I’ve decided to post this mid-month portfolio update because about half of my companies (DDOG, LSPD, NET, UPST, and ROKU) have reported their latest quarterly results. That and because my family’s been out of town so I’ve had some extra spare time. The companies’ results mostly reinforced my previous sentiments and hopes; I’ll discuss my updated views of these companies.
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% |
| Jul | 33.7% | 18.0% |
| 13Aug | 55.9% | 20.0% |
Since the end of July, the GR portfolio hit four more all-time highs, including an ATH on 13Aug at +55.9% YTD. Since the 13May YTD low (-23.5%), the portfolio has hit 17 new ATHs and increased by 104%. In the past two weeks, the portfolio surged up 16.6%! The portfolio has also continued to expand its outperformance over the S&P 500 and is now at an ATH difference of 35.9% in favor of the GR portfolio. The outperformance can be attributed to three factors. First, when managing a concentrated, high growth portfolio, I attempt to stay invested in the best companies at all times. I think I’ve achieved good success in this regard during 2021. Second, the portfolio earned 15.4% of its YTD gains from short-term options trading. In other words, without this options trading, the portfolio would currently be up only 47.0% YTD. Third, in March though May, I added leverage in the form of converting shares to LEAPS; I was fortunate to make the switches near the bottom of the recent big drop which enabled the portfolio to rebound more strongly after 13May. I have since reversed much of the leverage; I’ll explain the details of the remaining leverage in the Allocations section below.
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 |
| 07/06/21 | +33.4% | new ATH |
| 07/09/21 | +33.9% | new ATH |
| 07/14/21 | +25.6% | -4.0% on the day |
| 07/22/21 | +34.2% | new ATH |
| 07/23/21 | +36.9% | new ATH |
| 07/26/21 | +37.0% | new ATH |
| 07/28/21 | +37.9% | new ATH |
| 08/04/21 | +41.2% | new ATH |
| 08/05/21 | +49.1% | new ATH |
| 08/12/21 | +51.2% | new ATH |
| 08/13/21 | +55.9%* | 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% |
| 07/02/21 | 28.9% | 16.7% | 12.1% |
| 07/09/21 | 33.9% | 17.2% | 16.6% |
| 07/16/21 | 23.8% | 16.1% | 7.6% |
| 07/23/21 | 36.9% | 18.4% | 18.5% |
| 07/30/21 | 33.7% | 18.0% | 15.7% |
| 08/06/21 | 46.7% | 19.1% | 27.6% |
| 08/13/21 | 55.9% | 20.0% | 35.9% |
ALLOCATIONS
| TICKER | 8/13/21 | 7/31/21 | 6/30/21 | 5/31/21 | 4/30/21 | 3/31/21 | 1/31/21 | 12/31/20 |
|---|---|---|---|---|---|---|---|---|
| UPST | 21.4% | 13.0% | 7.8% | 6.3% | 4.4% | 5.7% | — | — |
| DDOG | 15.8%* | 16.4%* | 15.7%* | 16.7%* | 12.0%* | 12.9%* | 10.7% | 10.4% |
| CRWD | 14.9%* | 19.1%* | 19.9%* | 20.0%* | 30.2%* | 27.7%* | 31.2%* | 31.5%* |
| DOCU | 11.3% | 13.2% | 12.6%* | 6.6%* | 5.7%* | 5.6%* | 16.2%* | 16.4%* |
| LSPD | 8.8%^ | 11.1%^ | 11.3%^ | 12.1%^ | 13.1%^ | 13.2%^ | 4.8%^ | 3.3% |
| NET | 7.7% | 13.4% | 15.9% | 15.2% | 16.6% | 15.2% | 17.9%* | 17.8%* |
| SNOW | 5.7% | 6.0% | 5.6% | 6.8% | 6.9% | 3.0% | 0.5% | — |
| ZM | 4.4% | 5.5% | 5.8% | 10.8%* | 11.0%* | 12.3%* | 11.5% | 11.0% |
| ROKU | 3.0% | — | — | — | — | — | — | — |
| GOLD | 1.6% | 2.0% | 2.0% | 2.9% | 1.6% | 1.7% | 1.4% | 3.0% |
| NEM | — | — | — | — | 1.0% | 1.1% | 1.0% | 1.0% |
| PATH | — | — | — | — | 0.1% | — | — | — |
| PTON | — | — | — | — | — | 4.0% | 4.0% | 4.2% |
| BPRMF | — | — | — | — | — | 1.2% | 1.3% | 1.4% |
| Cash | 5.8% | 1.4% | 6.5% | 3.0% | -0.2% | 1.2% | 0.8% | 0.7% |
Three positions in the portfolio remain leveraged with call options. I have zero CRWD shares; the entire position is comprised of Jan 2023 call options ($170, $175, and $200 strike prices) that were purchased between 5Mar and 3May 2021. Thus, the CRWD allocation changes are amplified when CRWD stock moves up or down. In the past two weeks, I did not buy or sell any CRWD, but the stock price moved down so the allocation drop was amplified. The DDOG allocation is comprised of a 14.9% allocation in shares plus a 0.9% allocation in Jan 2023 call options ($65 strike price). The LSPD position is comprised of a 7.8% allocation in shares plus a 1.0% allocation in 17Dec $65 call options. The portfolio contains 16.8% of its value in the form of calls options and 77.4% in stock. The remainder is cash. The cash position has increased during the past two weeks, but 3.8% of the portfolio’s value is owed in accrued but unpaid capital gains taxes leaving 2.1% of net available cash. Portfolio changes during the past two weeks are detailed below.
PORTFOLIO CHANGES
Changes since 31Jul2021
- Sold 5% allocation of NET shares: Sold during the first week of August.
- Sold 70% of DDOG LEAPS: My bias was to continue to reduce the leverage that I added near the bottom of the big drop. I sold all of the DDOG LEAPS that were in my tax deferred accounts.
- Sold 75% of LSPD 17Dec calls: The sales amounted to about 1.5% of the portfolio’s value. I sold all of the 17Dec $70 calls and half of the 17Dec $65 calls. Since the options expire in a few months, I decided to take the gain and avoid the risk of a stock price drop (without enough time to rebound) between August and December.
- Bought more UPST: Increased the position by another 1% prior to earnings. I also bought some $125 call options prior to earnings, and I exercised some of those options (after the earnings result) in order to further add to my UPST position.
- Initiated a new position in ROKU: I’ve had my eye on ROKU since I exited the position in 2020. The initial allocation was 3.6%, but the allocation is now lower due to ROKU shares falling and most of my other positions rising.
Explanation of Changes
NET: I think that the shares are highly valued relative to what the company has delivered in terms of revenue and revenue growth. I explained my opinion about this in more depth in my last portfolio update. I followed through on my belief by selling another 5% allocation.
DDOG: DDOG delivered a superb result so the sale of the DDOG LEAPS had nothing to do with my conviction level. The LEAPS in my non-taxable account were the result of an opportunistic conversion from shares to LEAPS a few months ago. I had always intended on reversing the trade but wanted to wait until after the Q2 earnings result (because I expected a great result that would likely move the stock up). I sold the LEAPS when the shares were trading at about $135 while I had bought the LEAPS when the shares were trading between $75 and $80.
LSPD: LSPD showed me that the thesis is playing out as I expected (see more details below). Actually, their 30Jun quarter was better than I expected. I’ve written about all the reasons why I own LSPD; these thoughts can be found in several of my previous portfolio updates starting with the 31Dec 2020 portfolio update.
UPST: My confidence in UPST’s business grew in the weeks leading up to its Q2 quarterly earnings results. Since I thought there was a very solid chance for a big share price increase after the Q2 earnings release, I added to the position by buying more shares and some call options. Clearly, I wasn’t disappointed. I’ll explain my updated thoughts on UPST below.
ROKU: I deployed some of my NET proceeds into ROKU after ROKU delivered a solid result and then sold off. Granted ROKU shares had run up prior to the earnings release, so the decline may be due to other investors’ disappointment. As a company, I see ROKU as a long-term winner, and I like the progress that ROKU is making in the U.S. market. I want to see ROKU replicate that success in international markets, but this future success outside the U.S. remains a question mark for me. Another risk with ROKU is whether global supply chain woes will affect ROKU’s ability to meet demand for their players; their platform revenue is dependent on new customer additions which, in turn, is dependent on a continuous supply of players. Currently, ROKU is my lowest conviction company, and I may not keep it.
EARNINGS RESULTS
DDOG, LSPD, NET, and UPST reported quarterly results since my last portfolio update. Below are my thoughts on these results.
