Q4 2024 Portfolio Review
Up 4.14% in Q4, 22.8% for FY24
I. Results
Q4 2024 Returns
No Deep Dives Portfolio: +4.14%
S&P 500 (in EUR): +10.08%
The portfolio underwent massive underperformance after Trump was elected and a variety of stocks started rallying. It’s funny how this works: 4% quarterly return is solid, but it feels less impressive when "the index" performs significantly better.Still, there’s not too much to complain about!
FY24 Returns
Portfolio on January 1st, 2025
I made a few transactions in December to fine-tune the portfolio heading into the new year. Here’s where things stand:
I covered each position in detail in my first post of 2025. To avoid repetition, I’ll direct you to that post for insights on the new additions:
II. Portfolio Updates
I track my portfolio in euros. In Q4 2024, the euro dropped 4-5% against the US dollar, providing a temporary (and likely mean-reverting) tailwind. This gives my returns a slight edge compared to other “annual returns” figures you might come across.
Top Detractors
Caesar’s ( CZR 0.00%↑ ) : -13.6%
An notable contributor for Q3 24, but a big detractor in Q4. It’s not always easy to pinpoint to exact reason for stock movements, but here’s my take on the key drivers:
The bad
Asset sale of a non-core asset was at lower price than the market expected
Caesars increased capex in the Regionals segment, of which they would reap the rewards afterwards. But during the latest conference call they mentioned increased competitive pressure in that segment. This walk-back tempered expectations.
CZR often trades down with broader concerns about the U.S. consumer or rising interest rates.
The Good
The digital business is on track to become a meaningful profit contributor.
For the first time in years, Caesars repurchased $150M of shares and approved a new $500M buyback authorization. However, their main focus remains debt reduction. On the Q3 2024 earnings call, they stated:
“You should not expect a programmatic use of this authorization. It's not going to be x amount per quarter as far as the eye can see. We're going to be looking at returns in the various possibilities in terms of capital spending, debt reduction and share repurchase. Debt reduction will remain our #1 focus, but if we can continue to buy our stock in the mid-teens or better free cash flow yield, you should expect us to be active there as free cash flow comes in and cash flow from asset sales comes in.”
They still see a path from $4 bn currently in EBITDA to $5 bn:
Digital business reaching a $500M EBITDA run rate.
Incremental growth from Regional investments.
Strength in Las Vegas heading into 2025.
I’m still patient, but the next 1-3 quarters are critical. The thesis of “post-big-capex hump” and “digital inflection” should materialize during this period. By then, we’ll know if the initial investment case played out.
Grupo Catalana Occidente (GCO.MC): -10%
I don’t think there’s any company specific news, just more sellers than buyers. Sounds silly, but sometimes that’s just the way it is. At least temporarily.
LVMH Moet Hennessy Louis Vuitton, (MC.PA): -7.7%
One of my go to “buy the dips” as it often trades down on luxury/China fears with peers, but then outperforms them since it is still a league of its own.
However, this quarter, they did finally report a “weaker then expected Q” themselves and traded down on that. The business is cyclical in some way.
When asked about the outlook going forward during the Q3 24 CC:
While it’s unclear when the recovery happens, the dip will be temporary, long-term prospects remain intact and the current price seems like a good deal.
(UPDATE: Yesterday (16/1), Richemont released better than expected results, boosting the whole luxury sector and MC.PA wass up 7%+)
Verallia (VRLA.PA): -7.6%
The stock took a massive hit in Q3 2024 after the company presented HY 2024 results at the end of July. Unfortunately, the negative momentum carried into Q4. Analyst EPS estimates have also come down a but. More detail about that drop:
I exited the position in Verallia during the first couple of days of January 2025.
Top Contributors
Garrett Motion ( GTX 0.00%↑ ) : +19%
GTX announced a new capital allocation plan which was received very well by the market. It committed to a payout of 75% of FCF going forward, consisting out of a small dividend and the remainder through share buybacks.
