Portfolio Update 7/1/22 at 9PM
It’s been a little over a month since I posted my last portfolio update found here; https://discussion.fool.com/retirementdough-may-2022-portfolio-3…
I have found doing these updates is helping me keep better records of my investing thought processes over time. Much like keeping a journal in life when you re-read in the future it helps you remember what your thoughts were at the time of writing. Hopefully others find this helpful as well.
Current Portfolio as of 7/1/22.
Change since 5/28/22 -28.0% YTD -71.8%
VTI Monthly -8.9% YTD -21.6%
I have decided to just benchmark versus the VTI which is Vanguard Total Stock Market Index Fund, which is probably what I would put my money into if I did not want to spend time researching stocks. VTI includes all 3600 stocks traded in market.
Stock % Portfolio % Portfolio % Change Market Monthly Stock
Current Previous Portfolio Cap (B) Price change %
UPST 93.1 79.5 +13.6 2.8B -36.5%
UPST options 6.9 13.3 -6.4
CASH 0 6.8 -6.8
New positions since last portfolio update: NONE
Exited positions since last update: NONE
Trades between 5/28/22-7/1/22
Bought: UPST 6/6 $47.03; 46.74; 46.79
UPST 6/7 $44.36
UPST 6/13 $40.00
UPST 6/14 $34.10
UPST 6/28 $37.99
UPST 6/30 $31.60
Sold: None
Thoughts on trades and companies for the month.
Another tough month, I may be getting use to them, as my mood is up beat. At the middle of May I began selling covered calls on my upstart position and using that cash to buying long calls on UPST. You can see from my purchases that I have also been buying stock with some of the covered call funds. I have been buying weekly covered calls and using the proceeds to make my purchases.
Though my portfolio is down big on the year and even down since my last monthly review I have increased my overall share count. I have gained 1 to 3 percent in cash of my overall portfolio value weekly by selling covered calls. I then either purchase long calls or buy more stock. My long calls have lost value since original purchase date, as have my additional shares. So my portfolio overall value is down but my number of shares is up. I currently hold 28% more shares than I did on 5/28 when I last reported. I did sell some of my long calls however I still own 89% of long calls contracts now compared to 5/28 update.
The Motley Fool did a recent interview with Dave Girouard CEO of Upstart which can be found here: https://www.fool.com/investing/2022/06/30/upstart-holdings-c…
I see a company that is executing on its business, expanding into new markets and adding new customers (banks and credit unions see press releases below). I really like the leadership team. They owned up to the mistake of upsetting Wall Street by putting loans on their balance sheet and owned the fact that they needed to improve the decision making capabilities of their software during difficult economic times (such as when war and inflation start). They seem confident that they are working in an area without competition currently. I obviously am hoping for big things in the future.
JabbokRiver just posted an excellent write up on his thoughts on UPST I am including link here for my future reference. https://discussion.fool.com/thanks-for-this-it39s-a-great-interv…
Others on the boards are just much more gifted writers than myself. I find when I read their work I am like, yes I agree, but getting those same thoughts with clarity on paper is difficult.
Upstart UPST
MC 2.8B
TAM 1.4T https://www.nasdaq.com/articles/upstarts-%241.4-trillion-mar…
Monthly performance of stock for June was -36.5%, May was -35.6% following a similarly brutal March and April. YTD -77.3%
Upstart announced first quarter 2022 results https://ir.upstart.com/news-releases/news-release-details/up…
Revenue. Total revenue was $310 million, an increase of 156% from the first quarter of 2021. Total fee revenue was $314 million, an increase of 170% year-over-year.
Transaction Volume and Conversion Rate. Bank partners originated 465,537 loans, totaling $4.5 billion, across our platform in the first quarter, up 174% from the same quarter of the prior year. Conversion on rate requests was 21% in the first quarter of 2022, down from 22% in the same quarter of the prior year.
Income from Operations. Income from operations was $34.8 million, up from $15.6 million the prior year.
Net Income and EPS. GAAP net income was $32.7 million, up from $10.1 million in the first quarter of 2021. Adjusted net income was $58.6 million, up from $19.9 million in the same quarter of the prior year. Accordingly, GAAP diluted earnings per share was $0.34, and diluted adjusted earnings per share was $0.61 based on the weighted-average common shares outstanding during the period.
