I am trimming 2 existing positions to take 200%+ profits in one and 300%+ profits in the other. I am shifting that exposure into another core name. The move is predominately to control overall fintech exposure while also continuing to lower overall portfolio beta as market valuations stretch.

a. Updated Performance

Overall:

Year-to-date:

b. Portfolio Changes & Updated Holdings

Meli:

I boosted my MELI stake by 21% this morning. I was waiting for another 5%-6% of downside before adding, but decided to make the move today. I did the same thing with Cava, as I think my mindset around buy targets is changing a bit. For companies like these, where I hope my holding period is several years, it doesn't feel prudent to hold off on accumulating shares at compelling risk/reward because I want another 2-3% decline (and vice versa).

As I've been talking about in the Discord, the risks right now are related to a blend of (mainly) Argentinian macro as well as another merchant promotion from Amazon in Brazil. I do have a decent amount of confidence in the currency swap line between Argentina and the USA getting done and MELI has been outcompeting Amazon in Brazil for years and years – despite countless promotions that titan has run in the region. This is simply another. And more importantly, I don't think either of these items do anything to challenge the long-term bull case for this special company. This is a generational structural compounder with ample margin upside. I want to add exposure while ephemeral headwinds rage, and that's what is happening. So I'm adding at a roughly 1x PEG ratio, assuming worsening Argentinian macro lowers 2-year net income CAGR from 42% to 40%.

At the same time, I don't really want to eat into my cash pile right now and fintech exposure (which MELI is part of) is getting to be a very big part of the portfolio. SoFi has tripled over a short period of time while I've recently added to PayPal and Nu. Furthermore, Lemonade continues to grow in size.

I am forcing myself to lighten up on a bit of other fintech exposure to make room for this addition. That came from a 9% trim of my SoFi stake and a 5% trim to my Lemonade stake.

SoFi:

I remain highly confident in the company, its team and this investment. If you'll notice, my top 5 holdings are 3 mega-caps, the highest-quality firm in Latin America and this disruptor. There is a reason why this younger, smaller and more speculative company is in the top 5 with those 4 blue chips. I think it's a gem and that is not changing.

This is just me practicing my iteration of risk management and making sure my portfolio isn't too exposed to specific sectors – especially cyclical ones. There have been some headlines like Fitch talking up higher delinquencies for some 2022 vintages (which we already knew) and Yipit calling out 22% Y/Y personal loan volume declines in August for SoFi. Still, both of those items are entirely noise to me. Why? Leadership told us on September 8th how well the quarter was going and how good credit continued to look. The Fitch data is from August.

I then got direct comment today from CEO Anthony Noto telling me the Goldman conference remarks still hold true. He added that he "said demand was strong, which is completely contradictory to Yipit data."

This team has been uniformly candid and trustworthy and this trim is solely related to portfolio and sector exposure management. SoFi remains a large piece of my portfolio and I remain highly optimistic about its multi-year future. Not something I wanted to do. Something I am making myself do.

On Lemonade:

Exact same idea here. I love this investment, team and company. I did not want to trim. Their path to profit as they accelerate growth is crystal clear. Their underwriting is rapidly sharpening. Their runway is massive. Their product is superior. If you'll also notice, I own 1 company that doesn't generate positive EBITDA today. That is Lemonade. And not only do I own it, but it is a top 10 holding for me. And I do not plan on changing that. This is again me simply creating a bit more room for more MELI while also continuing to modestly lower overall portfolio beta.

Updated Holdings: