Oddinary Investing

For the start of 2021, I added three new long term companies. praying big on these three =]  

1. Atomera (ATOM) -  A materials engineering company and is engaged in the development, commercialization and licensing of processes and technologies for the semiconductor industry.

2. Magnite (MGNI) -  Provides a technology solution to automate the purchase and sale of digital advertising inventory for buyers and sellers.

A story of Sea Limited, Invitae, and Fastly.

When you start investing, there’s this place in your mind that just switches… Giving you more and more of an appetite for information and learning.

I could have easily just focused on copying Cathie Wood’s ARK Invest holdings, which is honestly a good idea, but I wanted to absorb as many opinions as I could. I didn’t want to focus on investing in ETF or make my holding match an ETF completely. I wanted to focus on a handful of companies that would maximize returns over the next few years.

This brings us to Sea Limited

I remember seeing Sea Limited as a Motley Fool recommendation earlier this year but discarded it because I was uncomfortable with its story. I simply didn’t know enough about it to feel confident putting my capital (not a lot at that time) at risk in this South East Asian company. I recognized my ignorance and decided to wait until I knew more.

A week later, The Motley Fool recommended the company again, which was at a bargain compared to the week earlier. I took that as a big sign as for things to come, so I dedicated the time to look further into the company.

I dug through ARK Invest holdings and was not seeing it in the top 25 of any of their ETFs. It is now obviously held by ARK Invest.

I searched on Twitter and didn’t find much in terms of deep dives or anything more of substance than people adding it to charting patterns for day trading.

Never mentioned on CNBC (which is a good sign when it is not) and is still never mentioned on the main television channels.

Eventually, I stumbled on exactly what I needed and found someone I can look up to in investing.

Dennis Hong, Founder and CEO, Shaw Spring Partners

https://shawspring.com/            

I’m not sure how I came across this ‘Good Investing TV’ interview with Dennis Hong, but it was amazing. I walked away just mind-blown with how much I liked listening to Dennis (now follows my personal Twitter?). I think he is one of the most unknown investors of today.

https://www.youtube.com/watch?v=A2e1KbAKg-8

https://www.youtube.com/channel/UC5Z-C01O2VlpeD1rMs_HS2Q

I wanted to see the holding of his company’s portfolio and Sea Limited was the top holding by a long shot. It was a clear sign that he and his company were 99% confident that this company would 5x plus within the next 3-5 years.

I went back to The Motley Fool and read through the deep dives on their service. I went to the dedicated forum thread for that company. Read all news articles on Google about it.

Even though this post is much shorter than the first two parts, this company was one of the most heavily scrutinized ones in my portfolio. I’m never going to be someone who relies on charting or any technical analysis. I’m not going to really care about if a company’s quarterly earnings will beat or miss some random analysts’ expectations. I just want to invest in a handful of companies that are leading the way to the future.

I’m simply a story investor. If the company has a great story and I feel like it will be significantly larger in 5 years. I think it’s worth investing in.

I took a 20% position at that time at $61 a share and purchased several more times leading up to $100 a share. 

Obviously Fastly was a clear winner and doesn’t look to slow down anytime soon, but it’s about consistently finding new companies to hold for the long-term. As mentioned in the last post, I started off with Fastly, Crowdstrike, Livongo, Zoom, and Datadog, but these were not paying off despite my conviction for them. I focused on finding better ways and resources for companies.

I first went to Reddit, which was a clear vacuum for bad investing decisions, but it showed me that we were all looking for the same companies. I just was not focused on buying 3-million-dollar marijuana stocks.  I checked out CNBC and YouTube and found at that these platforms were focused on only entertainment and not sound advice. My college days of economics have proven quite useful when it comes to the market and it’s easy to tell when Youtubers or CNBC people are using talking points from the previous decades. Finally, I focused on Twitter. Twitter has got to be the best social platform for stock tips. No one get’s paid for memberships like YouTube. Even with a shade of anonymity, it’s not like Reddit, because validation can be built around people who follow these certain people. Famous investors and economists won’t typically follow some random person when they have no obligation to.

So, I turned to Twitter and simply used their search function. I focused on finding like-minded investors. I simply searched by stock symbol of my current holdings, for example, I would search ‘$FSLY’ and I would see anyone who was talking about Fastly from an investors point of view. I found people who would break down these companies and examine their growth prospects and much more. I followed as many people as I could and just researched all their tweets on companies. I would take those companies stock symbols and do searches on those companies and I just gathered as much as I could. I finally relaxed and realized I had gathered 130+ companies worthy of investing in.

I took these companies and screened them by IPO date, revenue growth rates, market capitalization and narrowed it down to about 30 companies I thought fit my criteria. I just had to believe in a future where they were highly valued as a company. Just like Fastly, I had to watch hours upon hours of conferences and interviews and commercials on these companies. I eventually got to a gene company called Invitae (NVTA), which surprised me because I was sure that only e-commerce and SaaS tech companies would make my list.

