AMS Portfolio Review – January 2021
Background Overview
I run investments in both the UK (an investment legacy from my UK origins focused mainly on stable high yield income producing investments) as well as here in Singapore, (where I have been living for approaching 12 years).
My Singapore investments are split between a US portfolio and an Asia portfolio (listed equities in Singapore, Hong Kong and Australia). My US portfolio is principally a Saul style pure growth portfolio whilst my Asia portfolio is a mix of High Yield income producers (mostly REITs) and Asia located growth plays (e.g. Ali Baba, Meituan Dianping and Afterpay). This Portfolio summary will focus only on the US portfolio.
The US portfolio has produced outsized returns since discovering Saul’s board - I’m up ~300% since 2016 Year End (and that doesn’t factor in ongoing withdraws during the period whilst getting my own consulting business up and running with my business partner).
The portfolio has also gone through a considerable reconstitution. Going back 4 years I had 120+ stocks in my US portfolio and very low concentration amongst holdings, (my top 15 holdings were between 1.5% and 2.5% in value), I had a lot of long held positions with many investments under water and if I’m honest with myself a lot of equities where the investment thesis had changed and I had not acted accordingly.
As of today my US portfolio is down to 50 positions with much more substantial investment sizes and higher overall concentration. My holding period has come down although I still own stocks for longer in duration than many on this board and will tend to stick with positions when conviction and investment theses remain strong even if there might be short term weaknesses in the share price or quarter to quarter transitions. Cloud and tech now dominate my portfolio in terms of holdings and value and I’m no longer allocating investment towards old economy plays no matter how favourable the situations or the tailwinds. I have also reduced my exposure to China considerably for a number of reasons, including; the tailing off of its hypergrowth emerging era, the delisting risk in the US and the availability of China plays on the HK market. In common with others on this board the position sizes are driven by a combination of performance and conviction – as a result positions are stratified into tiers within the portfolio. My investment selections, entries and exits are now financial/business performance driven as far as possible and there’s no room for story or narrative investing, turnaround speculation or value fishing. Key mega themes that I do pay attention to and am comfortable maintaining outsized exposure to include: eCommerce (~20%), Cybersecurity (~15%), Big Data (35%), Fintech (~5-10%) and throughout that – the Cloud. These mega themes are in part a function of secular tailwinds and in part the respective TAMs involved. I have also had exposure to Genomics although I have exited that sector for now.
Portfolio Composition:-
My portfolio ended 2020 up 124% (not accounting for withdraws which would probably knocks off ~25% in performance). I ended around 2020 and entered 2021 ~15% down from my 2020 all time high position (mid December).
The top tier ~10% positions include: Shopify, Crowdstrike, TTD (and at one point Zoom) and represent my highest conviction positions together with outstanding growth rates and market positions.
The second tier of 2.5-5% positions are high conviction strong growth plays including a mix of mature performers (MongoDB, Alteryx and Square) as well as young stars (Teladoc, Cloudflare, Fastly, Elastic, Datadog and Palantir).
The third tier of 1-2.5% positions is a mix of: early stage positions (Snowflake, Skilz and Exp World), deliberately lower exposure situations - either due to either lower conviction and/or lower growth levels (Pure Storage, Micron and Nutanix)or sector over exposure and self enforced limits (e.g. eCommerce in the case of MercadoLibre and SEA)
Outside the top 20 , other notable recent positions that I am: following with interest, considering building a position in and seeing some high returns with include: Peloton, Asana, Hims and Hers, Farfetch, Magnite, Digital Turbine, Acuity Ads & NCino.
ZScaler, Roku, Sumo, Fivrr and Root and a few gene sequencing players are also on my watchlist. Snowflake is the position I am looking to build with most interest with their 240%+ growth in RPO. I may take another look at Nvidia if they pull off the ARM acquisition.
3 holdings I would mention that sit outside of my US portfolio include:
Afterpay at ~10% of my US portfolio in value (which I hold in my Asia portfolio and via an Australia listing), up over 300% in 2020 and up over 500% for me.
Ali Baba at ~5% of my US portfolio in value (which I hold in in my Asia portfolio via an HK listing) and is probably a candidate for a 2-10 trillion $ franchise.
