Finishing February: Our Portfolio Outperforms S&P 500 by 11%, Here is What We Own
Our portfolio is now up 27% in the last twelve months against 16% of S&P 500. Here is our updated portfolio.
💥Our portfolio is outperforming the market by 11%!
Portfolio is now up 27% in the last twelve months against 16% of the S&P 500!
“It’s not going to be an easy year.”
This was the theme I emphasized in the last several portfolio updates and almost all my trade updates since September.
One of the strengths of our community is that it goes beyond the writer-reader relationship. We are always in very close contact through our Discord community, and I feel like we have come to see ourselves as a group of friends.
We have done very good trades together, made money, and also naturally had some losers. All these have resulted in a strong sense of friendship in the community.
This environment enabled us to be very straightforward and act with a sense of responsibility.
This is why I have been very clear for the last few months that:
2025 was not an easy year, as 75% of large-cap managers underperformed.
We outperformed because we were exceptional in stock picking and also lucky.
2026 will be an even harder year as everything has peaked, including uncertainty.
Toward the end of 2025, the picture was this: Equities, metals, and commodities were stretched, and economic-geopolitical directions were uncertain.
This is why I said a downward move in 2026 was more likely than an upward move.
This is what history taught us. Whenever the forward P/E of S&P goes above 22x, it drastically comes down at some point over the next two years:
To be prepared, I laid out a three-pillared strategy:
Cut risk assets that do not have much legroom for further appreciation.
Diversify away from the US and into the emerging markets.
Keep an eye on opportunistic purchases in the US market.
This is why we began growing our cash position last October and went from 10% cash position to almost 20%.
We started to see these predictions play out. Forward P/E has come down below 22x as investors rotated out of the more expensive tech stocks with a higher weight in the index to more defensive sectors.
This is why many growth investors saw their portfolio down between 10-20% while the index stayed stable near its all-time high.
Though we prepared for this by exiting the riskiest assets in our portfolio, we weren’t fully immune, as we always prefer to stay invested at all times. As a result, our portfolio was down by 7% YTD, which is still pretty solid given that the Nasdaq is down by 4% and many growth portfolios are down by +10%.
Another piece of good news is that our drawdown is mainly due to a pullback in two of our biggest and permanent positions—SoFi and Amazon.
We see these two as permanent positions, so we ride ups and downs in the positions, not trade them, and consider pullbacks as buying opportunities, so our YTD drawdown doesn’t bother me at all. Quite the opposite, it excites me as betting on these stocks at the current levels will be the drivers of the alpha in the future.
I want to remind everybody that this is how you should feel about the downturns.
I have been trying to explain to people who are coveting my returns for the last three years that the seeds of these returns were planted at times nobody wanted to invest in the markets.
When nobody wanted SoFi back in 2023, I was buying. When nobody wanted Nebius last April, I tripled down at around $20 per share.
Yet, I still see some people trying to position themselves according to what may come next in the markets. Please don’t.
Peter Lynch puts it best:
Investing in stocks is simply owning pieces of the business. Can you imagine being a sole owner of a business and trying to sell when you think the market will go down and buy again when you think it’ll go up? Sounds insane, right? Doing the same in stocks is equally insane; they are basically the same things.
If you are holding exceptional businesses bought at attractive prices, you have nothing to be afraid of. You should stay in the position, be unemotional, and do nothing.
Yes, you’ll go down with the market, but this is part of the game. If the companies you are holding are exceptional, they’ll keep increasing their intrinsic value even in down markets, and the stock price will rise back stronger when good times come again.
And even beyond staying in position, ideally, you should be buying at those times.
This is why we grew our cash position. Not to sit on it, but to buy more of the exceptional businesses we own in case of a downturn.
Why should I be worried? There are signals that I may get these opportunities, as I already positioned myself accordingly as I explained above, and trying to prepare you for months. I should be excited. You should be excited.
Most people in markets are not too stupid to see quality after a while, but 99% still don’t have the emotional strength to buy when they are cheap or hold through downturns. We capitalize on their weakness. When they break and sell us bargains, we buy them, and we are happy. It’s not more complicated than this.
This is how we have always operated, and we’ll always operate this way.
I think this sane and measured strategy will deliver for us now and in the future as it’s delivered so far:
Our portfolio is now up 27% in the last twelve months against 16% of the S&P 500!
The following transactions took place in our portfolio in February:
Exited 1 position.
Increased 2 positions.
Opened 1 new position.
In the previous updates, I provided my outlook for each company in the portfolio. In this update, I’ll also provide an outlook for our new position and provide a general commentary about the portfolio and strategy going forward.
Let’s dive in!
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📊Here Is Our Full Portfolio!
As of today, we have 18 holdings in our portfolio.
8 of these positions can be considered foundational.