A monthly update of the Compound 8 to 80 Portfolio…
The 8 to 80 Portfolio gained 0.25% (net of fees) in January.
The historic squeeze in heavily shorted names (GameStop being the most prominent) featured extreme volatility, which eventually spilled over to the broader markets as hedge funds delevered. The S&P 500 finished down 1.01% (total return), giving back all of its gains in the last few trading days of the month.
–Netflix reported an increase in revenues of 21.55% in Q4, the 31st consecutive quarter of >30% year-over-year growth.
Profits in 2020 hit $2.76 billion, a 48% increase over 2019.
Free cash flow, which had been negative for many years as Netflix invested heavily in new content, reversed course to not only turn positive but hit a new annual high in 2020 ($1.9 billion).
Paid subscribers increased by 8.5 million during the 4th quarter, capping off a tremendous year of growth and beating expectations by a wide margin (6.47 million expected).
Subscribers grew 22% in 2020, up from 20% in 2019 and 18% in 2018. It goes without saying that the stay-at-home economy has been good for Netflix, with more time spent at home and less competition from outside the home entertainment.
Netflix had a huge year in creating content that resonated with viewers, with its series “accounting for 9 out of the top 10 most searched shows globally in 2020” and “2 of the top 10” most searched films. 62 million households watched “The Queen’s Gambit” in its first 28 days, making it the biggest limited series in Netflix history.
-Apple reported its strongest quarter in many years, with Revenue (+21% YoY), Net Income (+29% YoY), and Free Cash Flow (+24% YoY) growth all exceeding 20%.
iPhone sales hit a new record at $65.6 billion, up 17% over the prior year.
Steady growth in “services” continued, increasing 24% over the prior year.
Wearables (Apple Watch, AirPods) are also becoming a more important driver of growth, with record quarterly revenue of $12.97 billion, up 30% from a year ago.
The top performers during January were Tencent (+24.2) and Zoom (+10.3%).
The bottom performers during January were Nike (-5.6%) and Mastercard (-11.3%).
A new position was initiated in Adyen.
Position size in Zillow was reduced after a sharp advance.
End of Month Exposures
Cash and Cash Equivalents: 40%
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Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security.
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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