Performance recap
- 2021: -35%
- 2022: -76% (Found Saul’s amazing board Jan 2022, started this style of investing in Mar 2022)
- 2023: +80%
- 2024 through August: +52%
Current portfolio holdings (109% long - 102% stocks, 7% leverage play)
- HIMS - 16%
- TMDX - 9%
- ADMA - 9%
- BSEM - 6%
- MIRM - 6%
- CSTL - 6%
- AFRM - 6%
- MNDY - 6%
- ZS - 5%
- ECOR - 5%
- DUOL - 5%
- NU - 4%
- ALAB - 4%
- POWL - 4%
- ROOT - 3%
- LFMD - 3%
- ARDX - 3%
- 7% TQQQ as leverage play, to be sold at Nasdaq ATH
Changes this month
- New positions ARDX, ALAB
- Sold CELH, ASPN, ELF, APP
- Bumped HIMS, ADMA, AFRM, BSEM, ROOT, LFMD
- Trimmed MNDY, TMDX
Why I hold these positions
- HIMS - 16%
- The GLP-1 story has really created a storm in the investment world. The stock is quite beaten down with the expectation of pending litigation/price war with giants Elli Lily, Novo Nordisk.
- I don’t see the punching bag being taken away anytime soon. The shortage for weight loss drug is real and HIMS should benefit from it.
- I want to see continuous execution from them though - need the next product launch and their standard 3% beat in the next earning cycle. But earnings is a good two months away so I expect a lot of drama in the next month.
- The LTM P/S ratio is down below 3 and that in my opinion is quite cheap for the numbers HIMS is putting up.
- I am curious to see if HIMS can beat expectations by more than 3%, maybe 5 or 6% next qtr. The reason for optimism is they are clearly disrupting Elli Lily’s plans as LLY is coming down to compete with them now.
- TMDX - 9%
- They blew their earnings out of the water last quarter. I expect more of the same in the next quarter.
- The stock has had quite a run so I kept trimming in the last couple of months. It’s trading at a good valuation of 15 P/S now. But it can easily be trading at 25 P/S for all I know. So I will ride out the current position and try to keep it between 5 and 10%
- ADMA - 9%
- ADMA had a extraordinary quarter as revenue came in 24% north of expectations.
- The stock had a good run and now is quite decently valued. Their pipeline is strong and there is good momentum behind them to capture more market share.
- They are currently 2% of the IG market and has a chance to get to 20 to 25%. I plan to add on any pullbacks.
- BSEM - 6%
- This is a speculative play for me. The current quarter results were really good. The revenue beat was 69% and they just went FCF positive.
- If they keep this up, I don’t see how the stock trades with P/S 1 and something handle. But tiny volume so as with micro cap stocks, I expect returns to be lumpy. News will drive major moves but I am tracking the underlying story and so far so good.
- The only concern is share dilution but it came at the back of a huge earnings beat so I am ok for now, but not thrilled.
- MIRM - 6%
- The earnings were ok. Nothing great, nothing bad.
- They have a solid pipeline and takeover rumors have kept the stock at a high level.
- I see revenue growth slowing down in the next two quarters and then picking back up in 2025 as new product launches arrive. So for now I will stay the course and keep the position sizing between 5 and 10%.
- CSTL - 6%
- Really good results this quarter with 25% revenue beat and FCF firmly into positive territory. Growth story intact and a slow volume pickup underway.
- I expect this to trend higher over the next months.
- AFRM - 6%
- AFRM’s results were quite good this past week. They beat both top and bottomline numbers quite handily.
- Technically, the stock has been consolidating for over 6 months. So I think this breakout might have some legs. The business is generating over 10% FCF now and that should put a floor on it’s valuation too.
- MNDY - 6%
- Another good quarter from Monday this month. Consistent beat and raise.
- The stock has quite richly valued, so I trimmed some this month. But I see no reason to sell out as I think MNDY will keep trending higher.
- What I like about MNDY is their consistency. The last four quarter growth numbers are 8, 7, 7, 9%. And I expect another 7% incoming.
- ZS - 5%
- Another quite richly valued business. The numbers are good but it’s slowing faster than MNDY. Now that they have started to print 5/6% quarterly revenue growth, time to ease of this one. I feel like anything below 8% and there is very little room for error, especially at this valuation.
