I remain in accumulation mode for names like PayPal, Zscaler, Coupang, DraftKings and a few more. But? I also remain in “trim into excess multiple expansion” mode.

Along those lines, I sold 19% of my Shopify stake this morning. Since I added aggressively to my position on August 2nd & August 5th (4 months ago), the stock is up about 140%. More generally speaking, the initial shares purchased throughout August 2022 to December 2022 are now up over 200% in aggregate. Gains like this don’t motivate me to trim. What does? Multiple expansion. The firm’s forward gross profit multiple is back to multi-year highs as it approaches 80x forward FCF & 80x forward earnings. FCF and net income growth multiples (using forward 2-year CAGRs) are also both approaching 3x.

This best-in-class commerce platform deserves a large premium. The runway for international, large enterprise and core business growth remains massive as it continues to rapidly take more market share. It has fixed its cost base through discipline and asset sales to deliver far better margins (with no impact to growth). It has a world-class team and a pristine reputation. Nothing about my fundamental excitement for this company has changed since my deep dive. The valuation has simply begun to reflect all of these wonderful things, and so risk/reward has somewhat worsened. Like I’ve done a few times in the past now, I’d love to add these proceeds back if we get a meaningful drawdown.

I also trimmed 10% of my stake in The Trade Desk. The explanation is nearly identical to Shopify. This is a special company leading a market with a gigantic runway. It has an elite team, an elite value proposition and an elite margin profile. Competitive threats from both Apple and Google have battle-tested this model, with The Trade Desk seamlessly coming out on top. TTD is the only name in open internet advertising with the scale to make Apple cross-app dating restrictions irrelevant for its business. 3rd party cookies depreciation would have been irrelevant for it too. And with all of that said, its forward multiples are back to multi-year highs and its FCF and net income growth multiples are both around 3x. Just like for Shopify… nothing has changed about my fundamental bullishness since I published my deep dive 4+ years ago. The multiple simply now reflects my optimism more completely.

I was also tempted to trim more Duolingo shares, but chose not to for now.

One final note. Yesterday I published an article about Uber. In that article, I mentioned that I went back and forth a bit on whether to trim or not, and decided not to. I did sell 10% of the stake yesterday and immediately bought it back. I think that was an emotional, impulsive decision and I wanted to fix my mistake. I’m human. The wash sale is why my cost base changed modestly vs. the last disclosure.