October Portfolio

YTD portfoliio is up 231%!
I rarely hang on to a stock long enough to obtain long-term capital gains. I’m not married, so the tax man hit’s me hard for being single as well. So I do rebalance my portfolio more often than most on here.

  1. SE 20.2%
  2. FSLY 19.6%
  3. PTON 14.6%
  4. TDOC 13.1%
  5. CRWD 13.0%
  6. NET 9.07%
  7. APPS 3.83%
  8. DOCU 0.95%

SE - Business Verticals:

  1. Garena: Digital entertainment (“DE”) and gaming

  2. Shopee: Mobile e-commerce (“EC”) - already fastest growing & largest e-comm entity in region

  3. SeaMoney: E-wallet/financial services (“DFS”)

All three segments are growing rapidly

2/ SEA PC/Mobile Gaming Market

Size: $5.1B in 2019; $8.3B in 2023 (13.2% CAGR)

82% of urban pop are gamers: 80% Mobile, 69% PC

  • More than 50% spend money

of Gamers:

  • Mobile: 227MM to 290.2MM in 2023 (6.3% CAGR)
  • PC: 154.3MM to 186.8MM in 2023 (4.9% CAGR)

3/ SEA E-Commerce Market

GMV: $5.5B in 2015; $38.2B in 2019 (62.3% CAGR)

Forecast: $153B by 2025 (26% CAGR)

Revenue: $37.9B in 2019; $88.1B in 2024E (18.4% CAGR)

Indonesia to lead: $20.9B GMV in 2019; $82B in 2025E (25.6% CAGR)

Long runway: Only 6.2% e-commerce penetration

4/ SEA Digital Payments Market

+70% un/underbanked adult pop

Digital Fin Svcs Revenue: $11B in 2019; $38B 2025E (23% CAGR)

TPV: $0.6T in 2019; $1T 2025E (8.9% CAGR)

2019 Credit Card (“CC”) per Capita: SEA: 0.1; US: 2.1

2019 CC penetration rate: SEA: 13.4%; US: 212.2%

5/ Garena: DES

Market leader

Producer of popular games including Free Fire (self-developed) & Call of Duty: Mobile

Primary revenue source: Sale of in-game virtual items & season passes

Esports growth creates flywheel effect

Q2 2020 Revenue: $716.2MM vs. $443.2MM (+61.6% YoY)

6/ Shoppe: EC

Launched in 2015: #1 shopping app in region

GMV Growth: $1.2bn in 2016; $17.6B in FY19 (499% CAGR)

Innovative features drive user engagement

Rapidly growing take rate: 0.4% in 2017; 5.4% in 2019

Q2 2020 Revenue: $510.6MM vs. $177.4MM (+187.7% YoY)

7/ SeaMoney: DFS

Integrated with Garena & Shopee; reduces payment channel costs

Services include: E-wallet, payment processing, micro-lending, & more

Fragmented market ripe for consolidation; led by GrabPay, WeChat Pay, and $PYPL

Q2 2020 Revenue: $11.9MM vs. $2.8MM (+325%)

8/ Q2 2020 Financials

Total Adj. Revenue: $1.3B vs. $665MM (+93.4% YoY)

Total Gross Profit: $200.8MM (22.8% Margin) vs. $97.4MM (22.3%) (+106.1% YoY)

Total Adj. EBITDA: $7.7MM vs. -$11.0MMDown pointing backhand index

EC Path to Profits: Adj. EBITDA Loss per Order: $0.50 vs. $1.01 (51% YoY improvement)

9/ Investment Thesis: Gaming

$TCEHY holds ~25% stake in $SE; strategic partnership fuels Garena success

2017 launch of Free Fire marked transition to game developer

^Catalyst for Quarterly Paying & Active User Growth (QPU/QUA)

Robust game pipeline will drive growth

10/ Investment Thesis: E-Commerce

Mobile-first approach benefits from rapid smartphone growth (14.5% T5-Yr CAGR)

Young population: 70% of pop < 40 years old

Two tailwinds:

  1. Expected 99% internet penetration rate by 2023
  2. Grow e-commerce penetration (27% China vs. 6.2% SEA)

11/ Investment Thesis: DFS

Payment solution creates network effects in the ecosystem (similar to $MELI)

Approval of Digital Banking License in Singapore will accelerate growth

Increased CC penetration → economic growth

Marginal increases in market share will accelerate TPV

12/ Risks

  1. Increased competition (especially in e-commerce and payments)

  2. Slower e-commerce and e-wallet penetration rates

  3. Continued high cash burn in EC and DFS businesses

  4. Inability to execute on gaming pipeline

  5. U.S. / China trade relations

Macro tailwinds will fuel future growth: SEA internet GMV forecast: $100B in 2019; $300B by 2025 (20% CAGR)

Excellent business model: Scalable, asset-light, network effects

Rapid and accelerating revenue growth

APPS - Is my current media advertising play. I did own ROKU for a couple of years, but this is my current play. APPS has a $3B valuation and its revenue growth is 93%.

PTON - Reminds me of Netflix subscription model and the bike reminds me on the iPhone.
Revenue Growth 172%; EV/NTM Revenue 8.2!; Rule of 40 (Current FCF) 218%

LVGO vs TDOC - I did own LVGO for the most of the run-up! I sold out of my LVGO and put most the funds
Into TDOC, primarily due to the following:
LVGO Rule of 40 - 113% but EV/ NTM Revenue 31.0
TDOC Rule of 40 - 92% and EV/NTM Revnue 13.4!!!

The rest have been discussed on here, so I really don’t have much new to add on those.