In honor of $LULU hitting 52-week highs today, I thought I'd share my post from last year about why I like them, and also a headline from my favorite analyst, Randy Konik, who has been routing against Lululemon for a good five years now. Maybe he should try a new trade, like meteorology, where it's more acceptable to be this consistently wrong 🤣

https://commonstock.com/post/867bf660-e77b-4ebb-8d93-6b3a9c9ced81 by @capisce_capital

A few weeks ago, I wrote a post about feeling like an imposted and feeling like no one would want to read my writing, and a few users encouraged me to just do it anyways, and block out the noise. Thank you to those who gave that encouragement, as I am finally trying to take my writing seriously! I've completed my Substack setup to start writing more long-form content there. I'll always be engaging here, as I enjoy the community I've found on Commonstock, and will definitely be summarizing my posts here, but for those who are interested in following my journey and the documentation of my research, please consider subscribing to my newsletter and I'd love any feedback on my first post!

Here is the link to the full post, and I'll summarize below:

For those who don't know me, I've been an active investor since the Great COVID Crash of 2020. While that's not a ton of time, I feel it's a long enough time to share some of my investment lessons (aka past mistakes) and how my strategy has evolved over time. From penny stocks to trading options, I've lost money in all kinds of imaginable ways so far! These losses were definitely the hardest and best way to learn some of those lessons, but the biggest takeaway I've had is that investing needs to be a deeply personal journey, and you need to find an approach that mirrors your tolerance for risk. I've been building my own playbook, and can identify it into four main parts:

I've recognized the need to adapt and change over time, especially as I've taken some losses. I will continue to tweak my approach, and if I gain more confidence in identifying winning growth stocks, I may lower my percentage of buckets 1-3, but that's why keeping this a flexible process is key.

I plan on this newsletter being more of a personal journal of my investing journey than anything, whether that be my research notes on specific positions, or an update on why I bought/sold something, or just observations of the markets as a whole. I hope people will find my notes add some value, but mostly I just needed an outlet for this hobby of mine, and a way to document what I'm thinking in a particular moment. Welcome aboard to those who choose to subscribe, and thank you to everyone for reading!

About six weeks ago, I was looking at my position in $PENN, realizing I was more overweight than I was comfortable with, and also realizing that 10% of my shares represented like 75% of my total losses. I wanted to buy cheaper shares (it was trading at $23 at the time) and replace those higher priced shares. Lower my overall CB, lock in the tax loss, continue the position for the long haul.

This week I was supposed to execute that strategy, free of the wash sale rules and post-earnings (I expected we were at/near a bottom). Maybe it's not an optimal use of cash, or an optimal strategy, but I had convinced myself it was the best move for my position at the time. Then they pulled the trigger on the deal with ESPN, and I discussed earlier this week the struggle I was facing regarding my position going forward, as a lot of my thesis was centered around a Barstool/PENN collab competing with $DKNG and FanDuel (see that writeup here: https://commonstock.com/post/123d42c4-0b56-486c-8f7d-8d7085add0fc)

Ultimately, I decided it was best to stick to the strategy I laid out for myself and sold those expensive shares, lowering my overall CB and lightening my position slightly. The surprising turn of events for me, was that I reallocated almost all of those funds into $DKNG - they were always a small piece of my portfolio, but management has seemed to be consistent in their strategy and successful, and owns a signficant piece of the sports betting landscape at this point. The Penn/ESPN deal reeks of a little desperation on both sides (ESPN knew they needed a hand in sports betting, Penn knew they needed a better branding partner to get any sort of decent market share).

I haven't sold all of my Penn, as I like the CEO and think his strategy is right (even if he got the partner wrong the first time, and gave Barstool back for $1), but they have their own in-house betting tech stack, and now are partnered with the largest sports media company in the US and own the largest sports media company in Canada; long term, maybe they overpaid for the ESPN deal (see Iger's quote below from their earnings yesterday), but they had no choice - they were about to be just another irrelevant sportsbook.

If they can parlay the ESPN brand into a larger market share, and continue their road to profitability, the stock should do okay long term. But if it pops back to $30+ in the near future, you might see me head for the exits, or at least significantly pare down - it's not one of my five best ideas, so it shouldn't be one of my five largest positions. Stay tuned for the next update of my gambling stocks!

After the close today, Penn Entertainment (one of my largest positions) announced a new 10 year agreement with ESPN to build ESPN Bet, a new branded sportsbook which will be the only odds shown on ESPN and advertised (which is probably why $DKNG was down 10% after hrs).

