PRIOR PORTFOLIO UPDATES
PORTFOLIO PERFORMANCE
| DATE | GauchoRico Portfolio (YTD) | S&P500 Total Return (YTD) |
|---|---|---|
| Jan | 3.1% | -1.0% |
| Feb | -1.2% | 1.7% |
| Mar | -13.2% | 6.2% |
| Apr | -1.5% | 11.8% |
| May | 3.4% | 12.6% |
| Jun | 28.0% | 15.3% |
The previous ATH for the portfolio was on 12Feb (+18.3% YTD), and the trough (-22.8% YTD) set on 8Mar was breached on 13May to set a new YTD low of -23.5%. Since that 13May YTD low, the portfolio rallied strongly and set a new ATH only 35 calendar days later. Thus, we have completed the cycle of this most recent big drop and subsequent recovery. Since breaking through the 12Feb ATH on 17Jun, the portfolio notched an additional six ATHs with the last one on 29Jun (+31.2% YTD) before the portfolio had a down day on the final day of June. The portfolio ended June at +28.0% YTD compared to the S&P500’s YTD return of +15.3%.
The +28.0% YTD result includes both investing as well as options trading (defined as trades closed within 90 days of opening the trade. I posted the results of my Q2 2021 options trading here. For more details on the options trading, please see that post. The options trading (both realized and unrealized gains and losses) for the first half of 2021 comprised a 3.5% gain on top of the total 2021 starting portfolio value. Thus, my investing gains (realized and unrealized) were 24.5% on top of my starting 2021 portfolio value. Therefore, the options trading comprised 12.5% of the total 2021 gain and investing comprised 87.5% of the total gain.
Staying invested in a very concentrated portfolio of high growth company comes with high volatility and requires a tolerance for large swings in the portfolio’s value. It’s not for everyone, but, for those who can stand the swings and act quickly to make changes when it’s clear that a portfolio company’s prospects have changed relative to other investment opportunities, the long-term rewards can be superior.
Since the start of 2018, I’ve been tracking my portfolio’s big drops (in March 2021, I wrote a post about this). This recent drop which we can call the 2021 rotation from growth-to-value/cyclicals can now be added to the table below.
| PEAK — BOTTOM | % DROP | Days: Old Peak to New ATH |
|---|---|---|
| 4Sep2018 – 24Dec2018 | -37% | 176 |
| 26Jul2019 – 22Oct2019 | -37% | 207/291* |
| 18Feb2020 – 16Mar2020 | -45% | 84 |
| 9Jul2020 – 16Jul2020 | -14% | 25 |
| 5Aug2020 – 11Aug2020 | -25% | 27 |
| 13Oct2020 – 10Nov2020 | -27% | 65 |
| 22Dec2020 – 3Jan2021 | -14% | 45 |
| 12Feb2021 – 17Jun2021 | -35% | 125 |
As the table shows, the recent drop was the fourth large drop since I started tracking in 2018. Interestingly, the magnitude of the 2021 drop (-35%) was very similar to the magnitude of the large drops that began in Sept 2018 and July 2019 (each of those two drops bottomed at -37% from the previous ATH). Only the drop caused by the lockdowns and fears of the pandemic was larger (-45%). An interesting feature of the 2021 drop was that after the initial decline of 35% from 12Feb to 8Mar there were several recoveries followed by renewed declines. The last of these subsequent waves finally breached the 8Mar low, albeit not by much, on 13May.
Is the Magnitude of a Large Drop Predictable?
Is there something special about a decline of about 1/3 in the portfolio’s value? Is that number somewhat predictive? I don’t think that anybody can be sure for it is certainly possible that my high growth portfolio could fall more than 37%. In fact, I sort of expect and am prepared for a drop of 50% or more. Yet, I must admit that during the 2021 drop I was influenced by the previous 37% drops, and I took aggressive actions starting on 5Mar when my portfolio had declined by a similar percentage to the 37% troughs of the 2018 and 2019 major drops. I recall thinking, at the time, that while the portfolio could decline further the risk-reward of adding leverage at the -35% level was a good bet. Even if the portfolio continued to drop to -50% or -60%, leverage added at about -35% would likely add incremental value to the portfolio over the subsequent two-year period.
