GolfCaddy4PLynch Portfolio Summary July 2021

Portfolio Summary July 2021

YTD by Month:
Jan: +20%
Feb: +28%
Mar: +1.6%
Apr: +11%
May +13%
Jun +33%
Jul +34%

S&P YTD +18%

I finally was able to put most of the cash to work over the past month.

I took a new position in a company called Affirm. Write up below.

This month my portfolio hit a new ATH as did the indexes. Asana also really took off and became my largest position. That was a surprise. The large stock purchase by the CEO was a big catalyst that the market seemed to like and I think that set a new floor in the stock at his purchase price.

Earnings start next week for three stocks in my portfolio ROKU, DDOG, and FVRR. I expect earnings to be a blowout for most stocks in my portfolio, but I think the market has run up a lot in anticipation of great earnings. If these high prices are sustained will most likely come down to guidance. And I also will make my decision to buy more, hold, or sell depending on the ER.

About Me
I have worked in internet media and technology on the business side my entire career. I live in the SF Bay Area and focus on investing in what I know, high-tech growth companies.

Investing Style
I like to buy small positions, this gets me focused to learn about a company. Then I sell, or I add to it over time in small increments depending on a variety of factors. Some positions I hold for years, others for only a few months. My goal is CAGR. Not 10-baggers and I try hard not to fall in love with a stock. My aim is to maximize my returns and I have no allegiance to any particular method or style of approach.

Current Portfolio:

Asana (ASAN) 17%
Sea (SE) 16%
Crowdstrike (CRWD) 16%
Upstart (UPST) 14%
Roku (ROKU) 12%
Fiverr (FVRR) 10%
DataDog (DDOG) 8%
Affirm (AFRM) 6%
Cash 1%

Nope. No stock sales.

Companies I am Excited About

Affirm (AFRM) - Why did I pull the trigger now?
Not a stock that I think many follow on this board, but one I have had on my watch list since going IPO in January. The IPO pushed the price way up, and it has now come down with the end of the lock-up period. The stock also took a hit from the Apple announcement that they would enter the BNPL (Buy Now Pay Later) by adding that as a feature to Apple pay. I think the stock got oversold during that period and it’s when I pulled the trigger.

Started by Founder/CEO Max Levhcin of PayPal, Affirm is the leader in the BNPL (Buy No Pay Later) space where it offers loans at the point of purchase to consumers. Most notably Peloton uses Affirm to help facilitate sales and was its largest merchant, but with the reopening in full swing that is no longer the case. Affirm recently inked an exclusive deal with Shopify to provide BNPL tech to all its merchants, and the merchant ecosystem is what makes Affirm unique from other players in the space. It’s similar to American Express in that it enables cross-selling between merchants in the network. Also notable, Affirm bought a company called Returnly that offers eCommerce services increasing their ability to provide value to independent merchants and helping them better compete with Amazon.

High Growth
In the previous quarter growth revenue grew at 66% YoY but the more important growth metric to monitor is Gross Merchandise Volume (GMV). The measure of the value of goods and services being sold through the platform. In the last quarter, it reached $2.3 billion, an increase of 83%, or 100% excluding Peloton, compared to the third quarter of fiscal 2020. It’s not profitable and does carry some debt, but that’s not unusual for a Fintech company at this stage of growth.

Here are some more stats from the last ER
-Active merchants more than doubled to nearly 12,000 from March 31, 2020, to March 31, 2021
-Active consumers grew 60% to 5.4 million from March 31, 2020, to March 31, 2021
-Transactions per active consumer were approximately 2.3 as of March 31, 2021, an increase of 10% when compared to March 31, 2020

My Take
There are a number of long-tail players who have tried to enter this space, but I believe the network effect of having more merchants on the platform are real and that Affirm is aiming to increase the value of that network by adjacent services, I think the vision is to create an Amazon Prime style offering for independent merchants who can tap into Affirm network to attract more customers and give them an even higher level of service than they would get from a competitor.

The Apple BNPLY announcement I don’t think has any legs. Apple Pay is mostly used for small purchases in retail environments. I don’t see people engaging in a BNPL service for any purchase under $100. Apple is still trying to get more eCommerce sites to adopt Apple Pay, but they will struggle as it’s limited to Apple users and the eCommerce sites need to support the huge market of people that don’t have Apple Pay.

Why Affirm Over SOFI?
Those that have followed my portfolio know that I was in SOFI at one point, but I finally sold all my shares and ultimately decided that Affirm was the better buy. They both have similar market caps, but after much thought, I decided that SOFI was really just a slow growth bank, dressed up as a cool fintech company. Affirm on the other is doing something new that I think is unique. They are founder-led with a CEO that has experience in fintech (PayPal!) and the Shopify partnership, if successful, could secure their position as the market leader.

Quick Takes

Sea (SE)
I am still in this as the pandemic in Asia will continue to accelerate their business this year. I also realized that because they are based in Singapore and operate in English they have a big advantage over other Asian eCommerce competitors. I was watching Coupang but passed on them for this very reason.

Crowdstrike (CRWD)
I don’t have much to add and there is plenty of analysis of this company on the board. I am very interested to see the ER and will most likely hold unless something catastrophic happens.

Upstart (UPST)
Another board favorite. I was skeptical at first but the video interviews that were posted with management going deep into their thoughts on the business completely sold me on them. Also all of the recent posts regarding banking partnerships, web traffic, etc. all are very bullish.

Roku (ROKU)
Now my favorite connected TV play. I got out of everything else in this space and I think this is the best pick. They have been growing faster than all the other CTV pure-plays and expect Q4 for them to be a monster. They bought an ad exchange which the rumor is the business is going gangbusters. And best of all, the CEO of Magnite on the last earnings call had to admit that Roku is the better business, once I heard that I sold all my MGNI shares and went all-in on Roku.

Fiverr (FVRR)
This is another post-pandemic stock that continues to have strong prospects as WFH shows no sign of slowing down. I think their model is unique compared to Upstart, which is just a recruitment platform. On FIVERR people are building niche businesses, which I really like.

DataDog (DDOG)
I am highly anticipating their ER and hoping the business really starts to accelerate post-pandemic. We shall see.


Be sure to do your own research and make your own decisions. Be warned that I change my mind frequently. I sometimes buy shares, and then quickly decide to sell. It can be based on new information, or it can also be based on a new insight that I had or read. Holding some shares forces me to pay close attention and it’s part of my process. That’s why I usually buy small blocks over time increasing my position.

I think this is the beauty of being a retail investor. We can get in and get out with ease.

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