META - Vision Capital Annual Investor's Letter: 2023
2024-02-15 01:30:00 ET
Summary
- Vision Capital is fundamental-driven, bottom-up, and only focuses on investing in long-only publicly-listed equities.
- For 2023, Vision Capital returned +69.9% versus the S&P 500’s +24.0%.
- A large majority of our holdings were sold off indiscriminately in 2022, but had rebounded strongly in 2023.
- When the company does well (grow revenues, profits and cash flows and returns capital), the stock does well.
Dear Investors (to myself as the single LP),
We welcome you to Vision Capital's 2023 annual investor letter .
For 2023, Vision Capital returned +69.9% versus the S&P 500's +24.0% . Since inception 24 March 2017, in TWR terms it has returned a cumulative +184.3% versus the S&P 500's +103.2% and versus the MSCI World's +71.7%.
The chart and table below details our performance thus far.
Inception 24 Mar 2017, as of 29 Dec 2023, updated monthly
Inception 24 Mar 2017, as of 29 Dec 2023, updated monthly
Reporting annualised returns going forward. Previously, annualised returns were not available in our broker, Saxo. We are excited to employ a new portfolio reporting tool, Portseido, and will be using it to calculate and report our annualised returns as well going forward.
Annualised Performance in SGD - 18% p.a. over almost 7 years. As of 12 January 2024, from 24 March 2017 inception, in SGD-denominated terms, our annualised time-weighted return ((TWR)) stands at 17.8% p.a. beating the S&P 500's 10.2% p.a. by 7.6%, and the MSCI World's 9.2% p.a by 8.6% (see table below).
Annualised Performance in USD (for reference) - 19% p.a. over almost 7 years. In USD-denominated terms (for reference), our annualised time-weighted return ((TWR)) stands at 18.7% p.a. beating the S&P 500's 11.0% p.a. by 8.7%, and the MSCI World's 10.0% p.a by 8.7% (see table below).
No FX hedging. As a reminder, the portfolio is denominated in SGD, and many of our investments that we do are not denominated in SGD (~100%). We do not do any FX hedging. Thus, the SGD value can rise or fall purely on FX movements alone. While the USD-SGD FX rate has been range-bound over the past 10 years, depending on FX moves in any given year, our SGD returns can vary somewhat from the USD returns, though it should not differ too much. We expect the majority of our long-term returns to come from the long-term appreciation in stock prices, driven by the majority of long-term business performance, to a lesser extent FX.
Global Mandate. Vision Capital's investment mandate continues to be global in nature. We can invest in any of the accessible publicly listed companies in the world. Since the majority of our holdings continue to be largely US-listed stocks (~91% as of 31 Dec 2023), it's important that we compare our performance with a prominent US stock market index, the S&P 500 as our benchmark, rather than the MSCI World, a more global index.
2023 strong rebound. 2023's +69.9% rebound was largely on the back of recovery of oversold valuation multiples, reversing 2022's -54.3% decline. A large majority of our holdings were sold off indiscriminately in 2022, but had rebounded strongly in 2023 as the businesses continued to deliver profitable growth. As the market recognised this, the valuation multiples managed to recover back to more normalised levels....
Vision Capital Annual Investor's Letter: 2023