DDOG (15.8% allocation; Q2FY21 5Aug earnings date)
Going into the earnings call, I was looking for a sharp reacceleration in revenue growth. In Q2 2020, the Company’s customers cut back on their spending with DDOG as they stepped back and assessed the impact of the pandemic on their businesses. For several quarters, the numbers (financial results) were deceiving and masked the true strength of DDOG’s business. I didn’t see this at first; Saul and others (not me) figured this out and wrote about it in posts on Saul’s Investing Discussions. We’ve patiently waited for three quarters for the reacceleration in revenue growth to begin in Q2 2021. The results, released on 5Aug, were even better than I expected. Revenue growth surged back to 67% growth. Every other metric that I track was very solid in Q2; I couldn’t find anything wrong or to worry about in the results. The only challenge mentioned on the call was a difficulty in finding candidates for DDOG’s job openings. However, I expect this challenge to fade next month when children go back to in-person school (freeing up parents to work again) and the removal of government assistance drives workers back into jobs. Overall, I give management a solid “A” for execution. Some of the CEO’s/CFO’s comments (paraphrased by me) that stood out as relevant included the following:
- Aggressively hired throughout the pandemic: DDOG never took the foot off the gas so the Company now has enough sales people to support further revenue growth and customer acquisition.
- Issued very strong guidance: For next quarter, DDOG is guiding for 60% revenue growth. Assuming DDOG beats that guidance, we can expect revenue growth in the mid- to high-60s percent meaning that DDOG only really had a brief hiccup during the start of the pandemic.
- Continued investment in R&D and S&M: It’s another positive sign that DDOG will carry on with “continued aggressive investments in R&D and go-to-market”. These investments should support new product introductions and customer acquisition to fuel revenue growth for the foreseeable future.
- Opportunity in front of DDOG is very large: DDOG has a lot of total available market left to grab and that market will also keep growing. Here’s what CEO Pomel said on the Q2 conference call:
“One is, in terms of penetration, I think the intersection of what we have and what’s in the cloud in the next year is still a small fraction of what there is in the market total. So there’s a lot more we can get from that. The second aspect is that the world is transforming digitally so the market, like the overall — the size of the infrastructure that will have to be monitored probably is a lot bigger than what had to be monitored five years ago.”
Oliver Pomel during the Q2 2021 earnings call on 5Aug 2021
- Continuing with what’s working: Management was asked several times about what’s changed and what DDOG is doing differently. The answer was that nothing’s really different and what’s worked for DDOG in the past should continue to work well going forward. From this and from the Company’s business performance, I’d say execution has been and should continue to be top-notch. Furthermore, I think management sees a very long runway for growth going forward. I agree.
In summary, I’m very pleased with DDOG’s performance, execution, and future prospects. As it should, DDOG remains one of the highest allocation stocks in the portfolio.
LSPD (8.8% allocation; Q1FY22 5Aug earnings date)
The thesis for holding LSPD remains strong with growth ahead from the reopening of commerce (particularly in sectors affected by the pandemic), rollout of Lightspeed Payments, and consolidation of a fragmented market. During the last quarter, we saw strong evidence that LSPD is executing well on all three fronts.
Lightspeed Payments penetration exceeded 10%, and the Payments attach rate for new customers was in the 60-70% range. LSPD announced the launch of Payments in five European countries (Germany, France, Switzerland, Belgium, and the Netherlands) with further plans to launch in some Asia-Pacific countries. The Company maintains that they will be able to achieve 50% Payments penetration. Assuming annual GTV is about $80B (and growing), a 50% Payments penetration translates to about $1B in revenue! And that’s only from Payments; LSPD will, of course, also get increasing revenue from software subscriptions. Progress toward that 50% penetration goal is continuing.
Customers in the retail, restaurant, and hospitality businesses showed incredible strength in Q2. These LSPD customers are coming back in a big way. Specifically, hospitality GTV was up 380% and omnichannel retail GTV was up 139%. Whether this strength continues into the 30Sep quarter we don’t yet know. The coronavirus is resurging which could once again affect businesses that are dependent on human-to-human interactions. If LSPD’s customers do need to take precautions, then we know that they’re better equipped with tools (provided by LSPD) that facilitate contactless purchasing. Furthermore, any shutdowns, if they do occur, will be temporary and business would rebound strongly eventually. Personally, I tend to think that the worst impacts (on retail, hospitality, and restaurants) of the pandemic are behind us.
LSPD also continued to make progress on its consolidation strategy. Having now acquired customers in most geographies, LSPD has continued to acquire companies for their technology: NuORDER and Ecwid most recently. As LSPD integrates these companies into the fold, the Company expands its product offering to all relevant customers in its target markets. Thus, we have growth from cross-selling of the acquired technologies. NuORDER is particularly interesting because it will likely create a nice differentiator through the rollout of B2B supply chain tools and a network.
In summary, there’s continuing evidence that LSPD is executing where it needs to in order for the investment thesis to play out.
