Wpr101's February 2024 portfolio update

My portfolio ending in February 2024, looks like,

Super Micro (SMCI) - 19.3%
Elf (ELF) - 12.8%
Celsius (CELH) - 11.9%
Axon (AXON) - 10.3%
Cloudflare (NET) - 9.9%
Samsara (IOT) - 9.0%
Monday (MNDY) - 8.5%
TransMedics (TMDX) - 6.3%
Nvidia (NVDA) - 4.8%
Hims & Hers Health (HIMS) - 2.4%
Beam Global (BEEM) - 2.1%
AeroVironment (AVAV) - 1.7%
Amprius Technologies (AMPX) - 0.8%

This month I started two new positions, one in BEEM and the other in HIMS. I’ve also been adding to TMDX and NVDA. I’ve been cutting MNDY down some, and have also trimmed SMCI multiple times, and trimmed slightly ELF and CELH. I’d ideally like to get down to about 10 positions or less, and will look to cut a company or two which underperforms.

Something I’ve been thinking about a lot this month is something the CEO of Beam said, that there is a bear market in micro-caps as a sector. I’ve been noticing that companies like HIMS and BEEM are putting up great results but not getting much credit from the market. I’ve also noticed this trend in TransMedics which is a small cap, but possibly not getting enough credit from the market. This is making some of these smaller companies quite a bit more attractive from a risk/reward perspective, seeing that they are basically priced to fail. I think once the market catches up to the opportunity, the prices in some of these names can rise very fast akin to Super Micro’s rise.

Some thoughts on my current companies,

Super Micro (SMCI)
They had absolutely incredible results this quarter. My confidence in them is very high since they have onboarded Meta and other large names. I believe they do have a competitive advantage and moat which I detailed here

I’m thinking back to when I first started a position in Super Micro and the P/E was 12 and they were growing revenue fast as well. It seemed like the best of both worlds with a strong top line and bottom line growth. I was wondering if I was missing something or why they seemed so cheap. That impression turned out to be correct that they were way underpriced, and I’m pleased to see the market catch up with the scale of the opportunity.

I’ve been trimming Super Micro as it’s gone up though primarily because it got too large a portion of my portfolio. On one day it got as high as 27% of my portfolio and I trimmed that day about 10% of the position at 1077 which was really lucky because that turned out to be a top. That same day it crashed down to 800 and I have left it there since.

Elf (ELF)
I’m pretty comfortable with where Elf stands in my portfolio and their business prospects. Another one which is growing both top and bottom line well, and seems reasonably priced compared to other companies in the industry. I had a write up on my thoughts after the earnings report.

The biggest question mark for me right now with Elf is whether their spend on marketing is paying off, the CEO says it is and I’m putting my trust in those comments. I feel they are paying for growth but it’s well worth it if they are seeing the return. Building a loyal customer base and investing in customer acquisition has been a winning strategy so far.

Celsius (CELH)
Celsius just reported and the market liked this quarter a lot. I wasn’t quite as confident as the market reaction because of how the sequential revenue went down about 10%. I know this is because of placement (Christmas, Thanksgiving, Halloween) and seasonality but I was hoping for something more flat. All the other metrics are trending in the right direction, including having the number one energy drink on Amazon. I wish this company gave guidance themselves to get a better sense of where they think they are headed, I’m kind of surprised they still do not with how much visibility they should have.

Axon (AXON)
I am pleased with the results Axon had this quarter, seems well on track. A topic of interest to me I haven’t seen discussed yet is their investments in drone companies. They acquired Sky Hero which has been a little bit of a bust so far because the company didn’t meet regulations for flying some missions. Additionally, Axon mentioned they have shares in Dedrone and I’ve discovered they are the lead investor there. Why am I so interested in this small portion of the business?

They said on the call Dedrone gives the ability for NFL stadiums to track all the drones around the stadium. They also said “Ukraine is buying a ton of these to track drones for obvious reasons”. I’m pretty surprised to see that a series C is already selling a “ton” of drones to Ukraine. I’m also interested to research into these other companies that Axon has invested in since 2021, stay tuned for a upcoming post about these investments.

Cloudflare (NET)
I’m confident in Cloudflare’s product and leadership. Their AI workers is picking up a lot of momentum it sounds like but I’d really like to see some meaningful contribution on revenue from their newer suite of tools. I’m fine if they want to get ubiquitous before emphasizing profitability. I’d be looking to add once I get further confirmation of their AI platform picking up even more share.

Samsara (IOT)
This one has been pretty well covered by the board. I’m purely in a wait and see mode here with the upcoming earnings next week.

Monday (MNDY)
I have lost quite a bit of confidence in Monday. I don’t understand why this company’s business seems so lumpy. This is the third of fourth time during the course of owning Monday where the follow a great report by a tepid one. They seem to be on a different sales cycle then other SaaS players and I cannot figure out why. Most of their business is US based so it’s not like they have a different market than other SaaS.

On the prior Q3 earnings call they beat operating income and operating margin by huge numbers. And this quarter they beat their forecasts only slightly so it seems like some slowdown. Additionally, operating margin this quarter was 10% and it was 10% a year ago, so I do have some concerns they may be reaching some terminal state of how they can improve the business metrics. They do say they are facing macro economic headwinds, but I’m not getting why Cloudflare is saying the opposite.

TransMedics (TMDX)
I am loving what I saw from this quarter and looking to add more shares, here was my write up on this report. Their aviation business is doing much better than the expected internally. I’m also pleased the stock has been mostly flat right now as it allows me to accumulate.

Nvidia (NVDA)
I was really pleased with the latest results, and don’t think the market gave enough credit for what they actually reported. I think they still have room to grow, although only concern is they are reliant on TSMC for their fabs like everyone else is. While the company is huge on market cap I still think they can double or triple from here.

