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Portfolio Screener Update - 5.6% Week of 01/08/2021 (Sneak Peek Preview)

Introduction

This is a preview of the weekly updates that are provided as part of the Gold Plan. Normally, this weekly update is only provided to Gold Plan members.


Each week, the Portfolio Screener will provide the following:

  • High-level snapshot of the portfolio

  • Portfolio holdings performance update

  • Two- and three-year Stock Price, SP, projection update for each portfolio holding

The three-year SP projection is temporary, and primarily relates to public companies that have been merged from Special Purpose Acquisition Companies, SPACs, as these companies have longer horizons before Revenues ramp up. Splunk, Inc. (SPLK) is the only non-SPAC with a three-year SP projection horizon as the company is transitioning to cloud services.

To date, the portfolio is up nearly 5.6%.


I have included major index performance below, as well as a representation of some of the top 25 performing ETNs, ETFs, and Mutual Funds from 2020 as a weekly comparable.

As can be seen, only the Russell 2000 as well as FANGMAT, the leveraged FANG ETN, and select ETFs with strong exposure to Tesla, Inc. (TSLA) have outperformed thus far. Tesla's performance is amazing; a nearly 750% return last year and already up nearly 25% for 2021. It does seem like a correction-induced sell-off may be triggered by Tesla, but that remains to be seen.


For those asking why I don't buy Tesla, that boat has sailed, unless there is a strong enough correction/recession to change my mind. Plus, I'm looking for the company that will hopefully replicate Tesla's performance at some point over the next decade.


Portfolio Sector Composition

To start the year, the portfolio weighting remains heavily skewed towards Consumer Discretionary, followed by the Technology sector. This will likely be the case moving forward, however, newer additions will likely be focused on Financial and Healthcare sectors and to a lesser extent, Consumer Discretionary.


The cash position has increased strongly, and will create some challenges in performance for the year. Due to the revamping that has occurred, the cash position sits just below 26%. Despite this cash position, the portfolio is doing quite well, but it will get more challenging if the market rally continues.


SPAC warrants have been a strong tailwind for the portfolio's performance both in 2020 and in 2021. Last year I spent some time figuring out a short-term strategy to include in addition to the long-term management. It has worked out quite well, and I have substantially narrowed my focus on which SPAC warrants to consider for short-term strong gain potential. I am going with big manager opportunities including Bill Ackman, Chamath Palihapitiya, and Peter Thiel, although I did not get in on Bridgetown Holdings Limited (but may enter a position if things don't work out as planned in the near-term). I am in with Ribbit Leap as they have a solid track record with Fintech, but it remains to be seen whether this will be enough - Chamath got SoFi, which was right in Ribbit's wheelhouse.


Portfolio Holdings

Top 10

From late 2020, there have been some changes which have impacted the top ten list. I am happy with all of the current holdings in this area. I expect the top three to continue to lead the portfolio higher, followed by sustained performance from Twilio, Chewy, and Palantir. I expect a strong return to SP appreciation for Dexcom, Teledoc and Zoom Video, but I must admit that I will be scrutinizing Dexcom as their five-year forecast from their investor presentation is indicating slowing growth. The only company that I feel has a really stretched valuation right now is Crowdstrike.


Remaining Holdings

There's a lot to consider from the remaining 33 holdings. For SPAC warrants, Social Capital Hedosophia Holdings Corp. IV and VI will likely merge with very appealing companies. Social Capital Hedosophia Holdings Corp. V's recent merger with SoFi is big, as I've written on the potential. Pershing Square continues to be a disappointment, but today's surge shows that the uncertainty still affords a positive bias.


I must admit that I did miss some pretty good opportunities earlier in the week to average some positions. These include DoorDash, Overstock, Snowflake, Opendoor, among some others. The swings of cash positions often makes it tough to reverse mentality on the level and/or pace of deployment of capital. Regardless, I do expect similar or even better opportunities to occur at some point.


Projected Two- & Three-Years Stock Prices

Three-Year Projected SPs

Of this list, the most lucrative opportunities all involve prior SPACs, which are now public companies as mentioned above. I have provided an update pieced on Opendoor to help frame the opportunity as well as some of the transparency needs. The electric vehicle, EV craze has gotten out of control, but I am sticking with both Fisker and Lordstown as a couple plays here. I could have averaged both, but am taking a measured approach based on the uncertainties.


Clover Health is still intriguing, and I've wrestled with letting it go, but have decided to keep it. I am very bullish on SoFi, but will be patient with the warrants. I'm looking for a 600% return before exiting and transitioning to the common.


I have really wrestled with selling Splunk multiple times where I could have exited with a gain. There are two reasons why I continue to hold. First, Adobe, Inc. (ADBE) witnessed a similar transition to cloud services, and if successful, Splunk may afford strong gains from the tipping point. Second, Splunk may get bought out before the transition is complete. I had this happen with Slack Technologies (WORK) to the tune of a 60% gain.


In any respect, these companies all have more to prove and as such, need to have an extended projected potential return over a three-year period. Depending on volatility, I may consider adding to existing positions. Opendoor is the number one target at the moment.


Two-Year Projected SPs

For two-year projections, there's a lot more to unpack. The color coding is meant to create leads for actions. Red coded projected SP performance is an indication that an immediate action should be considered. Orange could be approaching Red, and/or be considered depending on other circumstances. Blue indicates a very low interest level.


For SPAC warrants that have not announced a merger, there is no way to indicate any expectation of SP performance. Of the Red category, both Quidel and Zoom have already had positions built to levels that I am not comfortable increasing. Quidel is also unique in that it is not heavily covered (only four analysts) and its SP can be manipulated easier. Overstock, Wayfair, and Beyond Meat all could have been averaged this week, I am simply going to be patient before pulling the trigger.


For the Orange category, I'm most interested in increasing my positions in Airbnb, DoorDash, The Trade Desk, and Spotify. If the markets pullback hard, I would have no problem adding to MercadoLibre and Shopify as well.


In the Blue category, I do expect Roku's SP projection to continue to increase, I'm not ready to push it much higher than $400 right now. Companies like Schrodinger and Snowflake are of high interest in the event selling pressure returns. Snowflake was at a pretty good SP in the $260s this week.


Conclusion

It was a volatile first week for 2021. I expect this to be a sign of things to come. Ultimately, the portfolio is performing as expected, and the cash position is very robust. Additionally, more capital will be available to bring in if appropriate.


This weekly update is meant to give investors a clear idea of how the portfolio is being managed from a near-term performance perspective. Additional services from the Gold Plan include updates to all trades via the Portfolio Moves forum, and access to direct discussion topics on the Stock Talk forum.


I am directly available most days throughout the week, and as part of the Gold Plan, happy to engage in investment-related discussions. You bring up a topic or company, and I'll make sure to get you as much information as I can on it.


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