Wpr101's portfolio Nov 2023 update

Hey, my first time posting an end of month portfolio. I’m looking to get more disciplined with my approach. Here’s my holdings,

Monday - 15.8%
Samsara - 15.2%
Elf - 14.6%
Celsius - 13.8%
Super Micro - 12.3%
Axon - 12.1%
Cloudflare - 11.9%
Transmedics - 4.0%

Companies I sold recently are: Remitly, DLocal, and Datadog
Watchlist: Nvidia

Monday is my top confidence position, and I believe they are undervalued significantly by the market. The company has turned GAAP profitable and this seems to have gone relatively unnoticed by the market. Their scale is massively improving on so many different metrics. Interestingly their adj free cash flow for the last quarter was 64.9M which is exactly the same adj free cash flow that Snowflake posted in the last quarter! I posted more detailed thoughts on Monday in this thread.

Samsara is moderately high confidence position for me. These percentages posted include the 25% bump up on Friday so it was more in the middle of the pack before. The numbers keep looking impressive quarter after quarter. I’m in the middle of reviewing the past Q’s results which look good especially on large customer adds. That being said I’m surprised to see a 25% bump up, maybe the price was lowered by the short report which seems to be invalidated.

Elf is a newer position for me which rapidly moved into a top position recently. I posted an intro thread to this one some months back, and I’m pleased to see others on this board interested as well. What I like most about this company is they used to be a 25-35% grower for some time, and that has picked up into becoming a 70%+ growing company! It is very rare to see an established company do this, and most other growth companies have growth drop off as they scale. Some examples in SaaS would be Datadog and Snowflake which were about 100% growth companies that have now settled in the 25-30% growth range.

I ordered some elf products recently and was impressed with the delivery speed, packaging and products. The products are very low cost for what seems like high quality. They have a huge following among younger generations and making things like skin care a trending topic on social media. I believe marketing is a key competitive advantage for them, and unlike many vice related businesses they can advertise to teenagers without any consequence because their products are beneficial. I’m contrasting this to the company Juul e-cigarette company which basically got kneecapped for advertising to teenagers in a way that was similar to traditional cigarette ads.

Celsius is a fairly high confidence position for me. Before knowing this was a publicly traded company I saw some buzz around this product. My workplace had a fridge of Celsius, Redbull, coffees, traditional soft drinks, and waters. Yet the Celsius was the first shelf to always clear out and many team members talked about how they like it. I only found out a month later it’s publicly traded and growing at 100%+!

Their partnership with Pepsi seems to be win-win and I think this is a company which has mastered marketing in the modern age. I can see them continuing to take market share from Monster and Redbull. One thing that bothers me slightly about their investor relations is the lack of guidance. Their numbers seem quite good, but the lack of guidance makes it hard to know what their own expectations are.

Super micro is one I picked up when the share price was $100-150 and it rocketed up before topping off and coming down some. I first got interested seeing the P/E was less then 15 with massive revenue growth. This last quarter had revenue down 3% year over year. There’s some supply constraint issue which seem to crop up from time to time too. I should be doing more research here to understand what’s going on.

I still see it as a company with a lot of potential upside benefitting from AI trends, which has strong profitability. I’d probably reduce it this position a little more if the gains in the taxable accounts were lower, but I’ll probably wait till it gets to long term gains and then re-evaluate. I don’t mind staying in this one a few more quarters to see if they can recover the growth. I’ve been surprised to see the board get interested in Pure Storage over Super Micro, I would consider between smaller hardware companies that Super Micro is much more compelling of an opportunity.

Axon is pretty interesting to me, their number look really good. However I have a bad taste in my mouth from investing in this company from a long time ago where they were spending huge on marble tiled floors and buying private jets while the company was bleeding money and losing share price. It’s the same founder there who seems like he never matured from being a fraternity brother in college. I’m glad his role at the company is somewhat sidelined and he let’s others operate the company. There was recently a story about the crazy work environment at Axon with employees being encouraged to be tased.

