Mekong22 May 2023 portfolio update

May was certainly a nice month for my portfolio and I’m off to quite a good start over the first five months of 2023.

I made a couple changes this month too, exiting my Snowflake position, and selling most of my remaining Magnite shares, replacing them with a couple of new companies that I hadn’t owned before.

Here is my updated year to date performance:

+11.3% YTD Jan
+16.2% YTD Feb
+23.5% YTD Mar
+29.1% YTD Apr
+61.4% YTD May

It definitely feels good to be up pretty significantly in 2023. I haven’t had quite as much success in recent years as many others here, but right now I feel like I have my investments in the companies that I’m most confident in and feel most comfortable with.

My two big holdings (Trade Desk and MongoDB) are both up about +50% ytd. Without getting into any details because options are off topic here, although I don’t have as many as I did a couple years ago, I do still have some calls, particularly in TTD (and to a lesser extent in MDB and DDOG), which have boosted my returns beyond the movement in the stock price itself.

With Mongo’s earnings being released tomorrow, things could swing quite a bit by the end of the week.

and my allocations at 5/31/23

41.9%  (TTD) The Trade Desk  
36.9%  (MDB) MongoDB   
 9.8%  (TSLA) Tesla  *NEW*
 4.7%  (NET) Cloudflare  
 4.3%  (DDOG) Datadog   
 2.1%  (AEHR) Aehr Test Sys *NEW*  
 0.3%  (MGNI) Magnite 

As big as those two on top look, my largest holdings, TTD and MDB, combined, have become a smaller percentage of my portfolio (by almost 10%) compared to the end of April. So making a little progress in reducing the concentration there although I still don’t love having so much in just two companies.

I still believe in them more than any others over the long term, and at least so far this year, I’m glad I didn’t try to reallocate much out of those two, just for diversification sake.

Tesla is a new position. To be honest, I don’t have a detailed analysis that led me to want to establish the position. I just feel like they are the leader today, will have plenty of tailwinds over the next decade and beyond, and will have the potential to expand their business beyond regular auto sales as they evolve. Their valuation is pretty expensive today, but some of my best investments have felt too expensive right before I hit the “buy” button and worked out well.

I would actually lump Tesla together with my big postions in Trade Desk and Mongo as companies that I just think are going to do really well for a lot of years and I won’t worry too much about the ebbs and flows and individual quarterly results from period to period as long as it feels like they are still heading in the right direction for the future.

TSLA is actually up more than +26% in the three and a half weeks since I bought my initial stake on May 4th, which certainly helped my May returns. I added some more to it when I sold out of my Snowflake holdings toward the end of the month, and those are up +10% too in only about a week.

After Snowflake’s earnings report, I decided it wasn’t a company I wanted to continue to own right now. I never had a high conviction in SNOW (as an investment) given their high valuation, and only bought into it for the first time last summer. It wasn’t ever a big position, and most of my shares had a cost basis in the $130’s so, even with the post-earnings drop, I still came out with gains on my SNOW investment. Granted, it had me wishing I had sold a day earlier before they announced.

I also sold most of the last of my Magnite shares. Magnite, which was once my biggest holding in early 2021 (it had rocketed from about $10/share to about $50/share in the first six months after I first bought in) has just not performed the way I hoped they would over the past two years. They made acquisitions that felt right at the time, but just haven’t led to the revenue and profits that I expected. With such a big investment in my portfolio in another ad-tech company (TTD), I just decided I don’t need to own Magnite too any more. Also for the first time in a while, I had some companies that I was interested in freeing up some funds to invest in, so it made the decision easy. I still have a tiny position which I’m only holding on to because they are some remaining call options that are so underwater that aren’t worth selling before they expire in January.

My second new position, is a small 2% try out stake in Aehr Test Systems. The coverage on the board from others has peaked my interest. I’m definitely scared by the amount of customer concentration, but I think the risk/reward makes it worth having a little skin in the game and see how it plays out for a bit.

I looked into Celsius (CELH) quite a bit too, although did not invest in them. I’d say it’s still on my watch list, but I’ve all but ruled out putting any money into it unless the valuation comes down pretty significantly. I definitely think this energy drink company has done amazing and I can see them continuing to take market share and grow and expand to more new products. But the biggest thing keeping me out is that I don’t see their industry growing much overall. So if the pie doesn’t expand much, the only way for their growth is for them to keep taking more and more share from Red Bull and Monster and whatever other smaller players are out there. And I feel like that is only going to keep going for so long before they stall. And they are already a $10 billion market cap company.

As I considered a position in CELH, my recurring thought kept asking myself why would I want any funds in this company when I could have more in TSLA. Both have very high valuations. Both may never live up to the hype or may grow like crazy for a long time. But I feel more confident in the company with more tailwinds and a market that is likely to expand a lot for a lot of years to come. I cold definitely be wrong on this one. Maybe Tesla’s market share in EV’s will decline and more than offset the growth to the overall industry. But more confidence in them right now is what my gut is telling me right now and that’s what I go with.

I updated one of my charts that I haven’t used in a while showing the year to date performance of each of my current holdings:

December 31st^ May 31st YTD Gain
TTD 44.83 70.08 56.3%
MDB 196.84 293.79 49.3%
TSLA^ 161.3^ 203.93 26.4%
NET 45.21 69.16 53.0%
DDOG 73.5 94.91 29.1%
AEHR^ 32.04^ 33.02 3.1%
MGNI 10.59 11.88 12.2%

As mentioned above, some of my options, particularly in TTD calls, is why my overall portfolio is beating the individual stocks’ returns. But with about 80% of my portfolio in two stocks that are up 50% or more, and with the new Tesla investment moving up 26% in just a few weeks, my portfolio would still be up close to +50% YTD if all of my holdings were in regular common stock in the same companies.

^ Because I didn’t own TSLA or AEHR until this month, the “December 31st” numbers above for Tesla and Aehr 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, so there wasn’t any new earnings release since my purchase and I certainly didn’t expect they would rise 26%+ over the next few weeks, 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 recent run.

Aehr was a lot more recent, as I only bought my first shares on May 25th last week.

I also looked back and reminded myself that the majority of my Trade Desk shares were bought at a cost of $11.39 in January 2019, now up +515% in a little over four years, and the majority of my MongoDB shares had a cost of $57.39 in July 2018, up +412% in around five years. And I still think both companies have a long way to go for a long time to come.

My inclination has always been to not to shift my holdings too significantly in a short amount of time. The 10% or so of my portfolio that I changed this month was actually pretty significant for me. At times in the past, not moving faster has certainly hurt my results and performance compared to others that have a gift for being nimble and making quick decisions and moves. But for me, moving a bit slower and holding companies that I feel good about longer is just what I’m comfortable with. I don’t mind losing some opportunities here and there if I feel I’m in the right companies that can provide market beating returns over the long term.

Alright that’s it for another month. Fingers crossed for MDB on Thursday afternoon! Thanks as always to everyone for the great discussion and ideas.