🚨Trade Alert 15: Buying Two New Stocks, Trimming Two Positions
Trimming two high flying positions, buying two overlooked opportunities.
The past two weeks couldn’t be better for us.
Almost all our positions are appreciated, some have gone vertical, and our TTM performance climbed above 65%.
If you go back to the environment in early April, this would look unlikely. All-time high markets, conflict in the Middle-East, and increasing energy prices, declining hopes for rate cuts, etc.
It would be total insanity for any sane person to expect strong performance in the market under these conditions. I remember, at the heights of the Iran War, just as when valuations in the market started becoming attractive, many people exited the market, thinking that the risk was elevated.
Ironically, that was the time the market was most de-risked since April 2025. Many high-quality businesses were trading at attractive prices, and decisions were driven by extreme fear, exactly the conditions you would love to see to succeed in the market.
I said keep holding the quality businesses and even buy if you already have a big enough cash cushion. After all, newspaper headlines eventually wane in importance against the fundamentals.
The market once again humbled all those people who think they can better position themselves by looking at the headlines and forecasting the futures than by looking at fundamentals.
The market is up by almost 6% since the war started:
As the market was dipping in this period, we insisted on keeping our positions. We sold nothing, as we believe all our positions were very strong fundamentally. We even bought a new position.
Result? The past two weeks couldn’t have been better for us.
Our portfolio was up by 61% TTM in late April; now it has climbed over 65%.
Almost all of our positions posted positive returns in this two-week period, and a few of them literally went vertical.
What’s even better for me is that we haven’t derived this performance through a heavy exposure to one single theme like AI.
For instance, we own AMD, and we bought it in early 2025 when it was hated by everybody. That position is now almost 4x for us.
But that’s a 6% position for us. We also generated heavy alpha from financials last year and healthcare this year, alongside AI-driven sectors like semiconductors, cloud, etc.
That sectoral diversification is one of the core strengths of our portfolio.
However, it’s less of a deliberate pursuit and more of a by-product of our investing philosophy. We believe inefficiencies occur when people get concentrated too much on a sector, theme, or a specific name, completely ignoring others.
We are willing to look at those ignored places and buy inefficiencies there.
This was exactly the case when we bought AMD. Everybody was focused on Nvidia, and they thought AMD was trash. Same for Nebius. When we bought it, everybody was focused on Coreweave, and Nebius was there trading at $20 with a $5 billion market cap and almost $1 billion ARR guidance.
We now see this case again, and we see it more emphatically on a sectoral basis:
I recommend you to completely ignore the benevolent picture provided by P/Es relative to S&P 500, as S&P 500 itself as the current market P/E is between the 87th and 95th percentile. When you look at the absolute valuations, you see where you may find opportunities going forward. Even then, it’ll be really hard because no sector is undervalued relative to their 10-year and 30-year historical valuations.
Under these conditions, it’s imperative to look beyond what’s obvious and seek opportunities in overlooked sectors and industries to limit the downside risk while still retaining optionality.
This is what made us succeed so far, and we’ll keep adhering to it.
Today’s transactions will reflect this strategy once again. I’ll make four transactions:
Trim two positions
Open two new positions
Together, these transactions will broaden our optionality, reduce the concentration risk, and position the portfolio for further alpha generation going forward.
Let’s get started.
Let’s start with the trims as always.