Welcome! 2010 Partners Meeting October 7 th 2010
Welcome!2010 Partners Meeting
October 7th 2010
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010$0.00
$50,000.00
$100,000.00
$150,000.00
$200,000.00
$250,000.00
$300,000.00
$350,000.00
$400,000.00
S&P 500
Aquamarine Fund Inc
Comparison of changes in $100,000 invested in Aquamarine Fund Inc. vs S&P 500
3
0%
50%
100%
150%
200%
Fund DJIU S&P 500 FT 100
Aquamarine FundCumulative Return (Net of Fees Since Inception Sep, 1997)
Year Fund S&P 500
2010 4.3% -‐5.9%
2009 39.3% 23.5%
2008 -‐46.7% -‐38.5%
2007 17.0% 3.5%
2006 37.1% 13.6%
2005 7.2% 3.0%
2004 11.2% 9.0%
2003 29.5% 26.4%
2002 -‐1.6% -‐23.4%
2001 1.9% -‐13.0%
2000 21.4% -‐10.1%
1999 -‐6.7% 19.5%
1998 26.1% 33.6%
1997 2.5%^ 5.5%^
Investment Performance (As of May 19, 2009 net of fees since inception Sep 1997
Historical performance represents Aquamarine Fund, Inc.
Fund DJIU S&P 500 FT 100
Cumulative Return 181% 29.7% 14.1% 6.6%
Annualized Return 8.3% 2.0% 1.0% 0.5%
Trailing 12-‐Months Return 12.4% 5.5% 2.8% 6.4%
Performance Expectations
85% of mutual funds lag the S&P 500 Index after all fees and expenses. Just 0.5% of Mutual Funds beat the Indices by over 3%. (Source: Bogle)
My goal is to beat the three indices over the long haul. Beating all three indices is likely to put us in the top 10% of all US mutual funds and hedge funds.
quite confident we‟ll beat the indices over the long haul. Not sure by how much
Aquamarine Fund Value Proposition
Low / No management fees
Spier family is the largest investor we eat our own cooking
No performance fees until fund regains new highs
No leverage, No margin loans, No short positions, no complexity
going to die, so I will never go there.
-‐ Charlie Munger( Commencement Address to USC law
school)
Before Investing, run a checklist
Take buy and sell decisions when the market is closed
Buy to hold for at least two years
Reduce toxic relationships, increase productive ones
Create Useful Partnerships
Sequence information appropriately
Maximise positive feedback loops
Invoke useful circuit breakers
Instead of a 7X, Moodys
12
Go long what China is short
- John Burbank, Passport Capital
Iron Ore Cost Curve
Source Citibank
Steel China Iron Ore Fines cfrmain China port $/tonne
London Mining
18
Allocation of Ideas Value US$ mm Total
Best of Breed 41.55 50%
Global Commodities 9.54 11%
Global For Profit Universities 6.14 7%
Other 19.04 23%Cash 7.23 9%
Total 83.5 100%
Approx. 25 positions. New positions enter the portfolio at 2-5% of capital
Q&A
25
Danke vielmals
Auf widerluege
En guete!