Contribution Profit. Contribution profit was $147.8 million, up 165% year-over-year in the first quarter of 2022, with a contribution margin of 47% compared to a 48% contribution margin in the same quarter of the prior year.
Adjusted EBITDA. Adjusted EBITDA was $62.6 million, up from $21.0 million in the same quarter of the prior year. The first quarter 2022 adjusted EBITDA margin was 20% of total revenue, up from 17% in the first quarter of 2021.
Financial Outlook For the second quarter of 2022, Upstart expects:
Revenue of $295 to $305 million
Contribution Margin of approximately 45%
Net Income of ($4) to $0 million
Adjusted Net Income of $28 to $30 million
Adjusted EBITDA of $32 to $34 million
Basic Weighted-Average Share Count of approximately 85.0 million shares
Diluted Weighted-Average Share Count of approximately 96.2 million shares
For the full year 2022, Upstart now expects:
Revenue of approximately $1.25 billion
Contribution Margin of approximately 48%
Adjusted EBITDA of approximately 15%
Mascoma Bank, a $2.6 billion mutual bank and Certified B-Corporation® serving Northern New England, announced today that it has partnered with Upstart (NASDAQ: UPST), a leading artificial intelligence (AI) lending platform, to offer AI-powered personal loans to more people.
https://ir.upstart.com/news-releases/news-release-details/ma…
MIDFLORIDA Credit Union, one of the largest credit unions in Florida with more than 434,000 members and assets totaling more than $6.6 billion, today announced that it has partnered with Upstart (NASDAQ: UPST), a leading artificial intelligence (AI) lending platform, to provide affordable personal loans to more Floridians.
https://ir.upstart.com/news-releases/news-release-details/mi…
Firelands Federal Credit Union (Firelands FCU), an Ohio-based credit union with over 32,000 members and $385 million in assets, today announced it has partnered with Upstart (NASDAQ: UPST), a leading artificial intelligence (AI) lending platform, to offer AI-powered personal loans and auto refinance loans to its members.
https://ir.upstart.com/news-releases/news-release-details/fi…
YTD return of portfolio for each month
January -30.4%
February -9.4%
March -19.5%
April -41.3%
May -58.4%
June (July1st) -71.8% (low of year 6/30 -72.2%)
I think sharing ones portfolio can be a helpful endeavor but obviously I have a huge tolerance for risk. I base my investment decision on my analysis and thoughts alone. I listen and weigh others thoughts and information but never hold them accountable for any investment decisions that I make. Portfolio allocation is another unique decision for all investors. I obviously am extremely highly concentrated. This investment style is not for the faint of heart. It requires quick decision making and action if one feels there is a change in investment thesis. I state all of this to clarify that one should study and hold yourself responsible for investment decisions. New investors should take the time to learn first before investing their hard earned money.
Even though my portfolio is at all year low I am starting to feel very confident in back half of year. Short interest on the stock is extremely high currently. I continue to increase the number of shares I hold over time even though the value of my portfolio is at all time lows. I obviously think what has punished the stock was a blip on the radar of Upstarts businesses long term success. One of my favorite articles ever written on the TMF was Morgan Housel’s “The Agony of High Returns” https://www.fool.com/investing/general/2016/02/09/the-agony-…
It’s hard to grasp how the best-performing stock of the last 20 years could spend the majority of that time with returns that would make you want to vomit. It’s easy to think that the single-best investment to own is one that would make us smile every morning we woke up owning it.
But it wasn’t. It never is. And it never will be.
That’s the nature of the stock market. On the way to making serious money, you spend a lot of time losing serious money. It’s a reality anyone investing in stocks, no matter what you own, has to face.
I looked at the 10 best stocks to own over the past 20 years. These are all cherry-picked for their stellar returns, and the stocks you would probably choose to own if you had a time machine. On average they increased more than 28,000%.
But they all spent a majority of the time well below their previous high mark. They all had multiple declines of 50% or more. A few had multiple 70% drops.