Portfolio Update
Changes from 21Jul2022
Prelude
I’m going to keep my portfolio changes logged here with the details available to paying subscribers the same day. I’ll include writing the reasons for buying or selling. This is an effort to document my rationale and hold myself accountable to my decisions in an effort to learn and to add some layer of transparency to those who are interested in following along in real-time.
For the most recent full review of what’s in the portfolio, check out my Q2 review.
Sold out of $VHI.TO - Vitalhub was one of the top 5 positions. They are exposed to risks with their R&D and support staff being located in Sri-Lanka. Sri Lanka is undergoing significant unrest which includes economic turmoil with reports of inflation in the 50-70% range. The advantage of the IT staff being in Sri Lanka was that it is a lower cost operationally compared to Western based talent. I did not price in this risk and I believe it will LIKELY have short and medium term (maybe even long term) detrimental effects to the business. At the very least, it will be a very big distraction for the relatively small team to continue growing.
Added to CPRT 0.00%↑ - Copart has been, and still is, a great business. It’s business continues to grow steadily in the international markets. The management team is focusing on making continued improvements that willl incrementally grow operating margin. There is a crowd that believes that technology in self-driving will erode the business with fewer accidents over time. I don’t think the data supports this. The more tech cars have, the easier they are to becoming a write-off. Perhaps someday this will truly erode the business but I think this is wishful thinking.
Added to XPEL 0.00%↑ - Xpel was beaten down on their stock price recently with concerns over supply, car sales slowdown, and the impact from a general economic slowdown on the consumer wallet. Xpel has continued to grow and they expect margins to continue to improve along with revenue. I think all the issues have been priced in for now and I believe they are all short term in nature.
Added to POOL 0.00%↑ - Pool stock price sold off today with the second quarter earnings release due to concerns over inventory buildup and the forward impact of a slowing economy. I think these concerns are mostly priced in already and these issues are short term (a few years to recovery in the worst case). Given the recurring business makes up a large portion of the revenue mix and the age of the install base leads to plenty of upgrades going forward, I don’t see the long term prospects of the business as being damaged.
On another note, check out my new research on a new small cap company that could be of interest for value investors. It will be sent out to all paying subscribers on Saturday.
That’s it for now, check back soon for more. As always, follow me on twitter and please share this with anyone who might interested in my work.