My portfolio is bifurcated like I have never witnessed in my 12 years of investing. I have 18 direct investments in companies, roughly equally split between Australia and the US. 6 of these have seen their share prices decline dramatically this year, despite their financial performance leading me to continue holding them with high conviction:
The Trade Desk - 64% off 52-week high. Q4 FY25 revenue growth was 22% vs PCP, but this was the first time almost forever that the company missed its guidance, triggering a big sell off. Q1 revenue grew 25% and Q2 revenue grew 19%, ahead of guidance, but the share price continued to decline because of perceived competitive threats, particularly from Amazon.
Atlassian - Continues to report revenue growth around 20% vs pcp each quarter, continues to affirm a 3 year revenue CAGR of 20%, has been an early adopter of AI in its product suite, has been very successful in migrating on premise customers to the cloud, and will repeat this process with data centre customers over the next 4-5 years, which should result in margin expansion.Yet the share price is down 48% from its 52-week high, which is a mystery to me.
Adobe - Q1 revenue was a record, with 10% growth vs pcp, Q2 was another record with 11% revenue growth, yet the share price is 39% off its 52 week high, mainly due to fears that generative AI is a threat (despite Adobe being quick to embed AI its entire product suite), also fears of increasing competition from Canva, Figma and the like.
CSL - share price is 38% off 52 week high, mainly due to stalled revenue growth particularly in its vaccine business, but no-one seems to doubt the company will still be around in 5-10 years and still a market leader.
Wisetech - financially the company is going from strength to strength, dominates its market and is moving into adjacent markets through smart acquisitions, yet the shenanigans of its CEO dominate the headlines and are behind a 51% decline from its 52-week high share price.
Polynovo - still in the early stages of its growth trajectory, routinely reports record revenue months, but has had a revolving door of CEOs which may account for the 44% decline in share price from its 52-week high.
I have held all these companies for at least 3 years but some as long as 12 years. So ⅓ of my direct holdings are down 40% or more whilst I have owned them, yet my portfolio is at an all time high!
This is because on the other side of the equation I am a long term holder of Nvidia, Amazon, Google and Microsoft, all of which have been major beneficiaries of AI. Closer to home Codan has also gone from strength to strength, but this time due to increased military budgets and a surge in the gold price.
Whilst my personal experience backs up the general view that the magnificent seven are propping up the rest of the market in the US, I am mystified why other companies which are still growing healthily have been penalised. As long as the thesis isn't broken I will remain a long term holder of all these companies (I am very much in the David Gardner camp), but these sure seem like strange times. I rely on my portfolio to sustain my retirement lifestyle, so I keep three years of living expenses in cash as a sanity buffer, whilst the market does its thing.