NET (7.7% allocation; Q2FY21 5Aug earnings date)
NET launched a flurry of new products over the past nine months. Yet, revenue growth has not accelerated significantly and has remained stuck in the low 50s percent (year over year growth). I’ve been expecting an acceleration for several quarters, but it hasn’t arrived. With all the new products, eventually NET must accelerate growth significantly right? It didn’t happen in the 30Jun quarter. Revenue growth came in at 52% slightly higher than Q1’s 51% and Q4’s 50%. NET has a lower revenue growth rate than just about every other company in the portfolio. Surprisingly (to me), the stock prices has kept climbing (into earnings and after). Owning NET has required patience and that continues to be the case. Then why is NET still in the portfolio? There are reasons to be optimistic.
NET’s large customers (spending $100K or more) increased by 71% and net dollar-based expansion rate has been steadily increasing and is now at 124%. Only half of NET’s customers use more than one product so there’s a lot of available growth opportunity. NET also landed significant business from the U.S. federal government, but revenue from these contracts likely won’t appear in the numbers until 2022; NET needs to invest heavily to support this new government business, but those investments should also enable the support of any other customer in the world. So we won’t be seeing any profits from NET until 2022 as management will plow everything back to support future growth. I’m optimistic that growth could begin to accelerate in 2022. I also still believe that NET’s available target markets are huge and NET has the chance to capture a fair chunk. I’ll continue to patiently hold NET (albeit at a lower allocation given that there are other companies in the portfolio that have proven themselves).
UPST (21.4% allocation; Q2FY21 10Aug earnings date)
Coincidentally, I’ve saved the best for last. After the seeing the massive 20% raise to annual revenue guidance (after Q1), I was expecting great things for Q2. The results for Q2 were spectacular. In fact, I’d say that the business growth was significantly better than ZM’s Q2FY21 blowout result (+355% revenue growth). UPST delivered 1018% revenue growth and 60% sequential revenue growth! Yes, comparing revenue to last year’s Q2 is a bit unfair so let’s look back to Q2 2019 and annualize the growth: we get 496% growth (Q2 2021 over Q2 2019) which annualizes to 144% CAGR over the two-year period. It also looks like growth is accelerating, and, to top it off, there are headwinds for lenders in the unsecured personal loan market! These headwinds are present because government financial support acts to subdue the demand for loans. A large portion of the pandemic related government support will drop off in September so this headwind will soon abate. Unlike ZM’s quantum leap growth in 2020, UPST’s growth seems durable, and, as an investor, I’m expecting hyper growth to continue for a while. The 25% increase to annual guidance (after Q2) is a very strong clue that Q3 is going to be another great quarter. The stock price exploded after the result to close the week up 50%. I believe that, given the business result and future potential, the share price increase is justified. When someone asks me whether I’m going to trim my position, I say, “No way Jose!”. I’m clutching on to every single share that I own!
What’s so special about UPST’s business? It all hinges on UPST’s ability to predict who’s going to pay back a loan. If UPST can more accurately distinguish which prospective borrows will pay back and which will default then UPST can increase the profit for a lender. In addition or alternatively, it also enables lenders to gain marketshare by offering more competitive interest rates to its borrowers. And then you have an instant underwriting process (i.e. Upstart’s AI makes an instant decision); by comparison, banks traditionally use a team of underwriters (i.e. paid employees) who can take hours of their time and days before they approve a loan for disbursement. Thus, the lender isn’t just getting a lower default rate; it’s also getting faster and lower cost loan approval. In exchange, UPST gets a cut in fees for each loan that’s issued. Great deal for the lender, great deal for the borrower, and great deal for UPST. As long as this all continues to work, it’s also going to be a great deal for us shareholders.
So is it going to keep working? So far it has been working. Some folks on Saul’s board, in particular jonwayne235, have analyzed and compared the performance of loans issued via UPST underwriting AI and other lenders. In aggregate, UPST’s loans have been winning hands down every time. jonwayne235 even applied for an unsecured personal loan at various lenders. The result: UPST provided the lowest rate and did so instantly. Now, jonwayne235 is not just very smart and analytical, but he’s also financially responsible because he claimed to have a FICO score over 800. How would UPST do for people with lower credit scores? Well, jonwayne235 told me that another guy, who has a much lower FICO score, also received the best rate from UPST. Someone with a low credit score would have a much harder time getting a loan. Such a person would also need to pay a much higher interest rate on the loan. Thus, if UPST can identify people with poor credit scores who will pay back the loan, then that borrower will be extremely profitable for the lender. So far, UPST’s AI lending decision algorithm seems to be working. It’s further evidenced by an increasing number of lenders (now 25 stated by CEO Girouard during the Q2 earnings call) reported to partner with UPST. One Upstart partner-lender is now dropping the minimum FICO score requirement from its lending decision. That’s incredible to me, and it shows that UPST’s partner-lenders are beginning to place increasing trust in UPST’s AI; this may bode well for revenue growth as increased trust in the UPST AI should lead to increased utilization by the lender partners.