This may be an unpopular opinion, but I believe this company succeeds in spite of their CEO because they have an amazing product. The product is a near monopoly in the field and demand for their newer products is soaring. Almost anytime I see police videos posted online it’s with the Axon body cam. Their opportunity in international seems enormous. This company is really a story of contrasts for me and I believe they would be a much larger company already with better management. I’d be looking to increase my position if the CEO leaves.

Cloudflare delivered an impressive set of results and I’ve been building back a position here. I posted my thoughts on the quarter here. Sales efficiency has improved with large customers and I’m encouraged by the profitability numbers on operating income. I believe they have the biggest potential of any company I own, possibly becoming the 4th public cloud hyper scaler.

Transmedics I’m back in after an amazing beat on revenue they had, along with proven efficiency in the airline business. Just a starter position here to see if they can continue.

Remitly I sold this one as my confidence isn’t as high as other companies I own after their last report showed somewhat poor bottom line numbers. I initially thought to hold for one more quarter, but decided I would rather move that money to higher confidence positions. There was a long thread about competition for this company, I don’t see it as that huge a threat, but a decent amount of unknowns for me.

DLocal I was very enthusiastic about this company going into earnings, however they seem to be blindsided by Argentina and Nigeria currency issues. Even though on previous calls they mentioned the were fully hedged and currency fluctuations shouldn’t have an impact. Their hedges didn’t perform as expected and a lot of the call was explaining this. I lost some trust in management after this.

Datadog started a small position here which gained 10% quickly but I sold and reallocated to other opportunities.

Nvidia is on my watchlist, and looking to review the latest report. It was $500 going into earnings which seemed like a blowout but now they sit at $460, I’m intrigued by the scale of this one to be able to grow. I think adding a large cap may balance out my portfolio some.

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Nice portfolio. The only position I can’t understand is SMCI. Why would you want to mess with something that’s so dependent on supply with which it’s actively having problems?

Why not NVDA instead? Just grew 206% YoY this quarter – clearly benefiting already. Also the most profitable company I know of, with a net margin over 50%.

Bear

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I agree Bear, although I’m having a 10% position in SMCI. But I’m contemplating of selling it and buying NVIDIA.

The only two reasons why I’m still in SMCI is, that comparing the YTD charts, SMCI is up slightly higher 228% vs 220%. That gap closed over the last couple of days. I think last week, SMCI was up roughly 20% YTD than NVIDIA.

The other reason is, that SMCI with a TTM PE of 23 seems still to be cheaper than NVIDIA with a TTM PE of 61. But obviously with much more growth (23 vs 57%) all from Seeking Alpha.

I’m not sure, if SMCI might be the better 12months play on AI, just because of more room to grow.

But to be honest: I think NVIDIA seems to be the safer play. Hence me considering switching to NVIDIA.

Cheers
Haikili Kona

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Thanks for the feedback Bear. Funny you show mention swapping Super Micro for Nvidia. I was planning to swap some of the SMCI position in my non-taxable account to start a position in Nvidia, and hence why it’s on my watchlist.

The SMCI buys that I have in my taxable accounts are about 4 months away from getting into long term capital gains and I’m comfortable holding till they lap that period. Normally this wouldn’t be major factor but since the gains are large on those some of those buys, and it’s getting closer to this one year mark this seems to make sense.

First I’m looking to review the latest earnings report on Nvidia, I only glanced at the headline numbers but need to look deeper.

On the other hand, Super Micro is cheaper as HaikiliKona1 mentions. I see it having a fair amount of upside if the supply chain issues can be resolved, and the market seems to give some leniency on them when the do come up. I’m seeing the market believing they will overcome those issues.

On a product side I can understand why Super Micro has a big market. The software and AI guys do not want to spend time configuring a hardware rig, and would rather buy something off the shelf. I believe this is a growing niche within hardware.

Overall, I’d like to see how one or two more quarters play out at least on this company. I think they have a lot of potential to grow into a bigger company and have a reasonable valuation right now.

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