Latest Positions: Social, Trillions, Semis

Here is a Part 2 of the list my latest personal portfolio positions and most of the hedge fund positions with updated commentary and ratings for each position.

The ratings for each stock go from 1 to 10, 1 being “Get out of this position now!” and 10 being “Sell the farm, I’ve found a perfect investment.” The positions that are bolded are those that I consider to be “core” holdings and am unlikely to ever sell out of them entirely.

Longs –

• The Social/VR/AR Revolution –
  • FB Meta (8) – FB is trading at 22x next year’s earnings estimates, which assume the company is going to spend a lot more this year than last year to beef up security and otherwise protect/grow their businesses, including Oculus. The company generates tens of billions of dollars of cash flow over the year. Facebook remains a hated company even if they changed the corporate name to Meta to try to make people hate the corporate parent a little bit less and to help shape the company towards its metaverse-centric future. FB is one of my largest positions and I buy more for the hedge fund whenever it drops and I trim a little for the hedge fund whenever it rallies, but mostly I simply keep a large core position steady in the hedge fund. I’ve owned FB in my personal account since I pounded the table on it and made it a big position back years ago after its IPO and mostly just sit on it.
  • TWTR Twitter (6) – Well, we got our wish for a change in leadership, but the person Twitter tapped to replace CEO/founder Jack Dorsey is from inside the company and not someone fresh. That said, I’m glad they tapped the Chief Technology Office instead of, say, the CFO, because maybe this guy will actually implement some much needed technology enhancements and new features for Twitter users. Both Twitter and Snap have become small positions for me and I did finally nibble a little of this one last week. I’d buy more near $30 if it goes there.
  • SNAP Snap (6) – Snap’s still innovating, creating new video filters and continuing to grow despite the Tik Tok juggernaut consuming much of kids time. Snap’s growing its topline twice as fast as Twitter, but is trading a slight premium to Twitter and neither one is terribly “cheap” here. I did nibble some SNAP late last week for the first time in a long time and I’m sitting tight otherwise in this name that we literally, like with Twitter and Facebook, and Google and Apple, bought at their all-time lows years ago.

• The Trillion Dollar Club –
  • AAPL Apple (6) – From the prior Latest Positions write up: “Buying AAPL today gets you in at around thirty times this and next year’s earnings. You are paying that multiple on a company who’s revenue growth is pretty lumpy. Sometimes it is twenty or thirty percent, sometimes it is negative five percent. Apple at a thirty times earnings multiple is about the highest P/E ratio that I have ever seen it. Apple might be my least favorite long-term forever holding that I have right now. But I continue to hold it because it is Apple and I have owned it since $0.20 in March 2003. That and the Apple ecosystem is not going anywhere anytime soon.” Even as a long-time Apple bull, I’ve been amazed at it ability to hold these valuations that it’s gotten to. Apple’s a good buy in years past when it trades at a 10 or 12 P/E, but even as its gotten bigger, the P/E has risen to 30+ and it remains an overvalued stock, in my opinion, but yes, I continue to hold Apple as I have for more than 18 years now.
  • GOOG/GOOGL Google  (7) – Google has come down about 15% from its recent all-time highs from like two weeks ago. But it had tripled in the prior 18 months in order to get there. Google grew its revenue 40% or so this year and will report its first year where revenues top 1/4 trillion dollars. When I bought Google back in 2004, revenues were about $3 billion. So it’s grown its topline nearly 100 times in the last 17 years. That’s why we buy growth stocks. I’ll have to put together a spreadsheet that shows revenue growth for each of our stocks that have gone up 10x or 100x or even more since we bought them.
  • AMZN Amazon (7+) – As I’ve pointed out before, Amazon’s on track to do a trillion dollars in sales all by itself in another three or four years. In another five years after that, Amazon’s sales should pass Canada’s entire GDP which might itself be able to grow to $2 billion by then from the $1.7 trillion Canadian GDP of 2019. Meanwhile, the new CEO that came in and replaced founder/CEO Jeff Bezos is doing some interesting things around advertising and app notifications to push new purchases. I think revenue and earning estimates are too low from the analysts covering this company and the next report could b a doozy. I nibbled some of this name recently and in the hedge fund, I will trade around this long-held core position.

• The Semiconductor Revolution
  • QCOM Qualcomm (7+) – A lot of ways to win with Qualcomm, which most people think of as a pure-ish play on 5G wireless migration. Which it is. But it’s also inside of the 5G wifi hotspots from the likes of T-Mobile and other providers which is starting to win over DSL and Cable broadband subscribers. In the prior Latest Positions when the stock was trading at $140ish, I wrote: “I think Qualcomm could get to $200 by year end and I plan on holding this, one of my largest positions stead for now.” The stock got to $193 which is close enough to declare victory on that prediction and I did trim a little bit when it got there as noted at the time.
  • NVDA Nvidia (7) – As I’ve noted before: “NVDA is never cheap. I bought Nvidia at [a split-adjusted] $7 per share and it was not cheap then on a fundamental basis. You had to be looking out two to three years even then to have the guts to buy it. Here we are five years later and the stock is at $150 and it is still expensive although not terribly so as you can buy Nvidia at forty times next year’s earnings.” The stock got ahead of itself late last year when it started trading at 70x forward earnings but has since come back down to its more reasonable and familiar level of about 50x. That’s still a bit ahead of itself and I wouldn’t be shocked to see the stock come down below $250 at some point this year. Remember as always that the main reason that I am willing to stick with NVDA beyond my historical reasoning of owning it which was its positioning in the Cloud Server/Autonomous Driving/Bitcoin Mining/Gaming/All of the other Revolutions that it set itself for and that came to fruition is because Nvidia bought Arm Holdings on the cheap when Softbank was desperate and selling assets.
  • TSM Taiwan Semiconductor (7-) – Everybody needs TSM to make more chips. I mean, car companies, stereo companies, TV companies, computer companies, smartphone companies, tractor companies, refrigerator companies, tool companies, etc. I mean everybody. And that’s a great position to be in, especially if your competitors are going to continue to struggle to catch up with your technological advantage and experience. The biggest risk at TSM, as always, is if China goes in and tries to take over Taiwan. I don’t see that happening any time soon, but we have to be careful on this one. It’s a pretty large position for me as it has been since we bought back a couple years ago at a fraction of today’s price.

Part 3 coming tomorrow.