Stocknovice's December 2024 Portfolio Review

stocknovice · January 2, 2025, 5:22pm

Spanky

2024 Results:

2024 Monthly Allocations:

Key:
• darker green: started during month
• lighter green: added during month
• yellow: trimmed during month
• blue: bought and sold during month
• red: position exits
• positions >10% in bold

Past recaps:

Stock Comments:

This update is a bit different…

This month marks my six-year anniversary of monthly recaps at Saul’s. After finding this board and lurking a few months, I took a stab at my first portfolio recap in December 2018 (Stocknovice's End of Year Portfolio Review). I fully expected it to be a one-time thing, mostly a thank you for all the knowledge I had gained in such a short time. I mean c’mon man, how the heck does anyone have the time to keep up with journaling a portfolio?!? Well, the clarity provided by that initial write up was so striking I’ve kept it up ever since. 72 months in a row. What began as more of a personal accountability exercise has now become a catch-all for research, strategy, temperament, and psychology. At this point I don’t know how I ever managed our portfolio without it.

As 2024 draws to a close, I’ve spent the last few months mulling over a post from friend GauchoRico entitled “When Should the Game Change?” (When Should the Game Change? - GauchoRico Stock Investing & Personal Finance). Gaucho talks through the challenge all investors face in balancing the quest for of returns with preserving capital as your nest egg grows (“diversification” in the parlance, I guess). Our family now sits in that sweet spot. After the market’s brutal 2022 reminder of a fully enraged bear, we’ve been fortunate to see our portfolio grow 39.0% in 2023 and 31.4% in 2024. Those returns have pushed the preservation whispers front of mind. Good problem to have.

While many here have written about permanently removing a portion of their investible cash, I haven’t decided the right move for us just yet. That’s led to carrying an unusually high amount of cash all year (in fact, I’ve felt it ridiculously high at times based on what I’d prefer). I didn’t want to hide that cash from these recaps to artificially boost returns, so spent all year reporting it as its own allocation earning whatever interest I could get. Entering 2025, I’m fully committed to better managing this transition. While our portfolio will always have a growth portion, I expect a lot of shuffling and stumbling the next few months while figuring it all out.

This recap lists initial 2025 thoughts for each of our current holdings. You’ll see there has already been some shuffling. As for future write ups, I’m planning on shifting to quarterly for now. I figure that gives me room to maneuver our portfolio while still holding myself accountable for recording thoughts after each new round of earnings updates. On the flip side, spending less time on monthlies will hopefully give me more time to post in individual threads here for companies I might be looking at. As always, I continue to appreciate the power of crowdsourcing created on this board. Here’s to everyone seeing continued success in 2025.

And now back to our regularly scheduled update…

APP – Applovin gets a tryout position to end the year. Its numbers are impressive, and I believe adtech will see tailwinds to start 2025. At this point, I’m viewing APP, RDDT, and TTD as a basket in that space. With APP’s recent 25%-ish pullback, I decided to put some skin in the game to follow along.

AXON –Axon ends the year as our largest position after a phenomenal 2024. With the recent addition of new products for digital evidence and drone usage, all signs point to continued business momentum in 2025.

CRWD – Despite the embarrassing and potentially devastating misstep of a faulty July software update, CrowdStrike exits 2024 with its best-in-class reputation intact. Having literally owned CRWD since its June 2019 day of IPO, I’ve come to trust what this management team delivers. It’s not the portfolio driver it once was, but CrowdStrike remains a damn good company. I’m comfortable with its current allocation into the new year.

DDOG – I’ve honestly been disappointed with Datadog’s performance the last couple quarters. The main reason I hold our remaining allocation is delaying the tax hit on 2020 shares with a $35 cost basis. There’s a real chance DDOG loses its spot during the upcoming shuffle.

HIMS – A super-volatile holding, I’ll be keeping hims & hers on the smaller side into 2025. The company’s early foray into weight loss products has been extremely successful, yet it has also been met by a huge influx of competition into the space. Can its personalized approach let HIMS continue to carve out a profitable niche? We’ll see…

IOT – Samsara started December with what I consider another steady all-around quarter. Most of its Q3 results set new records, but prudence in the Q4 guide spooked investors. The softness in the headline number looks even less attractive given IOT’s last Q4 contained a fluky 13 calendar weeks versus this year’s traditional 12, which makes comps more difficult. However, I see this as more of a math problem than a business one.

Q4 has seasonally been IOT’s biggest, and management says this one should be no different. However, I get the impression management also wants to leave itself as much wiggle room as possible while many customers wait for clarity on the post-election business environment before making 2025 commitments. In the big picture, I’d say Samsara is firmly on top of everything within the company’s control. As for the rest, I believe this management team capable enough to adjust to whatever comes its way.

MAGS – MAGS is an ETF tracking the Magnificent 7 stocks (NVDA, GOOGL, MSFT, AAPL, AMZN, META, and TSLA). I trimmed some when the group jumped almost 10% to start the month. I’ll take my chances I can add those shares back later if I want.

