Summary
A true Santa Rally for me in December 2020. I had a great month to cap off a staggering year for my portfolio. I’m truly grateful for the learnings and hard work that goes into this board as well as the fortunate life position I find myself in. I too have been sharing my gains as much as I can with family, friends and charities close to my heart.
I’ve been trying to shape my portfolio and companies with a 2021 lens. I find it critically important to continue to question regularly each company I hold and believe that hyper growth in both revenue and share price is likely in the year ahead. I agree that 2021 isn’t going to be as easy. There is a lot of froth, charlatans and hype in the market right now. Some of it is justified, this was the year of Digital Transformation and the wider markets belief in our high growth companies but I am trying to stay humble and hungry to learn for the year ahead as like others I’m a little nervous this year was a complete fluke!
I am looking to expand my portfolio because I am having a hard time seeing the top tier winners right now. I believe I’ve got a great group of companies but 2021 is going to be tougher so I need to feel my way into it again before going big on a few tier 1 companies.
Background
See previous updates below.
Performance to date
YTD - I am up 209% as of December 31st 2020
January 2020 - 16%
February 2020 - 12.40%
March 2020 - 20%
April 2020 - 9%
May 2020 - 22%
June 2020 - 29%
July 2020 - 60%
August 2020- 68%
September 2020 - 105%
October 2020 - 101%
November 2020 - 144%
December - 209%
Previous updates
November 2020 - https://discussion.fool.com/horseplayandrew-update-nov-2020-from…
October 2020 - https://discussion.fool.com/horseplayandrew-update-oct-2020-from…
September 2020 - https://discussion.fool.com/portfolio-update-from-london-uk-sep-…
My portfolio
Crowdstrike - 17.52%
Teladoc - 12.30%
Cloudflare - 11.19%
Magnite - 10.94%
Roku - 9.57%
Peloton - 7.58%
Etsy - 7.33%
FuboTV - 6.21%
Pinterest - 4.97%
Fiverr - 4.92%
Cash - 7.46%
December 2020 Activity
I had some pretty explosive gains in December. FuboTV was the front runner, running up almost 200% in the space of a few weeks. I juiced my returns with them, adding along the way when I could see clear momentum and respectable analysts and services backing them. Crowdstrike, Magnite, Peloton and pretty much all of my other positions joined the rally.
I finished off the month trimming pretty much all my positions because it felt like things were overheating. I’m holding some considerable cash and plan to open up a few new positions or add again at the right levels.
SOLD
Zoom - I had started to doubt Zoom back in early November https://discussion.fool.com/zoom-the-thesis-going-forward-346634…, and reduced my position significantly back then. I sold out fully in early December because of a divergence of market cap and forward growth. I am watching closely because the price is now entering attractive levels for me and I think I can see revenue hitting the 50% region in 2021 so I am fairly confident of a 200b market cap going into 2022.
Docusign - I can’t quite put my finger on it but I’m lacking conviction in Docusign and therefore sold out of my position. They do have exciting products in the pipeline but these won’t boost 2021 significantly and I’m not sure whether they settle back into that 40% range or can keep it up. I may get back in if I can build up a stronger conviction. (bullish views welcome!)
BOUGHT
Fiverr - They’ve graduated from my watch list. A founder led, hyper growth company, ticks a lot of the Motley Fool boxes for a multibagger. They have very impressive gross margins north of 80%, remote working is here to stay, millennials are shifting to a freelance way of working, and Fiverr has a huge opportunity with the enterprise market ahead of them. At a 6b market cap, I’m excited to see them grow as I think they are a little off the radar at the moment.
Cloudflare - I’ve been kicking myself for not getting in sooner but I’ve taken an opportunity to finally add after a little cool down in the price. Their product innovation is outstanding, the founders are super impressive and all their metrics as Sauls brilliantly lays out are firing on all cylinders. I see Cloudflare becoming increasingly important for enterprises the world over so I feel we are still in the early days of their growth.
