August has been a very tough month, but also a very active one! The portfolio “only” lost 1.9%, but it felt a lot worse due to the crash in Adyen and Napco. So, without any further to say, let's get into it.
I think August has been the single month where I invested the most money into my portfolio so far. This mainly occurred because I had two great opportunities present themselves after I already invested my usual monthly amount (and a little more than usual actually). I added four stocks, sold one and bought another.
I ended up selling out of Sonova Holdings, like I teased in my previous update. There is nothing wrong with the company, but I think it is one of my least great ideas. It will do well, but I am more confident in my other holdings.
I started a new position in Danish Distributor A&O Johansen. The company is the leader in plumbing and electrical distribution in Denmark and expanding into other Nordic countries. It’s a family business in the third generation, with one big problem: Succession. The current CEO is in his 80s and doesn’t have a succession. The stock trades at a very cheap multiple and still grows high single/low double digits, so even if it will eventually be sold off to PE or a strategic buyer, it should be at a nice premium. The company has reinvested heavily into modern infrastructure, automation and digitization of their business and continues to gain market share.
I added to ULTA 0.00%↑ Ulta Beauty because I believe that current prices offer an attractive opportunity. The stock sold off further after good earnings which alleviated some of my concerns, so I do not understand why it sold off. I am not sure if I’ll add more to my Ulta position, but I’m very comfortable with my 3% position.
I also added to ATKR 0.00%↑ Atkore after great earnings. Here again, the report alleviated some of my concerns regarding the normalization. Sizable position at 6%.
The first crash last month was in $ADYEY Adyen. The company missed top and bottom line and sold off by 50%….yes, 50%! EBITDA margin declined from 59% to 43%. This wasn’t unexpected, as management prepared investors for the effects of their accelerated hiring. Wall Street didn’t like it and probably a lot of funds got scared out. Adyen was always my smallest position because of the high valuation, but now it is valued attractively in my opinion and I tripled my position to 2%. I am considering increasing it further while it stays in this range.
The second crash was NSSC 0.00%↑ Napco, which crashed around 45% after reporting problems with the first three quarters’ accounting. This was only due to the inflated component prices, which they messed up in COGS and inventory calculations, resulting in too high net income. Cash flows weren’t affected, which is what I care about. I used this opportunity to increase my position further to 5%. I am not sure if I want to go higher, but it is a consideration.
Looking into September I am considering consolidating two more positions: UFPI 0.00%↑ UFP Industries and Nemetschek. Both aren’t too high on my conviction list and they both performed pretty well since I bought them. Considering opportunities in the market like Adyen, Napco and Ulta it is worth considering to consolidate further.
As always I’ll share the articles I published on Seeking Alpha in the last month: