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Leon's avatar
$18.6m follower assets
Portfolio Recap 2022
2022 was a challenging year. I've learned a lot, especially regarding my strategy and investment criteria I want to focus on in the future. I already outlined these criteria in my last substack.


I owned 38 different stocks this year. This is way too high for me. Especially in 2020 & 2021 I've bought many stocks that did not really fit into my strategy and that's why I used the current bear market to concentrate the portfolio more on my higher conviction ideas.

But let's take a closer look into what has happened in my portfolio during the year:

The 13 stocks below are the ones I already owned at the beginning of the year and also currently own. All my Top 5 holdings are included in this list ($EPSIL.AT, $EVVTY, $YSN.DE; $KSPI, $LEAT). As I consider myself a long-term shareholder, this list should be longer.

These 3 stocks were bought in 2022 and also directly sold after just a short time period. Regarding $SPOT I realized for example that the main reason why I bought it was, that I love their product. But just loving the product doesn't mean that it's also a great stock to invest in.

I bought 9 new stocks in 2022, that are still part of my portfolio. I hope that I can own these stocks for a long time. But my strategy is not just to Buy & Hold. You should not forget to Check your holdings from time to time. When I realize that my original investment thesis for the company is not intact anymore, I'll have to sell it. Part of my $VOW.OL thesis is for example, that they're able to secure a new big contract for their pyrolisis solution in the coming quarter. When I realize that they're not able to do so, I have to re-evaluate my thesis again.

I have sold the 13 stocks below this year. As already said, I've bought too many stocks where my conviction was not that high during 2020 & 2021. Stocks like $TCEHY, $BABA, $SE, $U don't really fit my strategy which focuses on underfollowed small caps. Others like $MYNA or $SEYE are unprofitable and I realized that my conviction in unprofitable companies is not that high in a bear market. So in the future, I want to focus on profitable companies and will not experiment with high-risk bets.

All in all the turnover in my portfolio was too high this year. But the number of stocks has been too high. I bought too many stocks, that didn't fit into my strategy during the hot phase of the bull market. I used this year to correct these mistakes and in the coming year, I will probably continue to do so. I want to further increase the hurdle rate for new companies and more rigorously sell shares that no longer meet my requirements. By improving this process I hope that the list of the "winners" (stocks I own for many years) will become longer over time.
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I like how you are trying to realign with your strategy. I see a lot of CS users talking about the mistakes they've made over the year. I appreciate the openness. We can all learn from each other.
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Devin LaSarre's avatar
$20.8m follower assets
WhatsApp: Meta's Next Growth Engine
WhatsApp is one of the largest platforms in the world and is quite possibly Meta’s most underappreciated asset.

But the crazy thing?

It nearly failed.

The backdrop

WhatsApp was created in early 2009 by two former Yahoo! employees, Brian Acton and Jan Koum, who saw a massive opportunity in the fledgling mobile market after the launch of the iPhone. Their idea was to create an app where you could attach status updates for your address book to see, including if you were on a call on your device, busy in a meeting, etc. But in the early months, continual technical troubles and a lack of overall appeal led to only a handful of downloads.

That changed when Apple launched push notifications; allowing users to see status updates from others even when not actively using the app. People began to use WhatsApp as an instant messenger. That’s when Brian and Jan saw the opportunity to pivot. In August 2009, focused entirely on messaging, the duo launched a new version of the app, and active users quickly jumped to over 250,000.

WhatsApp’s user base continued to grow as it climbed the ranks of the App Store; catching the eye of the rest of Silicon Valley. In 2010, Google met with the founders, and upon seeing the potential, they quickly made a $10 million offer for WhatsApp. The founders just as quickly said no. Several months passed, and Google increased its offer to $100 million. Brian and Jan passed a second time.

But as the app grew, so did costs, and the company needed money. WhatsApp was converted from a free service to a paid one, in which users would pay a one-time fee of $.99. Not only would this generate essential revenue but it would help slow down growth to a more manageable level.

It wasn’t enough.

In early 2011, after months of negotiation, Sequoia Capital invested ~$8 million for ~15% of the company. Within two years, monthly active users had crossed 200 million, and Sequoia invested another $50 million, valuing WhatsApp at $1.5 billion. The company also changed its model from a one-time fee to free upfront with a $.99/year subscription thereafter. But that didn’t slow the company down, and by the end of 2013, monthly active users had doubled to 400 million.

