News of the Week (September 18-22)

CrowdStrike; Disney; Airbnb; Meta; Uber; Amazon; SoFi; Match; Consumer Health Data; Noisy Fed Meeting; Macro; My Portfolio

Today’s Article is Powered by my Favorite Brians Over at Long Term Mindset:

1. CrowdStrike (CRWD) -- Investor Briefing/Fal.Con 2023

This event was packed full of new financial targets and product enhancements. This is the 30,000 foot view condensed & summarized (as briefly as I could).

a. Winning

Platform Approach Working:

Founder/CEO George Kurtz subtly ripped on the competition like he often does. He lamented on point solutions marketing themselves as true platforms. CrowdStrike is the true platform play. While it has made smaller acquisitions in the past, it did not “stitch together” disparate point solutions and try and emulate a full platform like other competitors.

By building all of these use cases as one platform and interface, CrowdStrike not only delivers lower cost, but better efficacy. Data sets from log management, cloud security, identity protection, threat hunting, incident response etc. are all rich with valuable insight. CrowdStrike’s Falcon Threat Graph can ingest all of this data and leverage it in a cohesive fashion. It sees this capability as unmatched in its space. Knowing where vulnerabilities are means directing threat hunters to remediate more expeditiously. “Better together” examples like that are endless and require CrowdStrike’s complete platform approach.

New MITRE ATT&CK (3rd party research firm) research confirmed this reality yet again. CrowdStrike received 100% protection, visibility and analytic detection scores.

Long Term Guide (that definitely isn’t a guide):

Kurtz and CFO Burt Podbere offered long term performance targets. They told us the numbers aren’t guidance, but regardless, I consider it guidance. What else could it be? They set the goal of reaching $10 billion in annual recurring revenue in 5-7 years which represents 19%-28% demand compounding over the period. A few notes on this. CrowdStrike has a perfect track record of only offering targets that it can easily surpass. I’d put money on (and I have) CrowdStrike getting there in 5 years. If history is any indication, under 5 years is a lot more likely than 6 or 7.

CrowdStrike has a $40 billion market cap today. Let’s do some simple modeling. Assume that its FCF margin disappoints from here (virtually no leverage), it reaches its ARR target in 5 years and its FCF multiple contracts from 34x to 27x. I think these are pessimistic assumptions. That would leave us with about $3.2 billion in end of period cash flow and an $87 billion market cap. $87 billion represents a 5 year compounded return of 17% or 16% at current dilution (which will slow). That’ll work. I don’t see 34x FCF for a company like this one as aggressive, but I assumed it would contract from here to be overly conservative. It’s one of one in terms of scale, growth and cash flow generation. That commands a premium.

Furthermore, the margin assumptions I’m using are too pessimistic. CrowdStrike just raised its FCF margin target from 31% to 36%. 36% would push the annual return to 20% over the next 5 years (19% with current pace of dilution).

More Financial Flexing:

There were more impressive target margin raises as well. It raised its operating margin target from 21% to 30% while raising its subscription gross margin target from 79.5% to 83.5%. These will be reached within 3-5 years (so probably 3 years). A 400 basic point (bps) raise to gross margin targets is not normal… neither is a 900 bps raise to EBIT margin targets. Special company in my shareholder view.

Finally, it committed to GAAP net income profitability for this fiscal year and going forward. That should mean it’s a matter of quarters before it enters the S&P 500.

400 Bps of Gross Margin Leverage Sources:

• It’s quickly shifting to lower cost public cloud regions.

• Obsessively driving down hosting costs per endpoint wherever possible. That’s 50% of input costs and there’s a “lot of optimization to do here” per Podbere. I love Burt.

• Economies of scale.

• Use AI to build more automation into its own workflows.

More Financial Nuggets:

• CrowdStrike sees its total addressable market (TAM) more than doubling over the next 5 years from $100 billion to $225 billion.

• Its current client expansion opportunity is $16.7 billion vs. $9 billion just 2 quarters ago as it rapidly adds compelling new products.

• 160 CrowdStrike partners now have $10 million+ in CrowdStrike-based business.

