HorsePlayAndrew Update Feb 2021

Summary

A hard slap in the face from February. My portfolio hit a year high of 41% mid month before a few days of free fall and a timely wake up call for the market.

My background

See details here. https://discussion.fool.com/horseplayandrew-update-nov-2020-from…

Performance to date

YTD - 23%
2020 - 209%

January 2020 - 29%
February - 23%

Previous updates

January 2021 - https://discussion.fool.com/horseplayandrew-update-jan-2021-3473…
December 2020 - https://discussion.fool.com/horseplayandrew-update-dec-2020-from…
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 - 11.62%
Pinterest - 11.54%
Etsy - 10.44%
Roku - 7.69%
fuboTV - 7.65%
Magnite - 7.62%
Fiver - 6.64%
Sea - 5.71%
Peloton - 5.70%
HAAC - 4.75%
Teladoc - 3.87%
Cloudflare - 3.70%
Skillz - 3.28%
Stem Energy - 2.85%
Lemonade - 2.37%
OpenDoor - 1.90%
DermTech - 1.71%
Lion Electric - 0.95%

February 2021 Activity

I continue to look for new opportunities and believe a strategy of looking across multiple sectors is the way to outperform in 2021. This is reflective in the number of companies I hold currently. I would prefer a concentrated portfolio but with the way the market is, and getting used to these new companies, it suits me for now.

A slew of company earnings in February has given me a new clarity of who I think deserves to be my top tier companies for 2021. Crowdstrike, Pinterest, Etsy and Roku are leading the pack for me, they are all executing, delivering world class revenue growth, metrics and financials, and currently have sustainable tailwinds to lead to an expansion in their market caps.

I think after the year we’ve just had, I’m thinking that most of the pricey companies are simply going to mirror their revenue in terms of price appreciation, rather than have a complete market meltdown and the world to go cold on tech. That’s why I’m trying to find exciting young guns whose market caps have significant expansion opportunities to compliment the usual star performers featured in most of our portfolios.

SOLD

I did a fair bit of trimming mainly to raise cash for my new buys. I halved my position in OpenDoor after its recent run up. I want to see their next earnings to see where they are headed.

I think the biggest trim that is worth talking about is Teladoc . I’ve been super bullish on these guys and still am, but it looks like the market is only going to reward them once they start to prove out the cross sell opportunity and the fog of Covid clears. A lot of the bullishness from the CEO on the earnings call was around acceleration in 2022 so I will monitor and look to reenter q2/q3 this year if the signs are good. I hope I don’t come to regret this move!

BUYS

HAAC This is an unannounced SPAC, led by Glen Tullman (I’m sure most remember those giddy LVGO days) and Hemant Taneja, a super successful VC behind LVGO and partner of General Catalyst. I bought on Friday because for me, this is like holding cash with the potential for major upside due to being close to its $10 SPAC net value. A deal is yet to be announced but I’m quite happy to wait and see what these chaps come up with.

NGA (Lion Electric Co) I wanted some exposure to the EV market. These guys seem to have their head screwed on, they have an exciting order pipeline with Amazon, US factories coming onboard and importantly trucks and busses on the road with orders coming in. Tiny position for now but lets how they go.

**STPK (Stem Energy)**Another SPAC but this one is due to close soon. Stem Energy is an AI-driven energy storage solutions business and the leading commercial energy storage installer in California. The battery storage market is due to increase 25x by 2030, the TAM is simply massive for Stem. Something this board may appreciate is Athena, their software that acts almost like Crowdstrikes Falcon platform, as cumulative installs grow, Athena becomes more intelligent through continuous learning, creating more value to new and existing customers, mainly lowering energy costs for them and driving up the gross margins of Stem.

They are forecasting $147m for 2021, up 348% from a tiny base, but importantly 88% of this revenue has already been executed due to the nature of their contracts. And they are forecasting $944m of revenue in 2025. One to watch and feel good about investing in as we move to a greener future.

DermTech This is a molecular diagnostics company that develops and markets non-invasive diagnostic tests to diagnose skin cancer and other skin related conditions without the need for a biopsy. Management estimates their current TAM at 10b, the revenue is tiny currently but there is confidence that they can pull off 100%+ revenue growth for a number of years, so the market cap has a lot of potential to grow out.

My companies

Crowdstrike - Nothing new here, looking forward to the Q4 earnings coming up.

Pinterest - An absolute stormer of a Q4 earnings to cap off a great year for Ben and the team. 76% revenue growth and guiding low 70’s for Q1, so the momentum is continuing in 2021. They are executing beautifully, watch out for their programmatic advertising product to really ramp up the ARPU, international is still massively undervalued (and their most active users) and they will continue to integrate e-commerce and shopping into the platform. A top tier company for me and currently undervalued after one of the best Q4 earnings reports amongst the growth stocks which led me to topping up this position.

Etsy - An absolute blowout Q4 report just like Pinterest. The key here was the guidance. They are only going quarter by quarter understandably but it is clear that analysts and the market are downplaying what Etsy can achieve in annual revenue growth over the next 2-3 years. Etsy is still so early in its international expansion and due to Covid has Amazon like brand recognition in the US/UK which will drive repeat purchases and establish themselves as an e-commerce titan. I’ll be looking to increase my position size soon.

