Key Gainers & Losers
Currency was the big winner this month as the USD gained 2.5% which translated into a 2.1% gain for the portfolio. Personally I’ve been expecting the USD to gain more on the CAD as the Fed continues to hike rates.
More great earnings across the board (similar to February) – more double digit gains coming from:
GAIN: Align Technology (ALGN) [+20%] – makers of Invisalign continued to show growth in demand for their invisible braces. This is a long term play that Invisalign will eventually become the defacto standard care for teeth straightening. In a world of social media and selfies, this should be a growing trend.
GAIN: Lumber Liquidators (LL) [+70%] provided a nice jump for the options we hold despite not reporting earnings – this was a play on a recovery of a successful business that was found to sell tainted hardwood floors from China. Potentially many were expecting great results for May.
GAIN: Shopify (SHOP) [+14%] continues to defy gravity as it posted it’s first quarterly profit. We haven’t owned this company for long (just a bit over a year) but with the amazing gain we’ve had in the past year, I’m debating if it’s high premium is worth the 80% growth rate. While I’d love to lock in the profit, I’m also thinking the eventual end state will be it gets bought out by Salesforce (CRM), Microsoft (MSFT), Oracle (ORCL), or Amazon (AMZN). Salesforce purchased a similar company over a year ago for $2.8B. At the time, Shopify was worth around the same amount but with better revenue growth. Now any suitor will have to pay at least 3 times that.
GAIN: Long time favourite Intuitive Surgical (ISRG) [+12%] posted another quarter of double-digit growth across all three segments – devices, services, and accessories. Rest of World (ROW) revenue ticked higher, but not enough to get us to trigger more buying. Introduction of a new Da Vinci X system (a budget version of the top-of-the-line Xi system) that offers a lower cost machine for the rest of world will hopefully set the stage for the ROW growth we’re hoping for. We identified the couple of growth drivers – new procedures and ROW growth which the X could be a catalyst for.
LOSS: CRH Medical‘s (CRH) [-26%] double digit gain from last month left as fast as it came. No real apparently reason for the run-up or the drop. Given the small market cap of the company, I’m not too concerned with the volatility as long as the company continues to execute on their business model.
LOSS: American International Group (AIG) [-4%] also continued to trend downward and continues to disappoint as the share price falls further and further away from book value (which is also experiencing lower and lower growth). My warrants are actually below water since I swapped shares and options for them around $65 but with a 2021 timeline, when the warrants expire, there’s still some time for the company to get back to double digit book value growth.
Saying Hi & Bye
Hi: Short Tesla Inc. (TSLA) – We’re back betting on a drop of this volatile stock as it has rocketed past $300 a share. The short term bet here is that the stock has run up too much without any additional information around Model 3 execution.
Some Key Decisions
No real key decisions made. However, In February and March, we noticed some eyebrow-raising numbers when calculating the calculating portfolio performance in the 70/30 SPY/XIU split comparison. We finally found out that I was too smart for my own good in how I was interpreting Yahoo! Finance data for dividend information. Looks like all has been corrected (for now!) – although we might find some more anomalies as we go forward. Unfortunately, I’m not going to go back and update every month’s comparison.