2023: A Year in Review
Thank you to my readers
Dear Ultimate Value readers,
I wanted to take a moment to express my gratitude for your unwavering support this past year. Thanks to your encouragement, Ultimate Value has grown from a mere idea to a thriving publication. We now have over 3,000 free readers and nearly 150 paid members, which is a remarkable feat considering I have been writing for less than a year. I truly appreciate each and every one of you.
I also want to extend a special thank you to those who took the time to complete my survey. Your feedback has been invaluable in helping me improve Ultimate Value. If you have any more suggestions or ideas to share, please don't hesitate to reach out to me via email or by replying to this message.
Thank you again for your support and for being a part of the Ultimate Value community.
Clark Square Capital
Odds & ends
Before we get into the performance review, I wanted to mention a few things:
New pricing: As I communicated previously, the price of an annual subscription will increase to $500 USD (from $300) per year on January 8th. Your rate will not change if you are currently a paid subscriber.
Chat feature: In 2024, I want to make better use of the chat functionality. The chat is a great way to provide quick updates, news, and links. I would encourage you to check out this feature if you haven’t already (link below).
Closed ideas outside of the paywall: I have taken all closed ideas outside of the paywall, so feel free to check those out.
Share your ideas: Lastly, if you have an exciting off-the-radar investment idea, you can pitch it to me. If I end up writing it up, I will give you credit for the idea and a free one-year subscription. I would love to hear your ideas, so please email me at firstname.lastname@example.org.
It was a productive 2023. Despite not being active until March, I was able to publish 18 actionable ideas this year. Only 3 have been losers, with Lastminute (SW: LMN) being the main performance detractor (closed; -24%) and TMP #3 being the second (open; -17%). Gravity has a small open loss (open; -3%).
Refer to the ideas here: https://www.clarksquarecapital.com/p/table-of-contents
Some of the best performers included:
The “High-Quality SaaS” company (+63%), which I continue to like for the long term.
The Restaurant Group (+55%), as this ended up being acquired by Apollo.
The first 2 three-minute-pitches (TMPs) worked out quite well, returning +52% and +47%, respectively, despite the very short holding periods of 40 and 13 days.
CBD (inc. EXITO closed at $7.06) has performed well, up 42%. I continue to like the stub here.
The cheapest e-commerce company has also performed well, up 44%.
I have created a basic attribution analysis below, which compares the performance of each stock to holding either SPY, QQQ, or IWM during the same time period. It's important to note that this analysis only takes into account price changes and does not include dividends, as Google Sheets doesn't have a TSR function. To compensate for this, you can subtract an additional 1-2% to factor in the dividend payments.
The chart on the right side displays how my stock picks have performed relative to each benchmark. This analysis shows that my stock picks outperformed the SPY, QQQ, and IWM over 2023. I do not wish to get overly precise here. There are reasons why this might not be the best comparison (betas, slippage, factor exposures, non-US securities, etc.) However, I decided to include this analysis as it can be beneficial to compare results. Investing, after all, is a game of relative selection. I will let you draw your own conclusions.
While I am pleased with these results, I will caution you to take them with a grain of salt. One of the toughest things about investing is being able to untangle luck from skill, and I’m afraid this “track record” is too short to prove anything.
With respect to the things that are within my control, I am happy with the overall cadence of write-ups. My original objective was to come up with ~10 ideas, and I over-delivered, providing more ideas than originally planned. I also rolled out idea updates, which I hope have been useful.
Clark Square Capital's Ultimate Value is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.
What to expect for 2024
For 2024, I will aim to deliver at least 10 actionable ideas. I will give myself room to account for changing market conditions, but I hope to find more interesting and under-the-radar opportunities than that. I also want to ensure I keep the bar high so as not to dilute the quality of ideas.
If you are new to this publication, I want to be clear that my purpose is to unearth actionable ideas that make money. Fundamental research, for its own sake, can be fun and intellectually stimulating. But we should not forget that, as money managers, our ultimate goal is to move the equity line up and to the right.
I characterize my investment mandate as flexible, but fundamentally, I look for three things: 1) an understanding of why an asset is mispriced, 2) a hypothesis of how that discount gets closed, and 3) a situation with asymmetry (a margin of safety if things go wrong). Given what is a pretty broad mandate, I think I should be able to find enough interesting ideas to make a subscription to UV value additive.
Aiming to get a little bit better every day is one of my guiding tenets, and I can promise that, over time, every iteration of write-up and idea will keep improving.
While I have no idea what 2024 will bring, I will be sure to keep finding opportunities in the market, and I hope you follow me along on this journey.
Best wishes and happy hunting in 2024.
Clark Square Capital