Lightning in a Bottle

I think we get a few chances to catch lightning in a bottle. Last year we got to capture Zoom (a 3-4x depending where you first bought) and Livongo (my first and only 5x stock - bought at $27, sold for $135 - when it was acquired by Teladoc). The fear, uncertainty, and doubt of 2020 combined with the rapid acceleration of cloud, digital, remote work allowed for the stocks we chose to do very very well. Those stocks were seen as a safe haven (as Saul said) and the subscription-based nature and high gross margins/non-capital intensive nature of those businesses made them even more attractive. That is not a trend that will go away.

Upstart doesn’t have a subscription-based business model, but just like Zoom and Livongo, it is in the right place at the right time. Lending is bouncing back strong coming out of these lockdowns. Banks have an incentive to start lending the money on their balance sheets and the public is ready to spend some money and take some risk after being locked up for more than a year. The AWESOME thing about Upstart is they’ve invented a totally different approach to lending through AI and it (thus far) is showing to be leaps and bounds more effective than traditional FICO-based lending models. EVEN BETTER, they are looking to expand the usage of AI underwriting and risk assessment into other verticals, i.e. auto lending. I don’t know where this goes for Upstart, but I’m happy to be a shareholder. As always, follow the numbers and keep a close eye on your holdings.

A special shout out to JonWayne and Saul