• CrowdStrike client discounts are entirely stable. It’s not pricing more aggressively to keep winning new business.

b. Product & M&A Announcements

Charlotte AI (its Generative AI product):

CrowdStrike, as telegraphed, will take the Microsoft approach to generative AI by directly monetizing Charlotte AI. It will charge $20 per endpoint annually for access to this tool. Considering Charlotte AI shrinks hours of work into minutes by automating analyst tasks, this should find traction. Individual clients protect millions of endpoints with Falcon to give an idea of how material this could become. This is easily a $20 million ARR up-sell opportunity for some of its larger customers. Kurtz walked us through some Charlotte AI demos which felt like stepping into the future. If you watch anything from Fal.Con, watch his keynote.

Table-Setting:

CrowdStrike’s 3 key growth vectors (along with endpoint) will be Security Information and Event Management (SIEM) (log management), Cloud Security and Identity Security. It made interesting announcements within all three. Starting with SIEM:

Raptor Release (for Better SIEM/Log Management):

Log management means fetching, organizing, storing and leveraging all relevant data sources for a company to utilize. It’s an “observability” tool encompassing a company’s entire asset base.

CrowdStrike’s Raptor natively integrates SIEM with the rest of the Falcon platform. It removes manual dependencies and creates newfound flexibility to innovate even faster. Kurtz walked us through a key SIEM pain-point: When data is aggregated through competition, it routinely loses needed context as it can’t directly communicate with a firm’s security suite. With Falcon, that headache disappears. By conjoining these two data and product siloes, CrowdStrike improves efficacy and lowers cost… like it does everywhere else. The index free nature of Falcon log management means searching 40+ terabytes of data takes minutes vs. days with legacy players. President/CTO Adam Sentonas sees querying speeds for this product as second to none. I’m sure Datadog would disagree.

There’s more. Raptor allows for near-endless 1st and 3rd party data usage to augment log management. This mimics an extended detection and response (XDR) philosophy of using 3rd party data to enhance detection. Data telemetry is a powerful, powerful thing.

Log management overall is a $16 billion market opportunity for CrowdStrike. It sees the segment growing from $100 million in annual recurring revenue (ARR) today to at least $1 billion by calendar 2028. That represents a 58% revenue compounded annual growth rate (CAGR).

Identity Security:

There wasn’t much new here but there’s an important reminder needed. When CrowdStrike says it will compete in identity security, it does not mean it’s encroaching on Okta’s Identity Broker/Access Control niche. Instead, CrowdStrike’s aim is to prevent identity malpractice. It uses a zero-trust architecture here to ensure a bad actor cannot breach the most vulnerable part of a company’s infrastructure and then freely, horizontally move through the rest of it. There is continuous identity verification and constant flagging of off-pattern activity to point out where breaches are occurring.

CrowdStrike sees this as a $17 billion market with it reaching at least $1.25 billion in revenue over the next 5 years. This represents a revenue CAGR of 38%. Over time, it thinks this segment will be as large as its bread-and-butter modern endpoint detection and response (EDR) product. That will take a while.

Acquiring Bionic to Expand the Cloud Security Suite:

CrowdStrike, as rumored, will acquire Bionic. Bionic is a trailblazer in App Security Posture Management (ASPM). It offers serverless scanning within ecosystems like Microsoft Azure and AWS.

There’s an annoying number of acronyms within cloud security that need to be covered here to understand what Bionic adds to the company. Kurtz gave us a wonderful, easy to understand purpose of each:

• Cloud Security and Posture Management (CSPM): Tells you about your vulnerabilities and misconfigurations.

• Cloud infrastructure entitlement management (CIEM): Tells you who is entering your software environment. It tells you if these entrants are allowed and exactly what they’re allowed to do.

• Cloud Workload Protection (CWP): Preventative measure to observe if anything bad is being done by entrants. This sounds the alarm bells while preventing and remediating cloud infrastructure attacks. It’s closely related to CSPM and CIEM.

• Cloud Native Application Protection Platform (CNAPP) is the overall suite tying all of these cloud products together.

Bionic’s ASPM gives companies a “complete inventory of what’s actually in their software infrastructure.” It gives them a birds-eye-view of apps in use, how they’re configured, how they’re deployed and if that’s ok. It then ranks these vulnerabilities at the app level to tell companies what to focus on first. This eliminates harmless vulnerabilities from alerts and cuts down on irksome false positives by up to 80%. Bionic extends CrowdStrike CNAPP to “deliver comprehensive risk visibility and protection across the entire cloud estate.” By expanding its service to the overarching app level, this gives companies a “complete picture of cloud risk.” It makes (per CrowdStrike), Falcon the first and only to provide end-to-end cloud security from initial source code writing all the way to deployment. CrowdStrike Chief Product Officer Raj Rajamani sees Bionic as the “final filter for every CSPM.”