While this is good news at face value, I was quite surprised by the market’s enthusiastic reaction. GTX had already committed to returning 100% of FCF via buybacks in 2024, so this new policy is technically a downgrade. But ok, stonk price go up, I’m happy.
Additionally, GTX benefited from midcap inflows tied to Trump’s victory and anticipated policies.
Alphabet ( GOOGL 0.00%↑ ) : +18%
Was a big winner during Q4, outperforming the NASDAQ. Google shed off some of the DoJ fears and demonstrated AI progress near the end of the year, stealing some of the spotflight from OpenAI. OpenAI had planned “12 days of OpenAI” with daily updates of new developments at the end of the year. But somehow, at least in my twitter feed, Google actually hijacked the attention with AI updates of their own.
Other Notable Portfolio Updates
Millicom ( TIGO 0.00%↑ )
I feel like write too frequenty about Millicom, but it’s also my favorite and largest position. It also happens to be packed with catalysts which keeps it in the spotlight.
Millicom finally announced its long-awaited tower sale-leaseback, but the stock didn’t react much. I explored this in detail here:
My conclusion was that, to get to stock price moving, we need clarity on how the proceeds would be used.
Uncertainty About Proceeds: The biggest issue for me was the lack of clarity on how Millicom intends to use the proceeds. If they had announced a special or recurring dividend, tender offer or buybacks, I believe the stock would have seen an immediate boost. But now, the uncertainty remains: “yes, they’ve monetized the towers, but will regular shareholders see the benefit before Xavier Niel swoops in and steals the company?”
A month later, they announced:
$150m buyback in 6 months (3.5%, or >7% annualized)
special dividend of $1 in January (4% yield at $25)
intention of restarting a recurring dividend, to be approved at next AGM
However, the stock was down on this news, how come?
Millicom simultaneously announced it would delist its Swedish SDRs. With most trading volume in the SDRs, some Swedish institutions likely caused selling pressure due to mandates restricting investments in the U.S. listing. Sounds like excellent timing to launch a share buyback program!
Two days ago, Millicom provided the clarity needed to push the stock higher (up about 10%):
The company announced their new shareholder remuneration allocation policy:
$3 regular yearly dividend paid in quarterly increments, to be sustained or grown
On a $25 share price, this is a dividend yield of 12%! How crazy is it to go from no dividend to 12%, and that dividend is sustainable and growing?
Millicom was basically trading at a 16% fwd FCF yield and that FCF is projected to grow in coming years (estimates are > $4.10 FCF/share in 2025, which easily covers the dividend).
This obscenely high yield should enable price discovery and force the share price higher. Investors can be quick to dismiss a cheap stock that has been cheap for a while, but when the company starts paying out a 12% dividend yield… it will get a second look. If not, I’m just happy to hold and collect my hefty dividend.
The high dividend yield should also ease concerns about the majority shareholder, Xavier Niel, mistreating minority shareholders. By sharing the spoils through dividends, Iliad (XN’s vehicle) appears content to collect cash from Millicom while keeping its options open.
Exited/Trimmed Positions
Sold all RLGT 0.00%↑ at $6.65
Sold half of FDEV at 276.5p (hype before release of PC2), sold half at the literal open for 290p after the results of the release/ mixed reviews started coming in.
Sold all BELFB 0.00%↑ at $75.14: I’m less convinced of Bel Fuse at the current prices. Not expensive, but not the deal it used to be. Depending on your style or tax obligations it can make sense to hold. I chose to sell here and move on for now.
Sold all of my CNQ 0.00%↑ at $33.6: I rotated proceeds into a new Canadian oil sands oil position, but at a cheaper valuation: Strathcona Resources.
