This portfolio update follows the completion of Q4 earnings results (for companies reporting their 31Dec or 31Jan quarters). I intend to continue posting detailed portfolio updates on a quarterly basis, typically after the end of an earnings reporting cycle. For more frequent updates on the portfolio composition, I post regularly on X (formerly Twitter). The posts there can be seen by following @gauchorico. I have also been posting weekly changes to the portfolio on X.
PRIOR PORTFOLIO UPDATES
PORTFOLIO PERFORMANCE
It’s been a volatile start to 2025 after the portfolio gained 82.7% in 2024. The portfolio reached a YTD high on 17Jan at +6.8% and a YTD low on 27Feb at -9.2%. The portfolio closed out February at -6.5% compared to the S&P 500 (Total Return) index at 1.4%
| DATE | GauchoRico Portfolio (YTD) | S&P500 Total Return (YTD) |
|---|---|---|
| Jan25 | 5.0% | 2.8% |
| Feb25 | -6.5% | 1.4% |
The GauchoRico portfolio’s cumulative return in the 8.16 years (through the end of February 2025) since the start of 2017 is now +930.0% compared to the S&P 500 (TR)’s return of +206.1%. In those eight years and two months, the portfolio’s CAGR was +33.1% compared to 14.7% for the S&P 500 (TR).
| Year | GauchoRico Return | GauchoRico Cumulative Return | S&P 500 (TR) Return | S&P 500 (TR) Cumulative Return |
|---|---|---|---|---|
| 2017 | +61.6% | +61.6% | +22.8% | +22.8% |
| 2018 | +55.9% | +152.0% | -5.2% | +16.5% |
| 2019 | +41.8% | +257.3% | +31.5% | +53.2% |
| 2020 | +245.6% | +1134.7% | +18.4% | +81.4% |
| 2021 | +27.7% | +1477.3% | +28.7% | +133.4% |
| 2022 | -71.4% | +350.5% | -18.1% | +91.1% |
| 2023 | +33.9% | +503.0% | +26.3% | +141.4% |
| 2024 | +82.7% | +1001.5% | +25.0% | +201.8% |
| 2025* | -6.5% | +930.0% | +1.4% | +206.1% |
| * through 2/28/2025 |
ALLOCATIONS
| 2/28 | 1/31 | 12/31 | |
|---|---|---|---|
| NVDA | 21.5%* | 16.8%* | 18.1% |
| MELI | 21.2% | 19.3% | 17.4%* |
| TSLA | 19.5%* | 25.7%* | 27.3%* |
| AXON | 13.3% | 11.1% | 10.6% |
| AMZN | 12.2% | 11.8% | 11.4% |
| ROOT | 5.1% | 6.7% | 5.3% |
| RDDT | 2.4% | — | — |
| SNOW | 2.3% | 2.1% | 1.9% |
| BORR | 0.9% | 1.1% | — |
| ASPN | — | 5.3%* | 5.8%* |
| Cash | 2.2% | 0.4% | 3.3% |
The allocation details described below are as of February 28, 2025. Two of the nine positions in the portfolio are leveraged with long-term call options. TSLA: Of the 19.5% position, 13.1% is in shares and 6.4% is in Dec2026 $330 and $350 call options. NVDA: Of the 21.5% position, 15.9% is in shares and 5.6% is in Jan2027 $125 call options. The portfolio consists of 86.4% shares, 2.2% cash, 12.0% long-term call options, and -0.5% short-term puts.
PORTFOLIO CHANGES
Changes since 31Dec 2024
My last portfolio update was on 31Dec 2024. I no longer report my detailed changes in my portfolio updates, but I have been reporting my allocation changes (buys, sells, and conversion between shares and LEAPS) on a weekly basis on my X account: For more granular updates, see @gauchorico.
EARNINGS RESULTS
Since the last portfolio update, all portfolio companies reported their latest quarterly results. I’ll review them in the order they reported.
TSLA (reported results on 29Jan)
Once again, TSLA was the first portfolio company to report results this earnings cycle. Oh, TSLA, so loved and so hated. This has long been the case for TSLA the stock. But now, we’re seeing the once beloved Tesla cars become a battleground as well. Previously mostly loved, the brand has increasingly become the target of anger and backlash against Elon Musk. Elon’s increasing involvement in politics using his status as the world’s richest person and his massive following on X (formerly Twitter) to gain influence. More recently, as head of the Department of Government Efficiency (DOGE), he’s become even more polarizing and controversial. It’s unfortunate for shareholders that Elon isn’t less vocal about his personal views and opinions. Clearly, the damage to the brand will have a negative impact to the consumer-facing products (i.e. car sales). For example, January car sales in Europe were down significantly Y/Y. Yes, much of the decline can be attributed to last January’s launch of the redesigned Model 3 (high sales last year make for a tough comparison) and this year’s pending launch of the redesigned Model Y (customers are currently waiting to purchase the newer version of the Model Y). This backlash can also extend to shareholders, some of whom won’t want their investment dollars tied to something that they oppose.