Perhaps the most compelling part of Bionic is its unique view of a firm’s full Information Technology (IT) environment. A better view of an asset base doesn’t just help with security hygiene but with observing productivity, understanding the need for software/data and the ability to query information right from Falcon. Falcon for IT should be another compelling growth area in the years to come with another $10 billion in TAM to go after.

This is a very small company and will not immediately lead to material growth. CrowdStrike sees the cloud opportunity overall at $31 billion in 5 years with it expecting $2.75 billion in revenue by that time. That represents a 56% 5-year revenue CAGR.

Falcon Foundry:

CrowdStrike Foundry is a “no-code” developer platform. It allows clients to build apps on top of Falcon. Clients previously requested new products and had to wait for CrowdStrike to build them. Now their developers can intuitively do so on their own. This will let CrowdStrike avoid building niche use cases while clients are still able to feasibly enjoy those use cases. It’ll monetize this directly by usage and Charlotte AI’s code-writing capabilities will be heavily utilized here.

Endpoint Still Has a Ton of Growth Left:

CrowdStrike’s investor day centered on less mature growth levers. Still, its initial EDR product has plenty of growth left. Roughly half of the market still uses legacy, ineffective anti-virus (AV) products.

Downstream:

A lot of the growth opportunity here will come from additional large client wins, but also from smaller clients. It’s less than 5% penetrated across that smaller customer segment ranging from 5-7,500 employees. Its Falcon Go bundle caters to these customers as a bare-bones service offering.

The team sees SMBs as heavily leaning on Charlotte AI to make their smaller security analyst teams more productive.

2. Disney (DIS) -- Parks, Linear Sales, Writer Strikes & Culture Wars

a. Parks & Linear Sales

The News:

Disney is literally doubling down on parks by doubling the pace of its capital expenditures over the next ten years to $60 billion in total. It shared this news at an (annoyingly private) investor event this past week. Here, we’ll dig into why it’s making this move and what I think of it.

Investing in its Highest Return Businesses:

Disney’s Parks business has compounded at a 6% revenue and 8% EBIT clip over the last 6 years. Spend per guest continues to briskly rise with those gains mainly driven by cross-selling (not ticket price hikes). Things look even better over the last decade. Since 2012, its tripling in DPEP investment levels has yielded a 300% return on investment (ROI). Those returns at Disney’s scale are impressive. In its international parks, growth is sharper, the Asia recovery outperformed, and its pricing power is growing. Disney is leaning in.

Its Cruise Line business is also thriving. Since it doubled its fleet from 2 to 4 since 2012 the segment has compounded sales at a 23% clip. It will double capacity again (which was already known) by 2025. This move is based on sky high occupancy rates, a 2x yield vs. direct competition and double digit return on investment for the bucket overall. Investing here is a no-brainer.

The Disney Vacation Club? Yep… You guessed it… Also thriving. The segment allows members to enjoy discounts at eligible properties in what resembles a hybrid loyalty and time-share program. This bucket also enjoys “solidly double digit ROI” and Disney will be greatly expanding membership opportunities and locations as a result. New wilderness cabins and villas are being built. Specifically, its new Disneyland Villas enjoyed one of “Disney’s strongest sales weeks ever.”

My Thoughts:

Doubling CapEx in this environment, while Disney aggressively cut costs elsewhere, was understandably met with negativity. As always however, more context is dearly needed. The $3 billion in incremental CapEx is NOT incremental to Disney’s fixed cost base. It’s cannibalistic.

Disney has already cut $2.5 billion in unnecessary annual SG&A. It will take out $3 billion in annual general entertainment content spending over the next several quarters. Redundant SG&A and its general entertainment are both very low return cost buckets. So? Disney is taking roughly half of the savings and investing in its highest return, highest conviction segment: DPEP. Re-allocating costs to its best prospect and still pocketing $2.5 billion in annual cost savings is something I support. And as an aside, Disney has already told us it will do better than its original $5.5 billion total cost cut goal.

This is Disney walking and chewing gum at the same time. It’s driving near term leverage via needed cost base reductions and ensuring long term profit compounding by reinvesting in its world-class assets. It has $1 billion in vacant land just sitting there and waiting for needed value extraction. Disney is taking advantage. Cost cuts can only deliver profit growth for so long. Disney will need to invest to deliver longer-term growth. It should invest in its best uses of capital. It should invest in DPEP.

