a. Updated Performance
Total:
Year-to-date:
b. Changes
The tough year continues. The large lead built vs. the S&P 500 has quickly dwindled and that’s frustrating. No point in denying it.
I am forcing myself to listen to the formulaic and robotic investor in me. I am forcing myself to fixate on fundamental quality and to not shy away when that quality is sharply discounted. That’s what is happening and so this is what I’m doing. Are we near the end of putrid software sentiment? I don’t know. But I know I will stick to the plan as long as financial performance justifies doing so. Right now, it convincingly does. Quarterly earnings were good. Guidance was good. Backlog commentary was good. New product traction was good. It was all good. Markets just don’t care right now… but they will. Timing entirely uncertain. I’m going to be doing this for a long time. There are going to be stretches like these and I have to embrace them and use them to my advantage the best I can.
I cut the rest of my CrowdStrike position to take quick 50% profits and create more room to add to other names. With the proceeds I did the following:
7% MELI add. I think they’re making the right decisions on investing aggressively in their future. I don’t think margins snap back until 2027, and we probably have some time to slowly accumulate. But demand signals in response to these investments are fantastic and this is a world-class company trading for 27x forward operating income. They should get back to 40%+ profit compounding next year and make this look like a large bargain in hindsight, in my opinion.
55% SHOP add. I deeply believe in this company and it’s now trading for 48x forward EPS (bottomed at 51x April 2025). That’s compared to 96x forward just a few months ago. It CAN absolutely get cheaper from here. It’s just now to a point where it getting cheaper would motivate me to make the stake bigger and bigger. This should compound above 20% for a very long time.
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 if I had cash available:
Amazon
Meta
Mercado Libre
Zscaler
ServiceNow
Nu
Coupang
Axon
Rubrik
Lemonade
Uber
Snowflake
Shopify
My holdings that are performing & expensive where I’d accumulate into meaningful multiple contraction if I had cash available:
Alphabet
I don’t consider SoFi expensive (it’s cheap in my view), but I am accumulating shares in this company more slowly than I normally would due to the various cracks forming across private credit.
Watch List:
Starbucks
Spotify
Reddit
Sea Limited
MongoDB
On
Cava
CrowdStrike
“If you were starting a portfolio today, what would it look like?”
11% Amazon
11% Meta
9% Mercado Libre
7% Alphabet
6% Zscaler
6% ServiceNow
6% Lemonade
6% Coupang
6% Rubrik
5% SoFi
5% Nu
5% Uber
4% Axon
3% Shopify
3% Snowflake
6% SOXX position as a hedge against my software bullishness
