Conor's avatar
$2.5m follower assets
Added $U and $PYPL
Added $100 to each stock in my Hood account that is copying the Brian's commonstock portfolio.

I have never owned $U and probably would still not own them if I weren't doing this. That makes it fun and interesting. If you could literally copy two incredibly smart investors and beat the market, why would you do anything else?

Please note: I am NOT judging this portfolio's returns for at least 5 years. I do NOT care what the returns are before that timeframe. This is important because this isn't a cyclical or macro portfolio. This is pure growth and buy and hold.
Good companies, good valuations relative to where market has previously seem them at, bright futures ahead for both IMO. Hopefully they weather the storm well and come out better, and you'll be thanking yourself for entering at these levels!

They can also just continue to a slow demise to zero, which is exactly what my current portfolio looks like it's heading for LOL
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Brian Stoffel's avatar
$26.6m follower assets
Stock Purchase #5 Announced: Unity Software ($U)
Today, @brianferoldi and I announced the fifth stock in our portfolio.

Before diving in, we want to congratulate @stonkmetal who won $250 from @commonstock for the most insightful comment on our $MELI thread.

That said, let's dive into this week's pick.

Unity's mission is "enable more people to be creators."

Gaming is the primary industry it plays in. But the company's platform is allowing creators to build world's in the meta verse in a number of different areas -- which is something we're very excited about.

It's important to understand the business model.

CREATE SOLUTIONS: subscription-based. This is where the games or applications are built.
OPERATE SOLUTIONS: usage-based. This is where (primarily games) are monetized.

Overall, we're big fans of this two-pronged business model (technically, there are also strategic partnerships that bring in money)

And, overall, results have been very solid.

We also like the moat surrounding the company. The network effect is strengthened by all the data Unity can serve it's AI/ML in the operate sphere to place ads (that was, however, an area with huge snafus in the most recent quarter).

Beyond that, switching costs are very high, and this is essentially a duopoly in its niche (with Epic)

Revenue growth has been solid, but net income isn't great. Stock-Based compensation is a huge reason for that. In part, that's annoying -- since it was management mis-steps that led to a significant downward revision (more on that below). But it's also partly understandable, as it was due to the acquisition of Weta Digital (which is also why net cash is basically even today)

While the founders (board member and CTO) are still involved, John Riccitiello is at the helm. he's on the hot seat right now to fix the problems in Operate. But we love the reviews employees give and the level of insider ownership.

There's HUGE optionality -- especially outside of gaming. We're starting to see evidence of adoption well outside of the industry, which is a great sign long-term.

The stock, however, has been a stinker in it's short life as a publicly-traded company. We aren't too concerned, as we don't have enough time to really judge how the stock (and company) have done.

No surprises here: we already mentioned the duopoly status and high level of stock-based compensation.

While certainly not cheap on an absolute basis, it is cheaper than it has ever been

As for that near-term snafu, the way we understand it:

  • Management realized in February that Operate revenue wasn't great
  • When it checked under the hood, it realized its algorithm had ingested bad data
  • To fix it, the company needs to go back -- check all the data manually -- and re-train the ML
  • This will cost roughly $110M in revenue for the year

That shortfall explains the HUGE divergence between management's and Wall Street's expectations, and why the stock fell so much.

Here's what really matters to us moving forward

Finally, with all of these things being taken into consideration, here's how the stock scores on our frameworks.

