Sorry for the delay in posting October month end review. Please note this update includes activity till eod today.
Performance recap
- 2021: -36%
- 2022: -76% (Found Saul’s amazing board Jan 2022, started this style of investing in Mar 2022)
- 2023: +80%
- 2024 through November 5, 2024: +96%
Current portfolio holdings: (105% long)
- HIMS - 17%
- BSEM - 11%
- ADMA - 10%
- ECOR - 8%
- POWL - 8%
- ALAB - 6%
- ROOT - 6%
- CSTL - 5%
- AFRM - 5%
- NVDA - 5%
- TMDX - 5%
- TARS - 4%
- ASPN - 3%
- TGTX - 3%
- ARDX - 3%
- MU - 2%
- NXGL - 2%
- LFMD - 2%
Changes this month
- New positions: TARS, TGTX, MU, NXGL
- Sold: MNDY, DUOL
- Watchlist: MELI, SEZL
Why I hold these positions
- HIMS - 17%
- HIMS reported their third quarter results yesterday after close. The numbers look really good across, revenue and free cash flow. They raised guidance about 5% and seems to be getting operationally super efficient. The stock is still under the weather with expectation of pending litigation/price war with giants Elli Lily, Novo Nordisk. At 20% free cash flow level, 77% LTM revenue growth with acceleration, there are a very few businesses I feel match this criteria. I will let this position run to 25% before trimming. It has done that once before.
- BSEM - 11%
- BioStem Technologies Reports Breakthrough Results in a Diabetic Foot Ulcer Wound Closure Study Comparing BioREtain® to Standard of Care TreatmentBioStem had a favorable report published showing better results than their competitors. They also got approved by Medicare for Vendaje AC product. I feel like the market is starting to wake up to the potential of this business. They really need to blowout earnings on Nov 12th to justify the recent stock price movement.
- ADMA - 10%
- ADMA had their auditor resign and that got them in hot water in the markets. But I think hiring KPMG as their new auditor has calmed down the nerves of market participants for the time being. They are currently 2% of the IG market and has a chance to get to 20 to 25%. They have a history of beat and raises and I am hoping for a good showing later this week. Again this is another business with elite numbers - 78% LTM growth, 20% FCF TTM.
- ECOR - 8%
- Another tiny company in my portfolio. Had good quarterly results. I expect their new direct to consumer product lines of Truvaga and Tac-stim to do well and add more to the bottomline. Their core product gammaCore is still growing rapidly. Given they have more product launches in the pipeline and international expansion happening, the execution will be the key. The demand and tam is there if they can perform. I am not a fan with the 28% dilution in the last 12 months but it comes with the territory for micro caps I guess. ECOR made the explosive move I was expecting. So now the upcoming quarterly results will have to be stellar. The volume has been very high in this latest run up, so I feel like institutions are starting to get interested in this name.
- POWL - 8%
- Their electrical equipment business in Oil and Gas, Petrochemical and Utility sectors is seeing great traction. The business has hit explosive growth curve over the last few quarters. Over the last two quarters their average revenue beat was 25%. The tailwind of power necessity in data centers seems to be a growth driver.
- ALAB - 6%
- ALAB just reported earnings and it hit it out of the park. The stock reacted positively to the business results and went up 37% today. Usually, these kind of moves are continuation patterns after earnings. So I expect ALAB to trend higher for a few weeks. Their new product launch of fabric switches purpose, built for AI infrastructure at cloud scale seems to be a differentiator. And all hyper scalers being customers is a win win situation for them.
- ROOT - 6%
- ROOT ignored seasonality weakness and reported a very strong quarter. The stock finally responded to the results and had a crazy day, ending up almost by 70%. The key will be seeing their margins improve and if they are able to retain these customers when the insurance is renewable in 6-9 months time. The Carvana partnership seems to be really paying off for them.
- CSTL - 5%
- Castle Bioscience had another good quarter but their sequential revenue was down. I need to re-evaluate this position as I have a good cushion in my position but if the next 12 months revenue will fall below 20%, I am not interested. The difficulty I am having is though analysts expect a 20% revenue decline next year, Castle Biosciences management has raised ltm guidance by 50% and even this quarter they came out and raised guidance by 10%. So this is going to be a game of who blinks first. And since CSTL management has won last four quarter battles with analysts, I am going to give them a little more rope. I might wait till next quarter’s guidance before deciding on this position.
- AFRM - 5%
- AFRM’s results were quite good this past week. They beat both top and bottomline numbers quite handily. The stock has responded to last quarter’s results and moved up nicely. Now, it’s a valuation issue for me. I feel it is quite richly modestly valued now. I might sell this soon to raise some cash but might stick around for q3 results.
- NVDA - 5%
- There is nothing to add on this amazing juggernaut of a business. Although NVDA has had a great run, I still feel it has lots of room to grow. The recent pullback gave me an opportunity to get in. I have been eyeing this for a long long time, own it in my other portfolios but not in my growth brokerage account. So I am happy to start a starter position. Looking for a 34 B upcoming quarter with steady margins at these high levels for FCF.