It was only natural for this to alarm Facebook, which for the past several years had been navigating its own shift to mobile. However, seeing an opportunity, Facebook decided to open its war chest rather than go to war. On February 19th, 2014, Facebook (now Meta) acquired WhatsApp.

The purchase price?

A jaw-dropping $4 billion in cash, ~$12 billion in Facebook shares, and ~$3 billion in restricted stock grants set to vest over a 4-year period. In total, due to share price appreciation, the company paid well over the initial price tag. It would be the largest venture-backed acquisition ever done and completely dwarfed Facebook’s $1 billion acquisition of Instagram two years prior.

But the deal was easy to criticize. For the full year of 2013, WhatsApp generated a mere $10 million in revenue and recognized a net loss of $138 million. Paying >$22 billion for a loss-generating business doesn’t sound great. However, justification lies in the fact that in one single move Facebook was able to acquire a huge number of users and their personal information, and all but guaranteed it retaining its spot on the top of the mobile mountain. After all, the company had spent the last few years shifting its focus to mobile, and losing future growth to a would-be competitor would be much more costly. This was affirmed during the Q3 2014 call (half a year after the deal announcement), as per Mark Zuckerberg’s comments (emphasis added):

"Part of what we've seen is that the use cases for products like Instagram and WhatsApp are actually more different and nuanced from -- than the products that the people compare them to, that Facebook had already built. So for example on the WhatsApp and Messenger side, Messenger's primarily used today for people to chat with their Facebook friends, within this context of, maybe it's not like a real-time text, like you would send an SMS on your phone, but it's something that you're sending to one of your Facebook friends, then if they happen to be there, and then you can text back and forth, or maybe they respond later. SMS and WhatsApp are more for kind of real-time activity. People have contacts on WhatsApp who they wouldn't want to make friends on Facebook, the graphs there are somewhat different. So one of the things that we found, interestingly, to us as well, was that Messenger and WhatsApp were actually growing quickly in a lot of the same countries."

To further appreciate the risk Facebook faced requires looking at what led to WhatsApp’s rise in the first place.

WhatsApp’s growth engine

WhatsApp was created with privacy in mind, with all of its services utilizing end-to-end encryption. Its team also vowed to provide a seamless user experience that would never be cluttered with ads. But the real success of WhatsApp can be attributed to one driver:

Accessibility.

WhatsApp was developed to be platform-agnostic and with a mobile focus, making it compatible with nearly all smartphones. It has also always been free to send and receive messages through WhatsApp, which is critical in countries where consumers can’t afford plans where they are charged for messaging. And instead of signing up and creating a username and then asking people for their username to connect, you simply used your mobile number. These factors made WhatsApp not only easy to use but also outrageously affordable, especially for those in developing countries who began to see it as the way to communicate. But there was still one barrier to entry: payment. However, in January 2016, WhatsApp scrapped the annual subscription fee, making the app completely free for users. Since then, the achieved network effect has been awing:

WhatsApp's monthly active users are still widely cited to be ~2 billion. However, that number was reached in early 2020. Similar growth has likely occurred with the number of messages sent per day on the platform, growing from ~100 million/day in October 2020. In fact, the present number of daily active users is greater than the monthly active users from just two years ago, as Mark Zuckerberg on the Q3 2022 call stated:

"WhatsApp has more than 2 billion daily actives, also with the exciting trend that North America is now our fastest-growing region. Across the family, some apps may be saturated in some countries or some demographics, but overall, our apps continue to grow from a large base."

Meta does not break out WhatsApp from the rest of FoA but the above comment should catch your attention. At over 2 billion, WhatsApp DAUs are larger than that of any other social media platform, including Facebook’s 1.984 billion as of Q3 2022. Additionally, the platform sports strong demographic mixes, including nearly half of the users estimated to be between ages 15-35:

KEEP READING AT INVARIANT BY FOLLOWING THE LINK BELOW:
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This was a great post. I wonder how the narrative would be different if the company said this was its biggest near term focus (while also putting more investment dollars to it) while Reality Labs is a long-term focus (while putting less dollars to that segment)?
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Phil Fisher’s 15 Points
Warren Buffett famously said he is 85% Benjamin Graham and 15% Phil Fisher.

Here are Phil Fisher’s 15 Points to Look for in a Common Stock
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All stocks acquired in this year's crash.
rate my portfolio out of 10
11%<5
0%>5
66%7
22%= > 9
9 VotesPoll ended on: 12/4/2022
Not a fan of Square, Netflix. Not too fond of Adobe after the horrendous Figma acquisition and can't say much about LULU, DDOG and Marketaxess. Overall a lot quality, 7/10
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Finding 100-Baggers 101
Over the past 3 years, I've spent hundreds of hours trying to reverse engineer the attributes of companies that can 100x your money.

Here are 7 critical characteristics to look for on your hunt

Intention To Get One

Most people spend time searching for them but are unable to withstand the peaks and valleys of long-term ownership

Focus on fundamentals, not the stock price.

Holding companies as they compound will allow you to get closer to 100-bagger territory!

Quality Growth

Too many investors focus on revenue growth that doesn't translate to earnings or free cash flow growth.

Instead, focus on finding companies growing earnings/free cash flows at sustainably high rates.

Reinvestment opportunity

If you focus on dividends, you can succeed, but finding a 100-bagger will be unlikely.

Instead, you want a company that can reinvest earnings back into the company at high rates of return.

Hold onto a business that can do this, and relish the results.

High ROE

Finding businesses that have one-off high ROEs isn't difficult to find.

Maintaining a high number is more important than 1-time increases.

This ensures that returns continue to compound rather than decelerate.

Decelerating returns are the kryptonite of 100-baggers.

Great Management

Too much analysis briefly covers management history.

Instead, find out what management is doing to boost the company's operations.

Great management + great business = the holy grail of investing according to Charlie Munger.

Culture

Learning company culture is one of the hardest parts of analysis, so most investors skip it.

Instead, look at the following to identify a kick-ass culture:

• High insider ownership
• Great relationships
• Long employment tenure

All these points to a winning culture

Incentives

Companies incentivized to focus on the short term are not your friend.

They sacrifice the long term for short-term.

100-baggers require the opposite approach: sacrifice the short-term for long-term fundamentals.

A 100-bagger should never sacrifice the long-term.
2022 - A Year in Review
2022 has been a very challenging year as an investor. I was hit with the double whammy of a tumultuous market and inability to maintain regular contributions. Life happened - continuing to adjust to a new house, new job(s), new city as well as a rising inflationary environment affected our ability to contribute.

Although I did not achieve some of my goals for 2022, there are many takeaways from this year:
  1. If I can manage this level of volatility and be unaffected, I will be set up to be a long term buy and hold investor
  2. Maintaining a process to guide through difficult times is essential
  3. Setting less-specific goals to help with mental blocks when goals aren's being reached

Now for the investing-specific goals I set for myself in 2022:

Progress:

Routine Roth Contributions: 2/26 ❌
Routine Taxable Contributions: 2/26 ❌
2021 Max: $2,180 ❌
2022 Max: $50 ❌
Roth Dividends: $157.54 (through November) ✅
Taxable Dividends: $389.85 (through November). Will reach target with confirmed December dividends ✅

Portfolio Changes:

Below is my current verified portfolio mix and a comparison to my portfolio allocation compared to my January Portfolio Reviews:

Taxable Top 5
  1. $CMA (13.8%)
  2. $VTI (12.4%)
  3. $VEA (7.8%)
  4. $VWO (5.4%)
  5. $TGT (4.8%)

December 2022
  1. $CMA (11.1%)
  2. $VTI (9.5%)
  3. $VEA (7.3%)
  4. $PFE (4.8%)
  5. $VWO (4.7%)

Roth IRA Top 5
  1. $VTI (12.4%)
  2. $VNQ (11.5%)
  3. $SBUX (9.7%)
  4. $VIG (8.9%)
  5. $HD (8.0%)

December 2022:
  1. $VTI (11.9%)
  2. $SBUX (11.2%)
  3. $VNQ (10.2%)
  4. $VIG (9.2%)
  5. $HD (7.6%)

Finally, I want to review my portfolio performance vs my benchmark of the S&P 500:

Taxable (YTD): -7.5% ✅
S&P 500 (YTD): -18.6%

Roth IRA (YTD): -13.7% ✅
S&P 500 (YTD): -18.6% (Had issues getting my S&P trend to plot)

Overall, this has definitely been a challenging year. My portfolios are down and the markets are down. However, I am down less than the market. I am thankful to have my dividend income that has allowed me to continue to add to positions, even when I am unable to contribute new funds.

