Table of Contents
a. Updated Performance vs. the S&P 500
b. Portfolio Changes
It's no secret. I've been deeply impressed with Rubrik since writing and publishing the deep dive. And their last quarter did nothing but fortify my positive views towards the company. The stock gave up the vast majority of its multiple expansion despite that masterful quarter and continued upward pressure on estimates. I see that as an opportunity and have started a new position in this company at 1.2% of total holdings.
They have carved a large and compelling niche within cyber resilience across human and machine-based assets. And they're now complementing this platform with a budding AI acceleration and enablement push that perfectly meshes with its existing suite.
I love the team. I love the financials. I love the opportunity. I love the approach to growth. And I like the valuation enough to start a small position. I think they're going to do somewhere around $250M-$300M in FCF for next fiscal year. Call it $275M. That puts them at 55x forward FCF and a 1.2X growth multiple. For a lot more detail on why I like this investment case, here's the deep dive and earnings coverage:
We don't have several years of public operating history here. I like to start smaller when that's the case, especially when there's no income statement profitability yet. I plan to keep using strong quarters as cues to grow more confident in the team and more comfortable with making this a larger position.
As always, my continued optimism in this company (and every holding) will be based on them delivering consistent fundamental execution going forward. In terms of where I add next? Based on the current forward estimates, my cash pile and present valuations for every other holding, I am eyeing ~$69. That's a 1.1x FCF growth multiple.
c. Portfolio Management Strategy Snapshot
My holdings that are performing & compellingly priced where I'd accumulate into modest multiple contraction:
- Amazon
- Meta
- Mercado Libre
- Zscaler
- DraftKings
- Starbucks
- Cava
- On
- ServiceNow
- Nu
- Coupang. Almost moved this down following the founder's disappointing decision to skip the investigation hearings, but I'm keeping it here for now.
My holdings that are performing & expensive where I'd accumulate into meaningful multiple contraction:
- SoFi
- Lemonade
- Shopify
I like what I own in Uber right now. I want it to be sized right where it is. That balances my optimism in their AV positioning with my respect for all the uncertainty and how rapidly things are evolving.
My hot seat – holdings that are NOT performing & need to do better if I'm going to stick around:
- PayPal
- The Trade Desk
"If you were starting a portfolio today, what would it look like?"
- 8% Alphabet
- 8% Amazon
- 8% Meta
- 8% Mercado Libre
- 6% Zscaler
- 6% ServiceNow
- 5% Nu
- 5% Coupang
- 5% DraftKings
- 5% Starbucks
- 5% Lemonade
- 5% SoFI
- 4% Cava
- 4% On
- 4% Shopify
- 3% Uber
- 3% Trade Desk
- 2% Rubrik
- 1% PayPal
- 5% cash
d. My Updated Holdings
