Jason’s January Portfolio Summary

Since the time I began to try to follow Saul’s advice and listen to the contributions from everyone here:

Year % Change
2018 +38.9%
2019 +32.9%
2020 +203%
2021 +46.8%
2022 (-)58.55%
2023 +66.27%
2024 Month to Date Year to Date
January (-)4.31% (-)4.31%

Remember, I have extremely high risk tolerance and what seems reasonable for me may not be reasonable for you.

Tesla 31.93%

Nvidia 21.75%

Snowflake 14.11%

Cloudflare 12.85%

Pure Storage 11.31%

Samsara 8.06%

1/31/24 12/29/23 11/30 10/31/23 9/30/23 8/31/23 7/31/23 6/30/23 5/31/23 4/30/23 3/31/23
Tesla 31.93% 33.61% 34.84% 33.35% 31.46% 31.63% 35.02% 33.69% 33.11% 31.07% 30.32%
Snowflake 14.11% 18.84% 19.07% 20.3% 19.21% 14.95% 20.01% 15.99% 16.03% 31.64% 28.18%
Cloudflare 12.85% 12.95% 12.88% 12.59% 12.58% 17.93% 19.26% 19.80% 33.8% 28.65% 27.03%
Pure Storage 11.31% 9.65% 8.7% 10.64% 10.08% 8.97%
Samsara’s 8.06% 8.82% 10.93% 8.87% 9.69% 8.38%
Nvidia 21.75% 16.75% 13.58% 14.26% 6.84%
Crowdstrike 0% 5.26% 9.98% 14.11% 13.34%
Zscaler 0% 4.89%
Monday 0% 8.15% 7.89% 14.26% 16.16%
Datadog 0% 7.20% 13.27%
MongoDB 0%
Cash 0% 0% 0% 3.7% 2.42%

The following is not investment advice, it’s just my own way of thinking about my own portfolio.

Saul’s Knowledgebase Part 1:

How do you know when a company is too big?

Let me try off the top of my head: Can you imagine Nike doubling and doubling again? It’s impossible. They already have most of the market.

Now to generalize that thought: If a company owns just 5% of a market, it has a lot of room to double and keep on doubling, especially if the market is growing too. If the company already has 80% of the market, all that it can grab is the other 20% of the market (which is unlikely, anyway). If a company has most of the market because it just invented the market and the market is hardly penetrated, that’s fine, it has plenty of room to grow (think Apple and the first iPod/iPhone). If it’s an old market and is saturated, that’s a different story.

Finally, there is the problem of big numbers. If you have a chain of 200 stores and you can add 50 a year, the first year you add 25%, but the same 50 stores only adds 20% the second year and 16.6% the third year, etc. To maintain the same 25% growth rate, you have to add a larger number of stores each year, and you run out of places to put them.

If you have another kind of firm, with $100 million in sales, and double it, the next year you will need to add $200 million to maintain the same rate of growth, and $400 million the next year, and it soon becomes impossible, except in rare cases.

IMG_1180.jpeg

Continuing with Another Saul Quote, also from the Knowledge Base, part 1.

I remember that the COMPANY may do well, but the STOCK may do poorly, if the stock price has too much growth already factored in.

I’m not sure I can come up with a single calculation that will give you all the information that goes into my thinking about a stock. Often the CEO’s explanations in the conference calls play a considerable role, along with the rate of growth, the company’s competitive position, the PE,how much is recurring income, and other factors I’ve already discussed.

Me: As Saul said valuation is just a small part of evaluating a Company. IMO, Current PE does not matter much if a company has competitive advantages are destroying the competition. Tesla is a AI and Robotics company, not an automobile company. But even if it wasn’t … the global trend is shifting dramatically towards electric vehicles, with one in every seven cars sold worldwide in 2022 being an EV. This is a significant increase from just five years ago when the number was one in 70. The 2023 eReadiness Report states, 30% globally have an ‘intention to buy an EV in the next two years’.

IMG_1130.jpeg

IMG_1139.jpeg

Despite this demand and expected lower interest rates, which will increase demand further by directly impacting Auto purchase decisions, the big Three auto makers have again cut their future production targets in half, IMO due to “The Innovators Dilemma”(sorry AEHR).

There is just so much demand and so little competition, I’m happy to hold a 19% position in Teslas-auto.

