AMS Portfolio review - Year End 2020

AMS Portfolio review - Year End 2020

Season’s greetings and happy new year to you all.

Background and Context
This will be an abbreviated review of my portfolio as I haven’t been performing monthly data pulls at a stock level during 2020 nor factoring in ongoing portfolio withdraws that have made and so I won’t be looking at full or intra year progression metrics or reviewing buys and sells the way that I used to and others continue to do and I hope to return to.

What I did want to do is get back to the habit of writing up my reviews and place a stake in the ground for reviews going forwards with a year end/start download.

I also wanted to perform this at the December 2020 year end point in order to contribute to MotleyPeer’s portfolio crowdsourcing efforts at a key timestamp.

Situation 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 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.

Performance review:-
My portfolio ended 2020 up 124% (not accounting for withdraws which would probably knocks off ~25% in performance). I ended up ~15% off my 2020 all time high position.

The overall performance has certainly benefited from a number of key positions in high performing shares including: Shopify, The Trade Desk, Crowdstrike and Zoom.

Honourable mentions along the way this year that I have now exited include: AMD, Roku, Guardant Health, Hubspot & Slack or slimmed down - Okta & Docusign as well as Livongo which I have rolled into Teladoc.

The top tier ~10% positions including Shopify, Crowdstrike &TTD (and at one point Zoom) have out performed and served me well.

The second tier of 3-5% positions are a mix of mature performers (MungoDB, Alteryx and Square) as well as young stars (Teladoc, Fastly and Elastic).

The third tier is a mix of deliberately lower exposure positions (either due to slower growth, lower conviction or sector over exposure self enforced limits e.g. eCommerce) and include: Asana, MercadoLibre, Pure Storage, Micron, Nutanix and SEA as well as positions I am still actively building a stake in: Cloudflare, Palantir and EXP World.

Outside the top 20 , other notable recent positions that I am following with interest include: Snowflake, Farfetch, Magnite and Digital Turbine. Roku (a re-entry), Acuity Ads, Sumo and Lemonade are also on my watchlist. Snowflake is the position I am looking to build with most interest with their 700%+ growth in RPO. I may take another look at Nvidia if they pull off the ARM acquisition.

Certainly my overall portfolio gains suffered from being late to the party with: Fastly, SEA, EXP World and Cloudflare whilst being early to the party helped me with Crowdstrike, Livongo and Zoom.

Being patient helped me with Shopify, TTD, Square and MercadoLibre but hurt me with Nutanix, Pure, Micron and Alteryx.

Throughout the year I stayed fully invested and stuck with the portfolio. During Covid I took the opportunity to switch out of lower conviction and into higher conviction stocks as well as shuffle between stocks holding up and stocks that were overly sold down.
One other feature I guess of the year was the active IPO/listing market which has produced some impressive gains. IPOs/Listings that I have participated in include: Snowflake, Palantir, Asana and Ncino.

Relating my portfolio with others on this board, probably what I have most in common is conviction in some Board wide acknowledged companies including: Crowdstrike, Datadog, Cloudflare (and to a lesser degree Teladoc & Zoom) ; where I differ the most is my remaining interest in former top stocks where I still hold highest levels of conviction, continue to deliver growth and also turn a profit and operate in the largest TAMs on the planet (Shopify and TTD), maintaining positions in some of our fringe stocks (Elastic, Square, MercadoLibre, Alteryx) as well as an interest in taking an exploratory ~1% stake in some new arrivals (such as SNOW, EXPI, Asana, NCNO, Digital Turbine and Farfetch).

2 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).

Overall portfolio value rankings

**#  Holding Portfolio(%) Mega-Theme 2020-SP-Growth(%)**
1  Shopify 15.3% eCommerce/Fintech/Cloud 184.7% 
2  Crowdstrike	 11.8% Cybersecurity/Cloud 324.7%	        
3  The Trade Desk 8.9% Digital 208.3%	        
4  Zoom 5.7% Cloud 395.8%
5  DataDog 5.0% Big Data/Cloud 160.6%
6  MungoDB 4.6% Big Data/Cloud 172.8%
7  Square 3.8% Fintech/eCommerce/Cloud 247.9%        
8  Elastic 3.5% Big Data/Cybersecurity 127.3%
9  Teladoc 3.4% Cloud 138.8%
10 Alteryx 3.3% Big Data 21.7%	
11 Fastly 3.1% Big Data/Cloud 335.3%
12 MercadoLibre 2.7% eCommerce/Fintech 192.9%
13 Cloudflare 2.7% Big Data/Cloud 345.4%
14 Palantir 2.6% Big Data/Cloud 135.5%
15 Pure Storage 2.5%	Big Data/Cloud 32.1%
16 Nutanix 2.1% Big Data/Cloud 2.0%
17 Micron 2.0% Big Data/Cloud 39.8%
18 SE 1.9% eCommerce/Fintech/Cloud 394.9% 
19 Exp World 1.2% Cloud 457.1%
20 Asana 1.1% Big Data/Cloud 0.0%

NB 2020 Gains are share price gains not portfolio position gains

2) Total % gain rankings

**#  Holding		%	Thesis Check	Conviction**
1  Shopify		1699%	On Track	High
2  The Trade Desk	1100%	On Track	High
3  MercadoLibre	520%	On Track	High
4  Square		412%	On Track	High 
5  Zoom 		300%	On Watch	Medium
6  MongoDB 		292%	On Track	Medium
7  Crowdstrike		256%	On Track	High 
8  Teladoc		185%	On Track	High 
9  Alteryx		159%	On Watch	Medium 
10 Cloudflare		133%	On Track	High
11 Datadog		109%	On Track	High 
12 Palantir		107%	On Track	Medium
13 Elastic		102%	On Track	Medium
14 Micron		85%	On Track	High
15 Peloton		68%	On Watch	Medium 
16 Magnite		63%	On Track	Medium 
17 Digital Turbine	49%	On Track	Medium
18 Exp World		39%	On Track	Medium
19 YY			30%	On Watch	Medium
20 Pure Storage	25%	On Watch	Medium 

NB Gains are actual gains of investment holdings not % change since beginning of the year

I hope to be able to perform a more regular and in depth portfolio review going forwards.

Happy new year to all and wishing everyone a healthy, peaceful and prosperous 2021 and congratulations to all you superstar investors who did so well this year.