Upsidedown's February portfolio summary

YTD return: 9.27%
February month return: +1.26%
January month return: +7.91%
2020 return: 159%

Positions


Stock	Feb	Jan	1st Buy
CRWD	10.49%	10.36%	2/25/2020
SE	9.77%	9.10%	2/19/2020
TWLO	8.84%	7.12%	11/26/2019
ROKU	6.68%	7.00%	10/15/2019
SHOP	6.07%	5.27%	11/26/2019
PTON	5.88%	5.65%	6/18/2020
SQ	5.45%	6.48%	9/20/2019
MELI	5.43%	5.34%	2/28/2020
PINS	5.27%	4.52%	12/8/2020
ETSY	5.22%	4.78%	5/28/2020
FTCH	4.61%	4.33%	10/21/2020
SKLZ	4.12%	3.31%	10/1/2020
TDOC	3.93%	7.76%	1/22/2020
CURI	3.60%	1.88%	1/4/2021
GHVI	2.53%		2/16/2021
SNOW	2.15%	0.82%	1/6/2021
FVRR	1.31%		2/22/2021
LFMD	0.91%		2/12/2021
VYGVF	0.73%		2/16/2021
ONDS	0.59%		2/18/2021
DOCU		5.16%	11/4/2019
DDOG		4.50%	5/27/2020
ZM		3.03%	6/2/2020
OKTA		2.18%	1/5/2021
Cash	6.42%		

In comparison this month: S&P 2.76%, QQQ -0.13%, ARKK -5.19%, ARKW +1.31%. So strain on the growth company holdings all across the board this month.
I took a re-look at my portfolio during various stages of these past two weeks sell off and made some significant changes by both trimming and getting out of positions that I have been holding most of 2020 or longer. Primary reason for these adjustments is to align to my current conviction levels for stock price appreciation from here. Purposefully staying around 20 positions as it doesn’t appear to be a stock pickers market (at least until a week ago) and to allow myself to the gain the experience required to handle a more concentrated portfolio.
One quick note - I hope am not contributing to cluttering the board as I understand given my skill and experience levels, the biggest and only beneficiary of my monthly summary is perhaps just me and primary reason for doing this is it forces me to pause and take a hard look at my portfolio and actions once a month irrespective of the performance.
Below is some commentary on my changes this week. Will focus more on companies that are covered relatively less on this wonderful board (again, thanks Saul and other leaders) and brief update that are widely covered as I don’t have anything new or valuable to contribute.

New Positions

Matterport GHVI
Matterport’s all-in-one 3D data platform enables anyone to turn a physical space into an immersive digital twin and share it with others to connect and collaborate in 3D.
For example, they sell a camera to 3D scan a building, allow for storage and massaging of that scanned data in their cloud, render 3D images and models for experiencing spatial data. So basically, a Google Streetview like experience for inside a building.
What is a digital twin and its value?
A Matterport digital twin is the most accurate virtual 3D model of a real place - whether it be a room, an entire building, or an outdoor space. Digital twins enable industries like real estate, hospitality, construction, and insurance to simplify how they work and connect with customers and vendors (excerpt from their website)
Reading the above, I was wondering if there is really no one else already bigger or better than them. They slate some big Real Estate companies as their customers in Redfin, KW, CENTURY, Travel Hospitality companies like Airbnb, Vacasa, Hyatt, HomeAway, Insurance/Repair companies like Nationwide, Belfor etc. For these companies, a 3D modeling of their digital catalog is a key component of their business (say, as opposed to a food vendor for their canteen) and if Matterport is good for them, then I’m convinced of their viability even if there are other competitors and Autodesk, Adobe and the likes stepping on their toes in the future. Of course, their financials should support this, and they are amongst the minority from all the recent SPACs with some real revenues.
2019
Revenue – 46M
Subscription Rev% of Total Rev= 54%
Total Gross Margin% = 48%
Operating Margin% = (-)68%
2020(Expected)
Revenue – 86M
YoY% = 87%
Subscription Rev% of Total Rev = 52%
YoY = 80%
Total Gross Margin% = 56%
82% Subscription Gross Margin
Operating Margin = (-)12%
Their EV at $10 per share is $2.26B and at current price of $17.76, their current EV is $4.01B
As usual with SPACs, they have high projections for a 59% Revenue CAGR through 2025 taking them to $747M 2025 revenue but I believe those projections may be possible for them given how sticky their solutions could be in certain industries (RE, Insurance/Repair industry will always have a need to survey physical properties) and future optionality with all the data they are going to own across the globe(150+ countries currently). One thing to note here is that they are projecting their non-subscription business to come down to 14% of total revenue in 2025 from 48% in 2020. This is primarily because they have now started allowing iPhones for photography and as smart phone cameras get even more sophisticated, they probably will extend support to other smart phones and thus expect their proprietary camera sales to taper off over time.
First came across this company on FinTwit. With all the SPAC frenzy out there I’m not sure when the market sentiment will turn significantly sour on SPACs and will probably throw out all the good SPAC babies with the bathwater. So there is that risk but I think Matterport is a very promising company with potential applications in myriad of industries. Will add to them if they further fall from here but plan to maintain it as a 2-4% position until the merger is complete, and they post at least one ER report out.
Matterport in 90 seconds video - https://www.youtube.com/watch?v=FXDjMJJDbqo
Investor presentation - https://matterport.com/sites/default/files/media-files/Matte…