Meituan Dianping at 1.25% of my US portfolio in value with stellar returns to date (260%) and another potential trillion $ business in the making
Buys & Sells in the Month
New positions: Hims & Hers, Unity, Skilz
Additions: Palantir, Snowflake, Lemonade
Sells: Asana, Alteryx, Micron & Exp World
Exits: YY, Unity
Performance Review:-
Monthly Performance
**Month US Port S&P**
**Jan +6.42% -1.1%**
Overall portfolio allocation rankings, theme & YTD returns
**# Holding Portfolio(%) Previous Mth (%) Mega-Theme 2021 YTD-SP-Growth(%)**
1 Shopify 14.3% 15.3% eCommerce/Fintech/Cloud +1.9%
2 Crowdstrike 11.6% 11.8% Cybersecurity/Cloud +1.9%
3 The Trade Desk 8.2% 8.9% Digital -4.4%
4 Zoom 6.0% 5.7% Cloud +10.3%
5 DataDog 5.0% 5.0% Big Data/Cloud +4.4%
6 MongoDB 4.5% 4.6% Big Data/Cloud +2.9%
7 Teladoc 4.3% 3.4% Cloud +31.9%
8 Palantir 4.0% Big Data/Cloud +49.4%
9 Fastly 3.7% 3.1% Big Data/Cloud +25.2%
10 Square 3.6% 3.8% Fintech/eCommerce/Cloud -0.8%
11 Elastic 3.5% 3.5% Big Data/Cybersecurity +4.0%
12 Alteryx 2.9% 3.3% Big Data +3.5%
13 MercadoLibre 2.7% 2.7% eCommerce/Fintech +6.2%
14 Cloudflare 2.6% 2.7% Big Data/Cloud +0.9%
15 Pure Storage 2.4% 2.5% Big Data/Cloud +2.3%
16 Sea 2.0% 1.9% eCommerce/Fintech/Cloud +8.9%
17 Nutanix 1.9% 2.1% Big Data/Cloud -4.2%
18 Exp World 1.7% 1.2% Cloud +68.9%
19 Snowflake 1.4% 1.1% Big Data/Cloud -3.2%
20 Skilz 1.3% 0% Cloud/Gaming +38.1%
NB 2021 YTD Gains are share price gains not portfolio position gains
2) Total % gain rankings
**# Holding % Thesis Check Conviction**
1 Shopify 1646% On Track High
2 The Trade Desk 1048% On Track High
3 MercadoLibre 559% On Track High
4 Square 408% On Track High
5 MongoDB 303% On Track Medium
6 Teladoc 276% On Track High
7 Crowdstrike 263% On Track High
8 Zoom 248% On Watch Medium
9 Palantir 175% On Track Medium
10 Alteryx 168% On Watch Medium
11 Cloudflare 135% On Track High
12 Exp World 134% On Watch Medium
13 Datadog 119% On Track High
14 Elastic 111% On Track Medium
15 Micron 93% On Track High
16 Magnite 84% On Track Medium
17 Peloton 62% On Watch Medium
18 Fastly 56% On Watch Medium
19 Digital Turbine 51% On Track Medium
20 Asana 40% On Watch Medium
NB Gains are actual gains of investment holdings not % change since beginning of the year
Investment Business Performance & Potential
TAM & Penetration Rates for Top Holdings
**# Holding TTM ($bn) TAM ($bn) Penetration (%) Comment**
1 Shopify $2.46bn $250bn 1.0% Calculated as 5% take rate of $5trn eCommerce mkt
2 Crowdstrike $0.761bn $32.4bn 2.3%
3 The Trade Desk $0.732bn $725bn 0.1%
4 Zoom $1.96bn $30bn 6.5% Combining V/C & unified CAAS market
5 DataDog $0.539bn $24bn 2.2% Unified monitoring = $8bn
6 MongoDB $0.542bn $63bn 0.9%
7 Teladoc $0.867bn $121bn 0.7%
8 Palantir $0.999bn $119bn 0.8%
9 Fastly $0.267bn $35bn 0.8%
10 Square $7.65bn $160bn 4.8% TTM includes Bitcoin revs
11 Elastic $0.510bn $53bn 1.0%
12 Alteryx $0.491bn $50bn 1.0%
13 MercadoLibre $3.32bn $35bn 9.5% Calculated as 5% take rate of 5% ecommerce penetration of a $5trn retail market plus consumer banking opportunity
14 Cloudflare $0.389bn $35bn 1.1%
15 Pure Storage $1.67bn $50bn 3.3%
16 Sea $3.59bn $150bn 2.4% PC download and mobile gaming $97bn SE Asia ecommerce & payments $30bn
17 Nutanix $1.31bn $90bn 1.5%
18 Exp World $1.46bn $15bn 9.7% 1% of US housing transaction market
18 Micron $22.06bn $200bn 11.0%
19 Snowflake $0.489bn $84bn 0.6%
20 Skilz $0.197m $68bn 0.3% Mobile gaming market
Others:
Asana $0.202bn $45bn 0.4% Productivity management software
Docusign $1.3bn $25bn 5.2%
Snowflake $0.489bn $84bn 0.6%
ZScaler $0.480bn $72bn 0.7% (SAM)
Comments & Notes
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Shopify – cornerstone investment in a top class business with the largest TAM in the world, supported by substantial tailwinds and expecting a future $1 trillion potential, watching for post covid new normal in eCommerce and 2021 laps with pandemic growth in 2020
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Crowdstrike – One of the fastest growing companies in a rock solid sector with an expanding TAM, watching for competition from ZScaler and others
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The Trade Desk – A disruptor in a massive TAM with a strong moat, watching for dynamics between DSP and SSP, CTV progress and browser/device privacy measures
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Zoom – a disruptor in the making with ultra high growth rates, looking for post pandemic new normal growth and laps with pandemic growth peak in 2020 and the emergence of Zoom phone which doubles its TAM and additional Zoom platform innovation
