2024 has been good to my portfolio, with February being the 4th straight month of double digit growth and March starting in the same path. After I did very little in January, I decided to do a post-earnings review as I make most of my decisions after reviewing earnings, and I felt this was a pivotal earnings period for many of my companies. With IOT reporting today, 98% of my portfolio has reported.
I also decided to do a full retrospective back to when I bought my first stocks in 2018. Believe it or not, I started investing because I’m the commissioner of a fantasy football league and I agreed with the members in 2018 that it’d be fun to invest our league dues. No joke. It’s been a great learning journey and I found it interesting to follow my own evolutions in approach, and chuckle at how utterly clueless I was until I found this board and followed the suggestion to create my own evaluation spreadsheet and update with earnings. In that retrospective I like to think I’ve gotten better (partially clueless!) and sharpened my approach around 5 principles:
- Find trends I believe in
- Follow the growth numbers
- Don’t assume I know more than what the numbers are showing.
- Take some chances on potential short term catalysts
- Don’t get emotionally attached or price anchor. Just cut bait when it’s not adding up.
For 2024, I am hoping to gain a better understanding about valuation and how that should influence my decisions. But in just reading everything on this board and outside, it feels like there are no well established rules or guardrails on the subject. So for now I’m just using the above and continuing to try to learn.
My portfolio is heavily balanced in AI at this point. I am a huge believer, in a way that I haven’t been in some of the most recent tech hypes, including AR, VR, Gaming/Metaverse taking over our lives, Crypto, etc. Why? Because the allure of efficiency is all-consuming for people and business alike. It’s not about chatbots, but about the automation that will be the next age in efficiency, which has been the driving force behind some of the transformative tech innovations in the last 30 odd years. Many of those have been consumer innovations: finding info, writing to each other, getting places, feeding yourself, spending time with others. We like efficiency because we theoretically can spend more time doing things we like (only to spend ever more time with the efficiency machines, another post for another day in another forum). But efficiency & automation in business really can unlock growth outward as you refocus capital. I imagine this has or will dawn on every major company, and the technical complications will make the early movers winners for a long time. My company is the leader in AI in our industry (marketing/advertising) and seeing what it can do not only on the front-end but the back-end is eye-opening.
But I know having the concentration below is super risky and I may yet set some revised limits if March continues on, especially as pertains to my SMCI/NVDA pairing.
With that said here’s how my portfolio has done and changed through just a couple of hours ago:
JAN: +11.38%
FEB: +19.98%
MAR: +14.27%
YTD: +52.71%
Earnings, Decisions & Changes
January:
TSLA: TSLA had basically told us that they were expecting a lull in performance, so I trimmed most of it pre-earnings, expecting a poor report. And indeed it was not great, with only 3% YoY growth, so I sold the rest after earnings.
February:
SMCI: In February I cut SMCI 5 separate times as it bumped up against my 25% ceiling I had set. Since cutting 20% of my shares I have set my new ceiling at 30%. In digesting their report, NVDAs report, and so much conversation on this board and in the financial press, I’ve chosen to follow the numbers and stay the course. For all the opinions on their moat and Dell and HP etc., the numbers are saying they are executing very well with a massive tailwind that I have a ton of belief in, so it checks all my boxes. But I will not hesitate to cut them if/when earnings disappoint. The trims in SMCI led to a lot of what I did below.
BEEM/AMPX: With a tiny amount of the gains from TSLA & SMCI, I decided to test out these two companies that were brought to the board in search of “the next big thing”. They will be on a hair-trigger and I look forward to earnings.
MNDY: Monday has been a great stock for me but I have had my eye on them because of steadily declining YoY growth rates, and not feeling like there’s an incredible trend they are on, per se, although they might be best in class in workplace OS. I trimmed prior to earnings as a hedge, wanted to see a rebound in YoY revenue, and instead they declined for the 7th straight quarter. Guide wasn’t super impressive, I sold out AH.
AXON/ELF: I finally had the time to evaluate both companies which I’ve tried to make the effort to do before buying vs. blindly following the board. I decided to use my MNDY proceeds to start positions in both before they reported after seeing the impressive results for myself. And AXON may have some short term catalysts in terms of the AI halo.
AXON’s report seemed steady, not necessarily a blowout but enough to maintain my position and look at what happens next quarter.
ELF saw an uptick in growth, making it one of the few companies actually accelerating their growth rate. I added after earnings and want to build this up.
NVDA: I added going into earnings, as this is really my highest confidence company, but I haven’t been willing to trim SMCI even more yet. I didn’t see how they wouldn’t have another monster report given what they and SMCI have told us, and they delivered. 265% YoY revenue growth at 77% GM and continuing to climb with their guide, and Jensen was doing his best to not underestimate the gravity of the AI situation on the call.
NET: I wasn’t overly impressed with their report as they haven’t turned the corner yet on growth rates, but I bought back in on the AI commentary in hopes that they might see some trickle down and return to acceleration next quarter. But this is admittedly a bit of a “hope” and it’s low confidence for me. I’ll be ready to make a move next earnings if they don’t reaccelerate.
TMDX: They had another great quarter, and while they haven’t moved much in terms of price, I’m not willing to miss a potential breakout. I may add here if I can. If it never comes, so be it, but I can’t reduce a position in a company that continues to deliver +100% growth and seems to have a real vision and ability to execute it, so far.
SNOW: I have been trying to get back into SNOW because I could see AI being a boon and I thought they bottomed in terms of revenue growth rate last year. So I added twice in February, at the beginning and again after the big earnings drop. I was disappointed that they weren’t able to improve on growth, but thought the drop (probably related to Slootman) was overblown. I saw the 5.2B in quarterly RPO, and it looked like a strangely large number, similar to when I noticed SMCI with a gigantic FY guide after a ho hum quarter. What if that’s not an anomaly, but a step change, similar to SMCI? I have to also think that this leadership change is to position them for an evolved future that we’re entering into. It may be a net positive. I’m hoping for big things next quarter.
UPST/PGY: Left them for next to last because I did not touch them. I was simply looking for any positive movement from either, with a little more hope for PGY.
UPST saw a slight uptick in numbers across the board which is encouraging that they are somewhat stable, but the guide was poor. I’m sure they are guiding extra conservatively given Powell holds them in his hand. I stayed put as I’m not willing to miss the future breakout.
PGY actually had a pretty good quarter considering the circumstances, 13% YoY growth, growing volume, profitable and positive guides. They also revealed US Bank as their top 5 lending partner. They’ve been positive since earnings but no crazy movements, which one day I hope to see.
Both of these stocks, I’m simply not willing to try to time the big moves that I feel will come. I’m hoping they’ll drive my portfolio in the second half of the year. And I have to believe that the AI narrative will only positively impact these companies, both in terms of investing and in real-world partnerships. PGY seems to already have started benefiting.
March:
IOT: They just reported and I’m a bit torn on earnings. Similar to MNDY, I was hoping to see a steadying or improvement in YoY growth, and instead the adjusted revenue shows 37% growth, another slowdown, in an environment where they are supposed to have tailwinds and an expanding TAM. So what’s the story here? On the other hand, ARR and customers held steady, and the guides seem ok. Maybe the call will reveal something, but for now my confidence has wavered a bit.
Considering Adding Before Next Earnings: PGY, ELF, TMDX, MELI, NU
That’s it for me. Thank you to the board contributors for all of the shared wisdom, it is so very appreciated.