Fiverr FVRR – Been watching this from a few months without taking action as I am of the opinion that the stickiness and quality of hiring freelancers packaged like a product goes down real fast at scale. I mean, who wants to hire a packaged average skilled worker irrespective of how easy they make it to hire and transact. So, I’m less convinced on the growth potential of their peer-to-peer freelance business model but I’m better convinced of their Fiverr Business offering that they launched in September 20 which allows them to be a talent agency that can get into long term contracts with businesses/industries that typically have possibility of having homogenous requirements and expectations of required skills, for example Graphics & Design, Digital Marketing, Translation services. This incentivizes freelancers to stay with Fiverr as this allows for maximizing their job opportunities while giving some possibility of income stability and incentivizes businesses to deal with just one big agency that can tap into global talent with not much leg work.
Still not sure what sized position I want to maintain given all the run up it had in the past year. Also I think Linkedin, with all its muscle has a good shot at infringing on Fiverr’s aspirations but given how job descriptions and skill levels vary significantly across industries, I can easily see more than one big player each serving a specific set of niches.
Other aspects covered well in this post by imuafool - https://discussion.fool.com/fiverr8217s-superb-ongoing-growth-pe…

Conversion Labs LFMD (recently changed from Ticker CVLB) – A DTC telemedicine company that offers physician services for free but generates revenue from prescription medications and OTC products primarily targeting hair loss, immune health, men’s health segments. Small Cap company with $20M LTM revenue. Took a starter position after seeing it on a premium service that I subscribe to. Very low conviction at this point as it appears there are a lot of companies in this exact space and whoever spends most on marketing will probably own most of the target customer’s wallet and then the next big spender will take over from there. Was planning to get out and then the stock price plummeted more than the average on the ticker change day, don’t know if it is company related or random.

Ondas Holdings ONDS – A provider of a software defined network — an edge (or ‘fog’) cloud meant for private mission-critical wireless markets like Rail networks, Land mobile radio, oil and gas, drones etc. They serve a different market segment than commercial public networks (like Verizon, may be?) as they tend to focus on urban, more populated areas, where consumers use high-bandwidth connections. Almost no revenues at this time and by the nature of their products there is probably long sales cycles although stickiness aspect should be huge. A speculative position <1% position after seeing it on the same premium board that presented Conversion Labs. I’m still forming my mind if it is worth hanging onto these tiny <1% moonshot positions which are sourced ideas from paid services and I, myself will not be able to gain or retain conviction independently.

Voyager Digital VYGVF – A digital asset broker that allows for trading in crypto and stablecoins. They claim zero transaction fees for virtual currency trades and up to 9.5% APR interest income on stablecoin deposits. They are not an exchange like Coinbase or Gemini but purely a brokerage firm, more like ETrade, Robinhood. Another speculative <1% position after seeing it on a different paid service and mostly took the position to start to get acquainted with the crypto world. I tried to get an account with them, and they said because of their high demand, all new requests are on a waitlist as they scale their infrastructure. I like this company so far although they seem to be very early in their innings, and I believe they can potentially transform into Robinhood of the virtual currencies with their zero fees claim. Co-Founded and led by ex-ETrade Brokerage VP Steve Ehrlich and he came across like a reasonable guy in a few videos found on YouTube.
Voyager is only mobile at this point, but they have plans to extend to desktop, debit cards, credit cards, margin, equity trading etc.
Investor presentation - https://assets.investvoyager.com/23KQMJh2TURSq_Z9?_ga=2.2548…

Added to Positions

Snowflake SNOW – Widely covered here but my biggest worry with them is still their valuation and the impending lock up expiry on March 15th. I personally know of at least one person who bought into Palantir in private markets pre-IPO and was desperately waiting for lock up to expire and wonder how much of Palantir’s decline of -34% (which is significantly more than other growth companies) in the past month is a result of people cashing out after lockup expiry and wonder if same fate awaits Snowflake. I know this line of thinking falls is OT on this board, but that’s what is holding me off from further increasing my position.

Peloton PTON – Even with their stellar top and bottom-line numbers, pipeline of new products, feels like market is always in two minds with this company which I think gives both opportunity and risk at the same time. I lean towards the opportunity side of it as long as they continue to post hypergrowth numbers. I ignore their supply and shipping delay problems as I think demand exceeding supply is more of a good thing than a bad thing. Also, I find their ER calls, reports very easy to follow and understand unlike say, Teledoc.

