The purpose of this journal is to document my investing and random thoughts.
I do occasionally purchase ETFs, which I will not include here.
This is NOT investment advice.
June 13, 2022
-Celsius network paused withdraws, the SP 500 slid nearly 4%, rumours swirled on twitter the fed is going to hike 75 bps (100?). Ugly day today, lots of red. Bought some VSP/XQQ etfs, bought some BTC at 28k CAD. Wonder if we hit the previous bubble peak in BTC – getting close!
May 18, 2022: Buy – Constellation Software
January 21 & February 16, 2022 : Buy – Shopify
“We help people achieve independence by making it easier to start, run, and grow a business. We believe the future of commerce has more voices, not fewer, so we’re reducing the barriers to business ownership to make commerce better for everyone.” (Investor Relations)
My process & my thoughts:
- Adding to a winner. This is the fourth time I’ve invested in Shopify, consistently at higher prices which follows the growth of the business.
- As of January 6th, they have 1.75 million merchants on the platform and 7000 apps on their app store (Source).
- The stock is in a 45%+ drawdown.
- Why the stock is falling off today? They are cutting contracts on their fulfillment network (BI). I recognize this can put short-term pressure on the stock price, but I’m putting my confidence and capital with management as a long-term shareholder.
- Shopify reported Q4 earnings this morning, highlights include: Revenue increased 41 per cent to US$1.38 billion. Profit, excluding some items, was US$1.36 a share. Gross merchandise volume, the value of merchants sales flowing through Shopify’s platform, increased 32 per cent in the fourth quarter from a year earlier to US$54.1 billion.
- Some highlights over the past 2 years from Harley below:
January 19, 2022: Buy – MercadoLibre
“MercadoLibre hosts the largest online commerce and payments ecosystem in Latin America. Our efforts are centered on enabling e-commerce and digital and mobile payments on behalf of our customers by delivering a suite of technology solutions across the complete value chain of commerce.” (Investor Relations)
My process for investing in MELI:
- Adding to a winner. This is my third time buying MELI stock, at consecutively higher prices.
- The business is growing: TTM revenue of $6.2B, compared to revenue of $3.9B (2020), $2.2B (2019) & $1.4B (2018).
- They are expanding into Crypto Investments (Digital wallets, Buying $7.8M in Bitcoin).
- The stock is in a 45% drawdown, bringing the valuation down considerably, almost to pre-COVID levels.
May 6, 2021: Buy – Constellation Software
Constellation Software reported their first quarter earnings, which can be found here. I view this as one of the best businesses for the long run, where they constantly deploy free cash into acquisitions and compound their investment process. I also consistently add to my winners, and CSU has been one for me.
April 28, 2021: Sell – Real Matters
Real Matters was a small position for me and I’m doing some spring cleaning in my portfolio. This isn’t necessarily a call on the business in my opinion, just portfolio management and keeping positions to a material weighting. It did fine for me, but when it was in a massive drawdown, I wasn’t excited to add more which is part of the reason I am moving on.
March 12, 2021: Buy – IDEXX Laboratories
I think for individual investors , less is more. Try to find awesome businesses in the growing industries, where their financials are moving in the right direction, then take a position and wait. For me, IDEXX Labs is one of those businesses. IDEXX is engaged in the development, manufacturing, and distribution of products and services for the companion animal veterinary, livestock and poultry, water testing, and dairy markets. Check out the financials I personally care about the most below.
February 9, 2021: Sell – Bell
Bell raised their dividend 5% a few days ago, and at the same time has laid off staff all across Canada. I recognize that a business should act in the shareholder’s best interest – but this case, at this particular time, these actions do not sit right with me. As investors, the strongest impact we can make is with our money and I have chosen to go elsewhere.
September 8, 2020: Sell – Savaria
Same with CCL, I’m using this money for school.
August 21, 2020: Sell – CCL Industries
I am going back to school for web development and liquidating part of my portfolio to finance the tuition cost. CCL Industries has done just alright for me and this is one of the names I am comfortable moving on from.
April 16, 2020: Sell – Dollarama
What I’m doing:
- Dollarama is a small weighting in my portfolio and I have decided to move on.
- Even if the stock doubled from here, it wouldn’t have a material impact on my portfolio.
- When the stock fell in late 2018, my first thought wasn’t “buy more”, it was “what did I miss”. I think that’s a telling sign.
- I am raising some cash, which I will deploy if opportunities present themselves in businesses, some which are massive winners, that I have more confidence in.
