May was looking good throughout most of the month, as my largest holding (TTD) moved up, but then I got a dose of reality at the very end when MongoDB’s shares had a very negative reaction to earnings (or more specifically their guidance) last week. This left my gains for the month slightly lower than at the end of last month, and only slightly positive for the year.
Here is my YTD results so far for 2024, cumulatively by month:
-9.7% YTD Jan
+11.0% YTD Feb
+3.7% YTD Mar
+2.3% YTD Apr
+1.2% YTD May
My portfolio is still very concentrated, seven positions, and three of those make up the majority.
This was my allocation at the end of last month 4/30/24
41.1% (TTD) The Trade Desk
25.9% (TSLA) Tesla
22.5% (MDB) MongoDB
4.8% (AXON) Axon Enterprise
3.2% (ELF) e.l.f. Beauty
2.5% (MELI) MercadoLibre
and this is what it looks like at the end of May 2024:
41.3% (TTD) The Trade Desk
26.2% (TSLA) Tesla
14.2% (MDB) MongoDB
6.2% (ZS) Zscaler *New
5.0% (AXON) Axon Enterprise
4.2% (MELI) MercadoLibre
2.9% (SNOW) Snowflake *New
I was able to free up some funds that were not previously part of my portfolio in May, representing about 8% of the port at the time. I put those to work primarily in new positions in Zscaler and Snowflake, and additions to Tesla, ELF, AXON and MELI.
Zscaler I bought into for a lot of the same reasons that have been discussed on the board recently. It felt underappreciated (and still does) while they continue to perform for shareholders.
Snowflake I just picked up a small tryout type positions. After earnings, which I thought were pretty good, the tone of their analyst call also seemed good, yet the the shares dropped several percent the next morning and I felt like it was worth buying a small amount while I dig into them some more. Subsequently it has already dropped a bit more, so that timing hasn’t been good so far. I realize many others on this board don’t love SNOW as an investment right now, so I may keep them on a short leash, but I do think that they have opportunities over the longer term if they can perform well. We’ll see.
elf Beauty
Although ELF has disappeared from my portfolio at the end of May, I was actually adding to it earlier in the month, and only sold (again) when it shot up to $190 after earnings.
I’ve had two round trips with ELF just over the past few months. I originally bought ELF at $154 in January of this year, and then sold completely in March when the shares were above $210. I bought back in during April as the shares were back around $162 and now sold completely again in May right around $190. All together that compounds to about +60% on my ELF investments over less than five months.
I’m typically someone that sticks with my high confidence companies for a longish time (as you can see from my MDB purchased in 2018, TTD from 2019, and the TSLA which I would bet I’m going to own for 3-5 years or more). ELF I’ve been a bit quicker to move in and out of this year and I’d say it’s partially because I don’t feel like I can predict if they will still be growing as fast 2-3 years from now. I have little doubt that they have a few more really good quarters ahead of them in the near term and I can totally understand why some of you have large positions in ELF. Maybe I should have held ELF longer, but twice this year, very soon after purchasing it, the shares jumped +37% and +18% and I just went with my gut and sold. Since then the shares are higher so maybe I’ll regret it (or maybe I’ll get another chance to buy back in at a lower price?)…we’ll see.
MongoDB
MongoDB dropped quite a bit both in the lead up to, and just after earnings. I’m really glad I sold a good chunk of my MDB shares when they were over $500 in January. In retrospect i should have sold more (or all) at the time. Their quarter was pretty good, but the new guidance is only for about +10% growth next quarter and the consumption trends sound like they haven’t been great since the quarter ended, either.
I do think MDB is a really good company that is well run, and I think before too long (but probably not until 2025) they will start to see a pretty good ramp as their customers start to move beyond the testing phase for AI applications and start to gradually move things into production. The valuation is not as high as it was for a while, and I have a very low cost basis as this has been a multi bagger for me already, even despite the stock drop in May, so I’m pretty comfortable holding it at the allocation that it is currently at and seeing how the next quarters play out.
The Trade Desk
TTD moved up in May largely after the announcement that they are going to be one of Netflix’s new partners for advertising. Netflix’s ad-supported business is growing quickly and I suspect that is going to get an extra jolt now that they’ve partnered with TTD, Google, and Magnite.
Here were my initial thoughts when it was announced:
TTD is now getting plugged into most all of the major streaming services, most of which probably may not start to ramp for a few quarters, but should help Trade Desk continue to grow at a nice rate beyond 2024 as they continue to take market share and as CTV and programatic advertising continue to take share of the overall advertising market.
My only other comment on TTD this month is that I suspect that 2024 political advertising may be starting earlier than it ever has before. I was visiting family in one of the “swing states” a couple weeks ago and presidential election ads were already running on television, practically on a loop for both of the major candidates. Typically the election cycle boost impacts Q3 and early Q4, but this was only about midway through the second quarter, so it gives me some cautious optimism that Q2 could be stronger than expected, before we even get into the two quarters that will be more impacted by the election advertising.
Tesla
Tesla continues to face a lot of negative sentiment due to a slow start to 2024 for all EV manufacturers. I continue to hold Tesla as I am optimistic that they are going to execute and be a winner in their long term ambitions (full self driving, robotaxi, humanoid robotics) which I think can ultimately be very profitable.
One area that I wasn’t banking on contributing a whole lot in the near future is their Semi Truck business. But in May, we received an update that actually makes me more confident than I was that they are making progress and this could be contributing to profits within just a few years. I previously would have guessed that the Semi business wouldn’t be doing much over the next decade due to the challeges setting up enough of a megacharging network which supports Semi’s and can charge a semi truck 70% in 30 minutes (different from the existing "super"charging network that supports Tesla’s regular vehicles).
To date very few of Tesla’s Semi trucks have been produced, with Pepsi’s pilot program running a small fleet of about 25-30 over the past two years. Tesla uses about 100 of their own Semi’s for delivering batteries from their Sparks Nevada facility to the Fremont CA factory. A few other companies, including Walmart, Costco, Sysco, and US foods are believed to be using a very small number of Tesla Semi’s likely largely as a test case.
We found out this month that Pepsi is planning to expand and receive an additional 50 Tesla Semis soon. Tesla has also broken ground recently on a new Semi producition facility in Nevada. One of their executives said last month that Tesla could be in “volume production” for Semis by the end of 2025, but I would bet that 2026 would be the earliest.
It’s way to early to put any significant value related to the Semi truck business into the company’s valuation yet imo, but I now suspect that it could start to contribute meaningfully at some point in the next 3-5 years, which is half as long as I previously thought.
Ultimately time will tell if they will be successful in any of these new businesses, but they’ve definitely been investing in areas where the world is moving, they’re ahead of competitors in most of them, and their CEO has historically been pretty successful at accomplishing what he aims to do (albiet often on a much longer timeline than initially suggested).
The stock may not go anywhere for the next few quarters. It may even go significanlty lower for a while. But I think the liklihood of Tesla getting at least a couple of these new businesses right and their being very profitable, growing the value of the business, as pretty high and I don’t want to be on the sidelines if the stock starts to move. So I’m pretty comfortable with my TSLA stake where it is and I don’t expect I’ll be changing the allocation much based on near term bumps in the road or less than expected EV delivery numbers, etc, as long as they keep moving in the right direction and making progress in the areas that I’m betting they can be successful in.
That’s it again for another month. Thanks so much as always to Saul especially, and to everyone else that posts and contributes to making this board so special.
-mekong