Earnings Reviews from Last Week:
- Trade Desk Earnings Review (and a Cloudflare Snapshot)
- Shopify & Mercado Libre Earnings Reviews
- Uber Earnings Review
- AMD & Datadog Earnings Reviews
- Lemonade Earnings Review (and a Celsius Snapshot)
- Palantir & Hims Earnings Reviews
Table of Contents
a. Portfolio change #1
As I said in my review of The Trade Desk’s quarter, I will continue to trim into multiple expansion and add into multiple contraction for this highly volatile generational compounder. As the time-stamped portfolio updates reveal, I’ve done this many time in the past:
- I trimmed in the triple digits on September 4th, 2024 when the multiple got especially frothy.
- I trimmed again on December 6th with the stock at all-time highs.
- I aggressively built out my stake from February 21st to April 4th at a blended price of $59, with a large purchase made on April 4th with the stock in the mid-$40s.
- It’s now pushing $80/share once more. That rise has been powered by multiple expansion more than profit estimate improvements.
I am now ready to trim with it moving from 25x EPS and a PEG ratio near 1.0X to 44x EPS & a PEG ratio nearing 2.0X. That’s what I did today with an 18% trim of my TTD position.
I do not say all of this to brag. I didn’t buy all of my shares at the exact bottom. That’s impossible. I simply kept inching in more & more aggressively as the deal got better. I did so because (as the Q4 review spells out) I viewed their Q4 blunder as a blip on the radar. I was confident backing this elite team and company based on a decade of flawless execution. I certainly will not always be right. But? I am adamant that I will maximize my probability of being right if I continue to run this playbook. Focus on excellent companies. Make sure they’re still excellent companies. Accumulate when those excellent companies see their multiples meaningfully contract. Trim when those excellent companies see their multiples meaningfully expand. Fixate on the company, not the stock chart.
b. portfolio change #2
For nearly identical reasons, I trimmed 7% of my stake in Duolingo this morning at $510/share. I said I’d lighten up more if it kept running. Candidly, I think I should’ve trimmed right after that report. The stock hasn’t risen all that much more since then, but I’m still ready to trim a bit.
Reviewing recent transactions here — I significantly raised my average cost base above $100/share with purchases on on March 11th and on April 4th for a blended price around $290/share. I began taking profits into rapid multiple expansion at the end of April, and I will do more of that today. The company has gone from roughly 55x EPS to roughly 85x EPS. Estimates are rising following their masterful earnings report, but the stock price is rising much more quickly. The PEG has gone from about 1.3X to 2X during that time.
Duolingo, Trade Desk (and CrowdStrike/Shopify) are elite companies that deserve premium valuations. That’s why I continue to hold sizable stakes in them at these levels. But? Risk/reward always wanes as multiples expand and this is me adjusting to reflect that reality. These are methodical and emotionless decisions that I will continue to make. They’re usually not popular moves, as I’m accumulating punished stocks and trimming darlings… but these decisions continue to serve me extremely well. I don’t care about being popular. I care about making money.
c. updated performance
d. updated holdings
Note that the two screenshots below are the same. I just include the excel sheet in addition to the primary source because the primary source is hard to read.
