Mekong22 Dec 2023 portfolio update

December was a slightly positive month for my companies. My portfolio is still dominated by large positions in The Trade Desk and MongoDB, and I’ve added to my Tesla holdings this month, making it more significant now as well.

Despite a negative reaction to MDB’s earnings release in early December, the stock came back most of the way, and only finished a few dollars below where it started the month.

All combined, that moved my portfolio’s YTD gains to just over +74% at the end of December. After being down about -70% in 2022, this certainly doesn’t bring the portfolio back to where it was two years ago, and I’m still down quite a bit from the 2023 highs in July, but I can’t complain about the performance this year, I’m very happy with how 2023 has gone.

So here is the latest YTD performance summary:

+11.3% YTD Jan
+16.2% YTD Feb
+23.5% YTD Mar
+29.1% YTD Apr
+61.4% YTD May
+87.4% YTD Jun
+118.9% YTD Jul
+94.6% YTD Aug
+80.0% YTD Sep
+56.7% YTD Oct
+69.7% YTD Nov
+74.1% YTD Dec

My portfolio is still very concentrated, still only five positions currently.

After Aehr’s last quarterly release a couple months ago, I sold half of my AEHR stake and initiated a position in Celsius. Well last week, as my long term optimism in Tesla grew, I decided to sell another 50% of my remaining AEHR (leaving me with about one-quarter as many shares as I had a few months ago) and added to TSLA. In retrospect the timing was good as Aehr was down each of the past few days, although I’m also somewhat wishing I had sold all of it

This was my allocation at the end of the year 12/31/23

36.6%  (TTD) The Trade Desk 
36.0%  (MDB) MongoDB     
22.2%  (TSLA) Tesla    
 3.3%  (CELH) Celsius
 1.8%  (AEHR) Aehr Test Sys 

My two top holdings at the beginning of 2023 (TTD and MDB) are still at the top today. Those have been two of my top three holdings pretty consistently for the past four years.

It is a very concentrated portfolio which I don’t generally recommend, but as of right now I don’t have many other companies that I have a high level of confidence in to allocate investment funds towards.

Here is the year to date performance of each of my current holdings. Excluded are any companies I have already sold out of in 2023 (e.g. Cloudflare, which was up about +50% YTD when I sold and redeployed those funds earlier in the year). Also note that the companies that I didn’t own at the beginning of the year (TSLA, AEHR, CELH), this only shows the performance since I purchased them:

Dec 31 2022^ Dec 31 2023 YTD Gain
TTD 44.83 71.96 60.5%
MDB 196.84 408.85 107.7%
TSLA^ 161.3^ 248.48 54.0%
AEHR^ 32.04^ 26.53 -17.2%
CELH^ 51.19^ 54.52 6.5%

My overall portfolio performance was driven by having so much concentrated in two stocks (which, again, I generally wouldn’t recommend) which have increased +60% and +107% so far this year.

^ Because I didn’t own TSLA, AEHR, or CELH until this year, the “December 31st” numbers above for Tesla, Aehr, and Celsius are not their 12/31/22 prices, but the stock price of my initial, most significant purchases. Also note that the CELH purchase price is split adjusted for their 3 for 1 split.

Most of the shares I hold in TTD and MDB were purchased in 2018 and 2019 at much lower costs. The largest portion of my Trade Desk shares were purchased in January 2019 for $11.39 and are up +532%, while most of my MongoDB shares were purchased in July 2018 for $57.39 and are up +612% now.

Here are some updated thoughts on two of my larger holdings, TTD and TSLA:

The Trade Desk (TTD)

I still feel that TTD has a long runway of growth ahead and are in great hands with CEO Jeff Green. Each of the big streaming platforms (Disney+, Netflix, etc) have been adding ad-supported tiers over the past year or so. But this month, one thing I wasn’t expecting happened when Amazon Prime has also decided to move toward ad-support for their Prime Video.

Last week, all prime members received an email indicating that Amazon would start showing ads on prime videos in February unless you pay a new $2.99/month fee (in addition to the regular prime membership fee). My guess is that Amazon is hoping that most subscribers won’t pay the new fee and will accept the ads, which will probably generate more revenue than $3/month on average.

