Portfolio Update January 26th, 2022

As of January 28th, 2022, these are my top 16 individual stock positions representing 44% of my long exposure

  1. Meta (FB) – Facebook (blue) is a near indispensable public utility. It’s the backbone of our online presence, even if we don’t login as often as we used to. Facebook and Instagram are the defining platforms for online targeted advertising.  I doubt anyone beats Meta in VR, especially with social media cash flows supporting their growth and R&D. Oculus has the potential to be gargantuan. Facebook has a lower price to earnings ratio than the S&P 500 with EPS growth estimated to be over 20% per year. 
  1. Scotts Miracle Gro (SMG) – Scotts has grown their top line by 18% over the last five years due to a fruitful pivot to marijuana and hydroponics. Hawthorne, their marijuana focused segment has quickly grown to half of their overall business. Whether marijuana is being grown by individuals, or large corporations, they’ll use Scotts’ products. With a 16 times forward P/E ratio, this is a no-brainer, pick and shovel, way to get marijuana exposure. 
  1. Alphabet (GOOG) – Alphabet is reasonably valued given their suite of high quality, high margin, and defensible businesses. They are the backbone of many of our virtual experiences, including search, maps, email, Youtube, Youtube TV, booking travel, managing passwords, and even this Doc. 
  1. Spotify (SPOT) – Spotify is a cult product. They have an enormous consumer surplus and structural cost advantage from network effects. Spotify is effectively a record label for many smaller artists. They have a gifted management team and aspirations of dominating podcasts. They’ve had great content acquisitions which include Gimlet Media and The Joe Rogan Podcast. At 3 times current revenue, and revenue growth consistently north of 25%, it’s compellingly valued. 
  1. Teradyne (TER) – Teradyne makes semiconductor testing equipment and industrial manufacturing robots. They have a great management team, enormous growth, and nothing but runway. They trade at just 18 times forward earnings.
  1. Block (SQ) – Jack Dorsey understands Bitcoin and how it’s going to change the world. He’s helping bring Bitcoin to the masses with Square, Cash App, Spiral, Tidal, and other smaller projects focused on decentralizing Bitcoin mining and promoting BTC self-custody. 
  1. Twitter (TWTR) – Twitter is the most under-monetized asset of all time. Twitter serves as an important public utility globally. As long as a competitor doesn’t eachieve similar network effects, Twitter is worth more than its current market cap of $30B. With Jack Dorsey out they can focus on monetization, probably at the expense of their ethos.
  1. BMW (BMWYY) – BMW is a portfolio of fabled auto brands valued as if they might not survive. At 6 times current earnings, ½ times sales and a focus on electrification and autonomy, this feels dramatically underpriced.
  1. JP Morgan (JPM) – Jamie Dimon is a master operator. Banks are cheap and this is the most competitive bank. 
  1. Alibaba (BABA) – Alibaba shares are dirt cheap. The CCP has  scared many people out of their positions. Is the equity worthless? Perhaps. Is Alibaba a monopoly? Yes. Will BABA trade at a reasonable valuation some time in the future? Probably. 
  1. Amgen (AMGN) – Amgen is a perennial compounder focused on oncology. The large biotechnology companies are trading at very reasonable valuations these days. 
  1. Amazon (AMZN) – Amazon and AWS are dominant. People want high quality things delivered to their home quickly, and that’s not going away. Neither is technology that supports online business. The valuation is reasonable but I wouldn’t call it compelling. 
  1. Electronic Arts (EA) – EA is a leading content creator in the ever-growing Esports industry. Their games include Battlefield, FIFA, Madden NFL, NHL, The Sims, Apex Legends, Need for Speed, and Star Wars. Given the recurring nature of their revenues, and consistent revenue growth, it’s silly that it’s trading at 17 times next year’s earnings.
  1. Texas Instruments (TXN) – Texas Instruments is a tremendous business trading at a reasonable valuation. They design a number of purpose built processors for electric powertrains, self-driving cars,  aerospace, defense, and a number of other crucial industries. Their North America manufacturing may prove to be an important advantage in the long term. 
  1. Nasdaq (NDAQ) – Nasdaq aggregates some of the most valuable data in the world. With less than a $30B market capitalization, and a 23 times P/E ratio, it’s a very compelling valuation for a quality compounder.
  1. Lockheed Martin – (LMT) – Lockheed Martin is a technological behemoth that compounds at rates far surpassing most companies’ wildest dreams. The market is euphoric on space exploration, but seems to have forgotten Lockheed’s role in it. I doubt the U.S. will ever see a reduction in defense spending. It’s a steal at 14 times next year’s earnings.

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