The full story from yahoo finance can be found here:

I'll try to dive into it further in the next couple days, but WOW! What a roller coaster of emotions for me as a shareholder. I initially bought Penn BECAUSE of their connection to barstool, and the fact that I liked Portnoy and their omni channel strategy. That connection is gone now entirely.

The fact that they paid $500 million for barstool just to give it back to Dave for free makes me feel like they're poor capital allocator, as that money just got lit on fire (unless portnoy sells again, then they get 50% of the proceeds). But then again, espn, who fired barstool after one episode of their collab together, probably insisted that Penn divest their interests in a company that doesn't align with their values, and let's be honest - the viewership, distribution channels, legacy of espn (they're the worldwide leader in sports for a reason) was well worth the $1.5B in cash that Penn paid for the branding rights and advertising - hell, they paid more than that for theScore, which was a good brand, but nowhere near the level of ESPN to the general sports fan.

So as a shareholder, I'm conflicted. They poorly allocated capital, but ESPN likely forced their hand and said "its us or them" and they had no choice, and knowing they had no choice, portnoy could dictate his terms. This opportunity will allow them the name recognition to get on par with Draftkings and FanDuel, and potentially become the third large player in this fragmented industry.

It aligns with their omnichannel strategy, it's a great (and probably better fit) partner to have in the US, much like theScore in Canada, and the initial reaction tells me that both Penn and portnoy knew on some level that he/barstool was holding them back on wall street. He had been involved in a couple of scandals and hit pieces, and now that they're free of that wild card risk, perhaps the stock can finally catch up to the multiples of its peers and rerate.

I'm not sure what I'm going to do just yet, but just writing out some of these thoughts has calmed my mind about panic selling now that my original thesis is gone, because it's probably a better long term move - but how long will it take to flow through the financials?

Happy Monday everyone! Hope you have a great week and for great investments for all.

My two of my largest positions ($PLTR and $PENN) report this week, with palantir after the bell today. I'm expecting a big move either way, but excited to see if the momentum they've alluded to with customer inquiries has shown up in the financials yet!

What is on everyone else's radars for the week?

I assume at this point that most people know or knew that Amazon was heavily invested in electric vehicle maker $RIVN -- if not, you are now! In studying $PLTR's investments (in a post that will come out later this month, when their latest 13-F is released), I realized that Dr. Karp - who co-founded a money management firm in London called the Caedmon Group - was probably not the only CEO allocating capital in other publicly traded companies.

Remembering the $RIVN investment, I was curious if Amazon had any others. It turns out, they do! Their list includes companies like Rivian, but also $ATSG (aircraft leasing co), $IONQ (quantum computing co), $MRVL (semiconductors), $NAUT (biosciences co), $OWLT ("smart" baby products), $SMRT (real estate tech co), $TWLO (enterprise communications), and $VITL, which @nathanworden posted about earlier today as he locked in his gains!

Some of these stick out as potential acquisitions (SMRT could be the commercial equivalent of purchasing Ring, OWLT could provide a lot of data about babies, perhaps TWLO could be complementary to AWS, etc), but Peter Lynch once said that the person who turns over the most rocks wins the game, and given that I own both $PLTR and $AMZN, it seemed like a good rock to turn over to see what public companies THEY thought were worth investing in.

Of course, we don't know why they chose to invest, and Palantir's strategy in particular seems more like a VC play, where they're hoping for one big winner to offset all of the losers, given that multiple investments in 2021 and 2022 have already been delisted and are down 90% or more -- losses which played a part in their own GAAP losses in 2022, which explains why they sold quite a bit of their holdings and began focusing on profitability this year (a move that combined with the AI hype cycle has paid off in spades for shareholders).

In any event, a couple companies in their portfolio that have made their way into my portfolio for speculative bets, and once their new 13-F is released in the next couple weeks, we'll do a deeper dive into Palantir's investments - they also have a quantum computing firm in their roster, so I'll be curious to compare that stock and $IONQ and see which CEO had more success allocating resources to quantum computing.

For anyone who wants a fun list of rocks to turn over, here is $GOOGL's latest reporting.. 58 companies worth!

It's my largest position, I don't think I own enough, and I regret not loading more in single digits.