My companies
Crowdstrike -All the signs were there. Quarter after quarter their earnings calls were awash with positivity. I can’t recommend enough to listen to these calls. I said this back in September
“I’d recommend reading the conference call transcript from Q2 again. George and Burt are just awash in positivity with performance and outlook. Superb metrics on all levels, the market still seems to downgrade them somewhat because of a perceived crowded field in the Cybersecurity space. So they’ll need to work harder to prove out their growth, and the power of their shared network learnings model. If they have another quarter like Q2, with no wobbles ala Datadog, then surely the market has to reward them more than they already are.”
The market did finally wake up, and because of these recent hacks, cybersecurity and in particular Crowdstrike have the sail in their winds. I juiced my December performance by buying more in the $170 range and then after reaching 35% of my portfolio I scaled it back. I’m confident in holding them as my no 1 position, the perceived TAM has grown, and I can see them growing in the 60-80% range.
Teladoc - Still holding firm with Teladoc. Another quiet month. I would like to see management raising their PR game and sprinkle some of that Livongo stardust on the market. Looking forward to the February earnings call.
Peloton - Peloton bounced back nicely! The big news was the acquisition of Precor. They really need to sort their supply out so this was a good move. Going into 2021 I still see plenty of upside as long as they can reduce delivery timelines. They have gone ad crazy over here in the UK so it will be very interesting to see their digital subscriber numbers. I have reduced my position size after the run up. This was mainly because I needed the cash for other ideas and didn’t want it sitting that big. And I am now an avid Peloton customer! The bike+ is brilliant, incredible instructors and we’ve all been using it daily in the house.
Magnite - Its profile continues to rise. Laura Martin from Needham has picked it as her 2021 stock (was very early on Netflix, TTD and Roku). This is very much a story stock and as Saul rightly pointed out, it’s not a hyper growth company, yet. I plan to keep this size as I think the next earnings may well see it qualify as a 40%+ grower and combined with the CTV story it could break out significantly.
Roku - The good news kept coming. A HBO tie up which further strengthens the offering. Roku is positioned perfectly for the CTV boom that we keep hearing about and should be primed for some stellar revenue growth in 2021.
Etsy - Etsy had a strong run in December in anticipation of their holiday sales. There is a fairly big question mark on what their growth looks like in 2021 but my thesis is mainly based on the fact millions discovered Etsy in 2020 due to Covid and will keep coming back whilst they continue to expand globally.
FuboTV This isn’t for the fainthearted. Raced from $15 to $60 in a matter of weeks. I took a lot off the table in the 50’s so I was quite happy for it to come down again and buy back more. It’s being shorted heavily, and it’s still very early days in their betting offering so I plan to keep the position size fairly small until we see more evidence of them evolving.
Pinterest - A quiet month for Pinterest. Happy holding and looking forward to Q4 earnings. I might look to add if a nice entry appears.
Fiverr discussed above.
Watch List
Lemonade Another story stock but with a super impressive founder (ex Fiverr) with grand visions of disrupting the insurance market with AI and clever branding. I like the brand, marketing, and ethos. I don’t really know much about insurance though so I’m a little hesitant. Perhaps Tom Gardner’s ringing endorsement should be enough…
Sea Limited - Banking licence approved. They continue to march on. Again it’s just the size of the market cap that is putting me off.
Twilio - I really like their recent play into the CRM space. The reopening of the economy should be an extra kicker. They are at the heart of digital transformation and I really like their founder and CEO.
AMD/Nvidia/Marvell still figuring out this space…
Square - once the vaccine is in and their POS revenue ramps up again it could be a pretty powerful combination with the Cash App growth. Bank of the future… it’s just the market size stopping me…
Zoom & Docusign as discussed above
Skillz I came across them via twitter. I like their vision of becoming the competition layer of the internet. A little put off by the quality of the games but its early days. I would like to see more endorsement of these guys from my regular sources of ideas before taking the plunge but there seems to be some very exciting potential here.
Thank you Bear for kicking me to look into Asana a bit more. I like the founder and space they are in but need to do some further research.
I wish you all a very happy and prosperous 2021. Fingers crossed the world can get through this horrific pandemic and we can all get back to enjoying life to the maximum (whilst taking care of those who need it).
Andrew