MELI –A Latin American e-commerce/payments/fintech behemoth, Mercado Libre gets another starter spot to end the year. Having watched this one for a while, MELI has always battled currency and geopolitical risks in its core markets. At the same time, MELI has always shown it can not only navigate those risks but come out stronger on the other side when things settle. With the region’s recent rumblings cutting the stock from $2,160 to $1,700, I decided it was time to formally put this one on the board.

NVDA – Another company with a monster 2024, Nvidia is primed to continue its role as the premiere picks-and-shovels play in the world’s AI infrastructure buildout. With side gigs in robotics and autonomous driving, this company has a lot going on. I am decidedly not one who believes “this time is different” as far as the cyclical nature of NVDA’s core business. That being said, I don’t see this current cycle ending anytime soon.

RBRK – Another new position. A recent cybersecurity IPO, Rubrik operates in the Zero Trust and resiliency space. Like most of our portfolio adds, the recent business performance is what earns RBRK its initial spot. Top line revenue growth has gone 37.5%, 35.2%, and 42.3% the last three quarters with a chance to challenge 40% again in Q4. What’s most appealing though is the company’s successful transition to a subscription-based model. Subscription revenue has more than doubled the last seven quarters from $108M to $221M. Likewise, subscription ARR has jumped from $587M to $1.002B. That has driven subscriptions as a percentage of total revenue from 79% to 94% over that span.

Gross margins have increased to 79%, and Rubrik just posted its first ever positive operating and free cash flow. While profits have yet to come, losses are narrowing rapidly and should reverse sometime over the next few quarters. With RBRK still at a sub-$1B revenue run rate, it hits a lot of the checkpoints for a growth company in an attractive part of its S-curve. I’ve decided Rubrik’s interesting enough to earn a starter spot.

RDDT – Another adtech play, Reddit joined our portfolio in November with a few more shares added in December. As a 60% grower just hitting profitability, RDDT is one of our more attractive holdings from an S-curve perspective. As mentioned above, I view RDDT along with APP and TTD as part of an adtech basket for our portfolio entering 2025.

TMDX – After a disappointing October led to cutting this position drastically, TransMedics lost its spot to end the year. On December 2 TMDX announced the appointment of a new CFO along with restating it FY24 revenue guide down (https://investors.transmedics.com/news-releases/news-release-details/transmedics-appoints-gerardo-hernandez-chief-financial-officer). The new guide lowers the top end from $445M to $432M while moving the midpoint from $435M to $430M. While not the end of the world, that’s a far cry from the string of large beats and raises the company had provided prior to last quarter. My gut says something has disconnected between management’s visibility into transplant volumes and its timeline to facilitating 10,000 procedures. I’m content to sit this one out until we hear a formal FY25 guide with updated comments. Since TAM was always a question here, TransMedics has a lot of work to do to repair its narrative.

TTD – A portfolio stalwart, The Trade Desk had a great 2024. However, TTD will be facing its usual difficult post-election comps in the second half of 2025. I could easily see shifting some of our adtech funds from TTD to faster growing APP and/or RDDT as we move through next year. My working target is a 15-20% allocation for the three combined.

ZS – I thought Zscaler’s December 2 earnings report another ho-hum effort as the company grinds through a revamped sales process. If the current weakness in customer adds is simply a blip in that revamp, this is probably no big deal. However, any extended drag only creates more pressure on already declining billings and top line growth.

Given ZS is already at or near its long-term margin targets, any improvement to its business model needs to be driven by increased sales. The company deserves credit for successfully navigating a similar transition in 2019. Can it do the same in a tougher environment at a larger scale while also announcing the transition to a new CFO? I decided I’m not interested in sticking around to find out.

Hindsight is always 20/20, but I should have better heeded the warning when the C-suite shuffling began a couple quarters ago. I admittedly fell into the “I’ll give it one more quarter” trap. Unfortunately, I doubt this is the last time I’ll be forced to learn that lesson.

And there you have it. I’m glad to say this was another market-beating year. That’s now six out of seven since starting these recaps (though 2022 definitely took its pound of flesh). Regardless of your investing style, I can’t emphasize how much better your game becomes when you log your thoughts and/or share them with others. Of course, any crowdsourcing success is directly proportional to the quality of your crowd. I’m grateful for the one we have here and look forward to another educational year in 2025.

As usual, thanks for reading and Happy New Year.

Topic		Replies	Views
Stocknovice's November 2024 Portfolio Review Saul’s Investing Discussions	0	2731	November 30, 2024
Stocknovice's April 2024 Portfolio Review Saul’s Investing Discussions	2	5047	May 4, 2024
Stocknovice's November 2022 Portfolio Review Saul’s Investing Discussions	0	2803	December 1, 2022
Stocknovice's September 2022 Portfolio Review Saul’s Investing Discussions	0	3604	October 1, 2022
Stocknovice's September 2024 Portfolio Review Saul’s Investing Discussions	0	2274	October 1, 2024

Stocknovice's December 2024 Portfolio Review

Related topics