Nurture the Flywheel:

Disney value creation is two-fold: First, it creates world-class content and franchises to build customer engagement and loyalty. Second, it activates this sticky affinity in physical settings and products within DPEP. This multi-pronged brand-building.

approach drives higher potential lifetime value, more repeat purchases and more pricing power. Simply put, this formula is what Disney has relied on to become an iconic, 100-year company.

What doesn’t fit into this formula? General entertainment (GE). It’s had success with some titles, but Modern Family doesn’t drive value creation remotely as meaningfully as a successful Star Wars or Marvel title.

Iger is thankfully fixated on nurturing these areas with a singular, passionate focus. That’s why Disney is exploring selling ABC, FX and National Geographic to potential bidders like Byron Allen and Nexstar. It’s why Disney is rumored to be exploring a sale of its Indian assets to Reliance and others. A fresh $10 billion + cash infusion into its balance sheet from its lower value businesses is something I would applaud.

b. Writer Strikes & Culture Wars

• Film studios and the Writers Guild of America (WGA), per David Faber of CNBC, are quickly working towards a strike resolution.

• As part of the private parks event, Iger told analysts that Disney will quiet down on the culture wars front. This confirms a key piece of my Disney thesis on the company playing nice with both sides of the aisle, avoiding polarizing political issues and fixating on shareholder value. Don’t be right winged… don’t be left winged… be shareholder return winged. This is great news and comes after rumors of Florida building a state prison next to Walt Disney World.

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3. Airbnb (ABNB) -- Product News

Updates:

Airbnb’s CEO Brian Chesky revealed a few interesting product tweaks this week. The firm added new search filters, will roll out verified listings in February and is promising it will answer 94% of customer service calls within 2 minutes. Furthermore, it’s actively working with hosts on cutting or trimming the cleaning fee. Specifically, since creating this objective, 3 million hosts have cut the fee entirely with over 250,000 reducing it. Chesky sees this as a win, win. Why? Airbnb’s are much further away from 100% occupancy than popular hotels. The cost reductions have been shown to raise occupancy more than enough to make hosts come out ahead… all while driving better guest affordability. Win, win.

This news conveys two things to me. First, Chesky is second to none in his eagerness to listen to stakeholder feedback as Airbnb constantly refines its offering. Secondly, it says that Airbnb has created a better supply-demand balance. Over the last few years, it has fixated on accelerating supply growth as scarcity has grown as a platform issue. That meant rising rates and Airbnb losing its initial reputation as an affordable travel marketplace.

By pushing hosts to cut their own fees, cracking down on verification and punishing bad actors, they’re seemingly no longer hard-pressed to find that balance. That’s likely why Airbnb’s apples-to-apples listing prices are slightly down Y/Y while hotels are up 10% Y/Y. Chesky sees that same trend continuing through 2024. That progress paired with newer tools like Airbnb Rooms (lets you book a single room within a living quarters) is helping to recapture the affordable reputation.

New York City:

Chesky sees the regulatory environment as calmer today than in Airbnb’s past. He sees NYC as an outlier. 80% of its top 200 markets are already regulated with no momentum in any other key market to pass similar laws.

Generative AI:

Airbnb this month added James Monyika to its board. Monyika is known as “Google’s AI Ambassador” which naturally led to Chesky getting questions about this disruptive technology. He sees Airbnb using it to become a digital travel agent for more perfect matching. The first rollouts of this technology will come next year.

4. Meta Platforms (META) -- WhatsApp & TikTok

a. WhatsApp

Meta continues to pull monetization levers for WhatsApp. With billions of engaged users, Meta’s slow approach to extracting value here has been frustrating. Now that it’s leaning in however, that frustration is morphing into excitement. This week, it rolled out a couple new business tools.

First, it added new enterprise and payment tools for businesses in India. WhatsApp is a ubiquitously used juggernaut in that country. These actionable upgrades allow consumers to book reservations directly within the app. This is just one example within what Meta calls “Meta Flows.” Flows allow businesses to create custom automation for customer communication/service to more scalably serve their fans. Business profiles allowed users to connect with their favorite brands more intuitively. This allows those connections and the brand power to be monetized more directly.

