2022 Review

We made no major investments in our active portfolio for the first 9 months of the year. But in September of last year when the markets started to go down and valuations looked attractive, we bought what we thought were good deals at the time. Our main purchase in September was Freeport-McMoran (FCX), which is one of the largest pure play copper companies in the world. There was a disconnect between copper demand and the copper price in September. The market was afraid that the feds interest rate hikes would choke off copper demand. But this was not the reality, the major copper producers were saying that demand was good and the physical market was tight.

Here is what FCX said in October of 2022:

“We certainly have no problem selling copper,” FCX CEO Richard Adkerson told investors on a conference call. “It’s just striking how negative the financial markets are about this industry and yet the physical market is so tight.”

OWI gets excited when we hear or see a disconnect between price and value. And we usually try to get into the position in a healthy way. We did this in September and October with FCX. The stock ended up rising to 46 dollars a share over the next three months. Which was a 76% rise from the October low of 26 dollars a share. Of course we didn’t catch the entire move, but a few clients that opened their accounts later in the year got a portion of this move.

Another notable mention was the the spinoff of BHPs Oil and Gas company to its shareholders. That was an extra 12% special dividend on top of the 11% regular dividend. Creating a >20% return for shareholders in a year where the S&P 500 was down 18%. Obviously this will not happen every year, but again we will take it.

So a few good events for us, but we do not know or attempt to know what our positions will do in a one year time frame. But we feel our holdings satisfy our investment principles and have a good chance of creating a good return over the next 5 to 10 years. Lets see what happens, but in the mean time OWI will be busy doing more research and hopefully finding more great companies in the years to come.

Disclaimer: It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities in this list. Past performance is not necessarily indicative of future results.