Henderson Capital: 3 Month Update
Square, Spotify, and Telaria
*This newsletter is free, but if you want to support it, our podcast, or website, upgrade to the paid version for $5 a month here:
**If tables/charts are not showing up, click on the link to read the web version.
Sorry to any of our loyal readers for the delay on this post. I would say that I’ve been really busy, but truthfully I’ve been more distracted than anything. With that said, I’ve found some time and focus to write to all of you about my portfolio’s return thus far. As you probably noticed I decided to change the name of my individual portfolio to Henderson Capital. This is obviously trivial and meaningless, but it’s probably a better name than “Ryan’s Portfolio”.
To reiterate what I said in my first post, all my invested money is now in a Schwab brokerage account. I used to have it divided between Schwab and Robinhood, but thanks to the introduction of commission-free trading to the Schwab platform, I’ve moved it all over. I’ve been investing for around a year and a half now despite the title of this article. However, due to the transition from Robinhood to Schwab, I’m having a difficult time calculating my overall returns. The earliest that I purchased an individual stock on Schwab was on October 18th, 2019. So from this point forward, I’ll be judging my performance vs. the S&P 500 from that point in time. In addition to the time frame, I’ll only be judging the performance of the pure equities I own and not the ETF’s portion of my portfolio. Roughly half of my portfolio is in ETF’s but as I continue to build confidence in my ability to pick stocks, my ETF exposure will decrease.
Since October 18th, 2019, Henderson Capital is up 22.01% vs the S&P 500’s 11.40%.
Here is my current portfolio allocation: (excludes ETF positions)
Square: 36.69% [Up 26.27%]
Spotify: 16.34% [Up 24.78%]
Alteryx: 14.56% [Up 43.40%]
Match Group: 13.15% [Up 12.86%]
Yext: 11.75% [Up 9.67%]
Telaria: 7.50% [Up 3.04%]
These past two months I made very few changes to my portfolio. I increased my existing positions of Square and Spotify and built a starter position in a new company called Telaria. Telaria is a video management platform that operates in the mobile, desktop, and connected TV space. I’m currently working on a separate 3 part article explaining my thesis behind the Telaria purchase, but as of now, I intend on adding shares periodically if the valuation continues to remain favorable. On top of the article series, Chit Chat Money is planning an interview with an industry expert, Dhaval Kotecha, in the upcoming month.
Telaria is a $454 million company that recently announced plans to merge with Rubicon Project to become the single largest sell-side and video management platform. As more and more consumers have cut the cord with cable and made the switch to connected TV, statistics show that advertisers are merging as well. Telaria appears to be well situated to benefit from the ongoing increase in CTV ads. I see no reason why Telaria can’t be the supply-side version of The Trade Desk.
As I mentioned, along with the Telaria addition, I added shares to my two highest conviction stocks, Square and Spotify. The past month Square announced the licensing of a new patent based around immediate currency exchange within an app. While most investors, including myself, can’t truly grasp the function this patent will serve, it should add more value to the Cash App and ecosystem as a whole. If Square’s allocation in my portfolio isn’t obvious enough, I’m clearly optimistic about them moving forward.
Spotify announced another steady quarter of both customer and revenue growth, as well as hitting the high end of their gross margin guidance. Podcast listenership has increased substantially on the Spotify platform, and they continue to make decisions based around the positive future podcasts can provide. Spotify stated that they intend to invest roughly $1 billion into the podcasting space throughout 2020, and during the 4th quarter, they did just that. Spotify announced that they are acquiring popular media and podcasting company The Ringer. While the price of the deal is unclear, The Ringer supposedly recorded more than $15 million in revenue in 2018. With plenty of positive tailwinds in the podcasting space, this looks like a great decision for Spotify.
Thanks for checking in, see you next month.