But enough about what we think. What do YOU think of Unity?
Unity's Operate Solutions troubles are
83 VotesPoll ends on: 05/24/22
I really like Unity for a while. I know Unity from my early days, as a gamer where many web-based games, Minecraft ripoffs, etc. were built using Unity3D, I think it was basically the only competitor to Flash in which many web games were built in, too. A few years later I got to know the company from investors perspective, and there's a lot I like. Their diversity makes it a very interesting company to me, especially as all the major industries they operate in face massive tailwinds. I like to invest in top notch technology that changes how we do things, and when I see how they are a part of revolutionizing content for example where essentially filmmakers won't have to really shoot films, they can essentially just model all the assets and compose a real-life like film because the depth of technology enabled by impressive AI/ML today already is very far (just look at their Ziva acquisition), then there's a solid question just about how valuable is that. And there's plenty of these examples that float around in my head in regards to Unity's solutions and really use cases under a tremendous amounts of verticals. Or even this concept of metaverse, which I suppose will be built around digital assets, which again will try to look as close as real-life things, and who do you think will be the one selling those picks and shovels for creators to make them? right, it's going to be Unity (and maybe a few other players), but I'm fairly certain Unity has tons of data that makes their lead almost unassailable. Now sure, there's a competition from Epic which has its UE, and that's going to be interesting to watch, how that fight unfolds, but I still believe Unity is in much better position given their vertical integration across all the platforms, starting from mobile devices, PCs, ending with consoles, all deployable for creators without additional variations of a code, and I think that itself is very valuable, that they have this sort of integration. When looking at things that are quantifiable, I look at healthy growth of >30% for probably years to come, I see a decent balance sheet, I see great scores on Glassdoor, so the culture is healthy, great insider ownership, even more so impressive that John Riccitello has 2,8% of the shares himself -- considering he's an outside CEO, that's a pretty substantial amount of skin in the game, I'm also seeing that they pulled off positive FCF this q despite the headwinds mentioned with the data regarding their usage based Operate segment, so I'm overall happy to buy at a discount here, hence why I 2,5x'd my position about a week ago.
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Josh Kohn-Lindquist's avatar
$8.4m follower assets
Might as Well Jinx Myself
Things are starting to get fun around here.

I just need about ten consecutive weeks of this, and I'll be looking good. 🙃

$UPST and $U drove most of these gains, up around 80% and 40%, respectively, in a single week.

Have a pretty good feeling more buying days will be coming, however.

We'll soon find out -- I'm happy either way.
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Samuel Meciar's avatar
$7.7m follower assets
Portfolio changes - update 6
I decided to sell $DASH and $ADSK. No specific reasons, I just find better opportunities elsewhere within the themes. Both are strong companies with lots to like, but I have to follow the process of adding to highest conviction, and I simply just see better R/R at these levels elsewhere.

As $ADSK replacement, I added to my $U position (cost average $57,08) - for those who care lol. By doing so, $U is back to I believe my top 10 when it comes to weighting, even as I'm down roughly 33% on my position. I'm happy to have it higher as I believe I'm looking at lucrative R/R here and Unity has tons of optionality, too!

So that concludes my portfolio changes for the week, I wish everybody a great weekend!
6 Additions for This Week
Through my regular dollar-cost averaging in my $HOOD account on Monday and my Stash account Thursday, I added to the following stocks: $TTD, $SHOP, $MELI, $U, $UPST, and $SE.

These may be my single highest conviction stocks and make up a portion of my core 34 holdings.

Trade Desk will benefit from the steady shift to connected TV, alongside $ROKU.

Shopify, MercadoLibre, and Sea are fascinating at these prices and offer increasingly strong optionality as time goes on, it seems -- not to mention they dominate their niches already.

Unity faced a significant issue regarding its advertising, but it appears to be a one-off event. I cannot like this company's optionality more.

Upstart's sell-off completely confuses me. While risks remain, the risk/reward potential for the company has become far too interesting.

tl:dr

These are six great businesses with high growth optionality for the long term, now trading at significant discounts.

I am also planning to add to one of my "higher-risk" core holdings Monday -- who would you all pick?
Which riskier stock should I buy Monday?
12%$TDOC
32%$SOFI
8%$GLBE
48%$RBLX
25 VotesPoll ended on: 05/16/22
@joryko what a great list you have here. I’ve purely been technicals, but want to add fundamentals into my game. Any suggestions on good reading material to start off? Thanks.
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TA Lesson Of The Week: Bullish Engulfing
A bullish engulfing is often a sign of a short term trend reversal. If you see a bullish engulfing with higher than average volume, that gives more confluence to the trend reversal.

These trend reversals sometimes lead to just a day or two of green followed by more downside or can lead to a few weeks of green.

A few examples of these today include $FVRR, $U, $UPST, $TWLO, $SHOP.

All of these stocks are in steady downtrends which means stay patient on your long entries, but they are ones to watch tomorrow for continued strength.
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Love the visual here— if you had a position in Twilio, Shopify, Unity or Fiver, would you be leaning towards a day or two of green followed by more downside, or a few weeks of green, and what would you look at to try and help you determine this?

Curiosity only— not financial advice of course. Always an important reminder, but especially when the market is so unforgiving right now.
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