My stock portfolio is built around one central thesis - the digitalization of our world. I believe that,
The digitalization of our world is 10% complete.
This megatrend will continue for at least another decade.
I believe that this trend allows for outsized returns. That's why I invest a significant portion of my net worth into individual stocks. If you're interested in my monthly portfolio performance, deep-dives, and analysis around my holdings, feel free to subscribe below!
In August, my portfolio underperformed the Nasdaq. It was one of those months where it was hard to keep up with the big Tech companies. Apple, in particular, drove a big chunk of the Nasdaq gains.
On the year, my portfolio is still up in this comparison.
Portfolio & Performance YTD
Portfolio: 35.36%
Nasdaq: 31.32%
All World Index: -1.26%
Q2 Earnings
A majority of my holdings have reported Q2 earnings. Except for Cisco, all posted good to great results.
Let's have a look at the two companies Jack Dorsey is running as CEO.
Square
Square posted $1.92b in revenue, a 64% increase YoY.
Cash App active monthly users soared to over 30 million, generating $1.2b in total revenue and $281m in gross profit in Q2 2020. $875m in revenue can be attributed to Bitcoin, on which they don't earn anything.
The core seller business only dropped 9% to $316m, and online GPV not surprisingly increased by 50% as sellers moved online.
Twitter reported revenue of $683m in Q2 2020 with a YoY decrease of 19% and 15% down from the $807m reported during Q1 2020.
Twitter's daily active users grew from 139 million in Q2 2019 to 186 million in Q2 2020 – a 33% increase.
Advertising revenue declined by 23% YoY.
In a move that excited a lot of people, Twitter announced that they are in the early stages of exploring a subscription offering, code-named Gryphon.
Twitter is a very relevant company for our world. It's long been Dorsey's hobby that he didn't care to monetize.
Time's are changing, and I believe that we will have a good time with the stock over the next 3-5 years.
Three companies that are underappreciated and posted great earnings as well are Hubspot, Pluralsight, and Nutanix.
Nutanix
$NTNX was the last company to report this month in a surprise move that pulled the earnings date up a couple of days. The stock popped +20%.
It has been a stock long overlooked. It has successfully transitioned into a subscription-based business model. At an EV/Sales of around 4, it continues to be a takeover target, and it could also be taken private. That would be a shame.
The $750M investment from Bain Capital Private Equity was likely needed as the company still burns cash.
Hubspot
Hubspot is an underrated, consistent performer. It was up 10% on good Q2 numbers. Corona slowed down revenue growth, but they exceeded expectations. For a reasonably young US company, the share of International is at an excellent 42%.
They are free cash flow positive and explicitly stated in their overall strategy that they plan on growing profitably. They have executed against this very well for years now.
I am always keen to see what companies do with all the money they raise via debt offerings. This piece from the latest quarterly call put my mind at ease. I'm not too fond of huge acquisitions.
Pluralsight
Another underrated company. It gets almost no love and is quietly executing against their plans.
Revenue grew by 25% and guided above consensus. They are profiting as their main competition; in-person training is not possible in the current climate. Companies are getting a taste of how well online training offerings can work. It is a substantial tailwind for Pluralsight. Their vision is much grander, and you can read more in an older article I wrote on the company here.
Current Portfolio - End of August
In August, I made a couple of moves.
New:
IAC
The company is essentially doing what I am trying to do. This holding company invests in companies that will grow with the digitalization of our world. Their most recent move is a $1 billion stake in casino giant MGM, good for a 12% stake. MGM has no online business, and IAC must be betting on the fact that this is going to change over the next years. With their expertise, they'll be a valuable shareholder that can offer a lot of valuable input—excited about this one!
The holding company is essentially debt-free after it spun out Match Group, and is now sitting on $4b cash.
LendingTree, TripAdvisor, and Expedia are three other examples of successful spin-offs.
Current assets of IAC include ANGI Homeservices, Vimeo, Dotdash, and Care.
Think about what these businesses may be worth, add the $4b in cash, and perhaps you come to the same conclusion that IAC is a good investment at these levels.
I plan on increasing my position with time.
Fastly
The stock consolidated nicely after last Earnings, presumably, on worries that they lose TikTok as a customer. It seems overblown and certainly doesn't matter if you have a long term horizon.
The acquisition of Signal Sciences should allow for cross-selling between the respective product offerings. App security is a logical area to expand into. This acquisition will also prop up Fastly Gross Margins.
I missed the run-up, but have now opened a starter position. I will look to add over time.
Sold:
Livongo Health
I held shares in Livongo for less than a month, and sold in August, for a quick 25% gain.
After doing my due diligence for a couple of months, I finally came around to buying shares in the company. Then they surprised everyone on their earnings call, announcing a merger with Teladoc.
The combined company may very well turn into a leading digital healthcare operator, but my thesis for investment was solely based on the business of Livongo.
Uniting two companies of this size is not an easy task. Structurally and culturally.
I am out for now and will consider Teladoc post-merger.
Opera
Opera has been a highly volatile holding. I closed my position at the end of August and booked a 6% gain. Not remarkable considering how well many stocks have done in the same time frame.
While I am used to Chinese companies having issues with corporate governance, recent events are too complicated for me to assess accurately. The CEO is involved in several companies, and Opera merged with one of these companies - Mobimagic. The shady thing here is that the acquired company operates in the same business as Opera, just in a different country.
I thought I understand Opera reasonably well, and at an EV/Sales of 1-2, it baked in a lot of the corporate governance risk. This recent acquisition is too dodgy for my liking, so I am out.
Overall, my portfolio now looks like this.
Top Performers - YTD
The Top 3 this year are ZScaler, Square, and Trade Desk. All three positions have increased by more than 100% this year.
Top Performers - August
Hubspot gained over 30% in August, followed by Nutanix and Nvidia, with gains of over 25%.
Alteryx got murdered after Earnings, losing over 30% this month. I am still up around 30% and trimmed my position last month ahead of earnings. It is one to watch. The current valuation even implies a high growth rate, which we are simply not seeing at the moment. If it doesn't return to prior glory post-COVID-19, then the valuation will further contract. I will keep my position for the long term and may add to it again in the future.
Thank you for following my investment journey. I hope you found this useful and here's to an exciting September.
Thank you for reading!
I want to share two links that allow you to invest alongside me.
Wikifolio:
If you are based in Germany, Austria, or Switzerland, then you can follow my Wikifolio. Once I publicize it, it would allow you to purchase a certificate through your broker that tracks my performance. Right now, you can watch it and can indicate whether you would be interested in investing.
EToro
My EToro portfolio, click here.
If you are based in Europe and are a user of EToro, then you can copy my portfolio. This replicates all of my trades in your portfolio. Feel free to check it out if you like the thought of more free time and me doing all the work for you.
Hey Christian: Thi Portfolio that you manage with ETORO seems different from the one you have on your website. I'm thinking about copying yours on etoro but can you describe a bit what are the main differences in guidelines between the etoro portfolio and the portfolio on your webpage. Thanks.