When making investment decisions, I try to focus on maximizing my returns even if it requires compartmentalizing my own feelings and opinions. With that said, I believe that TSLA’s mission is a good and noble one: 1) electrification of transport will lead to a lower carbon footprint and lower pollution, 2) autonomous driving will lead to fewer injuries and fatalities on the roads, 3) battery storage will lead to better optimization of electrical grids and lower greenhouse gas emissions, and 4) humanoid robots will lead to high productivity and more free time for society.
TSLA, as an investment, still hinges on what the Company will deliver in the future. Full Self-Diving (FSD) continues to advance, and I believe that progress will soon achieve breakthroughs in capability. In addition, TSLA continues to make progress with regulatory hurdles in the United States, Europe, and China.
This brings us back to TSLA as an investment. FSD implementation and regulatory approvals, in my opinion, are just a matter of time as the risk of failure is now virtually zero. I continue to believe that FSD will be not only a large boon to revenue and earnings growth but also a catalyst for share price appreciation, especially in light of the recent stock collapse from its recent high of $480/share. It’s also highly likely that other auto companies will license TSLA’s FSD, enabling TSLA to collect 100% margin revenue on sales of competitors’ cars. Optimus, TSLA’s humanoid robot, is an even larger business opportunity, but its success at scale remains farther out.
While I’ve resolved to hold a TSLA position at least until the FSD catalyst is realized, I now believe the portfolio’s allocation in TSLA is currently too large given the damage that’s recently been done to the brand. This damage continues to unfold with ongoing protests at Tesla showrooms. In addition, Canada has threatened targeted tariffs in response to any U.S. tariffs. These targeted tariffs are highly likely to include a 100% tariff on Teslas imported into Canada, essentially halting sales in Canada. This could happen in the next week.
AMZN (reported results on 6Feb)
AMZN reported Q4 results on 6Feb. Please read what I wrote about AMZN in my 1Dec portfolio update. My view of AMZN is still the same. I expect AMZN to continue to benefit from AI, both through digital efficiencies and through automation within its fulfillment centers and distribution network. I intend to keep my allocation the same at current or higher prices, and I may be willing to increase my allocation below $200/share.
RDDT (reported results on 12Feb)
RDDT is a new position that was added to the portfolio after the Q4 earnings result. I am still learning about the business and need to continue to research it. Several of my investor friends have owned RDDT since 2024 (it only just went IPO in March 2024). My discussions with them as well as having excess cash available from my recent ASPN exit prompted me to start a position. I was drawn to start a RDDT position for the following reasons. RDDT is a rapidly growing company with Q4 revenue growth of 71% Y/Y. This growth isn’t a one-quarter phenomenon; growth started rapidly accelerating in Q1 2024. Second, other KPIs started rapidly improving with daily active users (DAU) picking up in Q3 2023 and average revenue per user (ARPU) spiking in the back half of 2024. It’s likely much of the growth was driven by RDDT’s partnership with Google. In 2024, RDDT also added a partnership with OpenAI. RDDT’s revenue growth and high gross margins of 92.6% (GAAP) combined with the increase in DAUs and ARPUs led to huge gains in operating income margin (now 16.6%) and free cash flow margin (now 20.9%). RDDT is now GAAP profitable. RDDT has very low CapEx requirements, spending just $0.8M in Q4. The balance sheet is solid with $1.84B in cash and no debt. It certainly seems like a very well run business. For RDDT to be a successful investment, the revenue growth, DAU, and ARPU need to continue to be strong. I may add to my position in the near future.
ASPN (reported results on 13Feb)
ASPN reported its results on 13Feb. The new information, including the results, was disappointing and left me wondering whether management can even predict what future quarters’ results might look like. The Q1 revenue guidance, which was given when Q1 was in its seventh week of 13, had an extremely wide range ($75M – $95M). The top end is almost 27% higher than the lower end of guidance! In addition, the Company announced that it is scrapping plans to complete the buildout of its Georgia manufacturing facility. This facility was intended to support future growth of ASPN’s Thermal Barrier business. On the Q3 earnings call, the CFO, when discussing the pending approval of the U.S. government loan to fund the buildout of the Georgia plant, said that ASPN had other options to build another manufacturing plant outside the United States. Now, both options are completely off the table, and ASPN intends to use its existing facility in Rhode Island to satisfy future demand. The conclusion that I draw from all this is that ASPN expects much, much slower growth in its Thermal Barrier business. That’s all that I needed to hear to completely sell out of my position. It’s unfortunate that I took a big loss on this investment in shares and long-dated call options, but, when the investment thesis breaks, it’s much better to take quick action and redeploy the investment capital into more promising companies. I sold everything in the after hours market on the day of the earnings call and the following day.
