I had to do some more trimming today. I didn’t want to… I had to. When we get triple-digit returns in the span of a month, I think that’s prudent. Still, the companies I am trimming are fundamentally thriving and now seeing macro headwinds shift to tailwinds. So? The trims are a lot smaller than they’d otherwise be. Especially for SoFi at a 0.7X PEG ratio (using 2025-2026 EPS CAGR). For this specific name, I am internally weighing the ideas of it still being very cheap but also still being immensely volatile, a bit speculative and now my largest holding. I also know the lending platform debut is an absolute game-changer for SoFi. It uncaps its balance sheet bottleneck by letting other players fund originations within SoFi’s credit bands and through SoFi’s app. SoFi gets a high margin fee and a wider top-of-funnel for more data-driven cross-selling. The ramp in volume we saw last quarter was notable, to say the least. Everything that can be going well is going well, which is why it will remain my largest holding following this transaction. It’s why the trim was only 10% of the position.
For Lemonade, I am expecting large upward revisions to financial forecasts following the stellar investor day showing. If you missed that coverage, I’d highly recommend reading it here. Still, the valuation has exploded higher in a very short period of time. The gross profit multiple has rapidly moved from a large market discount to a healthy ~50% market premium. The premium will shrink following estimate revisions, but also will remain intact. While I think LMND absolutely deserves this (gross profit is growing rapidly), actually getting the credit always diminishes risk-reward for any company. The upside potential remains immense and increasingly realistic, but the downside risk gets larger as this company is finally praised for its execution. I trimmed 11% of this position.
For Lemonade and SoFi, both business models were assumed to be zeros through peak hawkish macro policy. As I argued then and will argue now, they are FAR from zeros. Bears had loud, sensationalistic opinions and personal attacks. We had calm, rational, data-driven evidence and history. These companies were simply coiling springs awaiting the slightest sign of accommodative macro policy to explode higher. That has begun to play out, and so I have begun to lighten up. In terms of more trimming, I am eyeing the $20 level for SoFi and the $70 level for Lemonade. Who knows if or when we get there. These are not price targets. I react… I don’t predict.
Finally, I sold another 9% of my Shopify position. The recent trim into multiple expansion felt too small, as the valuation has continued moving higher. All of these names remain core holdings and I remain fundamentally bullish on all three.
Part of these proceeds were used to boost my Coupang stake by another 18%. Here’s how things look following the transactions:
