Performance

The end of 2011 completes the third full year of Classic Value Investors. While the world was witnessing the greatest financial meltdown since the Great Depression, I was excited by what I saw as the opportunity of a lifetime to generate exceptional returns in the stock market. I saw it as the perfect time to create my own firm, and on January 1, 2009, I opened Classic Value Investors. I am happy to share the results of our efforts over the past three years as presented in the following chart.

One hundred thousand dollars invested with Classic Value Investors on January 1, 2009, would have grown to $324,949 by December 31, 2011. Because the accounts are individually managed, the returns differ from person to person. The composite is calculated by combining individual accounts as if they were managed as one account. The calculation is adjusted for any inflows and outflows of funds. The composite also includes my personal account, which is not charged a management fee. However, because the account represents only a portion of the total, it does not affect the returns in any material way.

To summarize the returns for the past three years, 2009 was excellent, 2010 was good, and 2011 was awful. While I am happy with the overall return over the three-year period, I am disappointed with 2011. Our performance was positive during the first and fourth quarters and negative during the second and third quarters. Unfortunately, the positive performance during the first and fourth quarters was not enough to offset the negative performance during the second and third quarters. Consequently, the performance for the entire year of 2011 was negative.

Considering that many of our positions really took a beating in 2011 and are MASSIVELY undervalued, 2012 should be interesting.

If you are interested in investing with us, feel free to contact me with questions or click here to learn more. I hope you have a profitable 2012.

Sincerely,

Mariusz Skonieczny