12/27/24 - how i'm thinking about '25 and playsdearest friends
thanks for following my stream of thoughts starting mid way this year. my publishing started as a way to "log" my thinking when i encountered new names to both hold myself accountable and not repeat my process, as had been the case many times before. and i figured... why not make it public, in case it added any value to the never ending game and puzzle we call "markets" (infinite quotations and IYKYK). judging by many of the likes, comments, follows and of course DMs (my favorite! you guys know who you are)... i really enjoyed it.
as we turn the page into '25
1/ it's important to remember that what worked in '24 won't necessarily work in '25. however, for stories and factors that remain secular growers, there's no reason to believe they shouldn't offer further opportunity at the right prices
2/ we will face unknown unknowns. most of them, usually fake and g&y, will affect the tape and cause all sorts of bent out of shape emotions. we've all been there. but that's why it's important to show up, do the work... sunshine and rainbows or halloween at Diddy's. what's important is to have a plan and use the trading session to act, not react. and when you're confused... you're probably not alone, and sometimes the best thing to do, is nothing.
3/ technology is changing our lives at such a rapid pace and (working inside the world of Bitcoin and AI)... it concerns me a bit that most people have very little idea what's happening. while those of us who follow markets (as well), can discern these tides as the mkts are forward looking, even the markets, i believe, are not entirely pricing in this disruption for a number of reasons and the major one remains the idea that the dollar is the ultimate denominator. maybe i'll start at this (last sentence) to share my book into '25.
what is the main way i'm positioning?
- 3 themes. Bitcoin. AI. Energy.
- concentrated
- math and valuation matters to me
when we look at the non mag7's (or even ex-US) in '24, it has become clear that the dollar milkshake is the best drink on the planet (for now). and with good reason. the tech moats built here are consuming the world, whether it be Google, Apple or Nvidia (or Tesla, or ... fill in the blank). even the incoming president wants to "make" Bitcoins in the US. that's the right idea. but one has to remember that we now live in such a printer go brrr "or else" world, that it's important to identify the assets that will either grow the fastest and are also not accurately priced for this growth runway. easier said than done. but many of these moats are essentially uninterruptible movies, especially as hardware now represents an (again) important input to these stories. so the denominator that i describe in the beginning of this paragraph (USD) is secondary to these asset-level denominators "money".
*we have been taught that the USD is "money" and while that is technically true, it is is increasingly less true. the USD is increasingly a currency-only and the S&P, assets with harder supplies, like BTC are beginning to take a more center stage in this definition*
so the goal is to be on the lookout for "money" that outperforms all other denominators. does your tech stock grow at 10% but cost you 30x PE? (like NASDAQ:AAPL ?) will that be a better "money" than NASDAQ:NVDA growing at 50% and trading at 30x PE? of course time will tell, but likely... NASDAQ:NVDA will outperform $aapl. so this is the logic.
1/ top pick remains $gdlc. it's about 25% of my book. many of you remember when it was 50%, 60% ("ALL IN" post). you're familiar with my sizing/ managing risk. and it's worked. the discount has gone from 35-40% to 10% today. it's still an excellent way to own CRYPTOCAP:BTC (about 70% of this fund is CRYPTOCAP:BTC ) and likely gets converted into an ETF in '25. but BTC remains in a precarious spot for now and i'd like to see some ST resolution on the downside before taking the size higher. more on this in future posts or if you'd want to debate in comments.
2/ second pick is $nxt. the ticker i've written most about. thesis is: solar represents largest incremental generation source for next 5-10 yrs. trackers are critical infra to these industrial deployments. there is no better solution than NASDAQ:NXT as they continue to take mkt share across the board. backlog is growing QoQ. earnings beat after earnings beat. 10% fcf yield, about 100% fcf conversion (NI->FCF) and ceo is a rockstar. it's a $60 stock today trading at $35 and at the whim of the ST flows in 1/ solar denial esp w Trump (but elon is big solar proponent), 2/ many solar names aren't best investments so water down the appetite for the passive flows/ ETFs ST and 3/ it's a rates-energy sensitive sector for now. however, NASDAQ:NXT has done an excellent job bucking all these trends and i remain confident the stock will hit its stride and don't want to keep a small position with where valuations are today (near floor IMHO)
3/ NYSE:TSM and NASDAQ:NVDA complex. i own both. just wrote about NASDAQ:NVDA this evening. NYSE:TSM is the only way all these next gen chips get built. AI/ GPU, CPU... ASICs (Bitcoin miners, among others). there is no second best. growth is 30%+, FCF yields are 5%+... "but muh taiwan risk". yeah. it's there, so what. size accordingly, be prepared. and there's $nvda. which while NYSE:TSM is 20x PE, NASDAQ:NVDA is 35x PE, but grows at 50% a year. there is no second best here either. i prefer to own the winners until proved otherwise in semis-related. the idea is to own the best verticals... and the top dog, such that valuation permits. both check these boxes.
4/ $uber. complicated, but also becoming a larger position in my book. AV (autonomous vehicles a la Musk) have taken the shine off this cash flow monster. nevermind their partnerships w/ Waymo and how AV will likely grow the transportation pie (at the expense of vehicle mfg's, NOT trips), but this will take time and the overhang is there. reminds a bit of the coof in '20 and travel names. took a while for the market (and people) to figure it all out... and resume w/ daily activities. the idea w/ NYSE:UBER is that 1/ AV isn't a winner take all market and Uber is the best demand aggregator out there and 2/ AV likely grows the transportation pie b/c cost to move is a fraction of vehicle ownership today. so you'd likely have one less vehicle as an example, and as a result, your uber, or robotaxi trips probably 10-20x in a year. so even if take rate is ultimately lower, the pie is multiples larger. anyway. big cash flow generator, growing high teens. CFO speaking recently a lot of strength going into '25. travel into YE has been solid. 4Q results likely great. stock cheap.
5/ "the bag". stuff I trade around, but worth flagging (and i won't get into shorts). this changes. but FOR NOW, i own... NASDAQ:LYFT , NASDAQ:BTDR , NYSE:S , NU, HIMS, NASDAQ:OKTA , NASDAQ:PDD , $TMDX. no particular order and not disclosing size b/c that would be distracting as i trade these around (e.g. PDD and HIMS were just re-added today lol)
and a healthy 30% cash balance. in case of a dippity do dah at some pt in 1Q. many of my names are ITM C's (long dated) which allows me a full gross book... while maintaining liquidity.
so there's that.
it's been a good year. family, friends. jesus is lord.
but let's turn the page. let's not rest on what's happened. onward and upward.
love u all
happy new year
V
PS - I picked this ticker to post on bc it made me lol :)
