YTD return: 8.99%
Note – YTD return through EOD 7/2/2021.
Current drawdown from ATH: 14.55%
Portfolio hit all time low drawdown of 36.14% mid-may.
YTD returns by month:
June: +8.99%
May: -2.84%
April: 6.52%
March: -16.5%
February: +1.26%
January: +7.91%
2020 return: 159%
June Delta YTD
My pf 15.42% -
ARKK 14.32% 6.05%
ARKW 9.51% 6.03%
S&P +3.26% -8.62%
QQQ 7.4% -5.33%
BTC -4.1% -7.97%
It’s amazing to watch how the leaders of this board managed their portfolio during the selloff that started in February and their subsequent march towards complete recovery and again looking at making ATHs for their portfolios. I’m still ~15% off my ATHs and somehow it adds up in my head as well when I think about some of the loosey-goosey conviction allocations I did in January as compared to the consistency shown by Saul and others in how they approach their investments. I know next sell offs won’t be the same as last but nevertheless this is a lesson I hope to retain.
Allocations
Ticker June May Chg% Name
ROKU 12.83% 11.05% 1.09% Roku
CRWD 12.00% 12.87% 6.54% CrowdStrike
TWLO 10.39% 9.73% -8.65% Twilio
SE 9.75% 11.26% 0.28% Sea Ltd
PINS 7.50% 7.00% -1.61% Pinterest
FVRR 8% 7% -1.33% Fiverr
MELI 6.82% 5.31% -13.51% Mercado Libre
ZI 5.59% 5.71% -15.48% Zoom Info
SNOW 4.23% 5.17% 2.78% Snowflake
FTCH 4.16% 5.79% -5.43% Farfetch
LSPD 4.12% 4.17% 3.12% LIghtspeed
UPST 4.00% 2.50% 35.96% Upstart
GHVI 3.70% 4.08% 11.29% Matterport
SOFI 3% 3% 18.53% SoFi
CURI 4.29% -26.10% Curiosity Stream
Cash 4.8%
Positions
CrowdStrike CRWD
A recent thread by @ CMF_BigECat highlighting the difference in market caps, revenues and valuations between Palo Alto Networks and CrowdStrike was very interesting. Palo Alto is a steady 20-30% revenue grower with comparable or better other metrics, 4x revenue base and 1/5th P/S multiples. So, market valuing high revenue and cloud native profile in high esteem. On the other hand, CrowdStrike revenue numbers have begun to show the effects of law of large numbers. I heard this snippet in Howard Mark’s podcast on Invest Like the Best and I guess it perfectly aligns with this contrast between Palo Alto and CrowdStrike.
“Psychology x fundamentals = price. So given set of fundamentals with rising psychology gives you rising price. People get more excited at the highs, they tend to buy more, that produces further price rise, and that process continues until it can’t anymore.”
CrowdStrike with all the tailwinds in cloud and cybersecurity and a hungry CEO, I’m hoping will not post a quarter or guide significantly lower than what markets want to accommodate for law of large number effects.
CMF_BigECat’s article - https://discussion.fool.com/cyber-security-comparisons-34860663…
Sea Ltd SE
A major player in Southeast Asia with a very profitable Gaming business (Garena) that funds E-Commerce(Shopee) and FinTech(Sea Money) businesses.
From 2018 Q1 – 2021 Q1, in three years Garena’s revenues went up more than 7x which by itself is astounding growth with a 111% YoY revenue growth in Q1 2021.
During the same period from 2018-21, Shopee’s revenues went up by even faster, by more than 25x with 2021 Q1 250% YoY.
Shopee Garena SeaMoney
Q1 2018 27.3 110.6
Q1 2019 130.6 173.3 2.8
Q1 2020 266.5 369.6 10.7
Q1 2021 772.3 781.3 51.3
However, on the profitability front, their Ecommerce is still losing 38c on per order basis with negative adj EBITDA of 45%. But these are much better than from a year ago when they were losing 60c on every order and -99% adj EBITDA.
On a much smaller scale, SeaMoney is also posting hypergrowth revenue growth while their Adj EBITDA is -299%.
At a group level, they are Adj EBITDA positive for four quarters in a row now, so I believe their losses from Ecommerce and Financial Services is not as much of a concern for now. Would be interesting to see how this interplay between their three divisions turns out as they start to lap Covid impacted quarters.
They posted lowest sequential % growth in MAUs and paying users for their gaming business, so that’s one thing I’ll be closely watching when they report next in August.
Roku ROKU
A platform provider for streaming services that is perfectly poised to benefit from shift to streaming. One of the top two in its space in US along with Amazon Fire TV.
No real weakness in their metrics except for clocking lowest quarterly sequential growth in Active Accounts in past 12 quarters. International growth is still to be seen if it can re-accelerate their active account growth.
In addition, M&A amongst other entertainment companies may directly put stress on content available through Roku and limit streaming hours. Until I see signs of it in their numbers, Roku is one of my high conviction positions.
Twilio TWLO
Communications as a Platform company with plans to extend as a customer data platform with their Segment integration. I really liked Peter Reinhardt, Segment’s co-founder podcast on Founder’s Field Guide and his articulation of Segment’s business and its potential within the realm of Twilio’s already established platform.
https://joincolossus.com/episodes/54216780/reinhardt-learnin…
Not hypergrowth like a few others on this board nor with the same 80%+ margin profile or operating efficiency at scale but along with their calculated acquisition strategy and a strong CEO they should be able to continue to post 40-50% revenue growth for the next year or so at least with all their acquisitions.