Sold my 1.85% position in IMAX China (1970.HK) at HKD 7.61
Sold all of Fairfax Financial Holdings ( $FRFHF ) at $1433
Sold all of SIRI at $26.50
Small trims to make space for new positions:
Trimmed Macfarlane (MACF.L) from 7% to 5% at 108.5p
Trimmed GTX 0.00%↑ from 6.2% to 3% at $8.77
Trimmed Inchcape (INCH.L) from 5% to 3% at 760.5p
Commentary on all transactions can be found in my Substack Notes
Fairfax Financial Holdings (FRHFH) - Exited Long
This position had grown to a 8.8% of the portfolio and was the best performer at the time of sale (60%+). Purchased for $920 at roughly 1.05x P/B, it was sold at about 1.3x P/B of estimated Q4 24 BV.
The stock’s performance has been exceptional, driven by a combination of improving fundamentals and multiple expansion, the double whammy. While still cheap, it’s less attractive than it was 12 months ago. The fundamentals have been stellar, with every segment firing on all cylinders, but that won’t always be the case.
The value investor life is saying goodbye to some of these too early * , but I’m fine with that.
( * usually talked about with the power of hindsight. )
SiriusXM - ( SIRI 0.00%↑ ) - Exited Long
I sold this position the day they released their downgraded guidance for 2025.
I wrote this at the time of purchase:
LSXMA: In less than a month, LSXMA/K and SIRI shares will collapse into one share class. Berkshire will own almost 30% of the company after this. I don’t recommend following BRK into stocks, but I think in this case you can frontrun the publicity (and share price increase that can come with it)
As a European, I don’t really “get” SIRI & and I don’t really love the company. But a story of declining capex/increase in FCF around the corner & buybacks will return… that’s one I usually like
The occasional news of Berkshire buying more shares did have a noticeable effect on the stock. However, the anticipated 2025 turning point has now been pushed back with the new guidance. When I’m confident in a company, I don’t mind holding through delays. But with less conviction, I prefer to avoid a cycle of negative earnings revisions.
Moving on.
New/Increased Positions
Bought Bekaert (BEKB.BR) at €34.3
Bought Alphabet ( GOOGL 0.00%↑ ) at $168.74
Bought Strathcona Resources (SCR.TO) at CAD$ 32.5, and a lil’ more later at CAD$ 27.50
Bought Mattr (MATR.TO) at CAD$ 13.47
Bought Winpak (WPK.TO) at CAD$ 49.5
Bought Barry Callebaut (BARN.SW): 3.5% at CHF 1200
Bought Linamar (LNR.TO) at CAD $56.08
Bought Chemring (CHG.L) at 327.8p
Again, for more info on these I refere you to my previous substack post:
III. Full Year Portfolio Thoughts
I’m pretty happy with the results, though I always compare myself against the S&P 500, which outperformed. As a retail investor managing my own money, I aim to outperform the main index and invest wherever I see value, even if a professional manager would be boxed into a specific style or benchmark.
Portfolio turnover for the year was 108%, desite my efforts “slow down”. In 2025, I plan to reduce this number by avoiding frequent small trims and adds.
While I don’t account for taxes in the model portfolio (making turnover less impactful), I recognize that’s not the case for most investors. Lowering turnover will make my approach more realistic and relatable.
IV. Substack Thoughts
2024 was the year I decided to give this Substack thing a proper go and started writing (a bit) more consistently.
I launched the model portfolio as a way to manage a virtual portfolio with full transparency, giving me something to track, write about, and essentially build a “track record.”
However, I also became a father at the start of 2024, so the writing pace hasn’t been what I imagined it would be …
Despite that, No Deep Dives grew from 204 (free) subscribers on 1/1/2024 to 618 right now. And that’s pretty exciting, even though it’s also still very meaningless.
Thank you all for reading and subscribing! Every like, comment, and share helps grow No Deep Dives, and I truly appreciate your support.
GCO: Big floods in Spain. And the big(est) assumption for fair value estimates is probably if they improve capital allocation, ie higher payouts with being overcapitalized
like 'more cowbell', no such thing as too much millicom (updates) !