Well. It was a great earnings season for my companies and I busted through my ATH only to have the geopolitical macro crush my entire portfolio, as I know it did for others – plus a couple other company-specific movements that were widely discussed in the board.
I plan on doing a rebalancing of my portfolio and percentages on Monday now that most of my companies have reported. With 14 companies, I’m hoping to have a tier at ~3%, a tier at ~6%, and a tier at ~10%, as many others do here. I’d like to reset to tiers every 6 months or so based on my confidence. So don’t take the current percentages too much to heart and I’ll try to cover where I plan on moving every company.
I must say, with the daily “macro” chaos….it is disheartening to feel like you’re making the right decisions, and earnings are confirming your theses, only to have the rug pulled. For the foreseeable future, it will be a constant test to keep my head on straight. I will follow Saul’s wisdom and stay in the market and follow results, but I know that there might be some pain for the time being. It won’t last forever, I hope.
JAN: -1.54%
FEB: +2.77
YTD: -3.04%
(I think the huge off-hours drop from Jan 31 to Feb 1 is not reflected in the above monthly changes)
Decisions And Company Reviews
Sell-Outs
Reddit: I expressed my thoughts in the dedicated thread. I really love Reddit as a company, I want them to succeed but as such a mature company in terms of user numbers, I have trouble seeing how they continue to reaccelerate revenue growth without a considerable push in terms of marketing or a big product innovation. They had climbed quite a bit up until earnings and I decided to take my profits.
SMCI: I was looking for a reason to get out, and I did, but it wasn’t only because I wanted to. If you recall, the first big hit to SMCI’s stock price was their margins. They sold us a story that the margins would improve almost immediately after Q2 last year. They also sold us a continual growth story. Even without all the drama of the short report and financials, they have delivered on neither promise in the 3 earnings reports since. No growth, same margins. I don’t trust the random off the cuff prediction of $40B next year. So I sold out…
TMDX: Nothing in the report got me excited, so I sold the last of my position.
NVDA: +4.9% Price Change MoM
In my opinion, their report was again nothing short of incredible, with 12% QoQ growth (very few of our companies are doing double digit QoQ, let alone at almost $40B in revenue), and their highest quarterly raise since Q2 2023, but it seems that there is nothing they can report that will excite the market. It was pointed out that MSFT trades at a higher multiple. It feels like the market can’t wrap their head around the growth rates with the fact that they are already the most valuable company in the world. How can that be? So it’s oddly undervalued, IMO.
In any case, I’m going to cut this down by a lot and move it into my 2nd tier which will be dedicated to companies I love but that have less momentum right now for one reason or another.
PGY: +41%
Pagaya finally had a huge breakout and looked to be accelerating until it all unraveled across the board. They were up 100% MoM before that. Luckily, I did trim at the high point when they became over 15% of my portfolio.
The results were strong especially with the confirmation that the loan impairments were in the rear view. But the guide wasn’t overly exciting. The newer segments of their business – auto and POP, are growing much faster, so I’ll keep an eye on those for the overall growth story. But the short report does have me concerned. It put a dent in my trust. Bert Hochfeld did come to their defense on SeekingAlpha, which gave me some comfort, but I am putting a pretty hard cap on them at 15%. I have some long calls with them (which I don’t report here), which I will let ride but for my normal shares, 15% is what I’m comfortable with until next report. They’ll remain in my top tier.
ALAB: -26%
Astera more or less accounts for the entire decline in my portfolio this year, all things considered, and was down 26% on the month after delivering what I thought was a great report. My confidence hasn’t waned in the company, but it has waned in terms of the market’s mood towards AI growth stocks. I think they sandbagged their guide a good deal, and they hinted at big things this year. I won’t trim them, and they’ll remain in my top tier.
UPST: +3%
Upstart had an absolute blowout quarter with 35% QoQ revenue growth and $30M in Adjusted Net Income. The quarterly guide of a decline next quarter surely let them down, but the FY guide of $1B revenue was a confident sign. The macro of course looms large here, and took them down from a big increase after earnings. Likely in my top tier.
NTRA: -11.7%
Natera just reported. It wasn’t the blowout I wanted, with a slip in YoY revenue growth from 64% to 53%, and Net Income did not improve after 5 straight quarters of improvement towards profitability. I still like them long term, with a strong innovation pipeline and expansion of medical plan approvals for existing products, but I’m going to take them to tier 2.
APP: -9%
The short attacks are laughable to me as someone who spent many years buying digital media. The claims against App could be made against any digital media company… There are big problems with digital advertising which is why I’ve generally avoided the space and didn’t get in to App much earlier – personal bias. But nothing they are doing feels abnormal/illegal UNLESS the claim of false transactions has merit, but that could also just be a “quirk” of the digital advertising system or be an upset client. I’m staying in as a top tier position after strong earnings.
HIMS: +22.4%
I’ve discussed this company in the dedicated thread. I think they have much bigger potential than others here who are focused on the GLP-1 story. They are making a play as a holistic health company against an industry that SORELY needs disrupting. I see a long runway for growth. A lot of parallels to AXON here way before they were tremendously overvalued. I’m in for the long haul, top tier position.
NU: -17.7%
It’s really hard to judge Nu with the currency factors, so I have to put it in my tier 2, but they are still growing at a rapid FX rate at huge numbers, with a lot of future potential. Growth did slip on Revenue and Net Income. But it will be in for a big move if the economy in Brazil starts to turn around, and they are also announcing a new market soon.
DCTH: -9%
One of my few companies that has not reported so I won’t say much. Pre-earnings, they will move into my top tier.
INOD: +43%
Innodata was my biggest % gainer in February and I’m glad the thesis panned out. Their call was very positive, they think they are in early innings. They mentioned Deepseek as a big boon for them, because if AI gets more accessible to smaller businesses, more data will need to be outsourced due to lack of internal capabilities. Growth numbers did slip but still above 125%, with positive Net Income and improving margins. They will be moved into the top tier.
KRYS: +12%
Krystal Biotech reported in the midst of the market crumbling and still managed a big move from earnings. Revenue is growing at 116%, they have a huge pipeline in many different disease areas, and their current marketable product still has plenty of room to ramp. They may end up in the top tier but I haven’t decided.
CRDO: -20.6%
Not a lot to say until I see earnings. They are a tryout stock for me, 3rd tier.
PAY: -13.7%
Same here.
NBIS: 1.6%
They are clearly in early innings, and I must admit that I am mostly making decision on board commentary here vs. following the numbers. The idea of this company seems to have great potential, plus the ARR numbers, so I added. But they will remain tier 3 until they show me the numbers.
Thank you to everyone who contributes here, it is so valuable to so many people.