How The Black Swan Portfolio Is Positioned At Record Highs

This is a short update on how the model portfolios of the exclusive research service The Black Swan Portfolio have been doing. I will also briefly discuss some of our favorite holdings within the portfolio. You can read more about the methodology used here.

Within the service there are two model portfolios:

  1. The Black Swan Portfolio which is a very aggressive portfolio. (Very aggressive equity investments but no options.)
  2. The Numeraire which is a very defensive portfolio. (Think a cash alternative.)

The aggressive The Black Swan Portfolio is what I’ve been running since inception of the service in 2015. It exceeded all expectations and shows a 29.66% annualized gross return. I expect this performance to come down to earth over time.

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There’s no doubt there have been some lucky events like the acquisition of Dreamworks Animation (DWA) and the reverse merger involving Magellan Petroleum (MPET), which we bought when it was a sub <$20 million market cap near bankrupt pre-revenue Exploration & Production company.

It went up 1380% at one point. It only added up to a 350% return for our portfolio, albeit within a few months, because I missed the fantasy required to perceive value beyond that point. Meanwhile, the company transformed from a below $20 million near-bankrupt company into a $1.7 billion powerhouse chaired by ex-Cheniere Energy (LNG) celebrity CEO Charif Souki and became backed by major oil corporations.

That’s how a 350% gain can be a huge mistake at the same time.

Chart

TELL Total Return Price data by YCharts

Year to date the aggressive portfolio returned 17.96% gross which is still very strong. If we could manage to generate something along those lines over the next decade I would be extremely content.

Interesting small-cap

One of our interesting large positions is a small-cap called Psychemedics Corporation (PMD). A hair-testing company that profited off new regulation in Brazil that forces every truck driver in the country to get a hair test every 5 years if they want to renew their license.  I first wrote about it in 2013 and it beat the S&P 500 since.

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Disclosure: long OAK, PMD

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