Leverage Added After ~35% Drop Speeded Portfolio’s Recovery
The aggressive actions that I took starting on 5Mar were a) converting some shares to LEAPS (I’ve previously described this concept here), and b) increasing the amount of short puts in my portfolio (I’ve discussed this idea here). How far did I take the leverage? I actually took it quite far for me: after I completed selling shares (and deep ITM 2022 long call LEAPS) to buy near-the-money 2023 long call LEAPS, the value of the LEAPS (including intrinsic value plus time value) comprised about 35% of the total portfolio value! Buying LEAPS doesn’t involve going on margin; it just increases the number of shares that can be controlled (as compared to owning straight shares). However, I also increased the level of short puts in my portfolio, and this action utilizes margin. I do stay well below the maximum allowed margin level to avoid catastrophe for the portfolio (I had a catastrophe in 2016). To monitor my short put exposure, I use the maximum loss (i.e. if the underlying stock goes to zero) from all my short put positions and divide that number by my portfolio’s total value. For example, if a hypothetical portfolio worth $1M contained 10 short put contracts (i.e. 1000 shares equivalent) on CRWD with a $250 strike price, then the maximum loss (if CRWD shares went to $0) from the short put position would be $250,000. Thus, my worst case/short put exposure would be 25% ($250,000/$1,000,000). My typical short put exposure is around 15%. In March 2021 through May 2021, I let the exposure go as high as 35%. The above two aggressive actions increased both my downside (should the stocks in the portfolio continue to slide) as well as my upside. I would never encourage anyone to take actions similar to those that I used as they add a significant amount of risk on top of an already aggressive high-growth portfolio strategy.
In the case of my portfolio, the time needed to attain a new ATH was greatly accelerated by the leverage that I added in March. Without the leverage, my portfolio and portfolios with similar stock allocations would have taken longer to reach a new ATH. Similarly, the recovery times of my portfolio’s prior drops and recovery can’t be directly compared because the actions that I took in each instance were different. In particular, this past 2021 drop would have taken longer than 125 days but likely less than the duration of the 2018 and 2019 drops.
2021 Notable Days for the Portfolio
Below are some of the notable days in 2021.
| Date | YTD Return | Notes |
|---|---|---|
| 01/27/21 | -2.2% | local bottom |
| 02/05/21 | +12.6% | new ATH |
| 02/08/21 | +14.0% | new ATH |
| 02/09/21 | +16.6% | new ATH |
| 02/10/21 | +16.8% | new ATH |
| 02/11/21 | +17.8% | new ATH |
| 02/12/21 | +18.3% | new ATH |
| 02/25/21 | -3.4% | -6.3% on the day |
| 03/03/21 | -6.3% | -7% on the day |
| 03/04/21 | -13.6% | -9.2% on the day |
| 03/05/21 | -17.1% | -4.1% on the day |
| 03/08/21 | -22.8% | -6.9% on the day |
| 03/09/21 | -11.0% | +15.3% on the day |
| 03/11/21 | -4.3% | +9.6% on the day |
| 03/18/21 | -10.2% | -6.7% on the day |
| 03/24/21 | -15.6% | -8.6% on the day |
| 03/29/21 | -19.0% | close to 3/8/21 trough |
| 03/31/21 | -13.2% | +6.6% on the day |
| 04/13/21 | +4.0% | +8.0% on the day |
| 05/04/21 | -10.9% | -6.1% on the day |
| 05/06/21 | -21.1% | -9.6% on the day |
| 05/07/21 | -17.5% | +4.6% on the day |
| 05/13/21 | -23.5% | new YTD low |
| 05/14/21 | -16.3% | +10.9% on the day |
| 05/20/21 | -5.3% | +7.1% on the day |
| 05/24/21 | -0.1% | 7th consecutive up day |
| 06/10/21 | +11.3% | +5.4% on the day |
| 06/17/21 | +19.8% | new ATH (finally!) |
| 06/18/21 | +23.2% | new ATH; +5.1% on the day |
| 06/22/21 | +27.4% | new ATH; +6.2% on the day |
| 06/23/21 | +28.0% | new ATH |
| 06/24/21 | +28.5% | new ATH |
| 06/28/21 | +30.8% | new ATH |