My question though, for those of you who don't own it.... Why not? I get that it may not fit into dividend investor strategies, but for people who like growth companies, I'm genuinely curious why Palantir didn't make it into your portfolio - no judgment, I swear! But curiosity killed the cat here for me, and I want to understand the other side of the coin. 🤣

I have been wanting to struggle to find the time to write on a consistent basis (and research for that matter), but I think the biggest roadblock to writing and sharing publicly is that no one is going to care or read, or that my takes and research aren't "good enough" or deep/different enough to add value. Anybody else deal with that? How do you overcome it, besides just starting? I have a pretty eclectic group of stocks both in my port and my watchlist, and I enjoy researching companies, but I have been hesitant about commenting or sharing for the reasons above.

Then again, someone hit publish on an article stating that a YouTuber was going to be the sudden downfall of an international chocolate manufacturer, so my research and findings can't be THAT bad, right?

I am probably going to ruffle some feathers with this one, but one of my goals in posting here is to become a better investor, and to learn things that I otherwise wouldn't push myself to know.

That said... I hate DCF models. I hate all pricing models tbh, I think price targets are silly. I can see where there's value in trying to determine if someone is grossly under/overvalued, but otherwise it feels like noise to me.

Why, you ask? Well for one thing, it's entirely dependent on the assumptions that I put in. Without actively working for the company and being a part of the strategic decisions, all I have to go off of is what management has put out for projections, their own interviews, and other analyst guesses - so to me, I can make the numbers dance any way I want to. How does that help me determine if something is a buy or a pass?

Let's pretend you were trying to value CVS in 2016. You punch in all your numbers to your little model, you project revenue growth, EPS growth, all the things. Then December 3, 2017 they announce a $69B merge with Aetna. Instantly transformed cvs into a totally different company, now vertically integrated from insurance carrier to pharmacy. How the $&#@ do you model THAT?

Fine, that's a one off example - let's assume you did a dcf of, idk literally any company in Q4 2019. Did your model factor in a global pandemic, followed by intermittent supply chain shortages, followed by mismanaged inventory, rising inflation, and interest rates almost tripling in the 48 months you modeled out? Ironically enough, with all of those ebbs and flows, some of those dcf models probably worked out ok, but to me, it just feels like a huge dance to justify your positioning or purchase/sell decision.

You know why I'm so cynical about these types of complex, multi year models? I highlighted part of it, but part of it has been molded by my own experiences. I said it'd be borderline impossible for me to project something independently without some sort of internal knowledge of the strategy, future products, etc. I am confident in this because I spent six years at a manufacturing company that had an annual plan, and a monthly reforecast, the forecast was due in week 2 of the month, yet they still couldn't nail down their numbers. So the FP&A department, God bless their souls, would HAVE the inside knowledge as to what sales were in the pipeline, what was in production, how many people we had, how many hires were starting when, and they STILL couldn't hit their forecasted numbers two weeks after publishing them for the month. But me, a retail investor with no insider knowledge, is supposed go project what Company X's revenue and net income look like in 2028 and use that to back into what a "fair" price is for today?

Of course, I say all of this, but if you ask me how I determine whether or not I'm buying at a good price, I'm likely going to tell you I'm going off gut feel, so maybe I'm just gambling over here anyways 🤣

Over the years, I've tweaked my investment process and tried to define parameters to drive my new capital effectively. I have too many interests and get too much fomo, that if I didn't try to restrict/limit myself I'd have 50+ positions haha.

I generally keep small caps off my radar because I've learned I don't have the patience they require, and normally don't have the time to do proper diligence, so I end up in a vicious cycle of losing money. I don't even remember where I first saw this one, probably a seeking alpha article about different stocks I own/follow, but I thought I'd poll the audience. I'll share the ticker in the comments, but just based off the data below, answer the poll on whether you'd continue researching the company, and in the comments I'd love to hear why you voted the way you did, but also where you'd go next.

@thegarpinvestor had a tweet the other day that said his goal is to say no to an investment as fast as possible, which was the inspiration for this poll, so thank you for that thought provoking tweet!

Market cap: $140m

Cash on hand (as of Q3 2022): $23m

Debt: $3m, all classified as current

Revenues (2019, 2020, 2021 and LTM for Q3 2022)

37.5m, 42.3m, 55.2m, 62.5m

Net (loss) /income for the same 4 periods:

(14.7m), (8.25m), 4.4m, 9.2m

FCF (defined as operating cash minus Capex):

(9.0), (3.2m), 8.3m, 8.9m

3.33% individual/insider ownership

Public since 2009, 2021 was first year of profitability

Ceo has been in role since 2022, but has been with the company in some capacity since they were spun off and made into their own public company (was CTO prior to CEO)

I'll add a comment with the ticker after the poll expires tomorrow, but will be happy to answer any additional questions you have about the company that may help your vote! Hope this leads a fun discussion 😁