- TMDX - 5%
- I never want to see my growth stock have a sequential lower revenue quarter. It’s a no-no. There is a lot of excuses being thrown around about seasonality, plane maintenance, ability for doctors to support the number of surgeries. So I did nothing after the stock dropped significantly post earnings. Based on their really good execution, I will give management one more quarter to right the ship. I expect the stock to hang out in the dumps till then. However, if it drops another 20% it will be attractive to me.
- TARS - 4% (New Position)
- I took the plunge in TARS after my last month’s watchlist introduction. It’s a starter position for me and I am really looking forward to this quarter’s earnings tomorrow.
- Their primary product XDEMVY kills mites in your eye lashes. Who knew there is a market for this. So they are the only FDA approved product and is just beginning to do commercial launch. They also have other products that are variations of this but in other forms - in different stages of approval process currently. The business has a 1.25B market cap, has started commercialization this year and is already upto 40 mil. revenue per qtr. 2025 estimates are at 275 mil. which according to analysts will be 70% yoy increase over 2024 revenue. However, the last two quarters they beat their earnings estimate by 54 and 26%. High margins of 93% but -150% FCF, though rapidly improving. The stock got cut in half recently and gave a descent entry but I missed that opportunity. So for now in my watchlist, looking for an entry.
- ASPN - 3%
- I have no idea what is going on with this business. I am just waiting for their earnings report later this week to make a. decision if I want to give them another quarter or not. I feel like once ASPN management can get over these hiccups, they have a good product to get market penetration. But this secondary offering after they got a loan is extremely annoying.
- TGTX - 3% (New Position)
- TG Therapeutics, Inc., focuses on the acquisition, development, and commercialization of novel treatments for B-cell mediated diseases. Successful launch of their flagship drug BRIUMVI, for patients with relapsing forms of multiple sclerosis. Robust pipeline in place - new indications for BRIUMVI and allogeneic off-the-shelf CD19 CAR-T for autoimmune diseases. Hyper-growth still intact with high margins and very healthy free cash flow. Allows for a lot of options. Risk: One drug wonder, maybe! Need pipeline to turn into real product launches and use FCF for growth. I took a starter position mainly because of the efficiency of their launch and I like their numbers.
- ARDX - 3%
- Ardelyx had a great quarter and I see potential in this biotech firm. Their main product IBSRELA has had great market penetration. They are currently in the high growth curve, has great margins but is transitioning from a FCF negative to FCF+ business. The latest quarter was around -25% FCF. I expect over the next 3-4 quarters, the business to go FCF positive… They launched a new product XPHOZAH and that has seen a lot of success as well.
- The numbers were too good to not take a starter position. I expect them to put up a 100 mil. upcoming quarter. And it should get to FCF+ in a few quarters too.
- I feel like this stock has similar consolidation pattern like AFRM and ROOT. Both of those stocks eventually had a breakout since the underlying business was performing. I will give this a little more time to get a breakout too.
- MU - 2% (New Position)
- I like the fact that Micron has finally gotten into the FCF+ territory. With growth numbers still in hyper growth phase, and rapidly improving gross margins, I feel like Micron may have some room to still grow. I also like the fact that it’s a steadily growing business.
- NXGL - 2% (New Position)
- NEXGEL is a leading provider of ultra-gentle, high-water-content hydrogels for healthcare and consumer application. Hyper growth in multiple product lines of branded consumer products and contract manufacturing. Landed deals with STADA and AbbVie. AbbVie launch scheduled for next year will be a huge tailwind. Rapidly improving margins and revenue pickup can be major catalyst for multiple expansion. Risk: AbbVie deal takes longer than expected to hit the ground and operational efficiency falters. Btw, tiny tiny company so very speculative play here.
- LFMD - 2%
- This is another play on the GLP-1 drug. With the LLY news, LifeMD took a bigger hit than HIMS. So far their execution has been pretty good. The latest quarter I thought was ok. I am going to stay the course for now but keeping a close watch on this if things go south. This stock hasn’t moved in 3 months that I have been in it. In fact, this is my biggest drag on the portfolio with -35% returns ytd. I am really trying not to add to my losers, especially after it’s a full position. So I am going to hold as long as my thesis stays intact but definitely not adding to this.
Why I sold these positions
- MNDY
- I love Monday but it’s a valuation exit for me. I feel the potential for the businesses I own have more upside than MNDY. But I also understand MNDY probably has less risk than a lot of the businesses I own.
- DUOL
- Same reason for this as well. I feel the valuation for DUOL has gotten quite rich and potential upside might be limited.
Question for Saul and other moderators:
I have an one pager for each of my businesses which is visual in nature and gives an overview of the business model, financials and my valuation looks like. If that is helpful, I can use them to do my monthly reviews. If not, I will continue in this format.
Here are a couple of examples:
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HIMS
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TGTX
Wrapping Up
October turned out to be a good month overall for my portfolio. I think by end of October my portfolio moved up by 17%. The rest of the performance for the year was added in the early days of November. Always appreciate the opportunity to post in this board. Thanks for reading. Cheers!