Twilio TWLO – During the investor day presentation last October, Twilio said it expects at least 30% organic annual revenue growth in each of the next four years and a 60% to 65% adjusted gross margin over the long term. So, their Q4 20 numbers resonate with those guided numbers and I can see them as a next CRM, Adobe, ServiceNow sized company in the making with from their current market cap of ~60B to ~200B market cap. So, at least a potential of 3-4x from here while the story is still intact.

Pinterest PINS – 77% yoy growth in Q4 2020, guiding for low-70% range next quarter followed by easy comps in Q2 21 (Q2 20 rev growth was Covid impacted 4%), so good numbers on the cards for them the next two quarters at least. Total MAUs grew by 37% yoy and International MAUs grew even faster 46%. Overall ARPU grew by 29% in Q4 20 and International ARPU grew by 67% YoY which makes both ARPU and MAU growth in line with their promise of international expansion. They are profitable both on GAAP and non-GAAP basis this quarter. I think they have some obvious product expansions into video, shopping cart, ads which I think leaves a good runway to grow into.

Skillz SKLZ A SPAC from 2020 but their merger was complete in December. Skillz offers something unique to the gaming industry that allows for monetizing light weight competitions on the mobile internet. Their Q3 20 showed 93% revenue growth with 95% gross margin unlike heavy weight gaming platforms like Epic, Unity, Riot games. However, their MAUs stagnated past three quarters and hardly any QoQ revenue growth from Q2 to Q3, something to watch when they post their Q4 numbers on March 10th. May be, it’s just me, but the way their CEO Andrew Paradise comes across in Investor calls reminds me of Jeff Green from The Trade Desk.

Curiosity Stream CURI With all the cord-cutting trend charts sprayed all over the place, I was looking for a pure play streaming services company that is still early in its journey. They called for 119% growth in 2020 and guiding for 80% growth in 2021.Their Q3 20 Operating margin was at -77%, so significant losses at this point. Since they don’t own the complete customer journey (like a Roku), they probably will dip into secondary offerings periodically to keep up their capital raise needs to produce original content. Yes, their production costs won’t be as expensive as that of Netflix’s, but they won’t be commanding as much of user’s streaming hours as well with educational content. A solid management team, all ex-Discovery channel folks gives a lot of credibility to their aspirations. Waiting for their Q4 results on March 23rd.
Nice writeup by 2020investor at - https://discussion.fool.com/curiositystream-curi-deep-dive-34755…

Sold out Positions
DOCU, OKTA, DDOG, ZM – No strong reasons except to limit my number of companies and wanting to take up positions in smaller cap companies that are early in their journey.

Trimmed Positions

Teladoc TDOC
I think they have multiple hurdles to overcome and prove on their promise to the market and until up to that point they may be price bound.

  1. Q1 through Q4 total visits QoQ change % are – 65%, 35%, 3%, 6%. So after Covid induced bump in Q1 and Q2, their numbers slowed down significantly. Seasonally, their total visit numbers get a spike in Q4 from the common cold and Flu. They reasoned this year’s subdued Q4 numbers to reduced infections from people wearing masks and don’t expect to return to the usual seasonality until 2022.
  2. On a question around revenue synergies with Livongo during the ER call, they mentioned 2022 is when they expect those synergies to materialize.
  3. Feels like there is lack of consensus on how strong the appetite is for Teladoc’s core offerings long term i.e., remote doctor visits – both amongst institutional investors and general public especially given how it all is heavily dependent on government taking the ownership in removing all the hurdles for reimbursements forever.
    My original position was in Livongo and I was patiently waiting for the stock price to pick up but now it’s back to where it’s been hovering from over 8 months. This means, I paid opportunity cost on the averaged TDOC position size of ~ 8% of my capital while my portfolio appreciated 53% during this time.
    Q4 earnings thread at - https://discussion.fool.com/tdoc-34762001.aspx?sort=whole#347627…

Square SQ – In Q4 20, Ex-Bitcoin revenue growth is at 23% yoy, Seller ecosystem revenue is at 5% yoy, Cash App revenue is at 127% yoy. So as compared to something like Lightspeed’s 79% Q4 growth, Seller ecosystem revenue growth is significantly lagging. As compared to Paypal’s 23% Q4 growth or probably even SoFi, Cash App revenue is growing faster even with excluding Bitcoin revenues. So clearly Square’s investment thesis is all about Cash App at this point and there is little to none re-open related potential hypergrowth aspect to the numbers.

Remaining positions in CrowdStrike, Sea Ltd, Etsy, FarFetch, Roku Mercado Libre, Shopify remain untouched as their thesis hasn’t changed for me.

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