Yesterday, I discussed the performance of the Fat Pitch Financials Port. Today, I want to go over the performance of the Special Situations Real Money Port. As some of you may know, the Special Situations Real Money Port is actually my son’s Coverdell Education Savings Account. This portfolio focuses on special situation opportunities including: going private transactions, odd lot tender offers, spin-offs, mergers, rights offerings, and other unique opportunities that may arise to provide individual investors an opportunity to exploit a market inefficiency. These opportunities are detailed in Fat Pitch Financials Contributor’s Corner.
After crunching some numbers this week with my annualized rate of return spreadsheet, I determined that my 2006 annualized rate of return for the Special Situations Real Money Port was 16.4%. This real money port closed out the year with an estimated value of $7,529.78. I used the word estimated because I am awaiting delivery of shares of Western Sizzlin Corp. (WSZL), which I acquire by exercising some rights last month. I’ll discuss this opportunity in more detail in the future.
The 16.4 APY for the Special Situations Real Money Port slightly edges out the 2006 total return for the S&P 500 of 15.79%. It also trounces the 12.38% return for Barclay Hedge Fund Index and it also beats out the more specific Barclay Event Driven Index 2006 return of 14.64%. I used these hedge fund benchmarks because I manage the Special Situations Real Money Port as a mini hedge fund of sorts. I would be interested in other suggestions for appropriate benchmarks.
Since I’m only an amateur investor, I am very please with my performance in 2006. Given some of the blowups I had this year, I really did not think my performance results would be this good at the end of the year.
Since I started this account on October 19, 2004, its balance has grown from $2,000 to $7,529.78. I have contributed a total $6,000 to this account ($2,000 each year, since that is the limit for a Coverdell ESA). The annualized rate of return since inception is 14.5%. I plan on adding another $2,000 to this account shortly, which will give me a little more flexibility since I only have just over $100 in cash right that is free to invest.