Pinterest PINS
Looking at their news feed on their website, they seem to be spending some energy on educating audience on how valuable it is to be a content creator and to be an advertiser on their platform. With the likes of Shopify, FB and Etsy, all trying to step on each other’s toes with new product offerings, I believe Pinterest would have to innovate and iterate even faster to get those ad-revenues go up and a stickier userbase and content creators. Especially with MAUs not projected to grow any faster, all eyes are on their ARPU growth. A second-tier position for me and will stay so until their next ER.
Snowflake SNOW
Poster child for a growth company with constant nosebleed valuation challenges. I’m contemplating to exit out of Snowflake purely on these concerns. As CrowdStrike, Cloudflare, DocuSign all near or heading to their ATHs, Snowflake’s price is stuck in mid 200s. If market’s appetite for high valuation increases further and pushes Snowflake’s price higher then probably other high growth names will go up as well in tandem. Unless of course Snowflake can post way an ER way above what market expects of them.
Upstart UPST
Increased my position to about 4% on an overall cost basis of $110 as the shorting noise seems to have settled down. After following the excellent coverage on this board, my conviction only grew and will look to add if there is any further weakness. I’m struggling to avoid price anchoring on this one to add to the position to match my levels of conviction as I followed them to a 4-5x stock price increase since their IPO just six months ago.
I like the positioning of their product offerings, unlike a vertically integrated financial services company like SoFi, I believe Upstart will have a relatively easier path towards growth and profitability with their platform approach servicing multiple banks that cater to different segments of the lending industry.
ZoomInfo ZI
A cloud-based information platform used primarily by sales professionals to identify and target their highest-value potential sales targets. Founded in 2007, based in Vancouver, WA and founder led.
No problems on the margin, profitability, cashflow metrics except for some debt on the balance sheet which probably is by choice to take advantage of the current low interest rate environment. However, they seem to be struggling with gaining psychological buy-in from the public markets as their valuation never went beyond their IPO time valuation even as they posted at least three better than decent ERs. Currently I have enough conviction to give them space in my portfolio as I understand their value as companies look to go aggressive on sales and marketing efforts to take advantage of the post-covid economic ramp-up.
Fiverr FVRR
Impressive 60% guidance for 2021 revenue growth even considering the three strong covid quarters that they would have to lap. SaaS like margins on what currently consists of mostly non-recurring business model. At least 60% revenue growth, increasing spend per buyer are two things that would keep in this company when they report next.
Farfetch FTCH
A luxury E-Commerce provider with significant operations in Europe and China. Their price keeps getting beaten badly for unknown reasons and they are currently struggling to recover as they are still 32% away from ATHs.
IMO, fashion could be one of the first industries to adopt AR and virtual try-on for online selling and Farfetch did just that with their collaboration with Snapchat. In addition, I’m hoping to see some reflection in results from their partnership with Alibaba.
Mercado Libre MELI
Added to the position as I no longer hold Shopify and wanted a pureplay Ecommerce-Fintech player just like Sea Ltd. They are another Covid beneficiary that will run into tougher comps rest of the year. Watching out for sequential GMV growth, Items Sold, TPV metrics.
Lightspeed LSPD
Market thinks they will ride the re-opening wave to the maximum, they keep on making M&As and their stock price keeps raising and their organic revenue growth although not spectacular still respectable 40-50% range. This was originally a Square replacement for me in pureplay FinTech space and I like their prospects as compared to AfterPay, Adyen, Affirm as Point of Sales are very sticky and have complex requirements in certain niches which they cater to.
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.
They are a company with a product that is full of potential in the AR Real Estate space and hopefully will start showing it in results once they get past the merger in Q3 2021. There is still a SPAC overhang on their price recovery along with probably some concern around non-subscription revenues which currently stands at 49% of total revenue. A smallish 3-4% position that is holding back my portfolio recovery to ATHs to a small extent but plan to wait and watch from here.
Sofi IPOE
Another company with still a SPAC hangover that is holding my portfolio recovery along with the shorting noise around it. Interested to watch if they are able to increase their non-lending revenues and see how their price moves once the shorting subsides. They are trying to be a FinTech super app and am starting to wonder if that is a bit of a stretch goal as it probably is little easier to have an investment product to go along with a replace cash p2p payments products like Cash-App and Venmo than for primarily a student loan and mortgage loan lending company. Not fully convinced of my dollars sitting here so thinking what to do with them.
Sold Positions - Curiosity Stream CURI
Below is what I have written in my May review and exited when I can’t think of a reason to hold onto them anymore and not add to the likes of ROKU, MELI that were still trading significantly off of their ATHs.
“Even at their small scale of only $43M LTM revenue, they are having to include recently acquired One Day university revenues to re-iterate their original guide of 71% 2021 revenues. Operating leverage also not showing any promise. Now that I think about them, with such crowded competition in streaming companies I’m now not sure if they have anything unique that customers are looking for. Their fact and education-based content probably will have better distribution with the likes of Netflix and Roku. I plan to exit position in the coming days”.
May Summary - https://discussion.fool.com/upsidedown39s-may-2021-summary-34844…
April Summary - https://discussion.fool.com/upsidedown39s-april-2021-summary-348…
March Summary - https://discussion.fool.com/upsidedown39s-march-summary-34792364…