Put in $2000, then purchased:
$300 for AMZN
$300 for META
$300 for NVDA
$637.2 for OWL
$300 for PSUS
$300 for TSM
While the alternative asset managers were still having a hard time, the big tech companies also went down quite a bit recently. I updated the valuation of AMZN and TSM and found they were trading at below my conservative buy below target, so I took this opportunity to add more into them, along with META and NVDA, and to some degree, continued to add PSUS (it has at least META and MSFT).
The need for more AI compute is real, so the AI capex spending will keep continuing, which benefits the shovels like NVDA and TSM. The various bottlenecks in the AI compute, for example, the HBM plays like Micron and Sky Hynix are definitely interesting, but I am not familiar with them enough in terms of the technology and the capacity increase cycle to include them in my family portfolio.
The market is still trying to figure out who the winners are, so there are contradicting signals in the chain of supply of AI compute. For example, the very upstream hardware component makers have seen their stock price multiplied, while software companies which make use of AI suffer. One such software company is Meta. AI will help Meta in spam fighting, ads targeting, user content generation in its social networks, internal development productivity, etc. They are seen as AI consumers, so the stock market didn't give them much credit.
Hyperscalers like Amazon are supposed to be a big beneficiary, but the cloud market may not be consolidated enough for the stock market to like them. I think the stock market is wrong. While AI compute is commodities, cost matters. Google and Amazon have their own chips in more advanced generations, and their scale will make them the biggest beneficiaries in the cloud market.
Finally, I added more into OWL because it's still the cheapest alternative asset manager in my portfolio. The worries in AI capex spending and the AI disruption of software may hurt OWL's portfolio companies a bit. However, there is a big difference between equity and credit. OWL manages funds which invest in credits, so they have a pretty high tolerance in getting AI disruptions or misallocation in AI capex spending before the fund values go down.
I like other alternative asset managers in my portfolio as well, but I can always buy them as a discount later. They are on sale all the time :(
I have updated the conviction and valuation for a few stocks in the Portfolio holdings conviction section below given the recent stock price changes. For conviction, I changed TSM to strong because TSM's importance in AI means the geopolitical issues will not be an issue given Taiwan is now too big to fail. I also changed PSUS to strong because I trust Ackman. I don't like all of his picks like QSR (no long-term sustainable growth prospect) and UBER (will be killed by autonomous driving), but his picks should be fine overall.
Transactions
Recent and upcoming dividend distributions
Portfolio performance snapshot
Total return:
One-year return:
Portfolio IRR (calculation): 15.56%
Approximated IRR for an SPY-only portfolio: 17.79%
Individual holdings:
Breakdown by categories (real-time):
Total returns for individual holdings:
Last prices:
Portfolio holdings conviction
The convictions in the table below reflects my current opinions and will guide the future contribution of additional investment to existing holdings. Stocks not inside the table are stocks with subpar return on equity that will be very unlikely to receive more contributions from new money (there can be exceptions for very cheap stocks). All of my writeups can be found here.
Conviction in long-term prospects means how much I believe a company would match or outperform the market (e.g. S&P 500) in the long run. Valuation matters so the conviction generally corresponds to the neutral rating of Valuation. It has the following ratings: weak, moderate, strong
Valuation: greatly overvalued, overvalued, slightly overvalued, neutral, slightly undervalued, undervalued, greatly undervalued
