Nvidia is Sold, All Hail Nvidia [Q4 2021 Portfolio Update]
The content of this post, or any post in Stumbling About, is for informational purposes only and does not represent investment advice. My investing style is fairly aggressive, and suits my own personality and psychology…it may not suit yours. You should do your own research before using any of the information that I share, and especially before investing.
Goodbye 2021, you won’t be missed.
Some context setting
My portfolio is primarily based on a Long Trend Momentum model that I created called Farfin. You can learn more about Farfin here. In addition, I will usually also have a relatively small investment in broad market ETFs, concentrated mostly in the Vanguard Total Stock Market Index ETF (VTI)1.
The combination of these typically results in my investments based on Farfin being 90%+ of my portfolio. However, I will opportunistically pick up other stocks when the market calls for it. As of the end of 2021, my portfolio was roughly an 85%/15% split between Farfin and non-Farfin, respectively.
Most of this post will look at the combined portfolio, but I do highlight Farfin performance specifically in the “High level quarter summary” section.
High level quarter summary
Results2: The overall portfolio was up +7% for the quarter, and +17% for the full year
Market Results: As a reference point, the market (VTI) was up +9.1% for the quarter, and +25.7% for the year. Well, shucks…I guess no beating the market for me this year 😒
As a note, I expect to trail the market in any given year about 35% of the time (based on historical performance), so I guess this is OK 😏
Buys: I made 2 purchases during the quarter, both non-US-based stocks — Alibaba (BABA) and StoneCo (STNE), each representing a little under 3% of my overall portfolio
Sells: As I mentioned in the Q3 performance post, I sold a number of stocks that I opportunistically picked up in 2020 (listed below, with respective gains/losses)
PG&E (+29%)
Boeing (+37.9%)
Airbus (+77.9%)
Cinemark (+136.5%)
Emerging Markets ETFs
Asia Ex Japan (-3.2%)
India (+26.8%)
Russia (+21.1%)
South Korea (-9%)
Vanguard VWO (+0.1%)
AT&T (-14.1%)
Reata Pharmaceuticals (-73%)
Top Holdings: DexCom remained my #1 holding at nearly 36%, and here’s the full of top 5:
DexCom (DXCM): 36.0%
Broadcom (AVGO): 23.2%
HEICO Corp (HEI): 7.5%
SeaGen (SGEN): 3.5%
Nvidia (NVDA): 3.0%
Top 10 holdings cumulatively: 85.2%
Below is a pie chart of my top 10 holdings for those that enjoy visuals.
Farfin-specific summary
Since it’s the end of the year, I’m going to take a little space to give a summary of Farfin’s performance specifically (reminder that Farfin is the model that dictates the bulk of my portfolio investments).
Below is a quick look at Farfin’s 1 year, 3 year, 5 year and 10 year performance (CAGR) vs. the market.
I expect Farfin to outperform the market roughly 60-70% of the time, so a 1-year loss to the market brings no frets to my brow. Below is the year-by-year breakdown of Farfin v Market over the last decade.
Lowlights and Highlights
Lowlights
Let’s get the painful stuff out of the way, so that we can end with the positive.
The 2021 train wreck that has been TAL Education Group continued, losing another -18.8% this quarter. As reminder, TAL is the Chinese education company that is no longer legally allowed to make a profit, so….
TAL ended the year as (by far) the worst performing stock in my portfolio, being down -94.5% for the year. Even just typing that sentence hurts.
Here’s a full view of the train wreck (TAL in blue, VTI in green)…
That said, TAL is off the hook for being worst quarterly performer — that honor goes to…Coupa Software! Coupa ended the quarter down -27.9%, and -53.4% for the year. Here is the full top 5 quarterly worst performer list (with full year in parentheses):
Coupa Software (COUP): -27.9% (-53.4%)
TAL Education Group (TAL): -18.8% (-94.5%)
Alibaba Group (BABA): -15.0% (-15.0%)
StoneCo (STNE): -14.8% (-14.8%)
Five9 (FIVN): -14.0% (-21.3%)
There is some overlap for the full year annual worst performers. Shame, shame, shame on these stocks:
TAL Education Group (TAL): -94.5%
LendingTree (TREE): -55.2%
Coupa Software (COUP): -53.4%
Appfolio (APPF): -32.8%
Five9 (FIVN): -21.3%
Another roller coaster notable for the quarter was DexCom, my #1 holding. DexCom ended the quarter down only -1.8%, so no biggie. However, it took an epic, heart wrenching, hair pulling slide from mid-November on, which is why I’m including it here. Take another sip of your coffee, and then look at this Q4 chart:
At the peak, DexCom was up +19% for the quarter and +75% for the year. But I was then forced to put away the champagne and strawberries as it proceeded to bring me back down to earth right alongside its own stock price — ending the year at +45%. Still a solid annual performance, but why must you tease me so DexCom? Why?