Most of UPST’s loans end up getting sold to institutional investors. UPST claims that it has partnered with 150 institutional investors to buy up the loans that get originated by UPST’s 25 bank and credit union partners. On the earnings call, management was asked what’s limiting the number of loans that get funded using UPST. The answer was it’s not demand from the institutional investors that’s limiting growth. The limitation is on the origination side so currently growth is limited (if you can call 60% sequential revenue growth limited) by the number of willing borrowers UPST can run through its AI and pass to lenders for funding. Thus, future growth will be fueled by increasing the number of bank/credit union partners and increasing the utilization of UPST by those partners. Progress in signing up new lending partners has been steady and has almost double since I started following UPST (February 2021). I suspect that the AI’s success is catching on in the banking industry and another lenders may soon jump on. If that does happen then we could be in store for an unexpectedly explosive disruption event (pure speculation on my part). In addition, UPST is launching a Spanish version to target the large and sometime underserved Latino population in the U.S. This effort could boost growth further especially since competition is much more limited for lending to this demographic.
UPST’s next target market is the auto lending market. UPST has been working hard to plant the seeds for 2023 success in this market. The auto lending market is 6x as big as the unsecured personal loan market. In the last quarter, UPST expanded into 47 states (from 14 states at the end of Q1) and has funded 2000 loans in 40 states. The first five lenders signed up to offer auto loans (via UPST) during Q2. The auto lending market could get big for UPST in 2023. After that, I expect UPST to continue to disrupt additional lending segments.
Yes, there are risks with UPST as an investment, but, for me, the risk-reward flipped very strongly to the reward. The lending market is enormous and it already exists. UPST’s process has very little friction to growth and switching the underwriting process to UPST is also frictionless. Therefore, I could see growth exploding unexpectedly at any time. Think about that for a minute: if UPST suddenly gets a ton of more business (it’s possible because of the low friction that I mentioned) then as investors we could be suddenly surprised by a result that moves the stock up fast. The rate limiting factor remains signing up new partners and getting the partners to ramp up their use of the UPST AI. I like the risk-reward so much that I’ve made UPST my largest position.
Upcoming Earnings
The table below shows the remaining earnings release dates for my portfolio companies; all the dates have now been confirmed by the companies by press release. In aggregate these four companies comprise more than 36% of the portfolio’s current value. CRWD, in particular, has the opportunity to affect the portfolio’s performance because the 14.9% allocation behaves like a 42% allocation (100% of the position is in the form of 2023 call options).
| Date | |
|---|---|
| SNOW | 25Aug |
| ZM | 30Aug |
| CRWD | 31Aug |
| DOCU | 2Sep |
FINAL THOUGHTS
The portfolio has rallied 104% in the past 13 weeks. That’s quite a run. For how long can it continue? Of course, no one has a crystal ball. Eventually, there will be another big drop. Or stocks could continue to push higher for a while longer. I don’t know. What I do know is that March through May provided me with a big opportunity to lever up. It really seemed like a fat pitch. I’ve since removed as much leverage as I can without incurring a huge capital gains tax hit (i.e. 14.9% allocation in CRWD options contains a huge unrealized short-term gain). I’m content to either watch my portfolio continue to go higher (without excess leverage) or brace myself for the next big drop (in which case, I now have the capacity to lever up again).
In the U.S. the big $1.2T infrastructure bill continues to move through Congress. An additional $3.5T in fiscal spending is now beginning to make its way through the Senate, but the timing and size of this larger package is less clear due to Republican opposition. However large these incremental increases in spending end up being, they will provide additional stimulus which will boost overall economic output. Despite concerns about the Delta variant (and other variants), I continue to believe that worst of the pandemic (with respect to negative impact on the global economy) is behind us. As government assistance falls off in September, people will be “forced” to go back to work; I think this will provide a big boost to the economy which may well support stocks in a big way. Of course, this is just speculation on my part, and we’ll need to see what actually happens.
I’ll post another portfolio update after the last of my portfolio companies reports results on 2Sep.
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.