Ryshab's Feb 2025 Portfolio Update

Investment Analysis Clubs Saul’s Investing Discussions
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Performance recap

  • 2021: -36%
  • 2022: -76% (Found Saul’s amazing board Jan 2022, started this style of investing in May 2022)
  • 2023: +80%
  • 2024: +104%
  • 2025 through Feb: +17%

Current portfolio holdings:

  • $HIMS 22%
  • $TARS 8%
  • $INOD 8%
  • $ALAB 7%
  • $NVDA 7%
  • $SEZL 6%
  • $APP 6%
  • $AFRM 6%
  • $DCTH 6%
  • $BSEM 5%
  • $ANIP 5%
  • $KRYS 4%
  • $TGTX 4%
  • $TQQQ 4%
  • $NU 4%
  • $GAMB 4%
  • $ADMA 4%
  • $CRDO 3%
  • $UPST 3%

Portfolio is currently 116% long.

Changes this month

  • New Positions: GAMB UPST
  • Bumped ALAB TARS HIMS APP

My methodology current scores:

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A visual representation of my current portfolio by Tiers:

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Another view plotting my quality against valuation:

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Why I own what I own:

  • HIMS - 22%
    • HIMS had really good earnings and incredible guide up. Just unfortunate that this stock trades like a meme stock.
    • But the GLP1 story is still intact. They have adjusted for semi-glutide shortage ending and even without GLP1 their organic growth is north of 40%. They are going to get into menopause related medication and treatments soon, that’s a big business. And their legacy business of hair loss and ED is still growing very well. If tele-health is the future, I see no reason why HIMS can’t be the face of it.
    • All this to say, if growth stays intact for another 2-3 years, the improving profitability margins are going to make this business look very very cheap.
  • ALAB - 7%
    • ALAB had really good earnings. Just what I wanted to see. Not worried about the price action as the numbers should win out at the end. I added to my position during this pullback.
    • If they execute, 100% revenue growth over the next 12 months should be achievable. And why would you not own a business that is growing at potentially 100% with 40%+ margins. Doesn’t happen very often in the stock market. So I am planning to ride the wave till I see material growth deterioration.
  • NVDA - 7%
    • NVDA had ok earnings. Beat on both top and bottom line but the raises are shrinking every quarter. They still are pointing to 60% growth and knowing how they raise, it might end up around 80% ntm sales growth. So I see no reason to lighten this position yet.
    • I think this whole tornado of DeepSeek information has created a buying opportunity in Nvidia. It still has the best in class chips product with newer models hitting the market. I still feel Nvidia can create a iPhone like cycle for a few years where all the hyper scalers are forced to upgrade hardware to keep up with the fight for first place in this AI race
  • TARS - 8%
    • TARS reported really good results but didn’t make any more inroads towards profitability. That is a concern so I will keep my position sizing right here and only increase if I see them getting fcf+.
    • Their primary product XDEMVY kills mites in your eye lashes. Only FDA approved product and is just beginning to do commercial launch.
    • Since it’s early commercialization stage, I expect them to grow rapidly in the next 12 to 24 months. They are close to getting to FCF+ and I feel the current high multiples will hold if they can get there soon.
  • DCTH - 6%
    • Delcath Systems. is an interventional oncology company focused on the treatment of primary and metastatic cancers of the liver.
    • They have two products in this space and are at an early stages of commercialization.
    • Analysts expect them to deliver 110%+ NTM revenue and the FCF numbers should turn position in the next 12 months. So if they deliver, I see a lot of potential in this name in the next 12 to 24 months.
  • BSEM - 5%
    • As expected, LCD got pushed back to mid-april now, which means q1 results will have full medicare coverage.
    • They have the better product and the clinical trials should show that. And the nasdaq listing should help which should be out over the next couple of months
  • AFRM - 6%
    • AFRM had great earnings results. And took a big step towards higher profitability. So I am happy with the report and will continue to add if there is significant pullback.
    • Affirm is trying to capture a big piece of the growing “buy now pay later” market. It’s a steady eddy in my portfolio and I still feel it is undervalued. I will keep this a mid size on my account for now and let it do it’s thing.
  • INOD - 8%
    • INOD reported great results but the stock is extremely volatile. I expect to see a bumpy ride up for this one over the next 3 months before next earnings.
    • This is a play on AI and LLM adoption curve. Initially introduced by wpr101 and then later I saw it in Purst04’s portfolio. Ran the numbers and it did quite well on my methodology quality score. The stock has been consolidating since last quarter’s blowout earnings. The fact they are profitable and probably has room to optimize, got me excited and I am in with a starter position.
