Fenicio: 74% return in 2021 with a portfolio 34% in oil

A 28-year-old civil servant goes from €74,000 to €83,600 in one month

The first rule of this portfolio was written by its author before showing a single number: zero risk aversion and diamond hands as long as the fundamentals hold up. With that premise, a 28-year-old civil servant, an Energy Engineering graduate from the UPM (Technical University of Madrid) and preparing for Spain's civil service exams, laid bare at the end of July 2021 a €74,408 portfolio with a concentration that would make even the most seasoned fund manager sweat: Ring Energy accounted for 34.31% of the total and Kistos another 19%. Between the two, more than half of his wealth in oil and gas.

The rest of the inventory was a mix of Australian miners, a Swedish betting company, a gaming peripherals manufacturer and a document scanning company. No index funds. No mutual funds. His stated idea was to replicate the Ivy Portfolio, spreading across gold, commodities, equities, private equity and real estate, although he admitted that almost everything else looked expensive to him.

Leveraging up with his mother and the mistake of not buying Hess Midstream

The personal story behind the numbers is as candid as everything else. In April 2020, with €20,000 in his pocket, he decided to leverage up with another €30,000. Of that debt he still owed €21,500 to his own mother. And he confessed the mistake that stings the most: he chickened out and didn't enter Hess Midstream, a position that, by his own calculation, would have meant a 3x and a €600 monthly dividend.

The emergency fund was €2,500. Net worth, around €62,600. And the author justified it with a wry joke: if funsionario ("civil servant if" — a pun on his job security).

What's behind Ring Energy: intrinsic value of $6.4 with the barrel at $36

The author's star thesis deserves its own section. His intrinsic value calculation for Ring Energy came out at $6.4 per share against a price of $2.5. The devil is in the assumptions: the company uses a 10% discount rate and a WTI price of $36, when crude was trading at nearly double that. Those reserves didn't include the unproved ones, which could add a bit more.

The counterweight was provided by the author himself, unprompted: $300 million of debt and direct exposure to any tapering by the Federal Reserve. The margin of safety exists. So does the scar.

From 74% for the year to -0%: the 2022 hangover

2021 closed with a 74.47% TWR return and 76.68% MWR. Since October 2019, 40.30% TWR and 89.45% MWR. Figures the investor himself described as hard to repeat. In February 2022, with the invasion of Ukraine already in the headlines, the message was different: YTD return of -0% and a €33 loss. Today is a sad day, he wrote, before confirming he was still comfortable with a portfolio concentrated in energy.

In between, options trading galore: Enova puts sold at strike 30, NMM at 30, ARC at 2.5, ARC calls at $5 for a 0.1 premium. October 2021 closed with the portfolio value at €83,607 versus €74,039 the previous month, with €5,000 withdrawn to add to Aptera. He attributed it to the luck of the oil narrative shift caused by the UK energy crunch.

The Hong Kong matryoshka that appeared on the radar

It wasn't all crude. In one of the most upvoted posts, the author presented Asia Standard Hotel (ticker 292): a family owning 66% of the capital, five hotels in central Hong Kong, a developer in Canada and bank debt. The response was swift and dismantled the structure: Asia Standard International is the real developer, Asia Orient (ticker 214) barely a financial vehicle, and the whole conglomerate works like a set of Russian dolls where the minority shareholder pays the toll.

The discussion drifted toward a more uncomfortable subject: usury as an investment category. One participant demanded a minimum filter, P/E below 5, before looking at anything. The portfolio's author acknowledged his bias toward the United States for jurisdictional reasons and admitted that China's accounting made him wary. A dictator in a non-communist dictatorship, he summed up, didn't reassure him either.

The exact point where the analysis gets stuck

This aspiring civil servant's portfolio is an unwitting experiment on a question the industry avoids: how much of a retail investor's concentrated energy return is thesis and how much is the cycle? The 74% of 2021 coincided with oil's best year in a decade. The -0% of 2022, with the same portfolio, came when crude turned. The author, for his part, kept selling puts and buying Aptera, convinced that the margin of safety of $6.4 versus $2.5 justifies the risk. The debt to his mother is still there, and so is the calculation that supports it.