Secondly, along these same lines, Meta is also expanding its verification tool on Instagram and Facebook to businesses. It’s also adding business verification to WhatsApp. If influencers gobbled up this offer, I’m confident businesses will be even more eager to do so. This will allow for more confidence in business to consumer connections to let users be sure they’re not talking to a scammer. It’s now building out the business verification program process. We’re still in the top of the first inning of monetizing WhatsApp… but that first inning already looks promising.

b. TikTok

The “ban TikTok” momentum continues. This week, attorneys general from 18 states supported Montana’s broad-based ban on the app. The reasoning? Per a Reuters article it was two-fold and fiery:

• TikTok “intentionally engages in deceptive business practices which induce individuals to share sensitive info that can be easily accessed by the Chinese Communist Party.”

• The platform “harms children.”

I still think a country-wide ban is coming, but I have no clue when that will be. Meta really doesn’t need this to happen. Its app engagement and user growth are very healthy. Still, this would serve as yet another tailwind. I like tailwinds.

5. Uber Technologies (UBER) -- Product Upgrades

Uber will use Google’s conversational generative AI models for its food delivery product. This will make searching more intuitive and matching/suggestions more relevant. It could also provide some up-selling momentum by combining Uber’s consumer data with these powerful models to recommend a guest’s favorite add-on. All of these workflow improvements should lead to higher conversion rates and lower cart abandonment. To help conversion more, it’s rolling out new payment options (like food stamps) with a dedicated “Sales Aisle” tab for consumers to find deals.

Along similar lines, Uber is partnering with Oracle for last mile delivery. Uber will integrate its driver network into the Oracle Retail Platform. Together, the two will match Oracle’s merchants with last mile delivery options. This includes Uber Direct which lets merchants plug into private label drivers.

6. Amazon (AMZN) -- Product & Talent News

a. Product Event Highlights from this Week

• Amazon integrated a new large language model (LLM) “custom-built for voice interaction” into Alexa. This will make Alexa “feel more natural and conversational than ever before.”

  • I’d love to see tools like this added to the search bar on its marketplace. That’s coming.

• More Alexa highlights:

  • “Eye gaze mode” to its tablets to “perform pre-set Alexa actions” with just a glance.

  • Real-time call translation for Alexa audio and video calls. This is cool.

  • Emergency Assist for rapid connection to emergency contacts & urgent care. This will cost $59 annually as a compelling up-sell opportunity.

  • Generative AI-powered “Art on Fire TV” to create pieces on the Fire TV device with “just your voice and imagination.”

• Echo Frames and Carrera Smart Glasses let you “take Alexa on the go.” These actually look like glasses, not ski goggles.

• Echo Show 8 debuted specifically for video calls. Features tools like dynamic audio processing for a better experience.

• Echo Hub is Amazon’s smart home control dashboard that easily hangs on a wall. This controls alarms, fans, speakers, and a plethora of electronic devices.

• New Fire TV Stuck with a new Fire TV Bluetooth Soundbar.

• Eero Max 7 for better network performance management.

• New Blink Outdoor Floodlight Camera and Battery Extension Pack along with an upgraded Ring camera.

b. More News

• Exploring adding new subscriptions within grocery and healthcare.

• Will infuse high margin ad placements into Prime shows and movies next year.

• Will hire Microsoft’s outgoing Chief Product Officer Panos Panay.

• Will hire 30,000 Californians for the holiday season and 250,000 overall vs. 150,000 Y/Y. This meshes well with the consumer data from Mastercard discussed later.

7. SoFi (SOFI) -- Tech Platform

DataDInvesting shared a great nugget on Twitter/X this past week. Awesome follow. In a recent interview, Noto subtly mentioned that the tech platform supports 135 million accounts. It last reported 129 million accounts in its last earnings call. Considering SoFi’s shift to larger, higher quality clients, this account growth should mean real revenue growth for the segment. That would be encouraging considering growth is supposed to be near 0% this quarter before re-accelerating in Q4. Early re-acceleration in asset light growth here would be encouraging; it would further support the team’s target of 15%+ Y/Y tech segment Q4 growth.

I also did a podcast this week with ChitChat Money to talk through the company’s investment case. It can be accessed below:

8. Match Group (MTCH): $500 a Month? $500 a Month.

Tinder debuted its long-awaited $500 per month subscription. It’s called Tinder Select and will only be offered to the top 1% of payers (in terms of engagement). It will boast a “VIP account search” tool with more product details still to come.

