Initiated position in Alphabet and bought back The Trade Desk

After so many years, finally added Alphabet to the portfolio. I also don’t know why I never have it in my portfolio, especially when I use its Google Office suite and Youtube so much!

As for The Trade Desk, it was in my mini SaaS fund 4 years ago. I was then still exploring the US market and trying out different strategies. A look at the historical post, only Shopify and Veeva remain in the current portfolio.

The above purchase was funded partly by my earlier divestment of United Hampshire REIT. The remaining funding comes from divesting Fiverr fully and reducing my position in InMode. Both Fiverr and InMode are Israel-based companies, and to set the record right, my selling has nothing to do with the current conflict in Gaza.

For Fiverr, the recovery is slower than my expectation. Revenue grew only in single digit last year, with a similar guidance for this year. An article on Seeking Alpha has shown that its rival Upwork has shown a much better growth for the same period of time. Hence, I am not that confident of Fiverr’s story going forward.

As for InMode, fundamentally the business is still sound. Its net profit margin is north of 30% and EPS has compounded by more than 30% over the past 3 years. Yet, it is unloved by the market. At the current pricing, its PE is less than 10. The only peeve I have with it is that they refuse to do share buyback, despite the growing cash pile.

Will it eventually make a breakthrough or become a value trap? I do not know, so I decided to sell off a churn of it.

Adding advertising businesses to my portfolio

I wasn’t planning for it but both GOOG and TTD are advertising businesses. Of course, Alphabet has other revenue including subscription and Google Cloud, but advertisement still accounts for 75% of its revenue.

Despite the challenge from MSFT and various mis-steps in its AI adventure, GOOG has continued to grow. And with share buyback, EPS for the latest year has jumped by 27%. So I do think at a forward PE of 20x, it is a reasonable price to take a stake in this giant.

As for The Trade Desk, I am impressed that it could quadruple their revenue in 5 years! While earning is a lot more sporadic, they have been profitable since 2013. It also has no debt and generate very strong free cash flow. Of course, it does mean that they are trading at a premium with forward PE (Non-GAAP) of 55x!

Can they continue to grow at this rate? I don’t know. But if the CEO is right about their addressable market, then they have a long runway to grow into.

I like that they are focusing on doing well on one thing. Also, by positioning themselves as enabler, I think it subtly widen their customers base and provides possible collaboration opportunities, even with their competitors (such as GOOG) in the future?

Taking a small stake again in this grower to learn more about the company.


These are the referral links for the services and platforms I used. If you would like to use any of them, do sign up my referral links.

Trust Bank (code: 1X9DDP1V, additional $10 Fairprice voucher)
Keppel Electric
FSMOne (code: P0003528)
StocksCafe (code: TFI)

Read more from source