  • SEZL - 6%
    • SEZL absolutely crushed earnings. I expect this to pick up steam once growth stocks turn up.
    • The numbers they are putting up are quite impressive. Do intend to add to this one if there is a significant pullback. They are in the same space as Affirm, buy now pay later space. I have a starter position based on just high revenue growth and the fact they are already FCF+
  • APP - 6%
    • APP had good earnings but got caught in 2 coordinated short attacks. I added to my position. I feel the same way as many here on the board. These short reports throw everything and hope one of them sticks. I have really not seen anything from the business end that warrants this kind of sell off. I still think they have room to run. Although highly profitable, they are still growing at a rapid rate.
  • TGTX - 4%
    • TG Therapeutics, Inc., focuses on the acquisition, development, and commercialization of novel treatments for B-cell mediated diseases. Successful launch of their flagship drug BRIUMVI, for patients with relapsing forms of multiple sclerosis. Robust pipeline in place - new indications for BRIUMVI and allogeneic off-the-shelf CD19 CAR-T for autoimmune diseases. Hyper-growth still intact with high margins and very healthy free cash flow.
  • NU - 4%
    • I thought NU’s earnings were descent given the headwinds around exchange rates. Lots have been covered about this great business in this forum. So I am not going to get into details.
    • Leader in LATAM Banking. Very well run business. Market provided an opportunity to get in and I took advantage of the situation. I expect a steady eddy out of this one.
  • CRDO -3%
    • Another business in the AI/LLM optimization play. Similar offerings to ALAB but their recent quarter results were stellar. Scored very high in my methodology and with the DeepSeek new opportunity, I got in. Hoping to see great execution from this business going forward.
  • ANIP - 5%
    • ANIP reported fantastic results. Their guide up was also very impressive. Thsi puts them back on 405 growth curve. I will add to my position if given the opportunity.
    • I have owned this pharmaceutical business with success in Q4 2023. Then growth slowed and I exited luckily in time. Now growth is back with a potential of 40% revenue growth in the next 12 months. Also, the stock price has been coiling for over 9 months. Very AFRM like chart. So if they execute I expect a nice pop for a few quarters. They are currently at 10% FCF margin with room for improvement
  • TQQQ - 4%
    • I am trying to see if I can make TQQQ as part of my long term portfolio. I have read enough papers to know this is a high risk strategy but it works. You just have to have an appetite for 70-90% drawdowns. I am not going to make this more than 10% of my portfolio but this is a grand experiment. For now, of the 17 positions I own, it is already sitting at number 12 as per performance. If it hangs out in the top half of my holdings in terms of performance, I will gladly keep it.
  • KRYS - 4%
    • KRYS reported good revenue growth but made significant progress towards more profitability. So I am happy with the results.
    • New entry for me. Scored extremely well as per methodology. They are a player in the genetic and rare diseases category. The company’s pipeline is impressive and their commercialization has seen good success.I expect Krystal Biotech to diversify into many drugs and have a long run. Obviously, execution will be key.
    • It’s not cheap but it’s highly profitable and is growing rapidly. So I am in with a starter position.
  • ADMA - 4%
    • ADMA Biologics is uniquely positioned to capture a large portion of the IG market
    • The big issue is LTM revenue growth is 63% and ntm prediction by analysts is 14%. Huge disconnect.
    • Well the CEO came out during the JP Morgan conference and pretty much told us that they are taking the same conservative approach to guidance as last year. And last year they beat analyst expectations by 30%.
    • Another important point is ADMA has hit a 40% FCF two quarters ago. If that is their high number and they can trend more towards a 30/40% FCF, then the market will give a higher multiple to the business.
  • GAMB (new position) 4%
    • Gambling showed up on my methodology with a high score and even with this impressive run, they look cheap to me. So I started a starter position on this one. More than the growth what impressed me was their profitability. I am still learning about this business and will share more over the next reports.
  • UPST (new position) 3%
    • I have owned UPST in the past. All the way from 80 to 400 to 60! Not fun memories. But I took a second look as this business showed up with good score on my methodology. And I feel UPST has turned the corner or at least that’s what I am betting on. Growth is clearly back and it has started to catch the analysts on the wrong foot. That’s always what I want to see in my businesses. So hoping for an extended run this time around.