March 6, 2020: Buy – MSCI
From their Investor Relations:
“MSCI is a leading provider of critical decision support tools and services for the global investment community. With over 45 years of expertise in research, data and technology, we power better investment decisions by enabling clients to understand and analyze key drivers of risk and return and confidently build more effective portfolios. We create industry-leading research-enhanced solutions that clients use to gain insight into and improve transparency across the investment process. MSCI is a leading provider of investment decision support tools worldwide. Our line of products and services includes indexes, analytical tools, data, real estate benchmarks and ESG research”
What I’m doing:
- Again I am adding to a winner, increasing the position size in my portfolio.
- When adding to a winner – I look for businesses with stellar 5 and/or 10 year track records, that selloff during times of fear in the market at a price consistent with historical drawdown %s as can be seen in the image below.
- Of course this isn’t going to be the bottom and I’ll never be able to time it perfectly, but any opportunity to add to a great business at lower prices will be a smart decision when looking back in the future.
- My original purchase can be seen by scrolling down, made on May 13, 2019.
February 5, 2020: Buy – MercadoLibre
From their Investor Relations:
“MercadoLibre hosts the largest online commerce and payments ecosystem in Latin America. Our efforts are centered on enabling e-commerce and digital and mobile payments on behalf of our customers by delivering a suite of technology solutions across the complete value chain of commerce. We are present in 18 countries including: Argentina, Brazil, Mexico, Colombia, Chile, Venezuela and Peru. Based on unique visitors and page views we are market leaders in each of the major countries where we are present.”
“Through our online commerce platform and related services, we provide our users with robust online commerce and payments tools that not only contribute to the development of a large and growing e-commerce community in Latin America (a region with a population of over 635 million people and one of the fastest-growing Internet penetration rates in the world), but also foster entrepreneurship and social mobility. Our main focus is to deliver compelling technological and commercial solutions that address the distinctive cultural and geographic challenges of operating an online commerce and payments platform in Latin America.”
What I like:
- Most importantly, I’m adding to a winner. I held a small position and now I’ve taken it up to a full position in my portfolio.
- A long-term track record of stock price appreciation, on both a 5 and 10 year basis.
- First mover advantage in a growing market of commerce and payments, while competition has increased they continue to execute on exciting opportunities for growth.
- Payments have become a much larger aspect of their business, the foundation for their next leg of growth and providing stability. On their Q3 presentation, e-commerce came second to payments in discussion.
- For a technology company, share dilution is minimal, which isn’t seen too often.
August 28, 2019: Buy – Boyd Group, Sell – Magna International
- I had a position in Magna for a couple years and it’s time to move on.
- I don’t use one method of evaluation for my investing purposes but prefer to combine as many as possible. For instance just by looking at Boyd’s stock price (here) vs Magna’s (here), I simply prefer the chart that starts in the bottom left and ends in the top right, and that brings you to Boyd.
- Per share earnings grew in both 2008 and 2009, and over the past 10 years have gone up almost 10x.
- There is also solid growth, over the past 3 years, revenue is up from $1.387 billion to $1.865 billion and EPS are up from $1.42 to $3.79.
- Boyd currently trades below their 5-year average P/E of 56.3.
- Some images from Twitter can be found here, what I posted are a 4 year stock price chart and a brief company overview.
- Highlights from Boyd’s latest presentation can be found here
- You can also find information on Boyd’s stock price here
May 13, 2019: Buy – MSCI Inc.
MSCI is a leading provider of investment decision support tools worldwide. Our line of products and services includes indexes, analytical tools, data, real estate benchmarks and ESG research. (Investor Relations)
- This is a starter position that I have taken as the market is currently 5% below it’s all time high. I plan to increase this position 1.5x in the near future. Fear has also returned, therefore I will be greedy.
- Diluted average shares has gone down from 97 million in 2016 to 90 million in 2018.
- EPS has gone from $2.70 in 2016 to $5.66 in 2018, below is a snapshot from their Q1 just recently announced.
April 12, 2019: Sell – RioCan REIT
- This position in my portfolio represented less than 2% and for little to no dividend growth, I have decided to move on.
- Payout ratio is a little high around 80%.
- Raising cash as there is now more greed than fear in the market.
- From a total return perspective, I think there are better opportunities.
- Continues my theme of selling out of Canada as I continue to counter my home country bias.
