Brett's November Portfolio Update
A good month for Axon and Spotify
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Brett here.
I’m going to introduce each of these newsletters with a stock I own and a few reasons why I like the company. This month, I chose Axon Enterprises (ticker: AAXN). Their third-quarter earnings were released in November and I was happy to see the stock pop 20% on the news.
So, what is Axon Enterprises? They originally developed the TASER to sell to police officers, but have since broadened their market and are now calling themselves “a market-leading provider of law enforcement technology.” This includes hardware like TASERs and body cameras but also software and cloud products for police departments. North America is where the majority of their business is done but they plan on expanding internationally in the coming decade.
(click here if you are interested in a deeper analysis of the stock)
There are a few reasons I see myself holding Axon for the next five years. One is their virtual monopoly on TASERs and body cameras, at least for law enforcement in the United States. This gives them stellar earnings stability. Another reason I like Axon is its new, high-margin, recurring revenue SaaS products for law enforcement back offices. Last quarter this segment grew 42% YoY and had 75% gross margins.
The big reason I love the stock is their recurring revenue bundle for police departments. For $199 per officer per month, agencies get TASERs, body cameras, and all of Axon’s software offerings. No other company can offer this many valuable, time (and life) saving products in one bundle.
Lastly, the management is fantastic. I actually just listened to CEO Rick Smith on Recode Decode and came away even more bullish on the company.
Okay, now to my portfolio returns.
Individual Account
Trades Made:
Bought 20 shares of JD.com for $34.355
Bought 4 shares of Square for $60.00
As you can see, I’m not a very active trader. I believe the best way individuals can try (emphasis on try) to beat the market is to buy and hold with a long-term mentality.
Axon, Spotify, Disney, and Teladoc all had great quarters, and iRobot was again a dog. I am considering selling all my shares of iRobot for tax purposes. Please note however that if I do sell the shares, it would mainly be because I’ve lost confidence in the business, not just to offset gains. Trim the weeds, as they say.
Stocks on My Watchlist (Unchanged)
StoneCo
Sea Limited Co.
Telaria
Sonos
Mercadolibre
Starbucks
Roku
Match Group
Target
Roth IRA
Trades Made:
Bought 8 shares of SCHB
Nothing to update here. Same plan as always: add shares to broad-market ETFs with low fees and continue to hold them forever.
Portfolio Performance
To make things easy, I’ve decided to track my performance using the Schwab Performance Tool and go all the way back to 2017 when I opened the account. This is why even though a lot of the stocks I own are up 20-30%, overall I’m still losing to the market because of some poor past decisions. This a good reminder to never invest in penny stocks. Ever.
Alright, that’s it for my November 2019 portfolio update. Make sure to follow us on twitter @chitchatmoney, subscribe to this newsletter if you haven’t already, and check out our podcast here.
See you in a month,
Brett Schafer
*I am not a financial advisor. Nothing I write is advice or a recommendation.