The Growing Quality Social Media Portfolio

What is the Growing Quality? It’s a recently opened, continuously added to, small account. The portfolio follows a certain methodology which I will explain today, so you can understand what I’m trying to accomplish with this investment portfolio. I will also go into the individual holdings and why I hold them briefly. Most stocks have been covered by the “Free Stock Analysis” which I share with my newsletter subscribers every Wednesday. Let’s dive straight into it!

• The Methodology

I buy growth stock, mostly tech. The reason is that I understand those the best. They mostly fall into my circle of competence. I also like smaller companies too much to restrict myself from those companies. I will go more into this in a second and what it means. Growth, however, comes in various shapes and sizes, mature companies can still outgrow the indices and can provide the stability needed not to lose conviction when smaller caps are in an unloved moment in the markets. As it currently stands, I have 32.9% of the value of my holdings in smaller, 44.9% in mid-size, and 22.2 in stable companies, this is as of market close June 7th.

So how do I plan to grow this account? Every Monday I deposit €125 into the account. This is a number that’s sustainable for me and seems like a number that’s within range of others as well. The goal is also not to make it a million-dollar account, but to show what happens when you deposit regularly, and buy stocks thoughtfully. It’s meant to show how fast the numbers actually stack up by being consistent, and having a concentrated portfolio of stocks. The allocation of funds is dependent on the state of markets, with more funds being pushed towards the “safer holdings” in the portfolio, and giving more attention to risk when others refuse to do so.

• The Holdings

- My #1 holding (19.99%, $417.43)
Coming in as my biggest holding is PayPal which has taken the lead over the last week as lululemon hasn’t made a real big push from earnings. This stock is my biggest holding as it is a business that has taken a big, and justified, beating coming out of the Covid-Bubble. After replacing the CEO, and afterwards swapping out most of the leadership team, the company seems to be back on track. They have thus far divested 1 distracting business, and plan on getting increasingly more focussed on the aspects of the business that drive the best economics. The company is also doing loads of share buybacks as they have decreased the shares outstanding by more than 5% over the last year.

- Second comes lululemon (17.7%, $369.64)
lululemon is a company that I have been very vocal about in the last few weeks as I have been aggressively buying shares of the business. The reason behind the fall of the company’s share price is uncertainty. Uncertainty is different from risk, and I think the clouds will clear for this stock as the company keeps performing. China is now also coming to a point where it can provide the company with the growth rates it used to have, even as the American side of the business is lagging a bit.

- In third comes monday (14.49%, $302.55)
monday.com is a work-management tool that allows for various other software to be linked in 1 place. For the companies using it, it saves a lot of time and money. monday has previously grown through entering companies in a single team and then spreading out withing a company. Currently, they are working closer and closer to the leadership roles which allows them to see incredible growth within the segment of users with 100.000+ in ARR. In the latest earnings call, they reported growth of 55% in this segment. The company is still quite small and has a very large runway of growth ahead of itself. By expanding into different categories, it is now increasing its TAM, these new products see massive adoption and are very exciting for the future.

- #4, a step smaller (9.48%, $197.92)
My number 4 position is one I will go over in a video on Wednesday as to why I bought it exactly, as it is the first time I’m actually speaking about it other than the stock analysis I did on it. The position I’m talking about is SoFi, which is a misunderstood stock in my opinion. It’s a cheap bank, trading like an expensive software company.

- … Number 5… (8.80%, $183.72)
Before last Friday, this stock would have been above SoFi, however, with the drop the stock had last Friday, it slipped to the fifth place. Enphase is very dependent on interest rates, this made the stock increase quite a bit over recent weeks as we saw data that suggested rate cuts may be coming, last Friday’s jobs data report shut that door for now however, as that data point came in a lot hotter than expected.

- Adobe in sixth (8.50%, $177.53)
Adobe is an interesting stock as it has been trading down on fears and uncertainty. Just as with lulu, uncertainty is not the same as risk, but there is something that has happened recently that has sparked a bit of concern. First let me quickly explain the recent sell-off, because as AI became the new hot thing, Adobe initially jumped up with it, jumping from $330, to $630. This may have been quite high, however, the stock has now given most of that back as it now trading for $460. This is overdone as I don’t think AI will replace Adobe as photo editing software. The latest drop, where it went from $470, to $435, was due to the earnings report of Salesforce, and what seemed like companies not wanting software with AI features, we can see how this affects Adobe in the coming week as they report earnings coming Thursday. The situation I will be monitoring sentiment around is the latest terms of use change in which they can use all the work of creators without consent, something that may result in creators trying different programs.

- Lucky number seven (7.72%, $161.23)
If you think corporate debt will increase in the coming years, this will be a good stock to capitalize on it. Together with Moody’s Corp, S&P Global operates a duopoly on the debt ratings. As that might be the most profitable part of the business, the part that is driving the most revenue is market intelligence, where they provide data on various markets to institutions.

- Small but building, at the right places (7.24%, $151.23)
In eight comes Shopify, which has dropped about 25% on the latest earnings report, but has recovered slightly since. What I will be looking for in this stock is for the business metrics to stabilize, without sacrificing its incredible growth. What I mean by it, is that free cash flow is coming in one quarter, but is lacking another for example, this should stabilize and judging of the latest investor day, also what the company wants. Furthermore, the company continues to grow revenue at 25% as it is now starting to push up market with more enterprise customers joining.

- #9 (6.10%, $127.41)
The smallest holding is Moody’s Corp, but this is not how I look at it. The reason is the correlation to S&P Global. As we analyze Moody’s and S&P Global, we may come to the conclusion that the businesses are quite different, while they have overlapping segments, but if we look at the market, they disagree. So This is also how I treat these two positions, as one. I would be very willing to add a lot to these two positions, but as for all stocks, at the right prices. They are not cheap right now, so I am looking for other opportunities until Moody’s and S&P Global show signs of temporary weakness.

• What Is The Plan With It?

I really like what I’m doing with Growing Quality, and although barely getting started with it, I plan on keeping this going for quite some time into the future. I also have way more plans to provide a lot more value for the future, but this will come with time.

This also means that I will keep this account going as long as possible, but will never increase the amount I put into the account, however good, or bad the markets are. Having an excessively large account might look good, but it provides nothing of value on how to build an account realistically. The goal will be to buy high growth, with stable factors, and shift asset allocation depending on market outlook.

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