| 06/29/21 | +31.2%* | new ATH (current) |
Weekly Performance
| DATE | GauchoRico YTD | S&P500 TOTAL RETURN YTD | DELTA |
|---|---|---|---|
| 01/08/21 | 6.5% | 1.9% | 4.6% |
| 01/15/21 | 6.4% | 0.4% | 6.0% |
| 01/22/21 | 10.2% | 2.4% | 7.9% |
| 01/29/21 | 3.1% | -1.0% | 4.2% |
| 02/05/21 | 12.6% | 3.6% | 9.0% |
| 02/12/21 | 18.3% | 4.9% | 13.3% |
| 02/19/21 | 14.2% | 4.2% | 10.0% |
| 02/26/21 | -1.2% | 1.7% | -3.0% |
| 03/05/21 | -17.1% | 2.6% | -19.7% |
| 03/12/21 | -6.3% | 5.3% | -11.6% |
| 03/19/21 | -7.7% | 4.5% | -12.3% |
| 03/26/21 | -15.8% | 6.2% | -22.0% |
| 04/01/21 | -9.5% | 7.4% | -16.9% |
| 04/08/21 | -3.3% | 10.4% | -13.6% |
| 04/15/21 | 0.0% | 11.9% | -11.9% |
| 04/23/21 | 3.1% | 11.8% | -8.7% |
| 04/30/21 | -1.5% | 11.8% | -13.4% |
| 05/07/21 | -17.5% | 13.3% | -30.7% |
| 05/14/21 | -16.3% | 11.7% | -28.0% |
| 05/21/21 | -2.4% | 11.3% | -13.7% |
| 05/28/21 | 3.4% | 12.6% | -9.2% |
| 06/04/21 | 2.3% | 13.3% | -11.1% |
| 06/11/21 | 12.6% | 13.8% | -1.3% |
| 06/18/21 | 23.2% | 11.7% | 11.5% |
| 06/25/21 | 28.0% | 14.8% | 13.2% |
WHEN TO DELEVERAGE?
As the portfolio blew past the prior 12Feb ATM on 17Jun, I began to reduce my overall short put exposure. As of the end of last week (25Jun), the short put exposure stock at 12.75%, down from about 35% in mid-May 2021. I know that my portfolio rally can’t continue forever so I will consider reducing my LEAPS leverage at some point. Switching LEAPS back into shares will provide me with additional ammo (i.e. to switch shares back to LEAPS again) when the next big drop happens. How do I know when to deleverage? I don’t think anyone can exactly time the tops and bottoms; however, I know that timing the top and bottom is not necessary to benefit from the actions that I took. In my opinion, the portfolio will probably continue to have more new ATHs in the upcoming months. Of course, I realize that I could be wrong about this. Let’s look back to some of the past big drops. Starting with Sep-Dec 2018 drop (-37%) which bottomed on 24Dec 2018, we can see that the portfolio hit 22 new ATHs before the next big drop. That big drop began after the 26Jul 2019 ATH and bottomed on 22Oct 2019; although the portfolio hit an intraday ATH on 18Feb 2020, the onset of the pandemic in early March 2020 prevented what otherwise may have been a full recovery to the 26Jul 2019 ATH. Also, 2020 was such an unusual year so the 42 ATHs between May 2020 and February 2021 don’t carry much weight for me. The chart below shows the new portfolio ATHs in each month (Jan 2019 through June 2021).
Since I added considerably more leverage during the most recent drop, the ATHs in June resumed sooner than if I hadn’t added that leverage. Thus, I can’t make an apples-to-apples comparison using the number of new portfolio ATHs when comparing different large drops. Instead, I’ll look at stock prices. The following table is based off of each stock’s 12Feb closing price. The following methodology was used.
- 12Feb closing price: 12Feb was the portfolio ATH before the “out of high growth” rotation began in the Spring of 2021. 12Feb was not necessarily each stock’s high around that date. I just used 12Feb arbitrarily.
- Low (after 8 Mar): On 8Mar the portfolio his its first trough so I used that date as the cutoff to assign each stock’s lowest closing price on or after 8Mar.
- Lowest drop on or after 8Mar as a percentage of the 12Feb closing price: This is the lowest that each stock dropped (using only closing prices) on or after the first trough. For example, CRWD hit a closing stock price oas low as $173.85 which is 72% (or a 28% drop) from its 12Feb closing price. This gives an indication of how far each stock dropped during the sector rotation.
- High (after 8Mar): Highest closing price since 8Mar. Intraday prices were not counted (e.g. UPST exceeded $190 intraday but only closed as high as $170).