Wrapping Up

February was a split month. The first half of the month saw rapid rise in growth stocks and the second half turned out to be brutal. I was up almost 40% at one point but ended the month around 17%. Given indexes are pretty flat, will take these results any day. But I am very highly exposed to the markets now. Any major pullback from here and that would have a significant impact. But I believe I own the best businesses possible and once the markets turn up, these businesses should do just fine. Earnings season so far has been quite favorable and hence I haven’t sold any position yet. Hoping growth stocks catch a bid in March. Let’s see how things unfold.

Always a privilege to post on this board. Thank you for reading. Cheers!

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I must say, by a long shot you have what must be the most unique adoption of Saul’s methodology of anyone who reports their portfolio on the board. 19 companies is a lot. I’m amazed that you are able to follow all of them, but apparently you are able to do so at considerable depth.

I love your X-Y plot of value against quality, even without understanding how you arrive at either score. I can guess at any number of ways you might come up with a value score, but even this one gives me pause with APP in the top right quadrant. Most of the valuation statements that I’ve read consider APP over-valued. Several authors (at least on SA) have recognized the potential for a great future, yet are still tepid about rating it a “buy” due to valuation. However, at least some of that sentiment turned around due to the last couple of weeks in February where we witnessed virtually all high growth stocks take a bath. Despite that, your quality rating is the metric that I find the most difficult to understand. I can’t really imagine what objective criteria you consider. You own everything I own (save RedCat which is purely speculative), so I obviously agree with you, but I admit, my quality rating is pretty subjective.

Anyway, congratulations on showing a profit even after the previous week or so. I’m a bit underwater even though I was up significantly until very recently.

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I love your visualizations but I have some questions on how you derived at them.

Are you using 70ish for you cutoff between high and medium quality? It seems to me that your allocations follow valuation then your methodology score, is that done intentionally? What valuation metrics are you using because I have several companies in a different order of overvalued to undervalued using Reverse Discounted Cash flow and P/E? Off-topic but what are you using to create your visuals?

Drew,

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@ryshab Congrats on a good start to the year!

I’d like to hear your thoughts on HIMS. What is the MOAT for HIMS? I know they offer personalized, DTC products, with snazzy marketing and have first mover advantage.

Maybe I’m wrong, but in the research, I’ve done, I wasn’t able to find that they have a clear moat or competitive advantage. Customers are clearly happy, with high retention rates, and strong sales growth - I’m just not sure how sustainable it is.

-No position

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Thanks brittlerock, drew and FoolishJeff for your feedback and questions. I will try to address them in this thread.

My methodology scoring and valuation formulas have changed and will change in the future. This is just a glimpse of where I am at in my journey and sharing how I come up with these numbers. I like formulas and trying to evaluate everyone through one scale. This allows me to be equally right or wrong on all businesses. And based on how off I am, I adjust accordingly. With this background, let me explain why I think APP is undervalued.

For valuation, I basically do two things. Try to guess what the ntm fcf will be and then come up with a multiple using a formula that I can replicate for all businesses. Without going into edge cases, the meat of the formula for APP is, I believe, ntm fcf will be 3.41 B. The fcf multiple is a range of 50 to 99. So using 50 market cap of 170B or using 99, market cap is 337B. That’s what I think APP should be valued sometime in the next 12 months. The 99 multiple comes from the methodology formula which is NTM Growth% + FCF% - Dilution %. That is the high of the range. I just use 50% discount for the low of the range. Hence, using 50 multiple as the low bar.

