YTD by Month:
At this point, I am used to the volatility and it doesn’t phase me. I can see my portfolio is now trading in a clear range and over the past two months chart is on a clear uptrend. While I am not a chartist, I do like upward trends. That’s what we are all aiming for, right?
My portfolio now is trading in line with the S&P (11% YTD for both) and that’s a good sign, but we need to get through earnings for all these companies. So far tech earnings have been spectacular. And I expect most of my companies will continue to grow at a fast clip, even with the reopening.
I have worked in internet media and technology on the business side my entire career. I live in the SF Bay Area and focus on investing in what I know, high-tech growth companies.
I like to buy small positions, this gets me focused to learn about a company. Then I sell, or I add to it over time in small increments depending on a variety of factors. Some positions I hold for years, others for only a few months. My goal is CAGR. Not 10-baggers and I try hard not to fall in love with a stock. My aim is to maximize my returns and I have no allegiance to any particular method or style of approach.
Magnite (MGNI) 17%
Crowdstrike (CRWD) 16%
Sea (SE) 16%
Twilio (TWLO) 13%
DataDog (DDOG) 8%
Asana (ASAN) 8%
Fiverr (FVRR) 6%
Roku (ROKU) 5%
Dermtech (DMTK) 3%
SoFi (IPOE) 2%
Fubo TV (FUBO)
I finally gave up on this. I still think there is a great business here, but watching nearly everything else in my portfolio recover and FUBO not recover, well that’s the market sending a signal that believers are in short supply. Many don’t pay attention to this feedback and dig in on their conviction. I think that’s a mistake. The magic of the market is that it provides you feedback and no matter how much you believe, the goal is to make money, not to prove you’re right. I sold this and slowly started to reallocate to top holdings.
This is why I buy small starter positions. Sometimes they don’t work. I just sell and that’s part of my process. Buying small positions gives me the opportunity to test out my ideas and see if they work, with real skin in the game. While I believe in research and understanding what you own, I believe more in outcomes.
I reallocated some cash to top holdings.
I denoted the ones where I have updates.
I believe the tremendous growth of Hulu’s free streaming service coupled with the move from linear TV advertising to digital will greatly accelerate Magnite this year as advertising booms with the reopening. The last earning report showed the growth (46%) in the connected TV business. Also, the changes at Google’s DV360 may actually drive more businesses to Magnite’s traditional ad platform as publishers look for an alternative to Google.
There has been a lot written about this board favorite. The only thing I can add is they seem to be able to scale across SMB all they up to major enterprises. Which I think will help continue to accelerate their business.
What isn’t discussed enough is that in order to get exposure to Asia and emerging markets it’s hard to find a high-growth tech company that’s domiciled in Singapore. It is one of the few foreign markets where I trust regulatory practices. I do not invest in Chinese domiciled companies.
Twilio (TWLO) - Updated
I know someone that just received a job offer from Twilio. What’s important to know is they are offering SF Bay Area salaries to remove workers in non-engineering roles. I know for sure Facebook’s policy is the opposite. Facebook is assessing pay by location for remote workers. I think the companies like Twilio that take this approach will win big. It will allow them to expand their talent pool beyond the Bay Area and hire the best employees at a higher salary than competitors. I also think this is good for America as it will more evenly distribute pay beyond the coasts. I still think there is a massive growth runway with Twilio and believe they are the next Salesforce.
This is a great product and I know techies personally who love it. As many have said, the expectation is for this to pick up post-pandemic as it should make sales easier for them. If it doesn’t I may cut this back.
With revenues in 2020 at $227 million, they grew 59% year over year and I think there is a lot more room to grow. And with 93,000 paying customers and 1.5 million paid users they should be able to easily monetize their massive user base significantly. Some have compared them to Slack, but I think Asana provides more value. Slack messaging can easily be duplicate as we’ve seen with MS Teams. A project management tool once set up, is much harder to replace.
They finished 2020 with revenue growth up 89% active buyers up 45% for the year. And they guided for revenue growth to remain in the 50% to 60% range. I believe the WFH trend will continue to accelerate the gig economy in 2021. Fiverr, like Airbnb, will dominate because of a marketplace network effect, where the review history of the verified pro accounts will be hard for others to duplicate at scale.
Roku (ROKU) - Updated
It appears that the streaming alternatives are making an impact with Netflix subscriber growth slowing significantly, it’s down to 4M in Q1 2021 from 16M Q1 in 2020. This is bullish for Roku as free ad-supported streaming services will gain more popularity as more people discover these alternatives. Roku has also done a great job evolving their business from purely licensing fees to a mixed model that also benefits from advertising. They purchased Data Xu an advertising exchange to help accelerate the ad business and I think their ecosystem will eventually have more appeal over YouTube which is a juggernaut with 2021 year-to-date ad revenue hitting $6B+ in Q1 2021. Why? The user-generated content on YouTube is problematic for brand advertisers who want traditional content where there is oversight and control which Roku can offer.
A small microcap that’s developed a skin cancer test that doesn’t require a biopsy. I expect the business to pick up post-pandemic as direct sales into the doctor’s office is the preferred sales approach. DermTech’s revenues rose about 74 percent year over year to $5.9 million from $3.4 million in 2019. They declined to provide guidance, so this is a high-risk bet and is a small portion of my portfolio.
SoFi (IPOE) - Updated
The SoFi merger with IPOE has been held up because of the purchase of a small bank. There are a lot of regulatory issues to be hammered out, or at least that’s the rumor. There hasn’t been any official news on this. I am still holding as once the merger is complete the valuation should be $6B to $8B a fantastic number for a company like this. This is a high-risk play and the merger may not happen, so be sure to do your own research on a stock like this.
They got a big boost of confidence with the former Twitter chief operating officer, Anthony Noto now signed on as SoFi’s CEO. He has a fantastic reputation. They guided for revenue growth to be 58% in 2021 reaching $980M, just shy of a billion. My only hesitation is there are a lot of FinTech companies out there. I think the market opportunity is tremendous, and they can all easily take market share from traditional banks, for now.
If you’re curious here is the link to the SoFi investor deck.