It’s 2:25am here…too late for a proper post, but if I’m not mistaken, that is 5 consecutive “up” days for the portfolio as a whole? July alone is up over 7% already in the first 5 trading days…
Here is todays “Christmas tree” as I like to call the board when it’s all green…SQ sure woke up for the festivities today after a major analyst upgrade, but what do they know! (I’ll try to send a picture of the board with all red one of these days to try to be fair and impartial!! )😉
User comment:
There have got to be down days, even for good companies. but this is amazing. I bought in mid-May to early June, and my holdings in these companies are up 15% in that time. Remember, no selfies with the bulls. Stay focused…
Victor: I was asked today by a long time friend and confidant about AMD, based on a recent upgrade of the stock and article about their new chip. First, I don’t follow AMD closely, but I thought it would be worth sharing the response with the whole group: AMD is a classic company with longevity. I don’t follow it too closely because it is a chip maker and does not have recurring revenues, blistering revenue growth close to the 10 companies I follow closely, and it has a LOT of competition (no moats around its tech). It is also a fairly large company at 36B market cap compared to most of those I invest in right now.
Depending on the computer chip cycle, AMD usually does very well with their new chips, but they can’t seem to sustain growth long term and have a rather large market cap of $36B, which will make it difficult to 5x or 10x themselves.
Consider this…if AMD sold 100 chips last year, in order to have 50% growth this year, they have to sell 150 brand new chips (which they have to remanufacture and usually have a whole new cost and R&D cycle). The following year, to sustain their growth they would have to start at zero (0) sales and sell another 225 new chips again to sustain 50% growth. And the cycle continues. And that is all with relatively small margins, due to the crazy competition they have in chip sales. They compete with Intel and NVDA, both great and large companies.
With the SaaS companies I own, they sell a 3-5 year “subscriptions” in the form of software (of which they can only recognize revenue for their first year of the contract), so after the first year of 100 sales, the next year they already have pre-sold 100 (they start at 100 because they have those recurring contracts) and only need to sell another 50 contracts to hit 50% revenue growth…and that doesn’t count the fact that they are able to upsell the existing customers for more business every year (Net Customer Retention rates exceeding 140%), so any new customers spell immediate additional growth. In addition, because of their unique technology and moats around their IP and tech (little or no competition yet) and that they don’t have to remanufacture a whole new product each year (they just keep leasing the software as a service (SaaS), most of the SaaS companies have 60-90% margins (compared to 10-20% for chip companies). Yep, you read that right…90%!! Seems insane, but their profit margin is $90 on every $100 of revenues. Granted, they are currently spending a lot of those profits on Sales and Marketing to capture as big a market share as possible as fast as possible, but that is still so far ahead of a chip maker making 10-20% margins with no recurring revenue growth. They can stop their M&S spend at any time and their profits will go through the roof.
All that said, AMD from a technical perspective has a beautiful graph and looks like it is poised to shoot to new heights, again, techically. But for me, that is a short term perspective. If they don’t have the fundamentals of a solid business and company underlying, with blistering revenue growth, loyal customers and very importantly, recurring and deferred revenues and bookings, I usually don’t consider investing…maybe its naive and maybe I’m the ostrich with his head in the sand, but I have to set my own criteria, parameters and guidelines or else I’ll get lost in the sea of analyzing and trying to track thousands of companies on all the exchanges. Hope that helps give a little perspective. Cheers! -Victor
Quick Stock Purchase Update: On 7/2 and 7/8, I purchased an additional small tranche of both ESTC and CRWD. Those positions are now about 5% and 3%, respectively. I had relatively small positions in both and typically make at least 5 separate share purchases to establish a complete position as I get more and more comfortable and confident in a new company investment. I certainly had no insight into the 4% and 8% jumps in those two stocks that happened today, but I am gaining more confidence in both companies and felt that increasing my relatively small positions a bit more was warranted at this point. If and when the two companies continue to outperform, I will continue to add small amounts as I deem appropriate. I have no crystal ball and (to be honest) am still a bit shell shocked by the very high IPO and post IPO valuation of CRWD, but the growth of the company certainly is stellar right now. Regardless, I just wanted to point out those two small purchases for those of you who are interested. Please note however that this does not change that my highest conviction still lies with AYX, TWLO and other stocks with the highest percentage allocations. I just don’t want to add to those already very high >10% allocations. Indeed, with the recent surge in AYX, that position has increased to 16.4% of my total portfolio, which is higher than I like any one company to be. I will monitor it closely and may even sell a small bit to reduce the position back down to 15% over the next few months, but I have to also be aware of the tax implications. So many factors…but good problems to have! -V
MongoDB Banks On Partnerships And Acquisitions For Growth $MDB
https://seekingalpha.com/article/4274372
Here is to a strong and continued Bull market…live from Pamplona this morning at 8am!! Ouch!!