I read and watched so many presentations on this company, but I didn’t feel the same passion for it as my original growth companies. I went to twitter to see if maybe I missed some great tweets about this company, but I only found the earlier mentions as before. No deep dives or hard selling points, but it seemed like everyone was aware of $NVTA.

February 6, 2020 – Invitae (NVTA) $22.39 a share

I finally purchased a few NVTA shares, but I still felt like I was just investing with a wave of people, instead of truly believing in this company. I needed to be convinced. I was already however convinced (as I am still today) that I needed no experience with technical stock analyst, chart reading, ratios, or headlines. I needed only a story. I vision of my companies being needed in the future. This is how I found Cathie Woods and Ark Invest.

I was watching CNBC one morning and Tesla was like a couple hundred bucks a share. They had this portfolio manager come on and she was marvelous. She was not a paid contributor to the network, and it was so obvious. She was talking about how Tesla was going to be the largest company in the world and worth trillions. She said essentially all the rating agencies and bankers were wrong and could not get out of the way of conventionally thinking. Tesla was not a car company. It was much more, and she laid out a plan so convincing I bought 4 shares of it at the time. I was blown away. The main thing for me was not what she was saying, but that the other analyst was laughing at her ideas, but you could see on her face that she knew she was right. So, I decided to research her fund and look at what other companies she invests in…  Tesla was number one, but $1B Invitae was number two by miles. I knew I would find my convincing through Cathie and her team at Ark Invest.

I watched her conferences and read her thoughts on the future of this company and how it was so clear… Invitae was going to be big. Throughout the crash, the stock plummeting on concerns of people using their services. I too was concerned, but I still donated plasma which was not important… besides what I heard one day giving plasma. A few of the girls at the plasma center were raving about these tests they took prior to deciding on having kids and all sorts of things. I had a feeling. I just knew. I asked, “what company was that with. Sorry for intruding.”

Invitae.

Shares closed at $11 a share that day and I had increased my position.

NVTA is now $47 a share and a 8.32-Billion-dollar company. Still incredibly early.

In this three-part write-up, I am not focusing on what the companies truly do. There won’t be deep dives in these posts. It is simply a story of how you don’t need to know how to read charts and day trades to make money in the stock market. It may seem like you need to know about charts and price to earning ratios and so much other noise, but you don’t. Find companies that are growing. Learn about them inside and out. Follow their stories.

A story of Sea Limited, Invitae, and Fastly

Ask an athlete how they got where they are now, and you’ll get a very generic “hard work and determination” response. This is not a bad thing, because the answer is someone’s life story. Each athlete got where they were in a unique way and each athlete’s way there was not better or worse than others… Many roads lead to the same place.

So, when I get asked about my approach to growth investing (not an expert < 1 year), I typically give a generic response. Usually not to hide any secrets, but because no one truly wants to see what goes into that. They usually just want a, “I look at blank and blank and invest in it until blank or….”, so I provide that and move on.

But if I am wrong, here’s three examples that illustrate my approach….

My new year’s resolution was to truly grab a path to financial freedom. I kicked around many ideas to make this a reality but settles on the stock market. So, I kept my 401(k) on autopilot and completely forgot about it. I wanted to open a brokerage account that could beat that retirement plan and eventually get to $1,000,00.00 before I retire from the military in 10 years. Bold plan, but I worked on mapping everything out… calculators, formulas, investment approaches, books, YouTube, etc. I was so certain this was possible, but I needed to budget heavily and make sure I could stick to my funding goals.

At the beginning of the year, I thought that focusing on dividend paying stocks would be solid. I would just use those quarterly dividends to buy more shares and over time those dividends would be larger and larger and at 4% average dividends per year, you would passively make $40k a year once a million is hit. I certainly could live with that, so I stacked the top performing dividend yielding stocks. It was a fine approach and once I get to that point dividend investing would be great. I learned quickly that dividend investing keeps you rich, while growth investing makes you rich (yes, debatable… blah blah).

The third week of January I sold every stock I had purchased, which was fine because it was essentially a break even and I would expect partial dividends at the end of the quarter. Now I was on the search to find the next Apple, Google, and Amazon, before anyone else.

January 16, 2020 – Fastly (FSLY) - 24.17 a share

In my search of the next big thing, I wanted to focus on the fastest growth stories I could find. I wanted a strictly technology company that was going to change the world. What I found was… Well, a shit ton of those companies. Like really… It was too simple… I thought I was missing something.  With limited money though, I also needed a way to really focus on choosing the best of these companies. I needed rules to follow, to multiply my money, the quickest way possible. It was in this moment I knew that I made the right choice and though this wasn’t going to be a get rich quick scheme, it certainly could be a get rich quicker plan.