- Highest percentage of 12Feb price (after 8Mar): A number below 100% indicates that the stock has not yet closed above its 12Feb closing price. A number above 100% indicates that the stock has closed above its 12Feb closing price (e.g. CRWD’s highest closing price since 8Mar was 6% above its 12Feb closing price).
- 30Jun closing price: This column shows each stock’s 30Jun closing price.
- Current percentage of 12Feb’s closing price: This percentage is the stock price’s current (i.e. 30Jun closing price) percentage of its 12Feb closing price. A number below 100% indicates that the stock is currently below its 12Feb closing price. A number above 100% indicates that the stock is currently above its 12Feb closing price (e.g. CRWD’s current price is 4% above its 12Feb closing price).
- Earnings reports since 12Feb: Each company has had one or two earnings reports since 12Feb. The last column in the table shows the earnings date(s) for these earnings report(s). The percentages in parentheses show the year-over-year revenue growth for the quarter(s) indicated; for example, CRWD reported 74% Y/Y revenue growth for its 31Jan 2021 quarter (compared to its 31Jan 2020 quarter).
- Adjusted current price as a percentage of its 12Feb closing prices: This percentage includes adjustments for revenue growth in all reported quarters since 12Feb. This calculation effectively raises the 12Feb closing stock price to adjust for revenue growth. We will use CRWD as an example to show how the calculations were made. CRWD reported Y/Y revenue growth of 74% on 16Mar. To compensate for this growth, we took the cube root of 1.74 to get 1.1485; thus, for CRWD to grow 74% in a year, it would grow 14.85% each quarter for four quarters in a row. So we would need to multiply CRWD’s 12Feb $242.10 closing price by 1.1485 to compensate for CRWD’s 31Jan 2020 revenue growth. We must do the same calculation for CRWD’s 30Apr 2021 quarter in which CRWD grew revenue by 70% Y/Y; this calculation results in 1.1419 or 14.19% growth for four quarters in a row. Thus, we multiply $242.20 by 1.1485 and again by 1.1419 giving us an adjusted 12Feb price of $317.50. CRWD’s 30Jun price of $251.31 is 79% of this adjusted price; thus, adjusted for reported quarters’ revenue growth, CRWD has not yet surpassed its 12Feb price.
| 12Feb | Low 8Mar or after | Low % of 12Feb | High 8Mar or after | High % of 12Feb | 30Jun | Current % of 12Feb | Adj. Current % of 12Feb | Earnings since 12Feb | |
|---|---|---|---|---|---|---|---|---|---|
| CRWD* | $242.10 | $173.85 | 72% | $257.12 | 106% | $251.31 | 104% | 79% | 16Mar (74%); 3Jun (70%) |
| DDOG* | $112.86 | $71.36 | 63% | $107.20 | 95% | $104.08 | 92% | 83% | 6May (51%) |
| DOCU* | $263.30 | $180.16 | 68% | $284.48 | 108% | $279.57 | 106% | 85% | 11Mar (57%); 3Jun (58%) |
| LSPD* | $73.02 | $54.09 | 74% | $86.17 | 117% | $83.61 | 115% | N/A | 20May (complicated) |
| NET | $85.95 | $61.77 | 72% | $107.60 | 125% | $105.84 | 123% | 111% | 6May (51%) |
| UPST | $102.18 | $46.87 | 46% | $170.00 | 166% | $124.90 | 122% | 96% | 17Mar (39%); 11May (90%) |
| ZM | $433.11 | $288.49 | 67% | $394.73 | 91% | $387.03 | 89% | 46% | 1Mar (369%); 1Jun (191%) |
| SNOW | $299.47 | $188.24 | 63% | $251.25 | 84% | $241.80 | 81% | 55% | 3Mar (117%); 26May (110%) |
The above analysis is far from perfect. In fact, there are many nuances which should be considered and the nuances are different for each company (below I’ll cover my take considering nuances that I find important for each company). Also, the companies marked with an asterisk indicate that I own call options (i.e. I’m employing leverage); I’m most interested in examining the companies on which I have leverage because I could make the decision to leave the leverage in place, reduce it, or even remove it completely; I’m not inclined to add any more leverage at this time so I’m not considering that option.