BORR (reported results on 19Feb)
BORR is a speculative value play, is not a company that I would normally invest in as part of a growth stock portfolio, and will never become a large allocation position. BORR is run my a management team that, as part of other companies’ management, has demonstrated past shareholder friendly behavior. Now that BORR has essentially concluded CapEx spending, it needs to maximize utilization of its jackup rig fleet in order to generate free cash flow for a stream of dividends that will provide payments to shareholders and increase the Company valuation and share price. The Q4 earnings update revealed a setback with some of BORR’s rigs in Mexico and Saudi Arabia, but it seems that the rigs will soon by reassigned by Q3 2025. I plan continued patience with this investment.
MELI (reported results on 20Feb)
As I’ve repeated many times, MELI is an investment that in my opinion doesn’t require much analysis and monitoring. MELI reported another great quarter including 37% Y/Y net revenue growth and 111% Y/Y adjusted free cash flow growth! In addition, the Company reported 27% growth in items sold and 24% growth in unique buyers. I couldn’t find any negative results in any of the KPIs within MELI’s eCommerce and FinTech segments. Management continues to show a great ability to execute growth, new efficiencies, and profitability. The stock price vaulted to a new all-time high on the day after the quarterly results were released. I see no reason to reduce the portfolio’s high allocation.
AXON (reported results on 25Feb)
AXON reported its Q4 2024 results on 25Feb. Overall, AXON is very much on track, and the results this quarter were a great continuation of what the Company has been delivering for several years. Revenue growth was 33.1% Y/Y for the quarter and 33.3% for the full year. It was the third straight year of greater than 30% revenue growth. I maintain a large position in AXON because I believe that AXON will continue to show >30% growth for several more years going forward. My view is supported by the following.
First, AXON has a low penetration rate in its target markets so there’s much room to grow in these markets. The slide below shows AXON’s TAM (by end customer as well as by product area) according to AXON.
Last year, AXON reported about $2.1B in total revenue. A large portion of revenue is from state and local law enforcement in the United States. Enterprise has recently shown an increasing willingness to implement AXON’s products and solutions to manage theft and security. International remains an under-penetrated opportunity. Even if AXON’s own assessment of its TAM is an over-estimation, AXON is currently nowhere near saturation.
Second, AXON’s growth is supported by its Axon Cloud and Services business consistently growing the fastest (40.6% Y/Y growth in Q4) and becoming a larger and larger portion of the overall business as each quarter passes. Axon Cloud and Services now comprises 40% of the overall business whereas a year ago it comprised 37.9% of the total revenue. Axon Cloud and Services is also AXON’s highest margin segment (73.7% gross margin) so it will increasingly support higher income and cash flow as well.
Third, AXON provided initial 2025 revenue guidance of 27.1% growth at the top end. In 2024, the initial guidance was for 24% revenue growth, and the Company delivered 33.3% revenue growth. With three more quarters of beats and raises possible, AXON should have little trouble achieving >30% revenue growth for the fourth consecutive year.
In summary, with these latest results, I continue to be a happy shareholder. The only negative I can see is the large and rapidly growing share based compensation that the Company awards; AXON’s share count increased by 6.4% during 2024; this dilution is a headwind to growth.
After the Q3 2024 results, I cut the portfolio’s allocation by more than half as I felt the share price had run too far too fast. With the recent pullback, I began adding investment dollars back into AXON.
NVDA (reported results on 26Feb)
NVDA reported its Q4 FY25 results on 26Feb. The Company delivered revenue of $39.3B topping guidance by 4.9%, the smallest beat in nine quarters. The Y/Y revenue growth for Q4 was 78%, an expected and continued deceleration. However, total revenue growth is hampered by the slower growing segments, so data center revenue, by far the largest segment, remains the story here, and its growth continues to outpace each of the other segments. Data center revenue grew 93% Y/Y and 16% sequentially. Blackwell is still ramping, and Black Ultra is due to launch in H2. The revenue growth rate will continue to decelerate but the market’s thirst for AI and NVDA’s efficient and cost-effective chips should keep demand in excess of supply for the rest of calendar 2025 and into 2026, at least. CEO Huang keeps talking about the three scaling laws (see figure below) that will keep the hyperscalers and enterprises investing in AI CapEx.