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Datadog – best in class in the unified monitoring space. Maintaining strong growth rates but dropping, watching for leadership position and declines in growth
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MongoDB – disrupting a sizeable space against an established player, benefitting from strong big data tailwinds. Watching for declining growth rates, penetration of Atlas and competition from native AWS DB solutions
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Teladoc – leader in telehealth with the combined Teledoc and Livongo offerings with strong underlying growth with solid tailwinds irrespective of Covid. Looking for additional disease management solutions and geographic expansion together with threats from changes within the US healthcare system
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Palantir – AI disruptor and potential leader in commercial and military/govt space. If Palantir can genuinely become either the de-facto operating system for the organisation or the de-facto AI operating system this might have previously un-imaginable potential. Top quality visionary leaders with a strong track record.
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Fastly – former strong growing CDN player working through headwinds of TikTok bans in India and US and threatening interference. Looking out for client retention/expansion metrics and growth resumption
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Square – strong fundamentals, very high growth rates operating in multiple significant opportunities. Bitcoin and fintech payment wallets offer massive potential upside. Watching for continued Cash App expansion and adoption.
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Elastic – undervalued but proven track record in a sweet spot of multiple optionalities including security, application monitoring and big data.
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Alteryx – former growth star with a pandemic growth challenge and accounting model transition together with a shift to cloud from on prem/hybrid solution. Looking for growth resumption, successful partnership outcomes and new product launch.
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MercadoLibre – the Amazon of LatAm with a strong moat and fintech business driving massive growth in a highly unbanked region. Watching for competition from Stone, Amazon and Sea as well as local market challenges in LatAm.
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Cloudflare – strong CDN player with high growth rates, improving competitive position, strong customer acquisition count and new solution/offerings emerging. Watching for continued growth, edge computing adoption and potential competition from Fastly.
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Pure Storage – storage market disruptor with strong underlying fundamentals having passed through a business model transition. Supported by strong tailwinds. Looking for product set expansion and growth re-acceleration.
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Sea – in the sweetspot of eCommerce, mobile gaming and fintech and increasingly dominating SE Asia. Expanding into India, MEA and LatAm. Backed by Tencent. Looking for continued triple digit growth and achieving profitability
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Nutanix – under valued, under respected disruptor with a large TAM supported by strong tailwinds negotiating multiple business model transitions. Looking for growth re-ignition.
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Exp World – operating in a massive market (housing transactions) offering a cloud solution and supported by a ZIRP environment. Very fast growing but concerned by market penetration and also the use of company stock for the basis of the sales incentive system.
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Snowflake – Incredible technology supported by the big data mega theme of our time. Extraordinary leadership and cornerstone investors. Triple digit RPO/revenue growth rates. Looking out for potential emerging competition and growth rate declines vs ultra high valuation.
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Skilz – operating at the intersect of online gaming and online betting. Fast growing and building a global scalable platform. Looking out for growth rates to continue and potential regulatory interference.
GLTAH!
Ant