2024 Annual Portfolio Review
My review of 2024 annual performance with the goal of providing full transparency. I will detail the investment decisions taken over the last year and my goals for 2025.
Briefly, I would like to share what I have decided will be the format for my publication.
I continually work on deep research on individual businesses and I will publish my research on at least a quarterly cadence. I will also publish portfolio updates, quarterly earnings coverage for core holdings, and the occasional essay on my thoughts on investment topics.
In a similar vein of reflection, I have decided that I am going to start building a public track record with full transparency. I will publish my investment performance on an annual basis. These updates will be very brief as I am both highly concentrated and extremely inactive so there is not much to discuss.
Here is my start with my performance over the full year in 2024.
Performance
All figures are calculated as of 12/30/2024:
Consolidated performance: +33.07%The discrepancy between the YTD change in stock price and the YTD gain/loss on my DLO 0.00%↑ position is my average cost basis of $8.88 per share — this brings my position to a positive return for the year despite the poor stock-price performance.
Commentary
The most positive contributor to the portfolio’s performance was AMZN 0.00%↑ which is a significant percentage of the portfolio. Amazon’s business is currently firing on all cylinders as the retail business continues to show increased operating leverage and AWS accelerates growth.
DLO 0.00%↑ was a positive performer for the portfolio despite the poor yearly stock price performance due to the opportunistic purchase which coincided with the stock price decline. This brought my cost down to $8.88 per share.
I began 2024 with an additional position in $DHER.DE (Delivery Hero) and exited this position in 2024 due to the following:
Opportunity cost — DLO 0.00%↑ share price decline made me compare the investment thesis behind $DHER.DE and DLO 0.00%↑ and I decided that DLO 0.00%↑ offered both lower risk and higher prospective return over a decade-long time horizon
Concerns about management quality — the management team uses significant accounting adjustments that drive over a €500 million discrepancy between published Adjusted EBITDA and free cash flow. The management team also failed to disclose lawsuits they were currently involved in with Glovo which impacted liquidity significantly
At the time of purchase $DHER.DE was trading for approximately 2.5x normalized Adjusted EBITDA. My view was that significant operating leverage would reveal the true earnings power of the business (similar to UBER 0.00%↑ currently) and result in a significant appreciation in the public market price.
I decided to exit this position to buy what is an excellent business at an irrational price.
Thoughts on 2025
I have a desire to reduce the portfolio’s exposure to AMZN 0.00%↑ over the coming year— this is not because I have concerns with quality. Rather, my view is there is a significant limit to the performance that Amazon can sustainably deliver over the coming decade.
My view is that Amazon is fairly valued today and should be able to consistently deliver returns in the ~12-15% range — these returns are satisfactory for me if tax implications are involved. However, a significant portion of my AMZN 0.00%↑ shares are held in unvested accounts and on vest I am able to exit the position without tax implications. This will allow me to opportunistically use funds in the coming year to either:
Hold in cash — the most likely outcome as I have hit my limit on DLO 0.00%↑ exposure and do not have ideas in an otherwise frothy market or
Open new positions — this is something I do rarely and as I previously mentioned I have no ideas currently. Great businesses are out there but the prices are too high for me
I continue to view the portfolio is well-positioned in 2025 due to the significant exposure to dLocal. Barring a market-downturn (which I would welcome, my goal is to purchase great businesses at low prices not high prices), I expect very solid performance of the portfolio in the coming year.
Disclaimer:
The content provided on this blog is for informational purposes only and should not be construed as financial, investment, tax, or legal advice. All information, data, and material presented herein is believed to be accurate and reliable, but should not be regarded as a complete analysis of any subjects discussed.
All investments involve risk, and the past performance of any investment, investment strategy, or investment style is not necessarily indicative of future results. The value of investments can go down as well as up, and investors may not recover the amount originally invested.
The author(s) of this blog are not licensed financial advisors, registered investment advisors, or registered broker-dealers. We do not purport to tell or suggest which securities or investments readers should buy or sell for themselves.
Nice article 👍