December 31, 2025 Portfolio Review
25-year/lifetime average results = 23.3%
I tend to follow economic news closely and follow a number of indicators, but with the tariff situation, I didn’t have a decent line of site with the economy or interest rates. In 2025, I was at a loss so I hedged many of my investments with covered calls. More times than not, it cost me sizable profits. That said, a 27.8% return on a year fraught with risk is not a bad thing.
Note: I am in the process of selling 30% of Nebius, and planning on applying the proceeds to Rubrik.
Comments on Companies
Mercadolibre: There are two key business areas: ecommerce and fintech. With ecommerce there is about a 25% growth in active buyers, but operating margins dropped below 10% as MELI invested in logistics, freeshipping, fintech products and technology. Shopee and Temu are increasing ecommerce pressure and Nubank is competing with digital banking and credit. 2025 will be an execution story, and though I expect it to be slightly muted, MELI is the only large company with finance and ecommerce.
Cloudflare: Free cash flow has turned positive with about $75M in last quarter. Earnings are expected to be above 25%, and gross margins are over 70%. I think it’s best advantage is it’s edge network, which simplifies integration of its other services to deliver a built in advantage.
Axon Enterprise Inc.: Axon provides equipment that improves safety, accountability, and reduces cost for law enforcement, but its PS roughly 18, but it has a rock solid customer base, and its Draft One, AI police report generator has a lot of sales opportunities. I am selling covered calls that expire before the next earnings report. Due to high valuation, I trimmed
Applovin They’ve sold off their gaming business and their apps to help with advertising and app growth. Their advertising margin is 81%, their advertising adjusted EBITA is growing at 92%, and their advertising revenue is growing at 71%.
Nebius Revenue is up 385% YOY. Nebius has optimized its AI stack for low power consumption and charges 34% less than its competitors. Nvidia is an investor and supplier for Nebius. Meta has a $3B/5 year deal and Microsoft has a $17 -19.4 B 5 year deals. It’s all about execution. I am in the process of trimming about 31% of my position, which I intent to realocate to Rubrik.
Astera Labs: This is a key vendor for AI data centers, which I believe will be strong through 2026. After that, further AI investment could flag, but it could also be as strong as ever.
Best,
bulwnkl