A monthly update of the Compound 8 to 80 Portfolio…
The 8 to 80 Portfolio gained 0.73% (net of fees) in December.
The broad equity markets continued to grind higher during the month with market participants celebrating the long-awaited passage of the second major stimulus bill ($900 billion). Covid-19 cases, hospitalizations, deaths in the US hit new highs during the month, pushing back expectations for a resumption of normalcy. The speed of the vaccine roll-out, which got off to a slow start in December, will be critical.
–Nike reported record revenue in Q3 of $11.2 billion, up 8.9% over the prior year and exceeding expectations ($10.6 billion).
Nike’s huge investment in Digital is paying off, with an 84% growth rate during the quarter. Online sales are now over 30% of its total sales (their pre-covid goal was to hit this mark by 2023).
In terms of geography, sales in China (+24% YoY) and Europe/Middle East/Africa (+17% YoY) outpaced North America (+1% YoY) by a wide margin (source).
-Lululemon reported revenue of $1.1 billion during the 3rd quarter, up 22% from a year ago (beating analyst expectations of $1.0 billion). Earnings of $1.16 per share exceeded expectations of $0.88.
While most apparel companies have had an extremely difficult year, Lululemon benefitted from the stay-at-home transition with consumer shifting their tastes from dresses/suits to more comfortable athleisure wear.
They has executed very well online, with direct-to-consumer revenue up 94% in the recent quarter which was 42.8% of total revenue (up from 26.9% a year ago).
Lululemon also started selling Mirror (at-home fitness device that retails for $1,500 w/ monthly subscription fees) after its acquisition of at-home exercise maker earlier in the year.
-Alibaba shares fell as China announced that it had launched an antitrust investigation to probe “monopolistic behavior.”
The top performers during December were Zillow (+20.4%) and Apple (+11.5%).
The bottom performers during December were Zoom (-29.5%) and Alibaba (-11.6%).
A new position was initiated in Alibaba.
Position size in Zillow was reduced after a sharp advance.
End of Month Exposures
Cash and Cash Equivalents: 41%
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Past performance is no guarantee of future results. Performance results are shown net of fees and include dividends and other adjustments. All performance data is strictly illustrative and may differ from actual results.
Discussion of portfolio holdings are for illustrative purposes only and are not investment recommendations. The portfolio holdings are subject to change at any point in time.
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