Time will tell how much access the Trade Desk has to sell ads into Prime or any of the other streamers. When it came to Disney and Netflix, Jeff Green initially indicated that he felt that over time, even the streamers that are initially less open to using third parties like TTD much are likely to come around and realize that TTD selling ads will better fill and maximize revenue potential of the available ad inventory on their platforms.

I also saw a new type of CTV advertising recently that I thought was interesting. When I paused a video on my tv, instead of just freezing the screen where it was, a static ad for toilet paper popped up and stayed on the screen until it was un-paused. That seemed like a pretty brilliant idea and a new source of ad inventory volume for the platform. I could see this slot being filled with ads for things like snack foods, beverages, or an ad for doordash or uber eats, or anything else that are usually on someone’s mind when the pause a show.

I could see a future where there is a quick ad right before a movie starts asking if you want to order popcorn, pizza, ice cream, etc to be delivered so that it would arrive about midway through the film. If your credit card information and home address are pre-set as a default, it could be as simple or one or two clicks with the remote to place the order and start the show. Maybe it would even promise to not show any other advertisements during the movie if you place the order (most likely the commission on the food order is worth much more $ than the value of the ads that would otherwise be shown).

That’s the holy grail of CTV advertising to somehow find a way for someone to actually click through and buy something when prompted. I don’t think there is an easy way to make it work right now or in the near future and I’m sure people are going to take some time to come around to buying things on their TV like they do on the computer or iPhone, but eventually someone is going to figure out a fairly painless streamlined way, and it’s could really have a meaningful impact to the streamers and companies like Trade Desk that partner with them.

Tesla (TSLA)

It’s no secret that Tesla could never support it’s current valuation if it were nothing more than a traditional auto maker that makes EVs. I initially bought into Tesla thinking that they would eventually get the fully autonomous driving figured out and it would lead to fully driverless vehicles and a fleet of robotaxi’s which could be generate much more revenue and income than simply building and selling cars (which I still do).

I don’t put too much value in my investment thesis into Tesla’s new Cybertruck, although the video of the Cybertruck racing and beating a Porche 911 (while the Cybertruck is towing another Porsche 911!) was pretty impressive.

Tesla’s stock price has been relatively strong recently, possibly due to some data from China regarding new car registrations that suggests that Tesla’s China deliveries will be better this quarter than was previously expected.

I frankly didn’t previously put much thought into Tesla’s Optimus humanoid robot division until recently, but I’m suddenly re-thinking this a lot.

A couple weeks ago, Tesla put out a short video demonstrating the new generation 2 of their Optimus prototype and there have been several really thought provoking videos posted on youtube by third parties discussing the potential and trying to value what the Optimus division could be worth. I tend to agree with some of them that are suggesting that the Optimus robots will not be built and sold, but essentially leased out with variable charges depending on usage, and maintained by Tesla.

I would encourage those of you with Tesla holdings or interest in the company to check out some of these clips as there are some where they pull up spreadsheets and try to come up with (what they believe are conservatively estimated) numbers around what the costs to build and maintain will be compared to what cash inflows they can generate over the next several years and the more I dug into it, the more I think this has the potential to really be a meaningful driver of value for Tesla shareholders.

Here is one video that I recommend. It is over an hour long but worthwhile. Some of the numbers they comes up with could be far fetched and seem hard to believe, but a lot of the reasoning makes logical sense and if the market is there and Tesla’s execution over the next 5+ years plays out, they could be a leader in the industry and may ultimately be a lot more than just a car company.

There is a news story going around this week about a Tesla robot that caused an injury in a factory. This was not an Optimus robot (which are not yet being manufactured for sale) but a “Kuka” robot arm and the incident actually happened about two years ago, although the story is just gaining traction now. Elon Musk claims that the Kuka robot arm didn’t malfunction and did what it was programmed to do but the worker thought it was switched off when it was actually on. Regardless, safety is going to be one of the risks that will need to be monitored if Optimus robots eventually go into large scale production. Granted, the risks are probably much higher for the autonomous self driving cars than for humanoid robots, but you can bet that any initial Optimus incidents are going to be broadcast and rebroadcast to generate clicks.

My optimism for the long-term potential of Optimus is one of the primary reasons I added to my Tesla stake this month and am contemplating adding more in the new year.

Well that’s it for another investing year. Thanks so much as always to Saul especially, and to everyone else that posts and contributes to making this board so special. Wishing all of you a happy and prosperous new year and I look forward to 2024 being another success!