22/04/2024
Q1 2024.
Dear Investors,
We published our first research report at smart Equity last October (https://tinyurl.com/2z9ez6kc). The next one will be coming soon. A quick reminder that in Quarterly updates here, we won’t discuss much about rock bottom DCF valuation and fundamentals of the business as that would be mostly covered in SmartEquity research reports. I hope the readers are reaping 5x returns on META investment at $96 (published in Nov 2022) , 1.9x return on GOOGL investment at $85-$92 ( published in Feb 2023), 1.5x return on Intel at $26.5 ( published in Dec 2022) , 1.5x return on Citi at $40-$44 (published in August 2022), etc. While we think we did thorough analysis for the right entry point, we can’t take credit for the returns we all are getting as we can only control the controllable i.e. buying at a discount.
In Q1 2024, we freed up some cash by selling our TGT position (bought at $106 and sold at $172) as we needed money for much better opportunity, which will be covered here in the later section. We still believe that TGT is an amazing business and if we had infinite capital, we would love to hold it forever as it was paying us more than 5% dividend and we bought an excellent business at such a fair price. In another news, 3M has completed the spinoff of its healthcare business, Solventum Corporation and every shareholder of 3M got one share of Solventum for every four shares of 3M they owned. We have sold the Solventum shares as well to free up more cash for a better opportunity.
Regarding the opportunity I was talking about, we started a new position in Zoom Video Communications(ZM) at $59. The Rock bottom valuation and assumptions/risks behind it will be covered in the Smart Equity research report. We believe it will be a growth play in the future b’cos of contact center solution and more and more larger enterprises keeping Zoom subscriptions along with its competitors’ solutions like MS Teams. Cheap valuation, strong balance sheet (zero long term debt) and decent EPS growth in the last 5 years were among several reasons to buy Zoom Video Communications.
We also started a new position in ACI (Albertsons) at $21 which was done partly due to cheap valuation and partly due to a potential arbitrage deal (Kroger was supposed to buy Albertsons at $26+ per share). Now that the deal might not happen, we are holding it because again we bought an amazing business at discounted price (more on this in the research report).
Until next time, happy investing!
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