HorsePlayAndrew Update May 2021

HorsePlayAndrew · June 8, 2021, 11:57am

Summary

A more enjoyable month that is for sure. I am a little late writing my portfolio this month as I managed to escape out of the UK for a week of sun in Portugal. I found it positively refreshing having a week away from the noise of the market. You often hear investors talk about this, but I can highly recommend clearing the mind and getting away from daily life.

Anyway, enough of that, I’ve had a positive bounce back, a month of stellar company reports and a few changes along the way to hopefully set me up for a strong second half of 2021.

My background

See details here. https://discussion.fool.com/horseplayandrew-update-nov-2020-from…

Performance to date

2021 > 11%
2020 > 209%

January > 29%
February > 23%
March > 1.7%
April > -6%
May > 11%

Previous updates

Upstart> 19.65%
Roku> 14.74%
Crowdstrike> 10.14%
Pinterest> 9.58%
Datadog> 7.61%
Fiver> 7.49%
Sea> 7.00%
Snowflake> 5.04%
Fubo> 4.86%
Futu> 4.67%
Aterian> 4.37%
Stem> 2.75%
Lemonade> 1.23%
OpenDoor> 0.86%

May 2021 Activity

SOLD

Magnite I’ve had a good ride with Magnite but I lost patience after their Q1 results. They are structurally a messy business currently, a lot like Teladoc in that respect. The revenue is still very small, CTV is promising potential but I am not prepared to wait out the merger. I Will keep watching but right now my CTV dollars are better off elsewhere in my opinion.

TwilioIt pained me to sell Twilio but they were the only candidate considering I expect them to produce good but low key results over the next year. The main reason was needing the cash to open up a position below.

Etsy I wish I had followed my conviction that they were due for a big wake up call in revenue growth. I sold out my remaining position but lesson learned. One to keep an eye on as we approach 2022.

BUYS

Datadog I have been on the sidelines with Datadog for over a year. I always had a hard time with the valuation and admittedly I didn’t quite get the product. But I have continued to read their reports and the excellent analysis from the board and I feel now is the time to pounce. Q1 was encouraging that they can return to 60%+ growth, and so I’ve opened up a good sized position with the view that they can take the leap up to the 50b market cap range that Crowdstrike did last year.

Upstart What can I say about Upstart! What a ride. I was lucky to build an understanding of this business back in March so when they smashed another quarter, it was obvious it was time to load up. I opened up a very large position in the 90’s and have enjoyed the ride. I have taken some off the table just for portfolio balancing reasons.

I have also topped up Roku and Fiverr.

My companies

Upstart Another stunning earnings report. I’m modelling they will hit north of 800m in 2021, so a lot more space for the share price to run this year. There will of course be volatility along the way but I can’t find many more candidates that offer the potential growth of this stock in the next 12 months. Excellent updates across the board on this one but on a top level they tick so many boxes, founder led and owned, disrupting a massive TAM, innovative tech and clearly many catalysts ahead. I’m going to need a strong stomach for this one as the stock is wild but I am confident we will see a much higher share price in a year’s time.

Roku - A stellar earnings report. Roku is positioning itself as the OS of the TV world. The tailwinds couldn’t be clearer, CTV advertising is early innings and they have expertly placed themselves at the front of the queue to benefit from this. Management keeps making shrewd decisions (hello Roku Channel and OneView) and the revenue is now reflecting this. If I compare Magnite to Roku then it was an easy decision to sell and move more money into Roku.

Crowdstrike - I really liked their Q1 report. It hit home that with only 10,000+ customers, they still have an extremely long runway, and we have the IOT trend coming along that will add fuel to the fire. The CEO continues to impress me and they keep making the right moves to keep the momentum going. The sequential seasonal increase from Q4 to Q1 bodes well to keep Crowdstrike in the 70%+ range for 2021.

Pinterest - No real news for Pinterest. I expect Pinterest to remain out of favour until their Q2 report comes along and hopefully shows continued ARPU growth.

Fiverr This is a stock that I am increasingly bullish on. It’s blasted away concerns that this is a pandemic stock. There are plenty of signs to show this company is just getting started, and I am building a position that shows I expect significant share price growth. They are scaling the number of digital services categories, adding 30 per quarter, for example TikTok advertising and VR services, but have ambitions to go from 500 to 30,000. With an increasing TAM, estimated at 115b in the US alone, and 2x that in Europe, there are not many stocks on Sauls board that have this potential, but yes it’s not SaaS. They are however in the early days of building out their Enterprise product which will help with recurring revenue, growth to date has been mainly from SME’s so there is a lot of potential here. They have a 84% gross margin, should be hitting 70+% revenue growth again this year and are firing on all cylinders based on their Q1 earnings so I am surprised that this stock isn’t more widely followed on here.

Sea An excellent quarterly report that shows they continue to operate in beast mode. The fintech side of the business really excites me and is the main reason I am investing going forward.

Snowflake I must admit it was a bit of a shoot out between SNOW and Twilio in regard to who was to get the chop to buy Datadog. I can’t escape the valuation here but I saw enough in their Q1 report to show that they are operating in a different league when it comes to the growth of pretty much every metric. Databricks on the horizon will be interesting but the TAM is significant.

FuboTV They keep delivering quarter after quarter. David Gandler continues to shake off the doubters and short reports. As long as they keep up these numbers in terms of customer growth and advertising revenue, then I am a happy holder. I do feel very uneasy over the negative contribution margins but this is a story stock and just makes sense to me that a sports streaming service needs to be established in this cord cutting age. Betting products should add to the momentum in the latter part of the year.

Futu An insane quarterly report! 349% revenue growth… The Chinese robinhood is clearly taking advantage of a new generation in China discovering investing. A high risk play here but I am expecting some fireworks with the share price if they keep posting these numbers.

Aterian Another one of my wild cards…a pretty decent Q1 report, gross margin went from 40% to 54%, they grew revenue by 88% and announced an acquisition of Squatty Potty… Shark tank fame. They are guiding up to $390m, so for a company valued at $571m, this one is cheap as chips… It’s not getting a lot of love right now but I’m holding firm. I really like the CEO and think in a year or so this could be worth a bloody lot more.

Stem So the SPAC is now behind them, and they are starting to get some love in the market. “A global leader in artificial intelligence (AI)-driven clean energy storage systems”, I feel good investing in this company and it is clearly an industry that has some of the best tailwinds around. Battery energy storage is forecast to increase 25x by 2030, revenue is up 275% in Q1 and management is projecting to grow at ~50% CAGR from 2021 to 2026.

Lemonade I continue to hold them in my tax free account in the UK. Will keep them on a low profile here as this is more of a late-stage venture investment.

OpenDoor -Same as Lemonade, holding for the long term in a tax free account to see where they can get to in 5 years time.

Watch List

Cloudflare Very much like Datadog, I am waiting on the sidelines here until I see evidence that the revenue is breaking out of their 50% range. Love everything about the company and founders.

Voyager Digital A coinbase and Robinhood rival that is on par with them in the download charts. Explosion of users and assets under management. Looks to be quite a compelling growth story for those comfortable with crypto. Getting closer to buying with their recent pullback.

HAAC Still watching to see what the Livongo guys bring to the table.

BlockchainI am still monitoring positions in blockchain. I’m planning on opening positions in Bitcoin, Ethereum and Chainlink at some point this year, they have corrected but not enough yet.

Thanks for reading and best wishes from a sunny and hot UK.

Andrew