2023 Annual Letter
This is my third annual letter since starting the blog. The last one was very special because I had to write it well before the end of the year, since my wife and I were expecting our first child around the time it was posted. It is amazing how quickly time goes by. Last week we celebrated his first birthday, and we could not be more proud and grateful for everything we have. Watching my son grow makes me very aware that time waits for no one and that life is too short to spend it distracted.
I am writing this letter while my son naps, and I am feeling particularly grateful to all paying subscribers. Thanks to your support, I have been able to continue putting my thoughts on the blog for another year, and I hope to keep doing it for many more to come.
The portfolio, which is updated every quarter for paying subscribers, ends the year +36.2%, after -29.9% in 2022, +47.4% in 2021, +41.8% in 2020 and 30.2% in 2019. The CAGR of the last 5 years is +20,7%, compared to S&P 500’s 15,8% and MSCI ACWI’s 1,9%.
Although I believe I am on the right path, I am not going to be the one to draw conclusions based on 5-year results. We may talk about it in a decade at soonest. In 2022’s Q1 portfolio update (link) I wrote something I still believe to be true: “Good long-term returns are the result of a continuous process of studying and learning, motivated by an intellectual curiosity that will make anyone a better investor. For that reason, I prefer to ignore any macroeconomic event or, in general, any circumstance that is not under my control, and always remain focused on the process rather than on the outcome”.
Macroeconomic uncertainty continued taking center stage during the last quarter of the year as well. To be honest, I am not wasting a single second listening to what analysts have to say about when they think the FED will cut interest rates, but I am quick to act when changing expectations cause markets to decline. In the 2023 Q3 update (link) I stated that I believed there would hardly be any substantial portfolio changes because I was very comfortable with my 30 positions to face the next decade. I was not expecting such obvious opportunities to arise in the following months, though. I took advantage of the pessimism and volatility experienced by the markets last October to add five extraordinary businesses that I had admired for a long time to my portfolio, and I have sold seven others whose terminal value I was less certain about. In this last quarter of the year, there has been more activity than I expected – in fact, it has been one of the busiest in the last two years in terms of the number of trades. I am confident that these new investments, which I hope to hold for many years, will help me achieve my main goal: protecting my family's purchasing power. All purchases and sales are disclosed below for paying subscribers, including how the portfolio looks as of now to face whatever 2024 has in store for us.
As for the blog, in addition to continuing to post portfolio updates on a quarterly basis, I will be writing about companies with business models that I consider unique over the next 12 months: Canadian Pacific Kansas City, Canadian National Railway, Zoetis, LVMH, Otis, Games Workshop, Vail Resorts, Spirax-Sarco Engineering and Diageo are some of them. I will continue posting one in-depth research per month. Additionally, in two weeks I will post a new investment idea about a company that is already among my top 10 positions (briefly discussed below). If you would like me to add a company to my 2024 schedule, there still are a couple of spots left on the list. You can contact me on Twitter (@Finding_Moats) or by email at findingmoatsblog@gmail.com.
All of this is what I intend to cover in the coming months, but for those considering subscribing, you can now access the archive with all of the companies I have written about since the blog’s inception:
Vidrala, Sherwin-Williams, RCI Hospitality, Givaudan, Robertet, Ferrari, Instalco, Pool Corp, Fasadgruppen, Evolution, Watsco, TransDigm, Hermès, Tyler Technologies, Tonnellerie François Frères, Intuitive Surgical, Waste Connections, Keywords Studios, IDEXX Laboratories, Chocoladefabriken Lindt & Sprüngli, KONE, Perimeter Solutions and Estée Lauder, besides two investment ideas (Dec 22 and Jun 23).
I have removed the paywall from my post on Intuitive Surgical (link) so that you can get a better idea of what to expect from the blog. You can also check other sample posts on the following link.
"Quality content. Long-term qualitative aspects are addressed in depth – this is certainly the main focus of Finding Moats’ strategy.” Amalio, paid subscriber
“Great blog that provides value and investment ideas. Really worth it.” Ignacio Reche, paid subscriber
“Finding Moats’ analyses of quality businesses have been invaluable to my proprietary research!” Ernesto, paid subscriber
“Finding Moats is a really great source for perspective and ideas that can help build a successful long term portfolio.” Zach, paid subscriber
Thank you for your continued support.
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