Mekong22 July 2023 Portfolio Update

July was another pretty great month for my portfolio.

Here is how things look year-to-date at the end of June:

+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

I’ll again use the standard line you hear from funds “Past performance is not indicative of future results”. I’ve had more than my share of bad picks in recent years, and plenty of others on this board have had better overall cumulative gains the past few years than I have, but at least so far in 2023, overweighting my portfolio with Trade Desk and MongoDB, and also adding new positions in Tesla and Aehr starting two months ago, and Teladoc last month, have worked out quite well.

I did own some LEAP call options in MDB and TTD which, had a positive impact on my returns so far this year, although I sold the last of my MDB ones when it popped post earnings in May.

Tesla and Aehr Test Systems are both now up more than +60% over the, less than three months, since I initially bought the bulk of my position in early May. And my newest postion in Teladoc rose 25% the day after earnings this month.

One of the things that has also juiced my returns was the timing of when I sold off the last of my Cloudflare (NET) and Datadog (DDOG) earlier this year and put much of the proceeds into Tesla and Aehr. NET was up more than +50% ytd when I sold my shares and DDOG was up more than +30%.

So the funds that were invested in NET, up more than 50% when I sold and were reinvested into Tesla, which then increased subsequently, now up more than +65%, have compounded and actually gained more this year (about +147%) than even my MDB and TTD shares which have each more than doubled. While timing isn’t everything, in this case, it certainly worked out well (so far) for me with those transactions.

Here is my allocation at 7/31/23

41.6%  (TTD) The Trade Desk  
29.0%  (MDB) MongoDB   
11.2%  (TSLA) Tesla    
10.8%  (AEHR) Aehr Test Sys 
 7.4%  (TDOC) Teladoc 

As big as the two TTD and MDB positions are, they represent a smaller portion of the total portfolio than they did in recent months. Combined they are 70.6% now at the end of July (yes, kind of crazy bigger than any rational person would have in two stocks). But it’s lower than when they combined were 73.9% at the end of June, 78.8% at the end of May, and were actually 87.6% at the end of April!

I actually sold a pretty decent number of Trade Desk shares this month after the stock shot up, but gains in the stock price has kept it just over 40% of the portfolio at the end of July.

Last month, after MDB spiked post-earnings, I had sold more than one-third of the MongoDB shares I owned, re-investing some, but permanently pulling much of those funds out of my portfolio.

Well I continued this new (for me) method in July as my companies’ stock prices have continued to rise. Without getting too into portfolio management which is off topic here, historically, in recent years, I stayed 100% invested because my only other alternative (that I wanted to consider) was cash. However, now that I have a home mortgage, the allure of prepaying some of that principal as my portfolio is strong when I didn’t have other investment alternatives that looked particularly interesting. And that’s what I’ve been doing as I take a little off the top of some of my holdings as they grew throughout the month.

At the very beginning of July, I sold a small amount of my TSLA shares. They were up 60% in about two months and it just felt right to lock in a small amount of those gains, pull those funds out of the portfolio, and hold on to the rest of my Tesla holdings.

Then, about one week into July, I sold some TTD and MDB. These shares I did re-invest, puttng the proceeds into more AEHR and TDOC shares.

Another week later, as TTD got close ot $90, I sold some more Trade Desk, and added more TDOC and AEHR (the day before AEHR earnings)

Two days later AEHR spiked after earnings and I sold a small amount of my Aehr. Like TSLA, it was up 60% in just a few months, and felt right to lock some in and take it out of the portfolio, given the big run in such a short time.

Finally, just before the end of the month, I sold some more TTD, MDB, and even a little bit of my new Teladoc shares which had risen about 30% in the two days after the announced earnings his month, and took those funds out of the portfolio.

and I sold off the last tiny (a fraction of 1% position) amount of MGNI (Magnite) that I owned in July as well.

That’s a whole lot of selling Trade Desk in July for it to still be over 40% of the total. And they still don’t report Q2 earnings until next week, which could have a big impact on my portfolio, either good or bad, in August.

Here is the year to date performance of each of my current holdings. Note that the companies that I didn’t own at the beginning of the year (TSLA, AEHR, TDOC), this only shows the performance since I purchased them:

December 31st^ July 31st YTD Gain
TTD 44.83 91.26 103.6%
MDB 196.84 423.04 115.1%
TSLA^ 161.3^ 267.43 65.8%
AEHR^ 32.04^ 52.16 62.8%
TDOC^ 24.33^ 29.77 22.4%

While my overall portfolio performance was driven by having so much concentrated in two stocks (which, again, I generally wouldn’t recommend) which have increased +103% and +115% so far this year, my timing has also been good starting new significant stakes in Tesla, Aehr, and Teladoc just in the past three months which are all up nicely in a short amount of time.

^ Because I didn’t own TSLA, AEHR, or TDOC until this month, the “December 31st” numbers above for Tesla, Aehr, and Teladoc are not their 12/31/22 prices, but the stock price of my initial, most significant purchases. For Tesla it was on May 4th. They had already reported their quarterly results in April, and I certainly didn’t expect they would rise 65%+ over the next three months, but I’m glad I bought as much as I did early on as I probably wouldn’t be as inclined to buy as much all at once right after its run.

And also note that 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 +701%, while most of my MongoDB shares were purchased in July 2018 for $57.39 and are up +638% now.

Thoughts on the Companies

Trade Desk (TTD) - I still just see this company being worth much more in the future than it is today. I get that some people look view it as expensive or overpriced using traditional metrics. But their ability to scale and the potential for revenue to grow with little to no increase in cost of sales (revenue is already recognized net of supplier/platform fees) or operating expenses has always been one of the things that drew me to TTD. I expect that a LOT of their future revenue growth is going to fall straight to the bottom line profit, and cash flow.

And I won’t be surprised at all if there is a reacceleration of revneue growth at some point in the next year or so. There are very real risks as advertising spend could suddenly slow and this isn’t a subscription service like some of the other companies we follow. But it feels to me like the signs are pointing in a positive direction and the tailwinds are continuing for Trade Desk.

Nine more days and we’ll know more (Earnings date August 9th)

MongoDB (MDB) – There isn’t much new to add to my thoughts on Mongo beyond what I wrote last month. It’s definitely one of my holdings that I can see being lumpy and having good and bad quarters along the way, but I think long term, they have plenty of good years ahead.

Tesla (TSLA) and Aehr Test Systems (AEHR) – They both have been getting good coverage here and I don’t have much to add that hasn’t already been said on the board. However, AEHR is probably on a shorter leash for me if I see signs of any difficulties ahead, while Tesla I’m more likely to let ride and endure some lumpy stretches along the way

That’s it for another quarter. Trade Desk earnings next week are likely going to drive how my portfolio performs in August…I eagerly await to hear how their quarter went and what they have to say about expectations going forward.

Thanks, as always to Saul and everyone else that makes this discussion board so great