My January “Matt’s Investing Rules” I created during many lunch hours in our conference room at work:

1. Relatively newer SaaS companies that focused on growth over earnings.

I wanted companies that focused on subscription-based customers. I wanted all money from these companies going into growing the company, instead of sitting on cash. I don’t care if a company is profitable if this is the reason.

2.  I wanted a small market cap company.

I like to look at every company as potentially growing ten times. If I can find a great company at $1 Billion market cap, I can assume that getting to $10B would be more likely than investing in Apple and thinking it will get to become 20 Trillion-dollar company. I felt Apple, Google, Amazon, and Microsoft was too easy. They are all amazing and will keep growing and making you money, but I wanted to get the next wave of companies.

3. I simply had to believe in a future with them being important.

This is probably the most important and the reason I developed so many great skills in researching companies. It forced me to watch hours upon hours of videos and presentations of companies (granted 1.5x speed settings) I was interested in. I learned as much as I could about the company and the people in charge of it, for I really liked investing in companies that are founder led. Skin in the game was appealing to me.

With these rules set in place, on January 16th, I found Fastly, Datadog, Zoom, Livongo Health, and Crowdstrike. These have all multiplied many times since then, but I don’t think that’s going to stop anytime soon. With that said, Fastly was the first company that I truly felt connected to… you know, in a weird investing way.

I found these companies, specifically Fastly, by searching for most recent IPOs (Initial Public Offering) and searching for companies that met my three basic rules. Focusing on Fastly alone—

Fastly appeared to me as a gem. A golden ticket, winning lottery number, and a double rainbow all rolled into one stock symbol: FSLY.

I knew little about what the hell they did, besides them being a less than $2 Billion dollar SaaS company, that made the internet run faster. Therefore, rule number three was crucial in developing a bond with each company I invested in. I went to The Motley Fool to read their free articles. Investopedia, Seeking Alpha, and so many other sites. I wanted to know more about this company, but it really seemed like no one really knew what they did. I remember getting exciting and losing sleep, thinking I was some genius and all I wanted was to learn more. I didn’t want to think I was seeing something people were missing to later find out I was the one missing something and lose all my money.

To learn more, I took a very interesting approach. Kidding. I just went their webpage, YouTube account, and Twitter. And out of these three, YouTube was all I needed to validate my belief in this company. Their founder and at the time CEO, Artur Berman was unlike any CEO I’ve ever seen before. Take the time and watch this sub 4-minute video of him years ago talking about how SSDs are important…

https://www.youtube.com/watch?v=H7PJ1oeEyGg

He did not come across as someone who wanted to just grow rich from owning a mediocre company.  PowerPoint slides littered with swearing and a total lack of professionalism. He certainly didn’t fit the CEO mold either when it came to looks. He reminded me (still does) of Jobs and Woz combined as one person. I was sold already, foolishly, but I wanted more so I searched all videos featuring the company and Artur.

Artur Bergman IPO Day CNBC on Cloud Computing and Competition:

https://www.youtube.com/watch?v=M57NtJeDKLU

Why Fastly?

https://www.youtube.com/watch?v=O0wbl9GlG-E

Obviously, I watched at least 10 more hours of videos from conferences and use cases of their company, but this is just laying out my process--

I could not see how a company that seemed so authentic was so undervalued, though, I had no idea at the time how to value a company. I just knew at the time Snapchat was considered a $13B company and Fastly basically made everything run faster. I felt the use case of Fastly, though underappreciated, was worth far more than the sub $2B market valuation.

I invested in this, along with those other gems found on the 16th of January. Over time, Fastly hardly moved, it was not performing at all. I was expecting quick money and grew frustrated with Fastly. I had seen the likes of Crowdstrike and Zoom grow in share price and for a brief period in time thought I was going to just sell Fastly and put all the money into Zoom at like 75 dollars a share (now obviously above $408 a share now lol). I decided against selling my shares and focused on the long-term goal. What I thought this company could be was still possible. Everything was going according to plan, aside from the price skyrocketing. Fastly taught me patience.- 

February 27th, I told a close friend that Fastly would essentially make him rich… then the stock market collapsed.

March happened and for some reason the crash made Fastly’s stock price collapse. I remember one day it was at or close to $8 dollars a share. Clearly, I was not going to sell the shares at this much of a loss. Instead, I doubled downed. This company had enough cash on hand to make it through a year of expenses. They were a SaaS company so most of their customers had already paid for the year in January. I kept thinking, more like reassuring myself, that Fastly should benefit from work at home. The more people had to rely on the internet, the more Fastly profits. So, at $11 a share, or more than a 50% discount, I purchased 50 more shares. Now I just needed to wait…During the year, Artur Bergman stepped aside from being the CEO of Fastly. He remains with the company but stepped down to focus on the technology and growing the best company. He made the CFO the CEO and it worked out as planned.

Fastly hit $116 dollars a share in August, which made it, at that time, my fist 10x stock. It now sits are $82 dollars a share, which I can live with.