I understand why some think this is a ridiculous idea. Who would pay $6,000 per year for a dating app? I truly think that some will. A small cohort of users already pays hundreds and hundreds per month for in app purchases. Why wouldn’t they buy this? Finding dates (especially for men) on apps is hard. This will help. Some will want that help. Assume just 5% of its top 1% of power users convert. That alone would mean about $50 million in added annual revenue for a nearly 2% boost to demand. It won’t be ground-breaking, but it certainly can be material.

9. Consumer Health

a. Mastercard (MA)

Mastercard published new SpendingPulse data. It sees 3.7% Y/Y growth in retail sales (ex-auto) for the holiday season. This “reinforces continued consumer resilience.” In Mastercard Chief Economist Michelle Meyer’s words, “the consumer has taken their power back.” Importantly, e-commerce growth is expected to be 6.7% Y/Y which is at the top end of what PayPal assumed in its annual guide. Restaurants and Electronics are set to be category stand-outs with 5.4% and 6.0% Y/Y growth expected. Jewelry is expected to shrink 0.3% Y/Y as consumer discretionary remains challenged.

b. American Express (AXP)

American Express published credit metrics for August which point to continued consumer resilience:

• Net charge off rates for its consumer portfolio fell M/M from 1.8% to 1.7%.

• Percent of loans 30 days past due rose from 1.1% to 1.2% M/M.

• Net charge off rates for its business portfolio is stable M/M at 1.8%.

• Percent of loans 30 days past due is stable at 1.2% M/M.

10. Fed Meeting, My Take & More Macro Data

a. Fed Meeting & My Take

Powell’s press conference this week was noisy as it often is. I wanted to cover the highlights and share my takeaway. The Fed held its benchmark rate flat while guiding to one more hike for the year. It also now only expects 2 cuts for 2024 vs. previously expecting 4 cuts. The long-term rate expectation remains 2.5%. GDP estimates for 2024 ticked up from 1.5% to 2.1% and unemployment expectations fell from 4.1% to 3.8%. It sees strong economic activity powering the current rise in the ten year yield. It also sees inflation cooling but needing to cool more and the same for employment markets. None of this is surprising. The overall conclusion from Wall Street was that rates will stay “higher for longer.”

In my mind, I don’t care if there’s one more hike or if cuts start a few months later. I was focused on Fed policy when the argument was a 3% terminal rate or a 6% terminal rate. Now that pundits are bickering over 25 bps and timing of cuts, it’s far less important to me. I’m eager to use these fits as buying opportunities and will continue to slowly inch into names as or if the drama from this headline builds. Core inflation would have to meaningfully re-accelerate for me to make Fed policy a bigger part of my process at this stage of the cycle.

I care even less about 2024 dot plot forecasts. Those forecasts change rapidly and are pure noise. We’re one favorable datapoint on inflation away from futures markets materially changing rate expectations. If the Fed is truly data dependent like it says it is… then members have no clue what they’ll do in the next meeting let alone a year from now. I want to own great companies for years to come. If Mr. Market wants to punish these companies for a reason like this, I’ll say thank you. The volatility could easily continue in the near term which is why I will deploy cash gradually as I usually do.

Pairing the press conference with renewed fears of a government shutdown (which will be resolved as it always is) opened the door for me to do some slow, careful adding.

b. More Macro Data

Employment & Consumer:

• Initial jobless claims were 201,000 vs. 225,000 expected and 221,000 last report.

• Existing Home Sales for August were 4.04 million vs. 4.10 million expected and 4.07 million last month.

Output:

• The Philly Fed Manufacturing Index for September was -13.5 vs. -0.7 expected and 12 last report.

• Manufacturing Purchasing Managers Index (PMI) for September was 48.9 vs. 48 expected and 47.9 last month.

• Services PMI for September was 50.2 vs. 50.6 expected and 50.5 last month.

11. Portfolio

I made a sizable deposit into my brokerage account this week. I expect another deposit coming this month worth almost 4% of my total portfolio.

I added to Amazon, Progyny, Uber and Disney this past week. The first three adds were related to my favorite combination of fundamental execution and multiple contraction. The Disney add was related to the positive news already covered above.

Finally, I trimmed 8% of my Duolingo stake to take some profits. There’s absolutely nothing wrong with the company which is why it remains in my top 5. Flawless, consistent execution is what shareholders have grown to expect. While earnings estimates have risen in tandem with the stock price, it’s still a tad pricey and expectations are through the roof. I think it will deliver, but obviously that’s not a certainty.