About

At this site, we are focused on finding attractive companies or technologies as long term investments and to capture profits which can be captured in shorter trading cycles driven by human fear & greed which can push asset prices to a short term extremes (extremely over or under values which can be exploited)

OUR PHILOSOPHY

We believe there are many different styles and schools of investing which are proper for different investors with different investment objectives and tolerance to risk factors.  Our style is considered aggressive and it is not suitable for all investors, but it works well for us. This is how we run our “concentrated high growth” portfolio:

OUR PROCESS STARTS WITH SELECTING (FOUNDER-LED) HIGH GROWHT COMPANIES: We mainly invest in “founder-led” high growth technology companies with long runways in product verticals and customer or geographic segments. High revenue growth is the biggest contributor of stock value appreciation over longer time periods. Besides “high growth” component, we love investing in charismatic founders, because we believe they are different “breed” of managers.  Founders like Jeff Bezos, Steve Jobs, or Elon Musk are not your regular 4-8 year “rent-a-manager” which you find in many companies. They are serious entrepreneurs at heart, understanding every pocket of their operations, they are super competitive and they relentlessly think about the company 24/7. 

NEXT WE FOCUS ON FINDING “DURABLE GROWTH” CANDIDATES: Not all growth companies are created equal. There are many companies out there which are growing exceptionally fast (i.e +50% yoy), but for many that growth is not sustainable?  During Covid there were many cloud companies which exploded in growth such as Zoom as the world shifted from work at work to work from home, but the growth was not sustainable once Covid was gone and people returned back to the offices.

So how do we separate “durable growth” companies vs “temporary growth” companies?  Honestly, this is the hardest part in investing.  There are no crystal bowls out there which can help you pick next Magnificent 7 for the next decade or two, but there are few signs we can follow to separate long term winners from long term losers:

• Relative growth rate: Is company A growing faster than their peers? If so, most likely it’s because customers are preferring product of company A vs all other companies, or maybe company A is overspending on marketing and promotions vs everyone else.  If the growth is driven by heavy marketing and sales promos, the growth rate will most likely not be sustainable:
• Customer ratings: If company A is more “likeable” company than its peers, (i.e. it has higher NPS score, better google reviews, and high follower base) it’s often a good indicator the current growth rate might have “legs” and the company might have longer growth runways.
• Innovation rate: Is company A constantly innovating it’s products and is increasing its addressable market? If so, it has a good chance to remain in durable growth status. Is company innovating faster than their competitors? If so, the growth might even accelerate as they capture some market shares from their competitors due to better product mix or product features.
• Financial security: Is company debt free with positive cash flow from operations, or is a company over leveraged with negative cash flow? If the company is growing fast but it’s financial situation is weak, there will be time when company will need to stop growing to preserve cash and fight for survival.  Hence it’s crucial to pick companies from the former (financially secure) camp.
• Financial profitability metrics: Best companies are highly disciplined in all aspects of their operations.  Best companies are not only focused on product quality and market share growth, but also on profitability growth.  Best management teams will fanatically push entire organisation to improve processes across the board, and this will be visible in all profitablity KPIs (gross profit margins, operating margins, FCF margins etc.)

RISK MANAGEMENT: However, our long-term mindset will not prevent us not to protect our capital our at turning points between Bull and Bear market phases.  Running a concentrated all tech portfolio comes with high risks of large drawdowns which are particularly violent during economic recessions, hence during those times we want to shift to our capital to “save havens” or “hedge” our positions to preserve capital during those nasty Bear runs.

We run very simple but effective risk management strategy which is based on “intermediate trend following” indicators.  Normally we use 200 day moving average to determine if the stock market is in BULL or BEAR market.  This is low turnover indicator which can run on for years before flipping from Bull to Bear market and vice versa.  This trend following strategy will not help us exit the market at the very top, nor will get us back in the market at the very bottom, but it will keep us is in the market during long bull runs where majority of gains are made, and will keep us protected during nasty bear markets where tech stocks can drop as much as 70, 80 or 90%.

VALUATIONS: Valuations are important but are not the most important parameter we look for us.  In fact, high growth companies are most of the time “overvalued” when measured by traditional value kpi’s such as P/E ratios or P/FCF ratios.  If we would invest money in companies based on traditional value metrics, we would completely miss all the best companies during past 2 decades which have created generational wealth for many investors.  Companies, like Amazon, Microsoft, Tesla, Google, META and many others were constantly “overvalued” so those who were waiting for their valuation to come down to a more “reasonable” areas, would have missed 10x gains for most of those high growth companies, and for some even +100x gains over the same time frame.

We use valuations more as a tool to “rebalance” our portfolio where we will take some chips of the table in companies with super “run” and relatively higher valuations and invest those chips into other companies with similar growth rates and relatively lower valuations.