Hey nerds! We've had some issues with deliverability since moving over to Ghost. If you wouldn't mind marking us as a safe sender and/or replying to this email (can be one word), that would be appreciated. Now, onto my updated performance, today's change & updated holdings.
a. Updated Performance vs. the S&P 500
I am meaningfully trimming a core holding to take nearly 300% profits and raise a bit of cash. This company has treated us extremely well, and I think it's time to lighten up. The details on the change are below.
Performance Since Inception:
Year-To-Date Performance:
b. Specific Portfolio Change
I sold 31% of my Shopify stake. The reasoning here is pretty simple. Markets are zooming, sentiment is soaring and thoughtful valuation framework is being replaced with "why this cash-burning business will 100x!" Animalistic spirits have fully returned to markets, and while this isn't nearly as ridiculous as things were in 2021 (when JPEGs were selling for millions), it's approaching that ballpark.
I will always remain predominately in the market as a long-term investor. But? I will also use periods of material market greed to lighten up on the highest fliers that have seen their multiples stretch the most. And I will do so with an eye towards modestly bolstering the cash pile while lowering the portfolio beta so that my performance more closely tracks the S&P 500 amid any major volatility.
That leads me to the Shopify trim. With a $41 average cost base, the holding has treated us extremely well. The great investment success has pushed the EBIT and FCF multiples to 100x and 90x, respectively. The EBIT and FCF growth multiples are also quite elevated at 3.3x and 3.0x, respectively.
That is the sole reason for the change. The company is thriving. They're effectively introducing the product suite across the globe, killing it with large enterprise customers, accelerating growth and leading the competitive pack in terms of value creation at lower cost. This is an obvious 20%+ compounder for a long time and a special organization. Like with CrowdStrike, this is why I'm willing to continue holding a smaller piece despite admittedly seeing the valuation as ahead of itself.
c. Updated Holdings