Looking forward to 2023, I want to continue to follow my Scorecard process, collect dividends, and contribute as I can to continue to grow these two portfolios.

As always, would love to see your thoughts, comments and questions below!
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I'm about to comment, and it may be outside your framework, so feel free to ignore it.

You've done exceptionally well to not be down as much as the market, so ten points from me on that aspect. So, you're putting into practice an effective way to help limit the downside.

Would you consider adding stocks with a bit more growth tilt so that when we do come out the other side, you're maximising much more to the upside?

Not sure if I've articulated my point precisely. Let me know if it makes sense.
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Chips made in the USA: Why I buy $TXN over $INTC
$ASML estimates that technological sovereignty will drive chip manufacturers away from Taiwan. Many think $INTC will be the big beneficiary, but I much prefer $TXN to benefit from this trend. Check out my new @seekingalpha article here

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Todor Kostov's avatar
$6.9m follower assets
UiPath $PATH - Industry Analyst Recognition
UiPath $PATH reported their Q3 2023 numbers on Thursday this week. Their ARR grew 36% year-over-year reaching $1.110 billion. One slide which stood out from their Quarterly presentation is their significant leadership in Group Robotic Process Automation (RPA) and Low-Code Development Platforms.

Source: UiPath Q3 2023 Presentation
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Brett Schafer's avatar
$27m follower assets
Mercado Libre Insane TPV Growth
Since 2017, $MELI has compounded it total payment volume at 55% annually and recently passed $100 billion in TTM volume

What would stop the momentum of this train?
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Yonathan Daniel's avatar
$110.6m follower assets
1 of 2
Time to start buying European Banks
Very interesting— as rates continue to go up more banks become more profitable. And European banks specifically because they were disincentivized to lend even more than American banks. But with interest rates rising they will be much quicker to lend, benefiting their earnings. Nice thesis.
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Brett Schafer's avatar
$27m follower assets
Power Hour: Why Isn't SBF in Jail?
Today we released our weekly power hour discussion on Chit Chat Money where we discuss a variety of investing/finance topics for an hour. Here are some things we hit on this week:

  • Why isn't SBF in Jail?
  • The state of the cloud market in 2022
  • Housing's lagging impact on inflation
    • more

Listen wherever you get your podcasts:


Todor Kostov's avatar
$6.9m follower assets
📊Big movers of the week📊
🟢 GAINERS 🟢
Netflix $NFLX: 12.73%
Meta $META: 10.72%
Las Vegas Sands $LVS: 7.42%
Estee Lauder $EL: 7.07%
Tesla $TSLA: 6.44%

🔴 LOSERS 🔴
PayPal $PYPL: -1.75%
Valero Energy $VLO: -2.08%
Baxter $BAX: -4.6%
Costco Wholesale $COST: -5.1%

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Samuel Meciar's avatar
$37.2m follower assets
$SHOP $190,4B worth of goods sold through businesses running on Shopify platform, just in the past year. The odds are you're ordering from shops running on Shopify without even realizing it.

Despite that, there's still doubters of Shopify's ability to execute.

Let that sink in!
The European energy crisis is boosting adoption for alternative appliances
Washing machines and drying machines, whether made by $WHR $GE LG, or any other manufacturer, are energy intensive. Sure, the energy consumption on the newer models is much less compared to the older models, but they still consume tons of energy.

Soaring electricity costs are encouraging Europeans to buy electric drying racks. At first glance, I never heard of an electric drying rack. As I did research on how they work and the benefits of using them, I was amazed to hear that (source):

  • they dry clothes 62% faster than drying machines
  • they're great for drying specialty and delicate clothes
  • no lint
  • uses 24X less power than your average dryer

According to a review by BusinessInsider, the electric drying rack is saving them a small fortune on their energy bill.

Outside of drying clothes, they're buying other energy-efficient appliances for the kitchen like air fryers (which can replace your oven, in most but not all cases), pressure cookers (which are also seen to replace ovens), and possibly the Tupperware MicroPro Grill (this innovation allows people to grill food in a microwave, which can greatly help Europeans save on energy while cooking them delicious food, which is probably why Tupperware insiders keep buying the stock).

And there's Greece, who's providing subsidies to people to switch out their old fridges and HVAC machines for newer ones. And there are concerns over how grocery stores can preserve food during the energy crisis.

