Hello CorpRaider Readers,
Welcome back to another installment of the Fun Fund series, where I discuss an actively managed portion of my investment portfolio. In this post I will update some positions and discuss the performance in the first half of 2025.
The portfolio was down almost 2.8% in the first quarter but bounced back in Q2 (with the rest of the market) to end the first half in the black by 4.61% as of June 30, 2025. That trails the 6.05% for the SPY but I outperformed the (.49%) VBR loss.
All is Well that Ends Wells
In April, I finally sold my Wells Fargo position. It was my largest position at time of sale, but I decided to finally cash it in as it was trading around 1.8x tangible book value, the government restrictions were being removed, and the price momentum was negative at the time.
I swapped the position out for a position in First Citizens Bancorp as it was trading more cheaply (right at 1.0x tangible book). So I decided to swap out the cheaper bank, with similar exposures, which is smaller with greater potential for growth, and has better capital and executive alignment/likely lower agency costs. I’ve planned to buy First Citizens several of time over the years, most recently right before they took over SVB, and never pulled the trigger. I plan to acquire more in other accounts and try to make it a meaningful position of my overall liquid net worth over time (if I can get it around tangible book value).
Wells has worked out pretty well for me overall. I “caught a few bags” in the TARP warrants back in the day and really bought a decent sized position when it sold off on the Berkshire disposal news (in other accounts). Most of those lots earned like a 20% CAGR. I made over 50% on the Wells position in the Fund Fund but those were among my earliest lots so the CAGR was more like 9%.
Anyway, the time to load up was definitely after the Berkshire disposition news came out and everyone was cracking jokes on Twitter. Wells has smoked JPM and the SPY from that (early 2021) starting point.
I also sold my position in US Bancorp. I’m planning to similarly replace it with another position I like more in the same industry. Not that I’m trying to target sector exposures, but it’s pretty easy to make a decision when you can compare Bank A to Bank B.
I have not done anything else material. I did reinvest some dividends in Comcast.
Current Largest Positions
My largest position at end of quarter was cash at about 11%. The second largest position was FCNCA/FCNCB.
After that, we’ve got Bank of New York (BK) at about 9.5%. This position is working out nicely. I’m up about 140%. I scaled this one up after Berkshire disposed of the position as well. It got pretty cheap. There are some reports that BK might make a bid for Northern Trust (NTRS). I’ve looked at NTRS a few times. It was cheap back in late 2023 through mid 2024. I need to take another look. I should also probably look at State Street. I just plan to hold BK for the foreseeable future.
The next largest position as of 06/30 was eBay at about 8%. Cost basis is about $41 on that one. It has performed nicely. A superb business that my marketplace/exchange analyst Jeffrey C. Sprecher put me onto when he tried to buy it. Actually, I think I was already into it but he gave me some more confidence. I bought a fair amount in other accounts, but not enough.
Next is Lamar Advertising (LAMR) at about 7%. I would love to buy more on big weakness (probably in other accounts).
Rounding out the top 5 is Comcast. I really like Comcast. Yes broadband connectivity seems to be moving from a monopoly to an apparent duopoly or oligopoly (in some regions). Probably some consolidation will come to pass, but Universal is a gem with a flywheel that only Disney can hope to match.
Comcast overall trades cheaper than Nexstar and Tenga on some metrics and that’s just stupid. Even if broadband becomes like wireless has been (a pretty competitive oligopoly) it will still have underlying demand growth as far as the eye can see and is way better than most business I look at (like banks). But I’m waiting for negative momentum to break and I’m probably at my cost basis limit in this account anyways. I don’t want to make my whole performance turn on one or two bets. Sometimes you’re wrong and I think you need enough bets to get a decent sample before you can have any hopes of drawing conclusions based on outcomes.
Writing Versus Doing
Speaking of having enough bets/positions, one tension I’ve noticed between writing about an investment account and running the portfolio is that you feel like you don’t want to be too boring (if only for your own motivation to write some stuff). A Nick Sleep type portfolio, where I buy 5 things and sit there for a decade, would be brutal to try and chronicle/write about (though I did enjoy the nomad letters). So, I’m hoping to have at least like 15 positions. There’s also a tension/desire to have some turnover but I’m running this portfolio with some restrictions.
Sell Discipline/Guardrails
As a reminder these restrictions are in the form of a loose set of sell rules in an attempt to codify a discipline. These are a sort of Ulysses contact/attempt to mitigate Behavioral pitfalls.
I only allow myself to sell if: 1) I want to sell (for example because the business is not what I thought or the valuation is too high versus the opportunity set) and 2) the stock price exhibits negative momentum based on some long-term moving average or breakout (breakdown?) rules.
For example, I decided “Hey I think I would like to sell Wells, it’s approaching 2.0x book and the government is getting off their back and most importantly I’d rather own something else similar/better that is cheaper.” But I was not allowed to go ahead and dump it. I had to wait for the long term price signal. That way I’m hopefully less likely to jump off the train while momentum is rolling along.
It also makes me sit with the decision to sell for a bit before acting. This allows me to put some distance between decision and action. Hopefully I end up moving from system 1 to system 2 (or is it vice versa?), in the lexicon of Kahneman et. al.
Cashing Out Kellogg
One other position change that kind of happened in the first half of 2025 is that Kellogg (KLG) is going away whether I like it or not. KLG agreed to be taken over/private by Ferrero Rocher for $23. I thought $28 was more of a nice valuation, so I’m not overjoyed with the deal, but it’s fine. That was good spin-off/breakup. Kellanova (K) and W.K. Kellogg (KLG) both agreed to be acquired within a couple of years of the 2023 spin. I sold Kellanova after the deal was announced which seems like it was a good idea as it still hasn’t closed and the EU seems to be giving Mars the business. I guess I will sell KLG pretty soon. I haven’t sniffed any news of a topping bid and the agreement looked pretty solid to me when I reviewed the SEC filing. I won’t apply my momentum rule since we’re looking at a claim on cash with just the timing at issue.
So that’s a first half of 2025 fun fund update with discussion of a couple of changes and a run through the top 5 or so positions.
I am currently in the “testing period” for the Fear and Greed Portfolios, so I plan for my next post to discuss any portfolio changes. Thanks for reading!