For quality rating, I use the above formula I mentioned: NTM Growth% + FCF% - Dilution%. If this number is over 60, this is usually a high quality business. It’s a little twist on the rule of 40 essentially. Because to achieve 60 you either have to be balanced with high profitability or if you are losing money, you have to have mad growth. And then I have started to use this number as my fcf multiple for the high bar on valuation. The low bar is half of this value. It’s been working so far, I haven’t come across a business in the growth investing arena that can’t be evaluated using this formula. I backtested this during 2022 abyss and it still worked. So I am going to keep using it until I get smacked and have to re-adjust. Which will happen sooner than later :slight_smile:

Yes, it’s about 75 ish. But I think this number will change based on where in the market cycle we are at. Imagine a 2 year bear market and 50 may start to be the high quality bar. We will see. For now, 70’s is working as it separates out about 15 or so businesses I track that has higher value.

Yes, if my generous valuation metric lands a negative return for a business in the next 12 months, I assign it a Tier 3 or 4% allocation. CRDO, DCTH, TGTX all fall in this bucket. The high scoring ones I don’t own like PLTR and RDDT also have negative returns for ntm using this formula. Hence, I am staying away. Since CRDO is so high on the score list, I dabbled into it. But if I just go my valuation, I should not be owning it. It’s an experiment really.

I usually just try to play out the next 12-24 months. And then use the quality and valuation scores to guide my allocations. I don’t think markets look beyond that timeframe. So I use the next 12-24 month timeline as a rolling in focus playing field.

These are all done using MIRO. I have an UX background and a product owner, so miro is my bread and butter app.

I really don’t have a good answer for you, Jeff. I think you have seen all the marketing materials that HIMS posts and you are aware of their grabbing market share significantly, usability/easy user experience of app and their flawless execution so far.

In this crowded marketplace, HIMS is the only business that is executing this well. I really think they are in the process of building a moat than having one. They have started to do M&A deals quite regularly now, so I expect them to grow in that way too.

What I am really following is the numbers. I don’t know if this is sustainable but they have really started to bring in cash flow now. That is starting to show as market is clearly taking notice. They should bring in 360 mil. in fcf over the next 12 months. In fact, analysts still don’t believe they can do this in 2026. Hence, they reluctantly upped the 2025 numbers, since Andrew told them so but 2026 analysts are predicting 15% growth. That after 2025 is at 57% currently. So clearly, if HIMS continues to perform, there is enough upside surprise to be had for the street. So far so good. Let’s see how the next two quarters go. We know the next one will be good as a lot of semiglutide revenue will be realized then. But the quarter after that is litmus test. So what they guide in their next earnings release may move the stock significantly.

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I don’t see any inconsistency with Ryshabs’ formulae’s and my investing criteria, having learned to invest here years ago. I’m also only interested in trading when new information leads me to believe a company’s abilities have changed, regarding how they are efficiently riding the combining adoption curves of the tech up the hockey-stick toward becoming behemoths. Maybe I need to re-think the bolded bit a little.

TLDR: Where I stray from this is when I also want to be in the current/future disruptive paradigm of doing business, not just the business model or the tech solution being sold. Ryshab’s monthly summary has led me to re-think this. I need to formalize my process more, so that I can be more consistent in times of volatility.

Some of my notes from over the last seven years:
Saul has written, I truly don’t need to understand the tech. Revenue growth (along with ARR and RPO) tell me whether their customers like the way their products work, and how well they are marketing those products. Profitability and free cash flow tell me how well management is running the business. (Selling a lot of product way below cost, at a loss, may give you a lot of revenue growth but a failing business.). I do try to stay out of the technological weeds as much as possible.

The confidence I must have before making a company into a full or greater sized position is determined primarily by: What level of confidence do I have in the CEO/Founders of each company and their ability to manage my money for me.