CRWD: CRWD is my most leveraged position. My entire 19.9% position is comprised of 2023 long call options (strike prices $170, $175, and $200). A position of 19.9%, if it were entirely comprised of shares, would cause my portfolio to rise or fall 0.199% for every 1% move in the price of CRWD shares. At the current CRWD price of $251.31, my portfolio would rise or fall 0.51% for a 1% move in CRWD shares; therefore, my portfolio at the current stock price is leveraged 258% (i.e. 158% above a share-only position). Thus, CRWD stock price movements amplify my portfolio’s gains and losses significantly. As CRWD share rise, the leverage factor will naturally decline (because the options get deeper and deeper in-the-money). Furthermore, the entire position was purchased in March 2021 or later and is held in only taxable accounts so selling decisions have significant capital gains ramifications. I do not want to needlessly trade my CRWD position. For these reasons, I find the information in the above table (for CRWD) very valuable.
So let’s analyze the figures in the table combined with other important information and nuances about CRWD. CRWD’s revenue growth has continued very strongly in the two most recent quarters. The growth has slowly decelerated but not significantly so. In addition, other key performance indicators such as customers added, ARR growth, new modules developed, number of modules purchased per customer, and dollar-based net expansion have come in very strong. In addition, the cybersecurity environment has become increasingly favorable particularly for the types of products and services that CRWD offers. CRWD stock hit an all-time closing high on 29Jun (yesterday), but, since there have been two quarters of somewhat stable growth, I think upward adjustments to 12Feb closing price of $242.10 are warranted. The adjustments would bring the price to $317.50 which puts CRWD’s current price 21% below its adjusted 12Feb level. Sure, we can ask whether CRWD was already overvalued on 12Feb; it’s a fair question. If the answer is yes then we still have a price that’s 21% below that level so the past two quarters’ growth provide additional margin of safety. This analysis corroborates my bias not to deleverage CRWD at this time. Even so, I deleveraged 10% of my call contracts this week but only for portfolio management reasons. I may cut the CRWD LEAPS again for the same reason if the share price continues to rise; however, after a second cut, I’d like to keep my remaining position until the 2023 LEAPS hit the one-year holding period (or until I get new information about the company that leads me to lower my allocation).
DDOG: DDOG comprises a 15.7% allocation in the portfolio. The position contains some leverage (long 2023 call options with $65 and $75 strike prices) held in both taxable and non-taxable accounts; thus, some leverage could be reduced without triggering taxable events. If all the DDOG LEAPS were shares then the position size would be 17.2% rather than 15.7%.
So let’s analyze the figures in the table combined with other important information and nuances about DDOG. Focusing on DDOG’s Y/Y revenue growth numbers could lead an investor to miss an opportunity. DDOG saw its business briefly stumble at the start of the 2020 pandemic; however, the business resumed its previous stride by most financial metrics and key performance indicators in short order. While the Y/Y revenue growth continued to deaccelerate, the setup for a reacceleration (partially due to weak comparable quarters in Q2 and Q3 2020) is intact. My investor friend, StockNovice, explained this eloquently in his May 2021 portfolio update. Reviewing his DDOG section in that update is worthwhile reading. With DDOG’s business very healthy, its dominant position in the log management segment of IT software, and an underestimation of its growth, DDOG’s 12Feb stock price, in my opinion, deserves an upward adjustment. Even without the adjustment, DDOG shares currently sit 8% below the 12Feb level. When adjusting for the 51% growth of the 31Mar quarter, DDOG trades 17% below the 12Feb level. DDOG shares have rallied strongly in recent weeks. I’m reluctant to reduce my leverage on DDOG at current prices; however, if the shares continue to rally into its 30Jun earnings result, DDOG would be the first position I would reduce leverage on.
DOCU: DOCU is the portfolio’s third largest position at a 12.6% allocation. The position contains the second highest leverage behind CRWD. Only 48% of the position’s controlled shares is in shares while 52% of the total controlled shares are in 2023 LEAPS (long call options with strike prices of $190 and $210). All of the LEAPS are held in tax-deferred accounts so there would be no tax consequences for eliminating leverage on DOCU. If all the LEAPS were shares then the DOCU allocation would be 18.8% rather than 12.6%.
