I’m late due to Labor Day Weekend and the following work crunch. Suffice it to say, it’s been a violent summer for my portfolio. My personal theory is the market is experiencing the result of constant anxiety in our world, ignited by the media and supercharged by social media. Since fear and anxiety produces a generalized response no matter what the source, I don’t expect that to subside until probably weeks after the election and I’m mentally prepared to not really see any gains until next year (but hope not!). But that’s all probably off topic.
More on-topic is my mentality right now which is to be patient and follow both the company numbers and official statements (rather than theories, speculation, assumptions, etc). If this means I’m not light years ahead of the curve, so be it.
This summer I’ve reached +90% YTD in June, July and August, only to get hit by a huge sell off each time. Luckily I had made some large sales at my ATH in July. This week (September month) I hit my lowest levels since April, and I’m now actually DOWN overall since March. It’s been crazy volatile. My August actually would have been pretty strong if it wasn’t for You Know Who (SMCI) and the terrible last week.
Here’s a summary of performance and positions before I go through companies and my monthly decisions/rationale.
JAN: +11.38%
FEB: +19.98%
MAR: +3.37%
APR: -7.07%
MAY: +15.18%
JUN: +7.13%
JUL: +0.19%
AUG: -3.43%
YTD: +78.21%
CURRENT: +59.09
Here’s my updated portfolio:
As you can see, I added a lot of positions this month and was generally a lot more active since most of my companies reported earnings. However, I really only have ~7 legit positions and the rest are still tryouts as I look for high growth, undervalued stocks (right now I’m using EV/Sales vs. P/E but I’ve started looking at both). I’ll touch on all the stocks I hold in 3 categories and then go over what I sold out of.
LONGER TERM HORIZON
NVDA: -0.6% In August
I have not touched NVDA since June, it grew on account of others dropping.
The report was pretty great once again and I think the sell off is a symptom of what I mentioned at the top. 15% QoQ growth suggests growth will stay strong even before Blackwell. With Blackwell we probably have an accelerator in the short term, so I’m not worried about this nor considering selling at all. To underline all the news chaos right now, Nvidia has denied the report that it was subpoenaed by the DOJ. Oy vey.
TMDX: +8%
They were up a lot more than 8% during the month before the plunge last week, following another great report, maintaining +100% growth with another great raise. Others have shown that there is still along runway for growth for them. It’s getting a lot more expensive but their growth justifies it IMO.
In any case, I actually trimmed them 3x during the month to keep them at around a 20% allocation limit I have set for them.
NU: +21%
I thought it was another strong report although there was a notable drop in growth, from 69% YoY to 52%. That’s still a great number and they have a huge TAM and realistic opportunity across Latin America, and the market seems to be waking up to them. The drop in revenue growth did make me trim some as I looked to free up some funds.
TSLA: -8%
Another disappointing report, maybe expected, but also a series of overpromises by Musk. It’s really tough not to sell out of this position as I just really don’t know whether to believe him or not. I’m still in it on the long-term potential, for now, but I trimmed in late July and late August as I’ve become more uncertain.
SHORTER TERM HORIZON
Note - it’s not that I don’t believe some of these companies won’t do well long-term as well, but they represent the strongest short term opportunities for me. All these carry way more risk but I am very risk tolerant.
SMCI: -38%
First, the earnings before the short report. The guides were staggering (~22% QoQ and ~85% YoY), as was the post earnings sell-off. The reasonings for the major margin hits were understandable, and I was buying the dip. An already affordable stock became even cheaper, even if margins were to stay where they were. At that ~$500 price point, I bought the dip on pretty simple logic: if the market realizes this is STILL an incredibly cheap stock growing at an enormous rate (like they did last year), then it will recover and more. And if margins do improve next report like they say , it will likely explode.
Then the short report. As I mentioned at the top, I am really trying to avoid speculation. My confidence has definitely decreased, as I did not buy the dip. But until I know the facts, there’s no way I’d sell a stock given everything in the paragraph above. In my opinion the have 3 really simple paths to massive growth over the short term: 1) put the short report to bed. 2) the market realizes this is a business growing revenue over 100% at 12 PE and under 0.9 EV/Sales 3) Deliver on the promise to improve margins (which would also regain some trust that their not liars)
I’ve only been doing this for a short time, so I could be an imbecile and this is the biggest red flag in the history of the stock market. It just doesn’t seem like there are any other companies with a bigger, simpler, short term upside - basically just getting back to business as usual. If they are fraudulent and it all goes to zero, it will be a very hard lesson learned.
PGY: +1%
I know I’m one of the few posters that owns them, but the price movements are utterly confusing. I’ll recap a few things.
- They went public right in the middle of rising interest rates so we really have no clue what they will do in terms of volume at dropping rates. Their first public quarter they reported 89% YoY rev growth and then it dropped from there. But it never went negative on the annual basis like UPST, although it did drop sequentially.
- Last few quarters YoY growth: 4%, 13%, 31%, 28%. Obviously we all know that rates haven’t even moved during this time.
- They have announced 3 major partners during this time in addition to SoFi, the original major lender: US Bank, OneMain Financial, and a 2nd “top 5 bank”.