Roku - A really strong Q4 earnings. What I really liked was how the Roku Channel is expanding and setting itself up to be the leading free streaming service without all the content costs the likes of Netflix have. Combine this clever content play with the general expansion of Roku as the streaming worlds operating system, there is a lot to like here. CTV advertising budgets will continue to migrate so Roku is perfectly placed to capture significant revenue growth in quarters and years to come. I increased my position last week after the dip as I now see them as one of my top tier companies.

FuboTV Wild swings are par for the course here. Earnings to come this week, an absolute steal of a buy right now ($30-40 range).

Magnite - The big news for me was the extension and expansion of the Disney deal. This gives them further credibility with other publishers but also increases the lock in with this key partner as the data and tech become entwined. Earnings confirmed the breakout of CTV revenue and SpotX highlighted what a great acquisition this was. I think this earnings baselined their meteoric share price rise, so now it’s game on to see if they can truly become a hyper grower and a leader in CTV.

Fiverr Another killer earnings report. Seven straight quarters of accelerating revenue growth, Q4 came in at 89%, and they are guiding for 84-90% for Q1, so there is no let up currently. They have so many opportunities ahead with going up market to enterprises with Fiver Business, international and of course the general shift to freelance working. LinkedIn’s move is noise but will take years to get right, which I doubt they will.

SeaI paired back my position size, mainly down to the need to raise cash. Looking forward to Q4 earnings coming up this week. I want to SEA to be the steady, workhorse of my portfolio that I don’t need to worry about.

HAAC discussed above

Teladoc - discussed above, still bullish in the long term but not so sure on their share price over the next 3-6 months.

Peloton - I think if you’re looking to get into Peloton now is the time after their cool off. I think if they can show signs of sorting their supply issues in Q2 then the share price takes off again and I will be looking to increase my position. They are still in the early innings, this is a powerhouse consumer brand with multiple new products ahead and an international opportunity that hasn’t even started.

Cloudflare - Like some, I was disappointed in the revenue growth. When Matthew Prince was talking about “firing on all cylinders” I had high hopes for them to move into the CRWD & DDOG world of revenue. Due to the valuation, Cloudflare is a candidate for the chop if I’m being ruthless because I can only see at the moment their market cap matching their revenue growth but I still love the products, the leadership and the potential of edge computing. The growth in the developers using the products is very encouraging too ala Twillio.

Skillz - One I’m eagerly awaiting earnings. Great buying opportunity in the 30’s, so I may deploy some cash asap for an earnings run.

STPK discussed above.

Lemonade Waiting on earnings. A long term, coffee can stock.

OpenDoor - discussed above.

DermTech - discussed above.

NGA - discussed above.

Watch List

Mohawk I can see why a lot of investors wouldn’t look twice here. Brandless products sold on e-commerce platforms doesn’t excite in many ways. But I’m super impressed with their founder, I’d recommend this interview https://www.youtube.com/watch?v=-KFDAbkirUg&trk=organiza… to understand the potential and what they are trying to achieve. Their AIMEE software gives them a huge advantage and I think they could be a modern day Proctor and Gamble. Looking to buy with a market cap at 1b.

TMDX TransMedic, they have developed a machine to dramatically enhance the way of transplanting and transporting organs rather than the current archaic way of bags and ice!!. They are waiting for approval but this company has potential to explode once they get this.

Upstart Thank you to the board members who have brought this company to my attention. Need to dig more but I like what I see so far.

IPOE Continue to research. If CashApp didn’t exist I’d already have bought but that is holding me back somewhat.

Farfetch A great earnings and I really like what I’m seeing. I’d have to lose conviction with my current companies I think in order to buy here.

Futu - A chinese Robinhood. Insane revenue and customer growth. I did actually buy at $70 but got cold feet before it took off grrr. Also looking at TIGR, its smaller rival.

If I wasn’t conscious about going over 20 odd stocks, I’d be buying Twillio as well. I also want to look into Palantir a bit more.

SPACS - I’m looking at BTWN, AGC and AJAX, all stellar management groups, but none yet to announce.

Thanks for reading and best wishes from a locked down UK (Soon to be released in May!).

Andrew

69 Likes

I’ve had a few questions about HAAC. For those who would like to find out more, I highly recommend this article: https://septum.substack.com/p/the-promise-of-haac

1 Like

Andrew, nice write-up! I like many of these businesses and because of that also had to increase amount of companies I own - from less than 10 last year to 16 now. But it‘s much more complicated to follow portfolio with many names.

Aside from the companies u mentioned I also like FUSE/Money Lion. I watched recently interview of CEO with Jonah Lupton and was pretty impressed with their business model. It‘s a platform. They are expecting SaaS level gross margins (around 80s) in few years and they don‘t take loans on own balance sheet. That‘s different from SoFi or any other bank/neobank. Platform model allows for sourcing of loans to partner-banks, sourcing of credit cards to credit companies, sourcing of cryptos to to crypto exchanges etc. They want to have kind of finance superapp. Yes, there is and will be competition in this space, hence the main question in bull thesis is how quickly they will be driving customer acquisition and new products. They already announced 3 new products including BNPL and guide for customer growth in 70s for next years. Overall, the company‘s business model is very powerful. And the stock trades very close to NAV now.

Here is investor presentation http://www.moneylion.com/wp-content/themes/moneylion/resourc…

Interview with CEO https://youtu.be/8ARuxRJkpsw

3 Likes

Thank you LearningInvest0r.

Agreed, I’d much prefer 10 for the same reasons.

I have been looking at Money Lion too. They tick a lot of boxes but because the space is a little crowded to me with Sofi and Cash App I’ve held back on opening a position. Trading close to NAV is very attractive though.