Taking this last paragraph and the fact that I have a very high risk tolerance, I believe the Tesla Auto business is likely only 60% of the reason I hold a 31% position in Tesla. I believe the other businesses that Tesla is developing (eg MegaPacks, Full-self driving, and Bots to name a few) account for 40% or 12.4% of the reason I’m holding my 31% position.

The amount of confidence I have in Tesla’s non-auto segments has increased significantly over the last year, not because I have less confidence in Tesla’s auto segment. It’s because I have so much more confidence in these other segments.

IMO, Humanoid robots will be the ‘killer app’ for AI When considering Bots, just for Dangerous, Dirty and jobs of Drudgery, they do not require the kind of AI perfection (the March of 9s), to get the regulatory approval that Automobiles must get. IMO, within 12-18 months Tesla will be selling ‘some number’; but, if Tesla sells only 1.8 million for the 85 million jobs that nobody wants and are habitually left unfilled then conservatively with Bots alone Tesla becomes a $10Trillion dollar market Cap.

Expected adoption, per Figure CEO, ‘all fortune 50 company’s are lined up for purchase’.

IMO, Mr Market is completely sleeping on this for three reasons: it’s unbelievable on it’s face and there’s no numbers for them to crunch yet. And, when the numbers get so big so fast that they themselves are unbelievable given this industries past record lacks luster. For an updated assessment of how I see this market taking shape, which takes into account both Cern Basher and Chris Camilo’s estimates on the humanoid robot opportunity at time stamp 23.49 https://youtu.be/aDhc6nvo48E?si=9sf91hRIuPEB1–O.

Even with a 10% probability weight fully considered, do I have more confidence in the potential of Tesla’s non-auto businesses than the amount of confidence I have in Pure Storage or Samsara? Not exactly. I am just trying to be less wrong. I see the non-auto segments of Teslas business as having a quasi-infinite demand and I do believe that the progress Tesla is making in developing the ability to meet this demand is enough for me to invest 12.4% of my portfolio.

Although I’m not saying I’m able to time availability of these non-auto products, I’m am saying that I’m willing to sit on a 12.4% call option position, for an indeterminate amount of time, when the downside is owning much more Tesla-auto than I would hold otherwise. It’s the safety afforded by Tesla-auto that does give me the difference in confidence levels, among those in my portfolio.

This portfolio is what is in my family’s non-taxable Roth and Rollover IRAs only. It contains the bulk of what we’ll live on during retirement. We have not added any money to these accounts for many years. To buy something I’ve sold something else. I don’t trade options or use any leverage. I stay fully invested at all times and keep, on average, less than 1% in cash.

January 2024

1/24/24

Sold ~14% of Snowflake position leaving ~3% in cash, lacking confidence in customer spend in Q4 and Management history of low guidance.

1/25/24

Sold more Snowflake, what is now 27% of what was a 21% position in Sniwflake.

As Tesla fell after ER, due solely IMO because they provided no guidance. In total, I’ve added 20.6% more to my overweight Tesla position.

I plan to continue adding on the dips to maintain a 30% position in Tesla. Over this next 12-18 months, I believe the share price could be range bound as Tesla prepares for their next step change in growth (I will not likely sell any Nvidia to accomplish this.)

Thanks to you forever Saul!

Best to ya’ll,

Jason

60 Likes

@WillO2028 I enjoy reading your write-ups on companies, especially Tesla. Are you worried at all about Elon’s behavior?

I am a Tesla bull but Elon’s boorish behavior and the fact that he runs 6 companies is a risk for Tesla in my humble opinion. He gets distracted and the last two conference calls were very weak from a leadership perspective. Even Tesla perma-bull Dan Ives called the last call a train wreck.

Where was the talk on margin strategy for cars in the last call?

How do you sleep at night knowing Elon is managing a company that has over 30% of your Portfolio in it? He’s a man-child, although a genius of one - who usually delivers in the long run - but he is still a man-child.

23 Likes

Hi Jeff,

Yes I sleep very well, thank you. Perhaps the reason I feel comfortable owning shares in a company, run by a ‘genius’ ‘man-child’ is that I like to think that I understand what it must be like to go up against ‘conventional wisdom’. For example, when Tesla chose to not give guidance. I see them being more honest than the other companies, given the initiatives effecting OpEx ($10B) this year.

It’s a high risk/high reward situation and if I didn’t feel management was pathologically honest I would not be invested.

Best,

Jason

22 Likes

There are others who share your view of non-auto opportunities for TSLA.

You certainly put your mony where your mouth is!
Vince

7 Likes