- I am most likely selling this as soon as Nasdaq hits all time high and creating some cash cushion for myself.
- ECOR - 5%
- Another tiny company in my portfolio. Had good quarterly results.
- I expect their new direct to consumer product lines of Truvaga and Tac-stim to do well and add more to the bottomline.
- Their core product gammaCore is still growing rapidly. Given they have more product launches in the pipeline and international expansion happening, the execution will be the key. The demand and tam is there if they can perform.
- Based on this quarter’s results, no change in allocation for me.
- I am not a fan with the 28% dilution in the last 12 months but it comes with the territory for micro caps I guess.
- DUOL - 5%
- This business has some elite level numbers but is valued in line with my expectations.
- The numbers are starting to slow and the next two quarters will show more slowing of revenue growth.
- I might exit this soon to raise some more cash in my portfolio.
- NU - 4%
- NU had a great quarter this past month. Their improvement in operating leverage numbers are quite impressive.
- This was a starter position for me as I am still learning the business.
- ALAB - 4%
- Thanks to @wpr101 for bringing this business to our attention. Right of the bat, these numbers are kind of stellar for a small sized business as this one.
- The stock did pullback from it’s IPO price but is still quite richly valued. And as Bear pointed out, can it really be a sustainable grower is the main concern.
- It’s in the right industry with a lot of tailwind. Improving high margins is the main reason I took a starter position as I learn more about the business.
- POWL - 4%
- This is a new addition to my portfolio. Their electrical equipment business in Oil and Gas, Petrochemical and Utility sectors is seeing great traction. The business has hit explosive growth curve over the last few quarters. Over the last two quarters their average revenue beat was 25%. I am not sure how to value this kind of business but I am counting on them to stay on this growth curve for a while. (based on the commentary coming from management and execution)
- ROOT - 3%
- This is clearly gone parabolic in terms of revenue growth and stock price. They just went FCF positive and seems like there is still some robust growth ahead. The key will be seeing their margins improve and if they are able to retain these customers when the insurance is renewable in 6-9 months time. This coming quarter has seasonality built into it where the numbers are expected to be softer (commentary by management), so I am looking for operational improvement for now.
- LFMD - 3%
- This is another play on the GLP-1 drug. With the LLY news, LifeMD took a bigger hit than HIMS. So far their execution has been pretty good.
- The latest quarter I thought was ok. I am going to stay the course for now but keeping a close watch on this if things go south.
- ARDX - 3%
- This is a new position for me. Ardelyx had a great quarter and I see potential in this biotech firm.
- Their main product IBSRELA has had great market penetration.
- They are currently in the high growth curve, has great margins but is transitioning from a FCF negative to FCF+ business. The latest quarter was around -25% FCF. I expect over the next 3-4 quarters, the business to go FCF positive.
- They launched a new product XPHOZAH and that has seen a lot of success as well.
- I am still researching the company and will have more insight in my next write up. But the numbers were too good to not take a starter position.
Why I sold these positions
- CELH
- This was as simple as growth falling off the cliff. I think the stock might stabilize around here and they once the weak hands (like me) are out, it will have a good run.
- But for me the projected forward quarters are just not high enough and I had a couple of other interesting businesses which look much attractive. So the exit.
- ELF
- I had a good run with ELF so probably reduced sizing after the terrible earnings.
- After a few days, I decided to exit all together. The combination of slower growth and continuous lower FCF did it for me.
- ASPN
- But I am unsure about this one. I like the business and the numbers it is putting up.
- I got out of this one because I thought the business is still quite far from getting to FCF+ territory.
- I will let it play out a bit more over the next few quarters and see if I want to get back in.
- APP
- Great business but growth is quite slow for me now.
- This is a great example of FOMO not working out. Should have never entered in the first place.
- FENC
- The business kept having missteps. It was one too many for me.
- This is the downside of owning micro caps. Half the times it doesn’t work out.
- They hired a new CEO - who has great reputation and I expect him to turn things around. I just don’t have the patience to wait for the turnaround. Will keep a watch, if it does turn, will evaluate the opportunity then.
Wrapping Up
My portfolio is currently 109% long. Would like to get back to 90% long and 10% cash. Ideally down from 17 to 10 stocks or fewer. Truly appreciate the opportunity to post here. Thank you for reading.