Q2 2024 Recap
Quarterly recap on idea performance during Q2 2024
The markets overall during Q2 2024 (remember, my dates don’t precisely line up with the calendar) were mixed, with the tech-heavy NASDAQ COMP appearing to be the star performer (thank you, NVDA) and is up 8% at the moment while the underperformer during the quarter appears to be the smaller and mid-cap names that make up the Russell 2000 which is down around 4.3% as of this writing. Meanwhile, the Dow and S&P500 continued their divergence, with the Dow down around 1.6% and the S&P500 up 4.2%, respectively, for the quarter.
Before continuing, the standard disclaimer holds; nothing here is investment advice, and I make absolutely ZERO guarantees about future results. No matter how often I may comment on how well or poorly things have behaved overall, that doesn’t mean the next quarter things will behave similarly. None of the performance measurements I use for comparison purposes are even remotely close to those used by the standards bodies; mine are simple averages while theirs use additional inputs. This most recent quarter is simply a three-month snapshot on a handful of names that should always be considered in the broader context of an overall portfolio. As always, don’t take my word for anything, consult with your own financial professional, and do your own due diligence.
During Q2 2024 I published on 6 new ideas, 3 of which I consider to be of the “quick take” variety while the other 3 are ordinary spiels. Since publishing on these 6 ideas, they are down an average of 27.2%, with the worst performer going against me (the stock being higher) for maybe 10% while the biggest decliner was down over 95%. Of those 6 ideas, 5 were profitable at the close of business today. Keep in mind this is an incredibly short period of time (the most recent idea being published only 2 weeks ago), and I consider my ideas to be better suited for investment purposes rather than trading purposes, but it is what it is. Having one of these ideas down over 95% can certainly skew the results to the downside, but even if you exclude that name from the overall results (the borrow was likely sketchy at best), the average new idea presented during the quarter would still be down around 13.5%. Both sets of numbers handily outpace the indexes above that I tend to track for comparison reasons, for whatever that is worth.
At the end of Q1 2024 I had 28 remaining names on my interest list, and their performance during the quarter was decidedly more mixed. At the close of business today, 16 of those names were higher than at the start of the quarter while the remaining 12 are lower (a few are close to unchanged, so that may all change tomorrow). On an overall portfolio basis (once again, this assumes an equal weighting of every name at the start, which is pretty unrealistic given some of these names) the overall list, however, was down around 2.8% with the best-performing name declining over 75% while the laggard of the group (thank you, CVNA) is up over 42%. I am somewhat intransigent on a few of these longer-running names (like CVNA, but also including FRHC & GSHD), which I refuse to believe will ever prove to be a long-term profitable business model, and names like these can have a rather negative effect on my overall performance. But once again, it is what it is.
Combining the performance of both the older 28 ideas and the newer 6 ideas, the average decline would have been around 7.1%, outpacing the decline in the Russell 2000, which tends to be the index that I believe has the greatest overlap with the names where I find the best ideas.
I thought I would also take a moment to point out that during the quarter a couple of my names were picked up by other services. In early April another service picked up on my Marqeta (MQ) story, and just yesterday an activist published a negative report on MediaAlpha (MAX). The MQ story appeared to lay out the main negative points found in Gretchen Morgenson’s story which appeared on NBC News back in February, while the negative MAX story focused on their healthcare-oriented lead generating web sites, an area that has been problematic for many companies. Of the 2, the MAX has certainly been the name under more pressure over the past couple of months for several reasons, including a moderating of insurance premiums as I highlighted in a note last week, so yesterdays piece surely was plowed into some fertile ground.
I would also like to point out that unlike the activist crowd that widely publicizes and disseminates their research and findings in order to alter the market’s current long bias, I pretty much purely rely on my research and track record of picking names that I believe should underperform the market regardless of any outside influences. If that business model appeals to you, I would appreciate your support.
Now, on to some additional company specific comments on current ideas…