.

• Monday: South American Energy (Petrobras, Ecopetrol, and Frontera)

• Tuesday: Coal Stocks (Peabody Energy and Warrior Met Coal)

• Wednesday: The Offshore Basket (Transocean, Tidewater, Valaris, and Borr)

• Thursday: Miscellaneous (all other holdings/trades)

I’ll cover total returns from each holding, when I was buying (and selling, if a stock is no longer in the portfolio), as well as dividends. As always, the portfolio weights will be for paid subscribers, but hopefully this week will give readers a peek into the returns of what’s in my portfolio. It should also be a window into my thought process and what has changed over the last year. Once again, I need to thank all of the readers. I appreciate all of your support, and I hope some of you find my work valuable enough to become a paid subscriber.

Current Portfolio Weights