Sean Rapley
Nov 2, 20212 min
Luke's Global Fund achieved a return of 12.3% (in constant currency) return over the month of October, and a 40.8% gain to date for FY22 on a constant currency basis. Our International Benchmark, the S & P 500, returned 6.9% for the month of October, and the benchmark returned 7.2% to date this financial year.
Our portfolio as at October 31, 2021 s outlined in Figure 1 below:
Figure 1- Portfolio Pie Chart
Our contribution analysis for the month of October is outlined in Figure 2 below:
Figure 2 – Contribution Analysis Bar Chart
The portfolio performance for October was driven by Crowdstrike, Datadog, and our recent addition Purpose Ethereum ETF. The only detractor from the monthly performance was Upstart, which retraced from all time highs, following a remarkable quarter for the business.
During the month of October, we trimmed Snowflake Inc. We trimmed Snowflake Inc, as due to some weakness in RPO growth in their most recent report, and a very high valuation.
We sold out of Teladoc Health Inc, following their Q3 2021 quarterly results, which showed decelerating growth.
In October, a short report was released regarding Lightspeed Commerce Inc, a recent IPO fintech business with a focus on the hospitality sector. Upon review of the short thesis, we considered it to be weak, and took the opportunity to open a position in Lightspeed Commerce Inc.
October was a relatively quiet month, with Teladoc Health reporting Q3 earnings on October 27, 2021,:
Teladoc Health Inc
Key takeaways were:
Headline revenue up 81% yoy. However, this did not separate acquisitions. Organic growth was 32% yoy.
Growth on the prior quarter was just 3.7% (Q3 2020 was 18%).
The significant deceleration, which was trending over the past 2-3 quarters continued. We sold out of our position. We consider Teladoc Health Inc. has diminishing competitive advantages over time, and believe it will be difficult for Teladoc Health Inc to outperform the market in the medium term.
Upstart
Upstart business development continued, with the launch of its AI-enabled auto lending platform, opening of a new office in Ohio (doubling office space), and added Credit Union Partners, Four Corners Community Bank to its platform.
Upstart also took a stake in fintech business Tala, a micro-lending platform with ambitions to serve the Indian, Kenyan, and Mexican markets.
We started our investing journey, focusing on becoming great stock pickers. However, we have learned that becoming a great stock picker alone will not make one a great investor. Understanding the macro environment, identify secular trends, and being open minded in a rapidly changing world is critical. The decision to include the Ethereum ETF into the portfolio was driven by the secular trends, and the macro environment. Had we continued a bottom up approach, we would have missed this opportunity.
If you have any opinions on the companies we hold, or would like to know more about our investments, we would love to hear your feedback.
Regards,
Sean