June 2021 Mid-Month Update

General Update

It’s been a few months since my last update. Quite frankly, I got tired of the market’s volatility and needed some time away from following the market too closely since I knew from previous experience that this would be the best way to prevent myself from making any emotional decisions I would likely regret (i.e. Selling all of my Etsy shares last year when COVID crashed the market). I’m generally a buy and hold investor and I make allocations based on business performance but when everything is down, it’s sometimes hard to focus since it can get pretty painful. So I took a break and I’m glad I did. More on portfolio stuff later.

In other news, I started a new job! I joined ShipBob this past week as their VP of Demand Generation, so I’ll be helping out on the marketing front. For those that don’t know, ShipBob is a global logistics platform that fulfills ecommerce orders for a variety of brands.

In addition, I spent a few weeks studying for the Series 65 exam which if I passed the exam, filled out some paperwork, I would have my Series 65 license that would allow me to help people with their investments and personal finances.

Long story short, after a lot of studying (I used Kaplan to prep for the exam) and a few tutoring sessions on Wyzant (of course), I took the Series 65 exam and passed! Now to figure out all that paperwork.

Finally, I’ve also spent a lot of time the past few weeks acquiring graphics cards and hard drives to mine Ethereum and farm Chia since I’m bullish on cryptocurrency and figured this would be a way to generate some passive income. It was definitely a fun experience learning how to build a mining rig and learning how to plot and farm (Chia).

Portfolio Update Summary

S&P 500 return YTD: 10.93%
NASDAQ return YTD: 8.86%
My portfolio YTD: 9-10% *

* Fidelity doesn’t give exact YTD figures until month-end.

A quick recap of the past two months portfolio-wise, in April I finished the month basically flat YTD vs. the S&P’s ~10% rise. May on the other hand was quite the disaster mid-way through, I think at the trough, I was down nearly 30% YTD but after some re-allocations and tech clawing back, I finished May down 5% YTD. 

As of Friday’s close (June 18), I am up just about 10% vs. the S&P’s ~11%. Definitely a lot of volatility in the past 5 weeks but I stuck to my guns and only sold off positions that I didn’t have as much confidence in. 

The Fed’s announcement that interest rates could come as early as 2023 definitely spooked the market but it seems it helped propel growth stocks even more. It will be interesting to see what happens next week. It’s good to be close to the market’s overall performance, but I have every expectation and desire to beat the market’s overall performance. Hopefully the next 6 months prove to be much of the same we’ve seen in the past few weeks vs. what we saw from mid-February through mid-May. This whole rotation to value was ridiculous. Growth is where its at :).

My Portfolio Breakdown

Since I haven’t provided a end of month update since February 2021, here’s my portfolio breakdown and how it compares to my portfolio at the end of February:

TickerMid-June 2021Feb 2021
< 1% Positions4.2%6.0%

Portfolio Adjustments & Position Notes

I sold entirely out of Fastly ($FSLY) besides one short put option that I’m holding onto until January 2023 so I don’t have to use cash to close it out. As I had explained in a previous post about selling and trimming stock positions, Fastly just kept underperforming and given its high valuation, that was a risk in the short-term. Do I believe that it will eventually grow into its valuation and appreciate as a stock, 100%, but it seems that Fastly has some work to do and hope is not an investing thesis.

I trimmed The Container Store ($TCS) pretty considerably since I needed cash and well, quite frankly their Q4 earnings wasn’t anything spectacular (their “Q4” is really Q1 for other companies, it’s just how their fiscal year ends). They did grow 30% YoY last quarter but their guidance was soft in the sense that while it was 50%+ guidance (easy comp due to COVID), when you compare it to 2019’s numbers, it’s only up 8%, so it seems like the tailwinds that I saw earlier didn’t fully materialize. I’ve decided to hold onto some of my position since I think The Home Edit, if season 2 does come out this year, should help them again and this new CEO may be able to help transform the company some more. Their debt is definitely lightened a lot which is good but there is still a lot of work to do. They are definitely on a short leash and if Q1 doesn’t result in anything “impressive,” I will likely cut them.

