New Year, New Investments: Outlook for 2024
The prevailing pessimism surrounding equities in 2023 proved to be an ineffective investment strategy, and it is possible that this trend will continue in 2024. The economy has avoided a recession, growth is still evident, and inflation has gradually declined from its peak. Against this backdrop, the Under the Radar portfolio has outperformed the S&P 500 by a significant margin, gaining 38% compared to 24% for the S&P 500. This represents an excess return of 14%!
As a novice capitalist who thrives on research and puts my money where my mouth is, I am grateful for the support of my subscribers. I would also like to express my appreciation to those who have shared, liked, and offered feedback. Your engagement is deeply valued.
As we approach the end of the year, it is apparent that a new playbook may be necessary for 2024. My portfolio is heavily invested in alternative strategies, particularly event-driven investments. Companies like Paramount, Ambase, and Liberty Media may witness significant catalysts in 2024. Additionally, compounders like Ferrari, Aspen Tech, Idexx Labs, ASML, and MSCI provide consistent beta exposure.
Beyond equities, the rationale for holding cash has less to do with its defensive qualities and more with the interest it generates. 4%-5% after tax in a flexible savings account is attractive. Over $1 trillion has flowed into money markets this year. I anticipate a rise in tactical deployment of cash over the next year.
I am not a fortune-teller predicting the macro future; I am a contrarian investor who seeks opportunities where market prices deviate significantly from intrinsic value. Like all value investors, my goal is to acquire assets worth $1 for half the price. In the realm of event-driven investing, I seek situations where there is a clear path to reclaiming my full value. These events include mergers, acquisitions, spin-offs, special dividends, and contingent value rights. Litigation has been a pillar for our return in 2023 and will be a key focus area in 2024. We are also actively involved in M&A arbitrage.
The Under the Radar portfolio has outperformed the S&P 500 by 50% over two years. A 41% return annualized as of 13/12/2023. Detailed information about the Under the Radar track record and portfolio can be found here. Some of the top holdings are Aspen Technology, Ferrari, IDEXX Labs and Ambase Corp.
In the meantime, I wish you a wonderful festive season and a prosperous 2024!
Disclaimer:
The information and opinions expressed on this blog are for informational and educational purposes only and should not be construed as financial advice, investment recommendations, or solicitations to buy or sell any securities.