So let’s analyze the figures in the table combined with other important information and nuances about DOCU. For a while, DOCU has been on the lower EV/S valuation range for hyper growth companies. I believe that the main reason for this is that investors have labeled DOCU a COVID-19 stock which they believe will face tough 2020 comparables. It also didn’t help that management has gone on the record stating that DOCU growth will likely slow toward pre-pandemic growth rates and that the company’s new products won’t contribute meaningfully to revenue growth for several years. I’ve posted in several past portfolio updates that I believe investors are wrong and that management is sandbagging. In each of the past five quarters, DOCU’s revenue growth rate has increased. There have been no signs of slowing. In addition, DOCU has a least 70% of TAM remaining to capture, an opportunity for continued and rapid international expansion, and an impressive roadmap that’s beginning to show early signs of growth contribution. Thus, for all of the reason stated above, I believe that adjusting DOCU’s 12Feb stock price upward for the revenue growth delivered in two quarters since 12Feb is fully justified. After making these adjustments, DOCU shares trade 15% below the 12Feb price, which I believe wasn’t overvalued. At this time, I have no interest in reducing my DOCU allocation or reducing my leverage on DOCU.
LSPD: With all of LSPD’s recent acquisitions, I won’t even try to figure our LSPD’s true growth rate. The figures in the above table are not useful to me for influencing any decisions about changing my leverage on LSPD. LSPD has several growth tailwinds that I’ve discussed extensively in my last portfolio update. My opinions expressed previously are not much different now. I’m expecting a spectacular 30Jun quarter, and I’ll likely maintain the leverage that I have on my LSPD position until I see the 30Jun quarter’s results.
NET: I have no leverage and no options positions on NET. In my opinion, NET is highly valued compared to other hyper growth companies. NET’s EV/S is among the highest among its cohort companies. In addition, since 12Feb, NET’s stock price appreciation has outpaced its growth. Even adjusted for a 51% growth quarter (reported on 6May), NET is trading 111% above its 12Feb closing price. Even though NET has shown steady revenue growth for a year and a half, I believe that lots of future success is already baked into the stock price. I have zero interest in leveraging my NET position. All of my shares are in taxable accounts, and my highest cost basis shares will go long-term in about five weeks. I may consider reducing my position then.
UPST: UPST is hard to value. I have no idea what it should be worth, but I like its progress and what it’s doing. The Y/Y revenue growth figures should be taken with a grain of salt because 2020 was such an unusual year. In particular, the pandemic induced a lending/credit freeze which affected UPST starting in March 2020. Thus, the 90% growth in the 31Mar quarter is inflated compared to what would have happened in the absence of the pandemic. Next quarter’s comparable is even more out of whack. The stock has been extremely volatile with a blowout quarter reported on 11May, a lockup expiration in mid-June, and a short squeeze on a heavily shorted float. Therefore, I wouldn’t make any decisions based on the numbers in the above table. I’m not buying calls or any options on UPST due to a) the difficulty in valuing a fair price, and b) the high volatility of the shares (i.e. making buying options very expensive). However, I am selling both puts and calls to take advantage of the high premiums that are available for selling options.
ZM: ZM’s revenue continues to decelerate as everyone expects. The Y/Y revenue growth numbers are very high because the comparable quarters from 2020 are so favorable. The comparisons will become increasingly more difficult starting in the 31Jul quarter. Using the revenue growth from the quarters reported since 12Feb (to make adjustments) will, in my opinion, lead to a faulty conclusion. I wouldn’t be adding any leverage to ZM.
SNOW: SNOW’s revenue growth numbers (and SNOW’s valuation) are abnormally high. Even so, revenue growth for SNOW is backward looking because newly onboarded customers take six to nine months to produce any meaningful revenue for SNOW. Thus, revenue growth isn’t the best metric for SNOW. While I want to be invested in SNOW, the percentage of SNOW’s 12Feb and adjusted 12Feb price in the above table are not particularly useful to me. I’m not interested in leveraging my SNOW position.
Summary: For most of the portfolio positions that have leverage (CRWD, DOCU, and DDOG), the analysis, in my opinion, provides some value for making leverage adjustments (or not). The exception is LSPD which I see as a special case for maintaining leverage through the next 1-2 earnings reports. For UPST, ZM and SNOW, I believe that the methodology of making adjustments based on recent revenue growth rates is flawed.
