Zen mind. Beginner mind.
My portfolio as of today stands at,
Super Micro (SMCI) - 19%
Nvidia (NVDA) - 16.2%
Elf (ELF) - 16.1%
TransMedics (TMDX) - 15.5%
Celsius (CELH) - 14.2%
Axon (AXON) - 7%
AppLovin (APP) - 6.4%
Hims & Hers (HIMS) - 5.5%
This month I sold four stocks: IOT, BEEM, NET, MNDY. I added one new company AppLovin (APP). I added to my positions in NVDA, TMDX, and ELF, and lowered allocations in HIMS, and AXON.
This month I was working with a mental game coach on investing and trading. The two most prevalent errors that I am making are copy trading and FOMO based trading.
Copy trading could be as simple as doing slightly less research on a company than you normally would because investors you respect have recommended the company. This tactic effectively undermines the entire investing approach of being in your top conviction positions, you are in someone’s else top conviction position. I strongly agree with Saul and Bear have said before about not copying their trades - the only thing you are doing is harming yourself by copy trading.
To counterattack the tendency to copy trade, for companies in which I learn about the ticker directly from someone else recommending them, I am doing more even more research on them than I typically would. In this way I won’t have a dependency on the recommender to have to follow their updates on the company.
With FOMOing into trades, this happens to me when I first learn about a company and show recency bias of preferring the new company to existing companies I know more about. With how fast some of the AI company stocks are rising right now, it’s easier than ever to have this tendency. To counterattack this tendency, if I am really interested in a company but haven’t done enough research yet I’ll take a small starter position.
Currently I have two companies on my watchlist which are Tidewater (TDW) and Aspen Aerogels (ASPN). The ramp up time to learn about these companies is quite large for me as these are industries I am completely unfamiliar with. I may start a position in small positions in these two companies as I learn more.
Reviewing my companies in order of allocations, my sells, and then companies I researched.
Super Micro - SMCI 19%
This is a very high conviction position for me. I believe this company has a significant competitive advantage in building AI servers. Facebook (META) is their biggest customer and going to be investing over 100B in AI over the coming years. This company is an engineering powerhouse. I wrote up some thoughts on their last earnings here
I’m holding at these current levels, because they were supply blocked this quarter, and I’d like to see them a deliver an outstanding quarter before wanting to add any more.
Nvidia (NVDA) - 16.2%
I am very confident in Nvidia and their future prospects. Watching Jensen’s 1 hour 45 minute GTC conference was like seeing a movie. I’m more impressed than ever with the visionary leadership this company has. They have evolved way beyond their gaming company origins - so much so that the GTC speech never mentioned gaming once. Seems like Jensen’s interests are towards optimizing industrial operations.
As Jensen points out, this AI industrial revolution is much different than the CPU revolution. In just eight years, Nvidia has increased computation by 1,000x. By comparison Moore’s law was roughly 100x every 10 years.
Yet as Jensen points out, it’s 1000x already by year eight, and “there’s two more years to go”! Jensen said, “the rate at which we are advancing computing is insane”
Here you can see the in graph in 2016, Pascal the fastest chip was 19 TFLOPS on 16nm. Now the fastest chip is Blackwell at 20,000 TFLOPS and 4nm. This is the 1,000 times computation increase in just eight years.
Elf (ELF) - 16.1%
I like this company a lot, and how their revenue is accelerating along with bottom line growth. I’ve added to my position recently as I don’t see that worry of Ulta sales being a big issue. Looking in that, it seems like Ulta is a dying business, but I’m not sure that significantly impacts Elf. At $160 this price seems quite reasonable to me.
TransMedics (TMDX) - 15.5%
I was writing that I thought at $70 TransMedics was a solid buy. I added a little bit around 80, and then added again after they reported earnings. I liked this earnings a whole lot and wrote up some thoughts here.
Celsius (CELH) - 14.2%
I haven’t done a lot of research on them recently but still fairly high conviction here, I might like to add a bit at these $75 prices. I’d expect them to do well on earnings.
Axon (AXON) - 7.0%
Axon is right on the edge of where I’d be interested from a revenue growth perspective of being at 30%. I still have some questions where why their product is not taking off internationally. The financials look really good. My confidence in the leadership team is not that high though.
AppLovin (APP) - 6.4%
There was a great thread started on AppLovin over here. I’ve added my thoughts there and I am really interested in this company. I’d like to live through at least one earnings and see how they do before I re-evaluate.
Hims & Hers (HIMS) - 5.5%
I decided I wanted a slightly smaller position going into the earnings to see if their net income can continue to accelerate. This is still a small company, and has more risk than others. Wrote up a lot of thoughts over here
Companies I sold: NET, IOT, BEEM, MNDY
I’ve become more skeptical of the SaaS business model in this ~5% interest rate environment. It seems like most of the companies now end up trending to 25% growth over time.
Cloudflare - NET
This company has become a disappointment for me. I’ve been invested since their 2019 IPO and followed closely. This company seemed like a bargain at a 5B market cap for a company which was said to “run the internet”. In fact, I remember before this company went public on Hacker News it was commonplace for people to say “If Cloudflare is down, the internet is down”.
Unfortunately, the way I see it now, this business is run like a charity, where doing good is more important than shareholder return. This is really an incredible product suite they offer, but if they are unwilling to monetize it anytime soon, I’d rather be out. I could become interested again if the price gets really low, or they somehow figure out a way to get their sales organization together.
Samsara - IOT
My biggest concern here is that 2025 revenue is projected at 30% and they project employee growth to be 30% that year. Maybe it seems like a weird stat to harp on, but I figure if they grow their headcount by 30%, revenue should be growing much faster than that. Plus I have concerns their product may not have as big as a competitive advantage as I thought - they seemed to misplay the situation with that lawsuit.