After LLMs are pre-trained, they are utilized for inferencing, and when models are allowed to think for longer, the answers get better. NVDA reported that models using 100x more compute today to do inferencing (i.e. answering questions prompted to the model) than one-shot, non-thinking models. Huang predicts that models will eventually use 1000x, 10,000x, or even 100,000x compute to think before giving an answer to a prompt. In addition, as compute gets more and more efficient, inferencing gets less and less costly, thus driving demand for an ever increasing number of use cases for AI. Amazon and others have said that they could get additional return on investment (ROI) if they had access to more compute. Thus, companies that rent out compute (e.g. hyperscalers) are supply constrained. Part of this constraint is electricity to fuel the GPUs in the data centers; given this energy constraint, operators of data centers can best boost compute output by deploying the most efficient GPUs (highest compute per watt), and these are the latest Blackwell GPUs from NVDA. Thus, NVDA’s market share, gross margin (73.5%), operating margin (64.9%), and free cashflow margin (39.5%) continue to be high without signs of erosion.
I remain bullish and optimistic on NVDA. The thesis of high growth for longer than other investors expect remains intact for me. This is supported by NVDA’s continued dominance as shown by both market share and gross margin. The number of use cases from AI will continue to rapidly increase as the cost of compute drops. NVDA is enabling productivity improvement across the globe’s entire $100T economy. This results in increased revenue and/or cost savings for enterprises. Those companies that don’t implement AI will begin to lose their ability to compete, making AI investments table stakes. At some point, the AI boom will stall or result in diminishing returns for shareholders. However, that point isn’t yet visible on the horizon.
ROOT (reported results on 26Feb)
ROOT reported Q4 results on 26Feb. Since the Q3 2024 earnings result, ROOT has been a very volatile stock. There were opportunities to trade it and to sell options to collect high premiums. Investing in insurance businesses is outside my wheelhouse. What I do know is that ROOT was left for dead, and it has now recovered into a profitable and still growing business. In 2023, the net income was -$147M and EPS was -$10.24 (yes, a massive loss), and, in 2024, ROOT’s net income was $31M and its diluted EPS was $1.83. Of that 2024 EPS, $1.30 come in Q4. The turnaround has been realized with Q4 being the second quarter with positive net income. ROOT is still growing the number of policies while successfully managing and improving its loss ratios. ROOT has a share price of $135 and EPS in Q4 of $1.30, so a run rate of $5.20/share and therefore a P/E (on a run rate basis) of 26.
After Q4 earnings and the resulting share price surge, I reduced the portfolio’s allocation back down to about 5% with most of the proceeds going into RDDT.
SNOW (reported results on 26Feb)
SNOW reported Q4 results on 26Feb. The halt of SNOW’s revenue growth decline was confirmed for a second quarter in a row. Product revenue grew 28% Y/Y in Q4. Other KPIs looked good as well with RPO increasing by 33% Y/Y, NRR remained high at 126%, and adjusted free cash flow margin of 43%. Dilution from share based compensation was 2% for the year so very reasonable. CFO Scarpelli resigned, but this isn’t unexpected since Slootman (Scarpelli’s long-time management partner) resigned a year ago.
The age of agentic AI is coming, and, as a SNOW shareholder, I’m holding out for revenue growth reacceleration driven by more and more AI use cases. As one example, JP Morgan Chase recently revealed that 450 AI use cases have been implemented, and, by the end of 2025, the JPM expects to have more than 1000 use cases. The bet on SNOW is a bet that AI will drive more use cases benefiting SNOW and leading to a reacceleration in growth. A 2%-ish allocation is a prudent bet on this future outcome.
FINAL THOUGHTS
Investor don’t like uncertainty. Yes, investing in stocks is a highly uncertain practice because, while we can look at the past and present, a big part of our job includes making predictions about the future. Sometimes things appear to be clear while other times they look hazy. It’s hard enough to make predictions about individual companies and the markets in which they compete. Throw in chaotic actions affecting geopolitics, and we will see investors grow very cautious. The new U.S. administration’s actions during its first month in office has been the most disruptive and chaotic that I’ve ever witnessed. Tariffs, shifting geopolitical alliances, cost cutting, etc. Seemingly every day there’s something new that investors need to worry about or at least consider. This chaos will likely continue, and we’re likely to see reactions from other countries, the Federal Reserve, businesses, and citizens. All of this, I’m afraid, will overshadow the prospect of business friendly actions like less regulation and tax cuts that investors are expecting out of the new administration. To me, it seems that the most powerful country in the world has become highly unpredictable and as a result unreliable. A stable, mostly predictable world like the one we’ve had over the past decades has been highly beneficial to investors striving to build wealth. The world seems to be rapidly diverging from the way it was in the past, and, as a result and as an investor, we need to take stock of these new risks and take actions to mitigate them.
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.