Photo by Matteo Di Iorio / Unsplash
a. Updated Returns
Overall:
Year-to-date:
b. Portfolio Changes
This sucks. Hard to sugar-coat anything happening in software right now. The companies I closely track are doing well. They're reasonably priced. They continue to get cheaper. Estimates are stable. 3rd-party data is good. Innovation roadmaps are compelling. I am ignoring the emotional human in me and robotically leaning in. Enough said. The adds:
10% add to ServiceNow at 18x forward FCF and a 20% FCF CAGR.
25% add to Rubrik at 40x forward FCF and a 47% FCF CAGR.
21% add to Axon at 38x forward EBITDA (best metric for them) and a 28% EBITDA CAGR.
Trimmed a small 4% piece of my Alphabet stake to free up a bit more cash for these transactions. Alphabet has enjoyed the most multiple expansion lately (for good reason), so this felt like the right move. This has nothing to do with my expectations for their earnings report today. Data should be good. Who knows what the stock will do.
I was very close to also adding to Zscaler. If these names keep falling I will deploy another chunk. If they keep falling more, I will likely consider Shopify and DraftKings as sources of cash to add to my flexibility.
c. Portfolio Management Strategy
*the order of the names in these lists below is meaningless.
My holdings that are performing & compellingly priced where I'd accumulate into modest multiple contraction:
Amazon
Meta
Mercado Libre
Zscaler
Starbucks
On
ServiceNow
Nu
Coupang
Axon
Rubrik
My holdings that are performing & compellingly priced where I'm happy with what I own:
Uber and DraftKings fit into this grouping. I love both names being around 4% of holdings as prediction market and autonomous vehicle sectors develop and evolve. I am confident in owning both names, but I want to see my bullishness proven out over the coming quarters and don't want either to be a top 5 holding while that happens. I'd say DraftKings has a bit more work to do to keep me confident in their investment case going forward compared to Uber.
I also like what I own with SoFi & Lemonade. I find the valuations compelling but don't see myself adding to or trimming the names in the near future.
My holdings that are performing & expensive where I'd accumulate into meaningful multiple contraction:
Shopify (getting closer to being moved to the list above)
Cava
Alphabet
Watch List:
CrowdStrike (would love to re-enter at some point)
Sea Limited
Netflix
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% On
4% Uber
4% Cava
4% Rubrik
3% Axon
2% Shopify
5% cash
"If things got really bad and you ran out of cash, which holdings would you look to cut first to free up more liquidity:"
1. DraftKings due to falling conviction in their ability to overcome prediction market risks
2. Shopify if it continues to hold up a lot better than other software holdings. It remains very expensive and the other software tickers I own (which I also view as elite businesses) are not.
d. Holdings