ALLOCATIONS
| TICKER | 6/30/21 | 6/4/21 | 5/31/21 | 5/7/21 | 4/30/21 | 3/31/21 | 2/12/21 | 1/31/21 | 12/31/20 |
|---|---|---|---|---|---|---|---|---|---|
| CRWD | 19.9%* | 17.8%* | 20.0%* | 25.8%* | 30.2%* | 27.7%* | 31.2%* | 31.2%* | 31.5%* |
| NET | 15.9% | 15.6% | 15.2% | 16.7% | 16.6% | 15.2% | 17.7%* | 17.9%* | 17.8%* |
| DDOG | 15.7%* | 16.3%* | 16.7%* | 17.5%* | 12.0%* | 12.9%* | 10.3% | 10.7% | 10.4% |
| DOCU | 12.6%* | 10.3%* | 6.6%* | 5.4%* | 5.7%* | 5.6%* | 12.6% | 16.2%* | 16.4%* |
| LSPD | 11.3%^ | 12.2%^ | 12.1%^ | 12.6%^ | 13.1%^ | 13.2%^ | 6.2%^ | 4.8%^ | 3.3% |
| UPST | 7.8% | 7.0% | 6.3% | 4.6% | 4.4% | 5.7% | 2.7% | — | — |
| ZM | 5.8% | 9.1% | 10.8%* | 12.0%* | 11.0%* | 12.3%* | 11.6% | 11.5% | 11.0% |
| SNOW | 5.6% | 7.0% | 6.8% | 7.4% | 6.9% | 3.0% | 0.7% | 0.5% | — |
| GOLD | 2.0% | 2.8% | 2.9% | 2.2% | 1.6% | 1.7% | 1.2% | 1.4% | 3.0% |
| NEM | — | — | — | 1.3% | 1.0% | 1.1% | 0.9% | 1.0% | 1.0% |
| PATH | — | — | — | — | 0.1% | — | — | — | — |
| PTON | — | — | — | — | — | 4.0% | 3.7% | 4.0% | 4.2% |
| BPRMF | — | — | — | — | — | 1.2% | 1.3% | 1.3% | 1.4% |
| Cash | 6.5% | 3.1% | 3.0% | 1.3% | -0.2% | 1.2% | 1.0% | 0.8% | 0.7% |
I’m happy with the allocations in my portfolio, and, as I wrote above, I’m also happy with the amount of leverage that I’m currently utilizing on CRWD, DOCU, DDOG, and NET (no leverage on NET). The cash has increased as I’m preparing to make a 15Jul estimated tax payment equivalent to about 2% of my portfolio’s value. In addition, I expect to owe an additional 3.7% in taxes on capital gains that I’ve realized in the first half of 2021. Thus, 5.7% of the portfolio’s 6.5% cash is slated for the taxman.
PORTFOLIO CHANGES
Changes since 4Jun2021
- Bought more DOCU: Added about 2% allocation to the DOCU position for about $240/share.
- Sold $210 CRWD LEAPS: The value of the sale was about 1% of the portfolio’s value.
- Bought more UPST: After the IPO lock up expired and after the short interest declined, the price stabilized around the $125 level. Added about 3.5% allocation to the UPST position.
- Sold about 1/3 of ZM position: Sold the highest cost basis shares. Much of the proceeds went into DOCU and the rest were reserved for an upcoming income tax payment.
- Sold 10% of CRWD LEAPS contracts: A >20% position that’s 100% LEAPS (no shares) controls more shares than if the same amount of capital were just invested in shares. The sale of these Jan2023 $200 calls was purely for portfolio management reasons.
FINAL THOUGHTS
In the Final Thoughts section of my last portfolio update, I wrote about the pandemic, inflation and interest rates, and the sector rotation from growth to value. Since then “the market’s” sentiment has completely reversed in favor of the GauchoRico portfolio which is now +28% YTD compared to the S&P 500’s +15.3% YTD. Whether this vindication is here to stay for a while or not, no one can know for sure. Personally, I think that the GauchoRico portfolio may well see more ATHs this Summer. The economy reopening, government fiscal spending, and the probability of passage of a large infrastructure spending legislation have yet to fully work their way through the U.S. and global economies. Inflation fears have abated for now. Of course, I have no crystal ball, and I could be completely wrong. But my portfolio is currently positioned to strongly benefit from continued increases in the stocks of the portfolio.
The next earnings results cycle will begin in about three weeks with most of the companies in the portfolio estimated to report between 4Aug and 1Sep. Stay tuned for my next portfolio update (probably in mid-August).
The opinions, thoughts, analyses, stock selections, portfolio allocations, and other content is freely shared by GauchoRico. This information should not be taken as recommendations or advice. GauchoRico does not make recommendations and does not offer financial advice. Each person/investor is responsible for making and owning their own decisions, financial and otherwise.