- They’ve been income and cash flow positive for over a year
- They relocated their HQ from Tel Aviv to NYC
So, major potential growth catalysts as they embed & ramp with these partners even if we weren’t staring down major rate cuts. The report was solid if not spectacular, a small beat, and definitely a conservative raise (I don’t blame them) but a raise nonetheless on topline revenue for quarter and FY. Slight reduction in net income. But the major partnerships announced on this call should have been big news for shareholders. So what happened? They retreated 20%, eventually climbed their way back up 25% and ended the month right where they began as if nothing happened. Their current EV/Sales is 1.4x. P/E is 9.2 – extremely affordable.
I’m not sure if this stock is just flying majorly under the radar or if there’s something I’m missing. Because the next stock definitely wasn’t during August, with much more questionable performance.
PS I added a small amount to PGY
UPST: +49%
My #1 performer in August, Upstart majorly benefited from the speculation on rate cuts. But compared to Pagaya, there results weren’t nearly as impressive and they’ve had much less positive company news. Report wise, revenue came in flat QoQ (maybe a victory for them?) and down YoY, but they finally guided for growth, at 17%YoY. And, loan volume improved as well as conversion rate. Obviously they have a lot stronger of a growth track record in more friendly interest rate environments, so I’m sure the market is imagining accelerating growth, along with me. It’s a rebound stock so I won’t say any more, but the path to short term results is obvious.
TRYOUTS!
All of these I found on Koyfin looking at the ratio of YoY growth vs. current EV/Sales, then apply a subjective filter for things that sound interesting and like a growing market. I’ll try to keep these short and sweet as I’m not a great evaluator like many on this board, and these are very small, low conviction positions.
NTRA: +15%
Natera runs genetic screening tests for fetuses. I have given them a good chunk of cash as my wife is expecting in about a month. I don’t know the current market penetration but I can see this as something less and less people would decline when it’s proposed to them. Revenue is accelerating: 43%, 52% 58%. Margins are accelerating: 51%, 57%, 59%. They are probably two quarters away from being net income positive. I doubled this position after earnings and I’m close to making it a legit position. EV/Sales is at 8.7
SOWG: -18% (since purchase on 8/27)
SowGood is a tiny company that makes freeze-dried candies out of Texas. They are at tiny revenue base but just built a new factory in order to scale. A few things got me interested: sounds like an intriguing product, they sell D2C and are very successful with current marketing, already profitable, and tripled revenue over the last year (albeit at a TINY BASE $5M to $15M). Simply exploring getting into something super early. EV/Sales at 1.9, P/E at 13.9.
GCT: -34%
GigaCloud Technology does overseas shipping logistics for large cumbersome items. I’ve read the posts on WPR’s monthly review which looks like a very fair watchout. And they will have tough laps as I understand they had a major acquisition. I’ll stick around for 1 more report since it is ridiculously cheap with 3 straight quarters of over 94% revenue growth while remaining profitable. EV/Sales is 0.9 and PE is 5.6. I actually added after earnings (from a tiny base).
ASPN: +39%
Aspen Aerogels has been covered on the board so I won’t pile on but they do primarily battery insulation technology but overall it seems like it’s an amazing technology that might have future uses we can’t predict. Revenue growth accelerating rapidly: 41%, 107%, 145%. Margins improving: 35%, 41%, 44%. Just became profitable. EV/Sales 5.1, P/E 151
ICTI: -0.6% (since purchase on 8/09)
Intra-Cellular Therapies make small molecule drugs for neurological disorders. Revenue growth HAS been dropping from their initial small revenue, but seems to be now more consistent at 45-50% over the last few quarters, with 55-60% GM. EV/Sales at 8.7.
GMED: -1% (since purchase on 8/08)
A medical device company for musculoskeletal disorders that recently acquired Nuvasive, a spine technology company. So their growth rates have surged to over 100% YoY but it remains to be seen where they settle. They have high margins at 69%. EV/Sales at 3.7 and PE at 23.5
IMMR: +5% (since purchase on 8/27)
Immersion has patented haptic feedback technology that the design and license out for use in phones, video game controllers, and wearables. Think, very tiny subtle vibrations based on what you’re doing or watching. It’s a tiny company but the numbers have recently exploded. YoY revenue went from 7M to 99M. Part of that was the acquisition of Barnes and Noble education, but removing that, their primary licensing revenue source was up from 7M to 52M. It’s also net income positive already. So things may be happening for this little company that the market hasn’t picked up on. EV/Sales is 1.6 and PE is 12.9
Astera Labs: +2% (since purchase on 08/25)
A lot has been said about this company so I won’t add much, but I got in thanks to the board and the growth has been obviously incredible with high margins although it’s not as affordable vs others I’ve mentioned. EV/Sales at 13
IOT: +8%
Results just came out and they seemed very consistent. Nothing super impressive or exciting, just consistent. Given it’s the most expensive stock at the lowest growth rate I own, I’ll probably cut it tomorrow.
WHAT I SOLD:
AXON: This was hard to sell but I initially sold to pay for personal expenses and I decided to cut bait after the massive increase in price, to prioritize other opportunities. Might kick myself, might get back in.
SNOW: Consistently disappointing results.
PDD: Remarks about slowing demand were enough for me although this stock is super cheap and revenue still growing. No reason to stick around for a Celsius-like drop off in growth rates, for me. They may have maxed out the market of people willing to buy $2 crap from China.
ELF: Terrible guide, with a slowdown in growth rate, that was enough for me to get out before it slows down further. It’s easy for incumbents to run out of room to expand (see Celsius)
If you’ve gone this far, I’m astonished but thanks for the attention. Best of luck to all through the rollercoaster!