I sold 11% of my Shopify stake this afternoon. The reasoning is identical to the Trade Desk and Duolingo trims I made earlier in the week. The company is thriving. The prospects are fantastic. The stock is getting much more expensive.

On April 4th, I meaningfully boosted my stake by 17% at about $73/share to lift my average cost basis into the mid-$40s. This was after selling 19% of the position in December at $120. Since the April add, the forward FCF multiple has expanded from 48x to about 70x (in a month) and the FCF growth multiple has moved from 2.0x to 2.9x. As I talk about constantly, a higher multiple always means less compelling risk/reward. This is me respecting that reality.

As I’ve done many times with this name, Duolingo, Shopify and CrowdStrike, I will continue to trim into excess multiple expansion and add as multiples meaningfully contract. I will do so while maintaining core positions in all of these names. I am willing to own generational companies at premiums… but I am not willing to sit on my hands as these stocks race higher and their valuations follow suit. They constantly cycle from being too expensive to being too cheap… over and over again. I will continue to take advantage. Worst case? The stocks keep moving higher and my positions are a bit smaller than I want them to be. I’m eager to make that my downside risk.

As a reminder, the two charts below are the same. I include both because the primary source image is hard to read.

Please keep in mind that my goal is to outperform the S&P 500 over the long haul. I do not expect to outperform by a 16% compounded annual rate forever. I think that lead will inevitably shrink. I know I’ve been saying that for a while but that’s still my expectation.