$GOOG: $1700, now at $2500
$NET(small position, see tracking position in 1st post): $65, now at $100
$CERA.NS: ₹2100, now ₹4300
$THYROCARE.NS: ₹1050, now ₹1300
Lesson: There are usually multiple reasons to sell a stock at any time. Bad idea to do so unless there are compelling reasons.
In March 2020, $FB shares were trading $137, amidst all the noise and overblown concerns. As per consensus analyst estimates, by 2026 $FB could have $150/share of cash and $32/share of FCF, meaning such a great business was completely free if you could wait 5 years.
Hard to go wrong with buying growing businesses that throw cash at cheap valuations. I didn’t catch exactly the bottom, but did allocate a lot of capital buying FB at lower levels(130-180) over the last 2 years, which has done very well.
I feel Alibaba is at similar juncture, however I am not buying because I do not like the corporate structure or the governance.
I was thinking about inflation and if I should rotate to capex heavy, higher debt old economy stocks but decided against it for two reasons:
a. I’m not a macro expert. Best to focus on what I know and assume rest to be efficient.
b. The best businesses usually are the opposite of this.
Some interesting stock ideas I’ve come across recently(keeping in mind valuation):
$BABA Alibaba
$TPB Turning Point Brands
$WISH Wish.com
Completely avoid. ARK is known for investing in fraud companies and has very little investment process. A lot of what they hold are close to a bubble or have very frothy valuations.
Watched it become a sensation on YouTube since the pandemic, how it replaced in person music lessons and other freelance gigs, and how the brand has now become a cornerstone of content.
Really nice seeing someone here on VP being a part of that journey. Just wanted to pop in and congratulate you on the pick.
Did you foresee it becoming this big when you invested, and when do you forecast sales/marketing spends to cool off?
Thank you Chins! I personally used to use the website and knew of a friend who used it for his business, at 4.5x P/S, it was an easy buy. I wish I had bought more, but didn’t because of taxation concerns. Fiverr is an Israeli company, not a US company. I fixed that by averaging upwards as the stock moved up. I have a significant position now and do not plan on selling anytime soon. It’s still a $9 billion company, and there is room for a lot of expansion. Shopify for eg. is a $200 billion company.
when do you forecast sales/marketing spends to cool off?
Fiverr can be profitable today if they want to, but why should they? For companies like Fiverr, when they see huge runway it’s a good thing to invest in sales/marketing to grow the business(as long as you have meaningful return on money spent). While traditional companies invest back into the business via capex, for Fiverr they have to do it via the income statement. I forsee them to keep ploughing in money into S&M as long as they can get meaningful ROI with that. IMO once they capture all available opportunity, they could have FCF margin(FCF per revenue) of 40-50%(extremely high gross margin, good cost structure and decent return on S&M).