I initiated a few new positions in the past few months:

Crocs ($CROX) – Most people probably think I’m crazy for buying this stock and when I told friends that I was bullish on this company, they state what everyone else states, “but they have ugly shoes.”

Yes, they have ugly shoes, but I am trying to be objective and not use my personal feelings for their products dictate what the numbers and what management had to say.

Here’s a few highlights from their most recent earnings report:

  1. In their Q4 earnings report, they guided for 40-50% YoY revenue growth in Q1 (this most recent earnings report). They delivered 64% YoY growth! So they blew out expectations by ~10%!
  2. They are guiding for 60-70% YoY revenue in Q2 which is incredible but what’s even crazier is that that they increased their full year 2021 guidance from 20-30% YoY to 40-50% YoY, so that’s a huge increase and I fully expect it to be closer to 50-60% based on how they’ve been beating guidance.
  3. Their EPS increased 3x last year and in this most recent quarter, their EPS increased 10x. For a company that is given no love from a P/E ratio perspective (only 18.4), the fact that they are growing earnings so quickly should help the stock appreciate quickly even without multiple expansion.
  4. Their APAC business continues to accelerate in growth which should become a bigger and bigger part of their overall revenue soon.

Upstart ($UPST) – Upstart is a lending platform that uses AI to assess the credit-worthiness of their borrowers to reduce their credit risk and maximize revenue. They are growing insanely quickly (revenue grew 89% YoY in Q1 which was up from 39% YoY in Q4 ‘20) and their guidance and sequential revenue growth is insane: 

Q3 ‘20: $65 M

Q4 ‘20: $86.7 M (33% sequentially)

Q1 ‘21: $121.3 M (40% sequentially)

Q2 ‘21: $160 M (32% sequentially)

They also increased their guidance from $500 M in 2021 to $600 M! Most companies increase guidance by 3-5%, maybe even 10%, but this was a 20% increase in guidance, so that was pretty incredible.

Upstart is also expanding into the Auto Loans business and recently developed a partnership with NAFCU (Nationally Association of Federally Insured Credit Unions) which I would think should be material to their revenue.

I bought shares shortly after their Q1 earnings when their shares cratered 20% for some strange reason. For a company growing revenue so quickly both from a YoY perspective and sequentially with a HUGE TAM, I think Upstart can become a monster of a company. However, one thing to note is that it’s heavily shorted it seems and is incredibly volatile. The stock hit $170+ before crashing down to $125 after the lockup expiration.

This is definitely a long-term buy and hold I think given how they are performing. I’ve been aggressively adding to my position since mid-May and it now makes up nearly 4% of my portfolio.

Snap, Inc. ($SNAP) – I added a lot to Snap the past few months and started to trim my position in Pinterest. I never loved Pinterest because I never thought their ad products were very impressive and while I do believe there is a ton of opportunity to expand average revenue per user (ARPU), their MAU growth is slowing down and honestly I just thought Snap was the better investment despite it’s larger market cap.

In addition, I think Snap is making some big strides in AR especially with their newest Spectacles release which could become a huge business in the future. I personally think watches are overrated, but glasses could be huge since seeing something in front of you is more interesting than looking down at your wrist.

ZoomInfo ($ZI) – ZoomInfo is a B2B intelligence platform and is growing quickly and has some really insane free cash flow margins. As someone that has worked in B2B, ZoomInfo is a huge asset to sales reps and as a decision-maker in marketing, ZoomInfo drives me crazy since I put my cell phone in my email signature for a week and then the vendor calls started coming. Ugh.

Regardless, ZoomInfo is growing revenues at a rapid pace and has a considerably lower multiple than other software companies growing at similar rates. So I think in some ways $ZI is a “value” growth stock.

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