Hims and Hers Health (HIMS)
This is a new position for me. They have an app through which they sell generic drugs at reasonable prices. I had looked at them previously once and was interested but not enough to start a position until this last earnings report.

The stock popped 25% after the latest earnings reporting 47% revenue growth. They are now reporting 1.2M in net income for this quarter, and the pervious quarter was -7.6M and had never been positive before. Additionally GAAP EBITDA was 5.3M up from -6.2M last quarter.

Here’s another small cap which isn’t seeing its share price correspond that closely to results. In Q4 of 2021 the revenue was 85M and the share price $20, now in Q4 2023 the revenue is 246M and share price is $13. So revenue has nearly tripled, the company is now profitable and the price is still way down from before.

The company is talking in terms of scaling up from 1.5M customers to over 10M. Gross margins are 83% on a business which you wouldn’t expect to have this type of margin. They are getting efficiencies from having affiliated pharmacies. Emerging categories such as weight loss are providing much better returns than expected.

Beam Global (BEEM)
I first heard about this company from JabbokRiver’s post about the company. Really interesting company providing solar charging car stations and solar powered street lamps. Revenue is growing fast and they had an acquisition recently which I think will be work really well based off my research. Will be following the upcoming earnings very closely.

AeroVironment (AVAV)
There has not been a lot of news on this one and they have an earnings coming up soon. I do have some concerns their drone Switchblade which they were selling in Ukraine and elsewhere may be too expensive or not as effective as they claim. Specifically I think it may not have worked as well as expected because of counter measures against their drone with electronic jamming. Will be a wait and see approach based on earnings.

Amprius Technologies (AMPX)
They will report earnings in March and I’ll be following that closely to see if I want to continue here. The company has been trending down nearly every day recently on no news, and I’ll be looking for significant progress and optimism in their next report to want to continue holding here.

I have a long list of companies I looked into this month which I ended up passing on,

Indie Semiconductor (INDI)
Semiconductor company with 112% revenue growth, started as a SPAC in 2020. They sell chips used in advanced driver assistance systems. They have a large backlog, but profitability is not great. There were some acquisitions they made which raised some questions. I think I’d like to take another look at this latest earnings since they growth is still impressive.

Spire Global (SPIR)
Revenue growing at 34%, they sell “space to cloud” data which collects data from outer space. They have some nano-satelites LEMUR and it’s a subscription based model. Market cap is 250M, so this is a tiny company. Main concern is they say this year was marked by a challenging business environment. I could get interested again if the revenue picks up from here.

Xtract One Technologies (XTRAF)
Tiny company with 110M market cap, revenue has gone from 0.9 → 1.8 → 3.1M. They make security solutions with AI, screening customers coming into stadiums with video recognition. Too many uncertainties here for me especially being on the pink sheets, would like to see at least another quarter or two of ramping growth before considering again.

Rheinmetall AG (RNMBY)
The German arms manufacturer has been on a good run recently, up 3-4x since 2022. I see them in stories everywhere for increasing European arms production. They are still a mid cap around 20B of market cap. Their backlog is 36B! Sales grew 24%, seeing really good leverage in their business, already saying they will have a “very, very strong Q4”. Takes some getting used to with the style of European conference calls, have this one a close watchlist.

AppFolio (APPF)
They sell software for real estate, last Q saw 38% revenue growth which was a surprise upwards. They don’t do any question and answer session on their conference calls which seems insane to me. I don’t like this business line which feels niche and potentially dependent on real estate market cycles.

Manhattan Associates (MANH)
Well run software business that is highly profitable and old school having started in 1990. I think they do custom software for companies. Revenue is growing in the 20-30% range. Problem is I don’t see a moat and if I understand what they are doing it’s like consulting and building software.

Evolus (EOLS)
47% revenue growth with a beauty product called Jeuveau which is for improving facial lines and it’s injectable, seems a competitor to Botox. Not sure enough about their competitive advantage, but like their revenue growth.

CleanSpark (CLSK)
Operates as a bitcoin miner who uses low cost energy. Seems extremely well run with 165% revenue growth. Too concerned that it’s just a pass through on the bitcoin price and cannot do well without bitcoin doing well.

Procept BioRobotics (PRCT)
2.5B market cap, does surgical robots for urology, revenue growth of 83%. Surgeons are demanding the product. Yet another company mysteriously not providing any guidance.


@wpr101 For what it’s worth. I brought up $HIMS here a few years ago and the idea was emphatically panned.

Nevertheless, I’ve kept loose tabs on them ever since. My biggest concern with $HIMS is they seem to be reliant on increased marketing spend for every incremental increase in customer base. My impression is they’re not really getting any word-of-mouth traction.

EDIT: I suppose IMO that means the thing to track is whether they are increasing their per-customer revenues.

Regarding their gross margins, I don’t think they include marketing spend in their GM calculation. So their reported GM might need to be taken with some salt.

I haven’t really dug into the numbers because it just seems like a low-moat business to me.

Some other interesting companies in the same space: $LFMD and $TALK


Thank you intjudo for the feedback here on HIMS. I’ll check out that those competitors as well.

With regards to gross margins I don’t think any company is including sales and marketing expense as part of gross margins? If that were the case all of the SaaS companies that the board likes to invest in would have much poorer gross margins. Sales and marketing is coming in at 51% which sounds okay to me considering they just got to profitability.

Additionally, HIMS is getting a very good payback period on their customers. This shows the 2023 cohort, where they spend $84 to acquire the money back in about half a year.

Comparing to the 2019 cohort, this is a big improvement over the last number of years,

In the past two years a number of metrics are trending the right way and shows signs of acclerating,


PRCT seems like interesting
Short introduction in the SA