- Chart Analysis: not stable enough, not constantly reaching new all time highs, positive trends but isn’t as “beautiful” as let’s say Visa below – that’s what I’m looking for (simply: bottom left to top right, uninterrupted)
January 31, 2019: Buy – Visa
- Visa reported after the close on January 30, the results are below
- They also initiated a 8.5 billion dollar stock buyback
- I do prefer to add to businesses when there is more Fear in the market, but this is a fantastic business which trades approximately 9% below it’s all time high. I often sway between being patient – waiting for fear -and knowing that I can’t time the market. What’s important is time IN the market.
January 15, 2019: Buy – Visa
Visa is a global payments technology company that connects consumers, businesses, banks and governments in more than 200 countries and territories, enabling them to use digital currency instead of cash.
- EPS Growth in %, 2009 to 2019 & 2020 estimates: 29, 33, 29, 24, 23, 19, 16, 8, 23, 33, 15, 14
- Share count has been reduced from 3 billion to 2.3 billion over the past 10 years.
- Current P/E: 31, 5-year average P/E: 32.6
- From CNBC, “More Americans say they don’t carry cash”
- 5 year stock chart:
December 31, 2018: Buy – Square
-Square has sold off ~45% from it’s all time high earlier in the year
-The fundamentals of the business are accelerating
November 9, 2018: Buy – Kinaxis
Why the stock fell?
- Kinaxis lowered their current fiscal year’s guidance to be between $152 and $153 million from $156 million.
- Margins also took a hit as they continue to invest in the business. Not only do I think investors should welcome these decisions, I think more businesses should do the same.
Conference Call Notes
- Management stated that some contracts slipped into Q4, again nothing they said would make me nervous about the business or their sales ability. Sometimes things take longer than expected, it happens.
- They constantly stressed that the investments they are currently making will result in accelerated revenue growth in FY2019, and as investors – I welcome these decision.
Kinaxis has no debt on their balance sheet and cash increased by $2 million this quarter. They have lots of sticky subscription revenue which provides visibility into the future. The stock is traditionally expensive, but that comes with stellar top and bottom line growth. Volatility should be expected into the future, and it will be very exciting to watch Kinaxis grow going forward.
October 29, 2018: Buy – Shopify
Most Recent Earnings Report: Q3 2018
-Revenue of $270.1 million, up 58%.
-$1.58 billion in cash.
-Gross Merchandise Volume for the third quarter was $10.0 billion.
-I like buying businesses after their stock prices rises from a good report (even though short term results shouldn’t impact an investing thesis). I view the current selloff as temporary and I will look to add in the future if possible.
September 24, 2018: Buy – Dollarama (Half)
Most Recent Earnings Report: Q2 2019
-Sales increased 6.9% to $868.5 million.
-Comparable store sales grew 2.6%, down from 6.1% the previous year.
-Diluted EPS increased 13.2%, from $0.38 to $0.43.
Why the stock sold off
-Same store sales missed estimates of 4.7%.
-Forecasted lower margins (Gross & EBITDA).
-Guidance of same store sales was reduced form 4.0%-5.0% to 2.5%-3.5%.
-Dividend growth 5-year average: 16%
-$1.71 EPS in 2019 (Analysts)
-$1.89 EPS in 2019 (Analysts)
-Buying back 5% of common shares between June 20, 2018 and June 19, 2019.
-Potential to increase store count 50% to 1800 and purchase a majority stake in Dollar City in February 2020 (FP).
Summary: I have waited on the sidelines of Dollarama as management continued to execute. They remain solid operators and this short-term issue represents an opportunity for long-term investors, knowing volatility will remain (the reason for starting with a half position). I will look to add in the near future.
July 4, 2018: Sell – Sun Life Financial
1. In my TFSA, over the past couple months I have been reducing my exposure to Canada, shifting the funds to the US markets. My strategy for my TFSA is to hold Canadian stocks directly and ETFs primarily for the US exposure. In my RRSP, I’m primarily holding the iShares ETF XAW.
2. Warren Buffett famously said, “Be fearful when others are greedy, and greedy when others are fearful”. From CNN, the index has been pushing to greed and now as an investor, it’s time to be fearful.
3. Sun Life does have a solid dividend and tailwinds of rising interest rates, but here I’m focusing on total return, where the US markets have outperformed by a wide margin since the crisis.
4. This trade does help raise the amount of cash in my portfolio, which I can use for opportunities in the future or when fear builds again.