Highlights
Now for a little celebration! Time for the glorious performers to be on full display. Continue to make me proud, little ones.
Honoring Nvidia
First up is a bittersweet celebration for our good friend, Nvidia. As we often say on the podcast (shameless plug —> Apple link, Spotify link), it’s best to go out on top. And that’s exactly what Nvidia has done.
Nvidia was the top performer in my portfolio for 2021 at +125.5%, and was darn near the top for the quarter as well with a +42% quarterly run up. I bow down to you, Nvidia.
So, you ask, why is this bittersweet? After that blistering 2021 performance, Nvidia triggered my sell criteria for overperformance…and thus on January 3, 2022 I sold off all of my Nvidia shares and sent it to live with the other legendary stocks of old.
Over our years together, you’ve given me a ~6x return, and I will forever honor thee. Thank you, Nvidia, and may the odds be ever in your favor.
Other deservers of glory
This quarter had a couple surprising overachievers, as well as a few of our old faves:
Trupanion came out of nowhere — like a phoenix, it rose from the ashes of despair and pulled off a remarkable +70% quarterly performance.
Similarly, Fluor Corporation came through with a +55% quarterly performance, ending the year quite strong. Fluor is a little baby holding (only 0.1% of the portfolio), showing that you should never count out the little guy.
Here’s the full top 5 quarterly best performer list (full year figures in parentheses):
Trupanion (TRUP): +70.0% (+10.3%)
Fluor (FLR): +55.1% (+48.3%)
Nvidia (NVDA): +42.0% (+125.5%)
Broadcom (AVGO): +38.1% (+56.4%)
Pool (POOL): +30.5% (+53.0%)
Now for the full year 2021 top 5 best performers’ annual results:
Nvidia (NVDA): +125.5%
Broadcom (AVGO): +56.4%
Pool (POOL): +53.0%
EPR Properties (EPR): +50.6%
Fluor (FLR): +48.3%
I’m going to give DexCom another shoutout here. While it didn’t make the top 5 list, it nearly did with a +45% for the year…making it in at #7 on the list. As nearly 40% of my portfolio, that’s worth a special shout out. I see you, DexCom.
Looking to the future
Overall: My market top indicator didn’t go off, so I’m staying bullish(ly pessimistic). It’s likely to be a much more volatile year than last year, but only time will tell whether we’ll hit the top (or whether we already have…).
To sell: As I mentioned previously, I’m planning to sell off the majority of my 2020 pickups through the end of Q1. Additionally, there are some Farfin-fueled sells that have already taken place.
To buy: I’m not eyeing anything specifically right now, though there’s a chance that the Nasdaq sell off that started in mid-November might create an opportunity or two — doubtful, but we shall see. This would be in addition to the Farfin-based buys that I made at the start to the year. You’ll need to stay tuned for the Q1 2022 round up in 3 months to see what those are.
Q4 wrapped with some downward market trends, and Q1 is starting with more of the same. We’ll see that means, but regardless of what the year brings, I’m looking forward to it.
Oh, and if interested, you can see my whole end of Q4 portfolio here — these are all my holdings, along with performance for the quarter3. Enjoy!
The content of this post, or any post in Stumbling About, is for informational purposes only and does not represent investment advice. My investing style is fairly aggressive, and suits my own personality and psychology…it may not suit yours. You should do your own research before using any of the information that I share, and especially before investing.
Throughout this and other posts, when I refer to a stock’s performance relative to “the market”, I’m using the Vanguard Total Stock Market Index ETF (VTI) as the proxy for “the market.”
All of my returns are calculated using time-weighted returns.
Remember, this is not investment advice, I’m just talking about what investments I’m buying / might be buying. I have an aggressive, concentrated style that wouldn’t work for most people. Every investor needs to invest based on their own needs, situation and psychology.