Mekong22 Oct 2023 portfolio update

October was another poor month for my portfolio, although most of that was due to the overall tech sector dropping and not specifically the performance of the companies I own (except for TDOC which had a pretty disapointing quarter and guidance and I fully sold out of my small Teadoc position).

On the bright side, since the month ended, the first few days of November have come back returning a good portion of the October losses.

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

At the end of today (November 3rd), particularly driven by Trade Desk’s strong few days, the portfolio is back up to +72.3% YTD

My portfolio is very concentrated, still only five positions currently. For part of the month, I was up to six holdings when I added Celsius, but later sold out of Teadoc and back to five again.

This was my allocation at the end of last month 9/30/23

40.3%  (TTD) The Trade Desk  
29.3%  (MDB) MongoDB   
13.0%  (TSLA) Tesla    
11.7%  (AEHR) Aehr Test Sys 
 5.7%  (TDOC) Teladoc 

And my current allocation at the end of this month 10/31/23

41.1%  (TTD) The Trade Desk  
31.5%  (MDB) MongoDB   
16.9%  (TSLA) Tesla    
 4.2%  (CELH) Celsius *NEW
 3.4%  (AEHR) Aehr Test Sys

After two months, August and September, when I had no trades or transactions at all, I actually made some changes that, for me, were pretty significant during October.

Early in the month, when AEHR released earnings and dropped, I felt like it was a good reminder that I don’t understand Aehr quite as well as I do the other companies I own and I swiftly sold half of my, approx 10%, Aehr holdings and started a new Celsius position, making both, approximately 4-5% each. Since then, Aehr dropped quite a bit and I am currently tempted to add back a little bit more Aehr if funds free up in coming weeks.

A couple weeks later, Tesla’s stock got cheaper and I decided to sell a small portion of my large TTD holdings, and some of the new CELH shares which had quickly gone up from $153 to $174 over those two weeks since I purchased them, and used the proceeds to add to TSLA.

Then a few days later, Teladoc put out earnings missing guidance and lowering their new Q4 guidance. I’m not sure I’ve ever fully sold out of a position afterhours before, but it was enough to tell me that buying TDOC was a mistake and I didn’t hesitate to cut my losses and move out of TDOC that day. I put some of those funds into further Tesla shares, added a small amount to my large MongoDB (MDB) stake, and when TTD fell below $70/share this week, I couldn’t resist adding a pretty decent amount, all of the remaining TDOC proceeds, to my already very large Trade Desk holdings.

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:

December 31st^ October 31st YTD Gain
TTD 44.83 70.96 58.3%
MDB 196.84 344.59 75.1%
TSLA^ 161.3^ 200.84 24.5%
AEHR^ 32.04^ 23.56 -26.5%
CELH^ 153.57^ 152.09 -1.0%

My overall portfolio performance was driven by having so much concentrated in two stocks (which, again, I generally wouldn’t recommend) which have increased +58% and +75% 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.

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 +523%, while most of my MongoDB shares were purchased in July 2018 for $57.39 and are up +500% now.

Here’s a look at the trend with the most recent guides for next quarter penciled in for my two largest holdngs (with q3 guidance penciled in):

The Trade Desk (TTD) (earnings this Thursday, Nov 9th)

Looking at the YoY growth rates by quarter over the last few years:

       Q1    Q2   Q3   Q4
2020   33%  -13%  32%  48%
2021   37%  101%  39%  24%
2022   43%   35%  31%  24%
2023   21%   23%  23%(q3 guide)

And sequential growth (note that Q1 is typically going to be negative sequential growth given the seasonally strong holiday quarter in Q4)

       Q1    Q2   Q3   Q4
2020  -26%  -13%  55%  48%
2021  -31%   27%   8%  31%
2022  -20%   20%   5%  24%
2023  -22%   21%   4%(q3 guide)

MongoDB (MDB)

MDB YoY growth

       Q1    Q2   Q3   Q4
2020   46%   39%  38%  38%
2021   39%   44%  50%  56%
2022   57%   53%  47%  36%
2023   29%   40%  29%(q3 guide)

And MDB sequential growth

      Q1   Q2  Q3   Q4
2020  6%   6%   9%  13%
2021  6%   9%  14%  17%
2022  7%   6%  10%   8%
2023  2%  15%  -5%(q3 guide)

A few quick thoughts on some of the companies:

Trade Desk (TTD)

TTD’s stock went down last week when Meta (Facebook) gave cautious commentary about advertising trends, also with some macro scares that interest rates may stay higher for longer.

