Date 2/27/2021
== My allocation ==
SYBL NOW (Previous Months)
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CRWD 19.52% (25.70%, 26.03%, 16.05%, 13.69%)
NET 14.92% (13.89%, 14.76%)
DDOG 12.15% (14.71%, 18.14%, 20.20%, 17.68%)
SQ 12.23% (12.08%, 16.84%, 15.56%, 11.79%)
MELI 7.52% (new)
TSLA 4.65% (new)
ROKU 4.7% (new)
SE 3.14% (new)
SKLZ 0.31% (2.17%)
(dropping)
PTON 0% (1.64%, 1.98%, 23.78%, 25.00%)
SNOW 0% (6.12%)
(baseline)
ETFs 20.84% (23.68%, 6.58%) *Benchmarks (a mix of ARKK, etc.)
== Quick update on the portfolio change ==
Similar to others, my portfolio is +30% in mid-Feb. Overall my Mom went up by 0.05% (flat), but my baseline (a mix of ETF) is down by around -5%. Stock picking wins again this month.
I dropped PTON simply because I feel it’s clear to me that they are going to have a headwind in 2021. I personally tried their YOGA classes this month and I kinds of love it, but I feel that the virtual experience is a compromise, not a solution. The experience is okay but $12.99 is close to my Netflix subscription ($13.99). If I can keep one, I will keep Netflix. I also saw a copycat at a $549 price tag at Costco (Inspire Fitness IC1.5 Indoor Cycle). There’s clearly a better, safe choice to invest. They are not going to have any tailwind in 2021.
I dropped SNOW around to reduce my margin usage ratio when NASDAQ hitting an all-time high. Also, I want to make some room for adding other stocks.
Let’s get back to the stock discussion:
CRWD/DDOG/NET/SQ:
Nothing changes. I don’t see a reason to make any adjustments. Lots of discussion on the board already.
MELI:
My average price is around $1800. I believe shifting to e-commerce is a trend that cannot be stopped. Are people forced to shopping online? Or they really get a better experience and price when shopping online? I believe the answer is former. It’s GMV (gross merchandise volume) improved 62% year over year. It also has a fintech segment, Mercado Pago’s TPV (total payment volume) soared an impressive 92% to $14.5 billion. This mix creates a strong moat.
My only concern is that I can’t tell their shopping experience. I also don’t know whether Amazon to be a strong competitor there. However, their fintech segment convinces me to take some position as I know even Amazon can try to compete with MELI, MELI’s fintech footprint is a strong competitive advantage.
TSLA: OT. No discussion.
ROKU:
I quote their CFO in the earnings call: “We anticipate Q1 OpEx year-over-year growth to be in a similar year-over-year growth range as Q4, and thus showing strong leverage against revenue and gross profit growth, which is expected to result in a Q1 adjusted EBITDA of $31 million at the midpoint.”
Their numbers look okay. Cord-cutting is a trend. They are not competing with Netflix, Youtube TV, or Disney+. They are probably competing with the Apple TV box. But I feel their target customer are quite different. People (like myself) chose the Apple TV box for its brand and my heavy usage on iPhone, iPad, etc. TL;DR apple fan. However, I believe if I have a Roku TV, I won’t need an Apple TV box.
Roku Ultra is about half the price ($99.99) comparing to Apple TV. Many TV has Roku built-in. People who buy Roku want to replace cable service. If my goal is to replace my cable service, Roku sounds a much reasonable choice (Value/Price).
I don’t see a strong competitor disrupting Roku, and I see Roku is disrupting cable TV. Roku (built-in) TV is a moat. Once you are comfortable with a UI, you don’t want to change.
SE:
I first notice this company via Riot Games - League of Legends (LoL). LoL is super popular among young adults. I don’t play games anymore but I know it’s very popular. SE owns Garena,
a separate company from Riot. They have acquired a formal license to run LoL (and many other popular games) on their own servers. Another popular game is call of duty.
While I’m not playing these games anymore, I know they are super popular. I view SE as an Asia vendor for these popular games. They run events and servers.
Their other product, “shopee”, is also a very popular e-commerce site in Asia. Similar to my reasons for investing MELI, I don’t see a reason not to invest in Asia in e-commerce, online game, and fintech (Sea Money).
After Amazon’s (and Paypal’s) dominance in the US, I feel strongly that e-commerce will break lots of brick-and-mortar shops. Other than Costco, and clothing, such as buying ski boots from Sports Authority, I saw my wife always buy from Amazon. I’m watching my wife’s shopping behavior, who won’t love a bargain? Gosh, she even started to buy Coach online (before the pandemic). When I asked her, she told me that (1) I love to see so many choices at a bargain price. Outlets have very limited choices. (2) If I know I can get something cheaper online, I don’t want to buy in a store. I hate to know that someone gets something cheaper than me.
Both reasons are not about the pandemic, and the more she knows how to find a bargain online (beyond Amazon), she is not going back to brick-and-mortar. Don’t get me wrong. She still enjoys shopping. But what I’m seeing is that when we are shopping in a store, she will just search online and if she finds a bargain, she ordered it and have the item ship home. It’s not about money (we are quite comfortable w.r.t to income), it’s about feeling the win – you buy something cheaper than others. Both Amazon and Alibaba are success stories of e-commerce, I feel both SE and MELI are reproducing this success in other countries (with even stronger moat by including fintech in their offerings) to build moats.
ETFs: (Benchmark fund)
I was curious about my investment performance, and I somehow feel that I need to create a benchmark for myself. I asked: if I had not found this board, how would I allocate my investment? I will not put my money on Russell 2000 Index (e.g., VTWO). I won’t put my money on the Nasdaq Index (QQQ either). Even the traditional 80/20 (Stock/Bond) is not my thing. Since they are all ETFs (OT), I’m not going to discuss them.
== My annual return ==
2017 0.56% (About ~2 months, not investing too much)
2018 2.30% (Mostly FANG-alike stock, technical)
2019 14.34% (Give up stock selection, switching to ETF: QQQ, SPY and keep only Amazon)
2020 117.17% (Found and followed this board in April)
2021 -2.47% YTD
A little breakdown of 2021.
JAN -2.52%
FEB -2.47%
== My investment principles ==
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My tax rate is very high, so if there are two stocks to trim, I will consider tax implications first, especially due to short-term capital gain, into my decision process. Namely, if two stocks are similar, I often sell the one I make less (or lose the most). However, I learned a lesson that I should NOT keep an investment for the sake of worrying about tax.
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I usually avoid a stock when Saul (or any other experienced investor) gives some little “experiments,” or their conviction is low (<10% of their portfolio). I am fine with only keeping 4-5 stocks, and I may diversify by holding to cover non-Saas stocks, especially domains I’m familiar with or interested in learning.
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I generally avoid stocks where I can see a clear headwind in the next six months, no matter how incredible the management team and the product are. Also, I get rid of an investment if I feel their growth will slow and the evidence of seeing a reacceleration. Revenue YoY means a lot to me for a growth stock.
For example, If in the earning call, the CEO/CFO says they are going to have some bumping rides (or headwind or slow-down) in the next few months, I trust them 100% because they have no incentive to lie for such a statement.
- If a company’s future is too complicated for me to understand/predict, I will pass it. If I find a better opportunity, I trim the lowest confidence ones to make room. PTON is an example in Feb 2021.