My confidence in the CEO is determined by their ability to communicate their vision of (my being able to understand) how the growth trends within the company- operations, number of customers, platform, and the expanding market- How will all these be improving from here. And then how well is managements’ vision executed: as measured by growth in Revenue, Gross Profit Margin and improvements in Operational Margins and Free Cash Flow.

Listed and somewhat categorized below here are the needed criteria for my being interested in investing in a company:

  1. Is it Technologist/Founder lead (also, not just their habits of transparency, execution (eg. Agile’s https://www.agilealliance.org/agile101/ velocity) but also his/her ability to communicate during CC’s. Reasonableness of c suite stated vision of how to execute and for potential of optionality/growth adjacent

2)SAM/TAM, not only from the CC’s given by the Co. but when researched in trade magazines; market penetration %. Is it growing in core area and growth adjacent.

3)Dollar Based Retention rate (revenue and bookings); often this is expressed as Annualized Recurring Revenue

4)CAP (Competitive Advantage Period) measured by: growing market share, movement within Gartner Leader/magic quadrant, Net Promoter score, adoption rates by developers (tags in software engineering forums), number of competitors and how well healed/ motivated / how well staffed with expertise etc.; developer fan base (fanaticism of product users within customer organization); self on-boarding.

5)level of product integration into customers infrastructure/processes

6)level of disruption to current market paradigm/first mover advantage

7)asset light/software defined/Cloud Native/AI benefited - in current paradigm shift in way of doing business (SaaS/AI agents) and where in the S-curve of technological adoption for the particular sector being applied.

8)Then there’s the numbers, are they predictably accelerating toward more growth/FCF/Profits what are their margins and how well will they be able to sustain them (measure of moat).

Thanks Ryshab,

Best,

Jason

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Krystal Biotech initiated at buy at Jefferies

“Analyst Roger Song said that he sees several factors boosting Vyjuvek growth, including: robust clinical efficacy; strong commercial execution along with high reimbursement and compliance rates; penetration projected to reach 60% two years after launch; given the use proprietary technology, a biosimilar is unlikely; and launches in Europe and Japan that could significantly increase revenue.”

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Sezzle looks interesting company is sense of growth and FCF. Looking at the charts for the last year, on 18 Nov 2024, the price sharply took a deep dive. Do you have any ideas why was that, because I can’t find any bad news for it. There was a Hindenburg Research short report but a month later.

Thanks,
MV

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@IamM I think you mean Dec 18, 2024. That day Nasdaq was down almost 5% and a lot of high flying momentum stocks took a beating. It was correlated with the markets.

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Thanks, Ryshab.
Actually the date range is 25 Nov 2024 until 19 Dec 2024. There is a sharp decline in the price without high volume. The Nasdaq decline did not affect much the Sezzle stock.

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Ah, I see. I think it was just general pullback that culminated on Dec 18th by the short report.

In the previous earnings cycle for SEZL in August, they reported really good results and the stock jumped all the way till Nov from $78 to $250. Then when the Nov results were even better the stock on earnings day moved from $250 to $431. It was only natural that it would start a meaningful pullback to catch a breather.

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As I have mentioned before, your reports are great!

I understand the community focus is on revenue growth and I support Saul’s concepts, but I also understand patterns born out of a rational structure of a data can many times produce rational conclusions that even a thorough knowledge of a random displayed data will miss. I offer your quality and other metrics offers this type of opportunity. - in both good and bad markets.

I have a data base populated by a bulk transfer of data, however, I am missing some metrics for a meaningful overall quality ranking. Do you have an on-line source from which you do a bulk transfer of the metrics required to establish your ranking levels?

Gray

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Thanks Gray for your feedback!

I use Koyfin subscription to pull my bulk data. I have everything setup in excel, where once the source tab is populated with the info, the rest of formula crunching happens on it’s own to get me the quality score. As you mentioned, the upside is once a business is on my radar, the weekly data updates I run highlights a business right away if they are starting to put up high quality score numbers.

Here is the watchlist field set I export with some sample data from today:

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