There are concerns that as people switch out their gas-powered appliances for those that use electricity and use energy-efficient electrical appliances simultaneously, the power grid in various European nations will struggle to provide power throughout the winter. With little to no sun, the many solar farms that European nations built since the war began won't be producing energy. The wind farms will meet some of the energy demand, as long as the wind keeps blowing. Utility companies will be using the fuel from the storage facilities and will try to be conservative about the usage of that gas so that they can make it last through the entire winter. Gas imports will be difficult as the rest of the world endures an energy crisis.

Overall, the energy crisis has pushed people to adopt other innovations that can reduce their reliance on ovens, drying machines, and other appliances. Many of these innovations that I've mentioned are things people buy to help them adapt to living in a small apartment where there's no washer/dryer and because of this energy crisis, people that live in more spacious residences are buying those innovations. And if there are no innovations to replace certain appliances, then people adopt habits that reduce their energy usage.

This crisis is inspiring entrepreneurs to create innovations that can help us become less reliant on our big, energy-hungry appliances. VCs are probably working to find those startups that are making those disruptive "alternative appliances' because those startups are probably thriving while the rest of the world endures an economic slowdown and will maybe enter a recession.

The energy crisis of the 1970s inspired Americans to adopt and build energy-efficient cars. The energy crisis of today is inspiring Europeans to adopt energy-efficient appliances.
Could installing A/Cs and heaters in delivery vans help reduce health insurance costs for parcel delivery companies?
Every summer, we hear of delivery drivers enduring temperatures well above 100*F on a typical summer day in their delivery vans because $FDX and $UPS aren't willing to install A/C.

This is a problem that has been happening for decades. The two parcel delivery companies say that by not installing A/C, they can reduce fuel costs. And this problem gets worse because of global warming (which ironically is saving Europe from a terrible winter).

Regarding cold weather, I've read a few posts saying that the vans have heating. Other posts say that there are no heating capabilities in the delivery vans because the company provides winter coats suitable for work and that many of them sweat during work in the winter. At least no one seems to be complaining about working conditions during the winter.


In 2019, FedEx waged a war against its employees when it came to health insurance costs. FedEx wants to do its best to reduce health insurance costs but its view of reducing health insurance costs comes with reducing health insurance benefits, which hurts workers. There have been numerous fights in the past between executives and workers when it came to health insurance costs and benefits, making it a norm for the business.

I assume that health insurance coverage for delivery drivers is very high compared to health insurance for an office worker. With a lack of A/C for the summer and other health risks that come with being a package delivery driver, it's no wonder why health insurance companies will only provide health insurance to those workers at a steep premium. The risk of death is high for delivery workers. In a way, summer weather guarantees a trip to the hospital when reading the severity of the conditions of being a UPS or FedEx delivery worker.

With that, I think FedEx and UPS (whom I assume have a similar issue) should consider adding A/Cs in the delivery vans. That way, working at FedEx or UPS becomes safer and hopefully, that can lead to lower health insurance premiums for those companies. *The fuel costs will increase but their health insurance costs get reduced, significantly.

Also, the executives should start thinking deeper about WHY their health insurance premiums remain high rather than rely on options like cutting vital benefits to workers and making working conditions worse for workers.

*I'm not sure how the math would work but I believe I'm correct. If you know how health insurance pricing works for higher-risk occupations, feel free to let us know in the comments section if health insurance premiums will be reduced as a result of adding A/Cs to the delivery vans
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Top 5 most held stocks on @commonstock this week | YTD Comparison and AI analyst insights
Here's a YTD chart of the 5 most held stocks on @commonstock this week:

*Please note that we took $BTC.X and $ETH.X off the list as we don't support Cryptocurrency yet 😎

> Vanguard S&P 500 ETF $VOO: -13.72%🔴
> Vanguard Total Stock Market ETF $VTI: -15.01%🔴
> Apple $AAPL: -18.04%🔴
> Microsoft $MSFT: -23.2%🔴
> Tesla $TSLA: -51.32%🔴

Below is one of the AI analyst's insights about that comparison:

Here are a few selected AI analyst's insights taken from the reports on the most sold stock on @commonstock today:




Until next time 😎

Sources:
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Commonstock is a social network that amplifies the knowledge of the best investors, verified by actual track records for signal over noise. Community members can link their existing brokerage accounts and share their real time portfolio, performance and trades (by percent only, dollar amounts never shared). Commonstock is not a brokerage, but a social layer on top of existing brokerages helping to create more engaged and informed investors.