August continued to be another great month for my portfolio - making 4 straight months in a row of double digit monthly returns. In May I was up 40% for the month, June up another 19%, July up a further 18%, and then in August up another 17% on top of all of that. As Bear often used to say - compound interest is one of the wonders of the world.
Year to date, as of September 1, I am currently up +67%. On top of the +70% from 2024 this is more than a triple in 18 months. This kind of concentrated stock picking does work (as we all know, because that’s why we are here).
I do keep hearing comments from some people on Seeking Alpha saying that we are maybe in for a correction - that September is often a volatile month - and that things are looking frothy in the market at large etc. But all of my companies have once again posted great numbers - and so I am very happy to just continue to hold my concentrated portfolio of just 7 stocks (really just 6 stocks, and 1 small one).
I have made no changes (again) to my portfolio since last month. Indeed, I have made very few trades this whole year - and my portfolio is not too different to what it was at the start of the year back in January.
My current portfolio is
Nebius 35%
Applovin 19%
Celestica 12%
Nvidia 11%
Astera Labs 13%
Electro Optic Systems 7%
Credo 3%
YTD return +67%
Nebius once again posted some incredible results with revenue up 625%, GAAP net income up 530%, and gross profit up over 1000% YoY to give a GP margin of 71.4%. Adj EBITDA improved from a loss of 58m to a loss of 21m - and the EBITDA for their core AI business came in positive ahead of schedule.
Of course, as I posted at the time, the big number to watch with Nebius is their ARR (annual revenue run rate - which is the last month revenue *12). This number was raised yet again to 1B at the midpoint - showing the insatiable demand for AI.
As Arkady Volozh, their CEO, said in his letter to shareholders:
“These are exciting times. With AI developing at pace, we stand at the brink of the next great leap in technology. To achieve this, we need to build entirely new infrastructure for AI. This is a great challenge for the next decade and beyond. Outside of a handful of big tech companies, only a few newcomers have both the technological expertise and the multi-billion-dollar scale to play in this field. Nebius is one of them. Demand for AI infrastructure — compute, software and services — is only going to get stronger as use cases multiply. We are aggressively scaling up capacity to capture this substantial opportunity, and are in the process of securing more than 1 GW of capacity by the end of 2026.”
I appreciate that having 35% in one company is a lot - but it has organically grown into this from when I first bought into Nebius in January. My average price is $35 (today it is around $70). I have not trimmed it yet - and I am still reluctant to do so. I may trim a bit if it goes over 85 to 100 dollars a share. But we will see.
APP - I am so pleased to have held Applovin as either my number 1 or number 2 holding for 18 months now. It has done very well for me. I first bought it at $75 - so even though it is still off it’s ATH of over $500 I have done very well with it. Once again I thought that their numbers, confidence, projections and excitement about their future was just excellent on their latest CC.
Now that they have divested their APPS business their total revenue is what they used to refer to as their advertising revenue. This was up 77% YoY, with Op income up 76%, and NI up 61%. EPS was up 168% - which shows that with results like these their valuation metrics will continue to look better and better. I love how Adam, their CEO in their CC, described their next quarter as a fun quarter! Full quote below:
The reality is like Q4 is going to end up being a fun quarter. You’ve got the advertiser cohort that we didn’t have last Q4 that was growing in the quarter to the point where we reported huge numbers and then had huge numbers in Q1. But we’re going to have those advertisers primed and ready to go for the full Q4. We’re going to have advertisers inviting their friends onto our platform in Q4, and we’re going to be opening up international all at the same time. So there’s going to be a lot of fun moment – moments for us and our customers in this e-commerce or web-based category that will set sort of a new baseline for that business.
Nvidia is another stock I am very pleased to have had in my portfolio for the last 2 years. As I wrote on another thread the other day, to be continuing to grow this fast at this scale is truly phenomenal and shows that the AI demand is not slowing down in the slightest. They are still more than able to sell every single GPU they produce. With the world’s largest company growing at 54% YoY there is still much to like here. I have no plans to sell or trim my NVDA shares.
CLS - I wrote about the Celestica report in my last monthly update because they posted just before the end of July. As I said then, the tone of their call was extremely confident. They raised their guide for the next quarter and the full year. Their CCS segment (cloud and communications section which serves the AI sector by designing and producing hardware etc) is now 72% of their business and this was up 28% YoY.
They are still undervalued I feel - even though they have returned to me nearly 300% over the past 18 months since I have held them. I bought them on the same day that I bought APP back at the start of 2024. That was a good day!
ALAB also had great numbers in their ER - with revenue up 150%, a GP margin of 76%, a 779% increase in NI and 680% increase in EPS. It is clear that their products continue to be in high demand. To quote from their release:
“Astera Labs delivered strong financial results in Q2 with sequential revenue growth of 20 percent, driving meaningful upside to earnings and cash flow from operations,” said Jitendra Mohan, Astera Labs’ Chief Executive Officer. “During Q2, we successfully executed the next step in our growth journey by ramping our PCIe 6 product portfolio into volume production for customized rack-scale AI systems and added multiple new design wins for our Scorpio Fabric Switches. We also saw strong demand for our signal conditioning portfolio driven by PCIe scale-up and Ethernet scale-out connectivity applications in custom ASIC platforms. Astera Labs is at the forefront of an AI infrastructure transformation, and we are accelerating our investments to realize our vision of rack-scale connectivity in next-generation AI systems.”
EOS - Since I bought Electro Optic Systems on the Australian exchange just 7 weeks ago, the stock has doubled! It is a small Australia-based company that is the world leader in shooting down drones by bullet and laser. Their marketing slogan is: "Nobody kills drones like EOS". They claim they can shoot down a coin from earth’s orbit with a laser. I am still learning about this company but their numbers and future look very exciting. I only bought a small initial position at the start of July (about 4% of my portfolio) but that has now grown today to 7%. I think there is still at least another double from here in the next few months.
Credo are reporting later this week. It is currently a small holding for me at only 3% - but I am expecting another great release from them in 2 days time.
Wishing everyone a great and successful September as we transition from Summer into Autumn, and once again thanks to Saul for this excellent board, and thanks to all those who post here.
Best wishes,
Jonathan