Monday - MNDY
This company has very promising financials, but it seems like they have on and off again quarters. They don’t seem to be in a rhythm on acceleration of revenue. A couple quarters ago I was really impressed with what they said on the call. Unfortunately I have macro concerns about this company being based in Israel even though I know most of their customer base is US enterprises.
Beam Global - BEEM
I have so many red flags written down for this business it’s not even worth going into them all. First earnings was delayed by over 2 months and they should already be reporting again soon - the reason: they took on too many new initiatives. Next their sequential growth is not that impressive because they are including the Serbian company.
Biggest red flag of all it’s the CEO’s comments about these warrants they had advertised on their investor relations page. These warrants had a strike price of $6.40 and the stock price closed that day at $6.30. The CEO said the warrants were in the money, but this was just an outright lie. Also how does he consider the warrant being at the money to be worth anything? There’s only two possabilities - he either doesn’t understand what a warrant is, or there’s something worse going on.
Energy Services of America Corporation - ESOA
I am fascinated by this company and held a tiny position in them before selling. They have a 14x PE and revenue is growing 50% year over year. Current revenue in the last quarter was 90M dollars, but the market cap of the company is 114M.
They do energy services along the East Coast. I’m not sure there’s much innovation here but this company seems tremendously undervalued - or maybe I’m missing something completely here. They don’t even do earnings calls and my understanding this is run a bit differently than a typical wall street stock.
DocGo (DCGO)
This one is a very complicated story. Revenue is almost 200M and grew 80% yoy, the P/E is 70 and this is a profitable company. Yet the market cap is only 368M.
The old CEO’s name is Anthony Capone or Tony Capone - no joke. He resigned in scandal, but what was the scandal he was guilty of? They said he lied about which college he went to on the homepage of the website. He went to some lesser accredited university but it blew up into a scandal.
The company also had a number of problems with the New York city about a contract to handle migrants. This company provides healthcare to people in need to stay out of the ER. They run ambulances, full staff with doctors and nurse and mobile ICU units basically. They can potentially step in for disasters and help out - the mission seems quite nice. However, the City of New York claims they were badly in breech of a no bid contract. Failing many responsibilities they had. My take on the situation is the migrant situation in New York spiraled out of control - beyond what anything DocGo anticipated.
Long story short, I invested briefly in this company but then sold my shares short after that after going down a rabbit hole here.
Companies I researched,
ASML Holdings
Was checking in on what this company does and if it has relevance to the semis I follow like SMCI and NVDA. Not enough growth here, but sounds like a decent enough company. Put some thoughts on this company in a thread dedicated to the industry.
Arm (ARM)
This is a really interesting British company in the semis market. I’d like to learn more, sounds like their licensing of designs is an interesting business model.
Universal Technical Institute (UTI)
They provide secondary education for students seeking careers in professions that do not require a degree. Growing fast, nice financials. Some criticism of the business online for charging too high of tuition.
Tradeweb Markets (TW)
Financial players for trading bonds and other assets. Hugely benefitted from higher rates, the market cap on this company is very big though and its not growing fast enough to be interested more.
Duolingo (DUO)
I finally got around to reviewing DUO. It seems like a decently run software company and they may be able to get into some other learning markets. I just cannot wrap my head around why this app is so popular - and the whole business is based around the app. I tried using the app for a few weeks and it was good, but it wasn’t something incredible I cannot stop using.
StoneCo - (STNE)
Well run Brazilian financial and looks like nice growth. They don’t offer guidance. I’m not thrilled about investing in Brazil.
MercadoLibre - (MELI)
Seems like a well run company with a good leadership team. I think this company will likely do well, although I think they will face more competition. The board knows much more about this company than I do, but some things leave me with questions about this company. Specifically, I’d heard they were completely dominant throughout Latin America but it seems 95%+ of the revenue comes from three countries. The ramp up time on this business to learn the ins and out seems enormous, in addition to following individual country risks, this one is not for me.
Pinduoduo (PDD)
I’ve been hearing about this company Temu over and over again in different podcasts and seen their ads targeted at me. I’ve been wondering what the heck these ads are for these knockoffs items and prices that are so low they don’t make any sense.
Turns out Pinduoduo owns Temu and revenue is growing 123% while EPS grew 143% year over year on their last quarter, the P/E is 23 which seems reasonable. They are a Chinese company though, so they are going to trade at a discount because the risk of fraud is so high. I was also comparing PDD to Kaspi (KSPI) and MELI.
I find Kaspi to be the most appealing of these three. Yes, investing in Kazakhstan is extremely risky, but this company has a P/E of 10, pays a 6% dividend and has a 45% net income margin.
Lantheus Holdings (LNTH)
They have tools for diagnosing cancer and heart disease. The have very strong bottom line growth and revenue growing the in the mid 30s. This story requires a big ramp up - complicated tools to understand the conditions they treat. I saw they had a bump after earnings, so may look again.
Li Auto (LI)
Growing revenue 136%. Chinese car market, gross profit growth and EPS growth are amazing. If this was an American company with these numbers I’d be all-in. Again too concerned with the Chinese markets which are rife with fraud.
Navitas Semiconductor (NVAS)
Fast growing semi, they make GAN circuits and silicon carbide tech. Ultrafast charging for mobile, electric vehicles, and industrial applications. Large customer base of 10 of the top 10 OEMs. Pretty small company. I had some concerns they are guiding to be down sequentially in revenue.
Wrapping up three of my companies reported earnings so far and I’m pleased with the results of SMCI and TMDX. Both companies say they can accelerate revenue sequentially for the foreseeable future!
I’m happy to sell Cloudflare and re-allocate to my other highest conviction positions.
Next week I’ll be looking at a lot of earnings reports again - HIMS, CELH, AXON and APP