What a difference a week makes. More recently this week, the earnings reports, including Roku yesterday, have suggested better things for advertising.

I couldn’t resist adding to my, already large, TTD holdings when it dropped below $70. Earnings are coming up in less than a week on Thursday. I expect it will be a business-as-usual solid quarter for them. 2024 will be an interesting year to follow as we get into the big election cycle and all of the related advertising that comes along with it.

There are also sometimes new changes announced to the S&P 500 in mid November and TTD is probably one of the top candidates for the index right now if any spaces open up, which would have the potential for a small short-term bump in stock price, if they get added, as demand increases to add them to the index funds

MongoDB (MDB)

Still another month to go until Mongo releases earnings in early December due to their non-calendar fiscal year schedule.

MDB has drifted down with many of the other tech companies recently, and they were actually down yesterday when most others were moving up, likely due to Confluent (CFLT) which was down more than -40% after reporting a good quarter and disspointing guidance.

Tesla (TSLA)

I’ve read through most of Walter Issacson’s new biography on Musk. It’s interesting for sure, and a very worthwhile read, especially if you are a Tesla shareholder. I do come away with the impression that Elon will be able to do most anything he sets himself to do. I was surprised to learn how far along they already were on the design and planning for the robotaxi fleet. I had thought it was more of an “idea” that will come along after they have the fully autonomous self driving worked out, but they’ve already been making lots of very detailed decisions about things like whether robo taxis should even have steering wheels or brake pedals at all (and whether regulators in the US or Europe will require them).

While an investment in Tesla is by no means a sure thing, I think the likelihood of the company being much much more valuable than it is today, is pretty good. It’s going to be bumpy at times, it’s already very highly valued, and Elon’s commentary on the latest earnings call regarding initiatives like the cybertruck was more cautinary than he typically is.

But I’m comfortable having a good sized position and just leaving it on autopilot (pun intended) and not worrying about quarter to quarter performance as long as the long term potential still feels like something massively transformative (to me, it does). Granted that’s not too different from how I view my holdings in TTD and MDB too, but with Tesla, the emphsis on the longer term future is really an outsized portion of the thesis.

Aehr Test Systems (AEHR)

Quite the rollercoaster in the short time I’ve held this one. My 10% allocation felt good when it shot up into the $50’s, but has quickly brought me back down to earth. I sold half of my position and put it into Celsius after the earnings release.

One of my thoughts is that maybe I should have considered it a bigger red flag when the CFO announced his retirement this summer. It did seem strange that he has been at the company for quite a while and right at the time when we all think this company is about to turn on the spigot and reach a level of hypergrowth unlike what they’ve seen in the past, he would decide that is the time he should retire? I guess it doesn’t do me any good to guess at what someone’s motivations are for leaving a job as he very well may have personal reasons driving the decision, but it did seem like a “why am I getting on board right when someone with a lot more information than I have is getting off the train?”

But with the price so low, I’m tempted to add some back…but with TTD below $70 earlier this week and TSLA down around $200, it would have been hard for me to put much more than I already have in AEHR, even at these prices. I think it’s worth keeping where it is and seeing what next quarter looks like and take it from there.

Teladoc (TDOC) - sold out in October

I thought they had the worst news already in the rearview mirror with all of the goodwill writedowns from the overpriced Livongo acquisition behind them. They’ve got mountains of growing data, especially related to diabetes, and a strong mental health business, and telehealth is likely to continue to grow in coming years. But they still managed to dissapoint this quarter against what were pretty low expectations, and guidance was no better. This was the first time I remember actually selling out of a full position afterhours as soon as I saw the earnings report. At least the silver lining is that my highest confidence companies had gotten pretty cheap around the same time and I was able to redeploy the funds into other places and at prices that I liked.

Alright, well hopefully these past couple of days will be a sign of good things to come as we close out 2023.

Thanks, as always, to Saul, and everyone else that contributes to his board.