Bulwnkl's Portfolio through 3/28/24

March Growth Portfolio Review

5 Year Rate of Return = 41.3% (Recalculated at the beginning of each year)
Stock Allocations: I try to build an individual stock allocation to the 10-15%, then I prune as little as possible. If my thesis clearly breaks (e.g. Upstart), I remove it from my portfolio. If a stock is a market leader and the business is doing well (e.g. Monday and Samsara), I will leave it alone as much as possible. This is me correcting my process after I sold Crowdstrike at the beginning of last year and lost out on a 350% gain. If I do modify my holdings, it will be when I am convinced that there is a much more dominant stock to replace a stock with. I’m happy with my 6-7 companies, but will always be looking for something that would upgrade my portfolio.

Comments on Companies

Mercadolibre (-3.8% YTD): Mercadolibre’s earnings were hit by a $351M impairment due to difficulties passing inflationary costs along to Argentinian customers and a Brazilian court decision that increased tax costs. Importantly, revenues increased 42%, Gross Merchandise Volume increased 56.5%, and Total Payment Volume increased 47.3%. The sell off since earnings has dropped the PS to 4.5. I think it’s turned into a great value, and when I have cash come available, I will be happy to invest some of it here.

Nvidia (44.4% YTD): Operating income up 563%, gross margins up to 76.7%. Their CEO, Jensen Huang, says that generative AI is reaching a “tipping point”. Of course, this growth cannot go on forever, but it probably won’t stop for a few years. This has grown to my second largest position at 15.0%. I won’t add new money, but I’m happy to hold it as well.

Samsara (10.6% YTD): Because I think fleet management for airlines, trucking companies, municipalities, and waste management is lacking, I see a lot of growth for Samara. Sales grew 39.9% last quarter. Free cash flow when from -$2.2 M to $4.7M to $8.5M over the last 3 quarters. Additionally, Samsara generated their first quarterly profit of $0.04/share last quarter. Hopefully, this is a sign that Samsara’s business is scalable. I increased my allocation by about a 0.5% this month to a total allocation of 14.1%.

Celsius Holdings (33.9% YTD): Sales up 95% YOY. International sales increase by 52%. The US market share was 10.7% vs. 4.9% last year. Part of the 20.4% stock price increase may be due to a short squeeze, we’ll see. Q4 sales were slightly lower than Q3, but that pattern may be seasonality. It happened last year too. I think 2024 will largely be determined by how well international sales go. Prices dropped about 8.8% this week when Morningstar said it was overvalued. I disagree, and am happy to stay the course.

Nu Holdings (37.5% YTD): Nu revenues are growing by 57%, it’s TTM earnings have just flipped positive, QoQ customer 5.4% for the last year, and it’s deposits are growing at about 50% YoY. They appear to be hitting critical mass, so I expect outsized profits to come in while they address the needs of the 50% of the unbanked people of Latin America. NU dropped 4% on 2/22 during their last earnings release, but gained an additional 12% since then. The revenue growth rate was 70% the quarter before, so the slowdown might concern some, but Nu is expanding into Mexico and Colombia in 2024, so I expect revenues will be lumpy during the investments for those countries. I increased my allocation by a 0.5% to 13.8%.

Monday (16.8% YTD): Monday got clipped by about 12% after announcing their first price increase and reduced guidance. Their last earning release showed 35% revenue growth with 90% gross margins and a free cash flow of $55.4, their business looks vibrant. I still believe Monday has seemed to developed work management tools and a Work operating system that’s ease of use is second to none. They overdelivered this quarter, and I plan to hold for the time being to see if they deliver more of the same.

e.l.f. Beauty (24.6% YTD): This cosmetic company just grew sales by 85% and market share by 305 basis points. I think they can keep their growth increasing due to expanding online sales, expanding international sales, and a value proposition that is resonating with US consumers.

Comments on the market: Although inflation has been sticky, it hasn’t been bad enough for the Fed to raise interest rates, and it doesn’t look like they’re in any rush to do so. Interest rates have been steady since mid-February, and there’s a good chance that they will drop later in the year. I’m optimistic that all of my companies will continue on a good trajectory with continued strength in their businesses and reduced interest rate tailwinds. Even if I end up steady for the rest of the year, I would be delighted with 27.9%.