2020 in Review

I started this blog to track my portfolio, write down my thoughts on various companies, and formalize my investing process.

Here, I write my thoughts about each of the seven positions I hold going into 2021.

The Investments


Facebook is the most undervalued large-cap tech company with the brightest future.


Speaking as someone who has studied law, the anti-trust lawsuits against FB are non-starters. Not only is the remedy disproportionate/unprecedented and based on an untenable premise (M&A is illegitimate if it is too successful), but the complaint also failed to include real facts about FB’s market position. The government’s failure to mention iMessage’s monopoly in the USA, Google’s 2x market share, and PINS/SNAP/TWTR/TOK’s fast-growing user base is telling: the government knew how FB would respond, but it suspiciously did not take a first crack at preempting the counterarguments and setting the narrative. I’d put breakup chances at <5% from here. Regardless, there are two potential outcomes (let’s call them A & B) if that breakup does happen.

In Scenario A, FB will have so thoroughly integrated its platforms such that a potential IG/WhatsApp spinoff (likely 3-5 years in the future) could meet the legal requirements of a court order but not the real-world anticipated effects (I.E. proportional revenue splitting).

In Scenario B, where a predictable split happens, total shareholder value increases. The individual components would enjoy a combination of re-rated multiples from the end of regulatory/political/social scrutiny and improved capital allocation. Furthermore, I believe US investors underappreciate WhatsApp because it is not popular among the primarily iPhone-wielding, non-immigrant groups who cover and share the narrative around tech-companies, both from an engineering and financial viewpoint. Live any appreciable time abroad and you realize WhatsApp has the potential to become the ex-China/US WeChat.

Resiliency Underappreciated

A lot of people who haven’t delved into how FB works underestimate its resilience.

First, the dynamic ad-bidding system creates a huge buffer to FB’s revenue. Incremental engagement is the lowest ROI for advertisers. When platform volume is high, CPMs (Cost per thousand impressions) decrease as advertisers don’t have to compete with each other for impressions and those impressions, in aggregate, have lower Return on Ad Spend (ROAS). If the volume of available impressions decreases, such as when incremental engagement decreases or disinterested users leave, there are fewer, higher ROAS impressions available. Therefore, advertisers increase their bids (raising CPMs), which help offset revenue loss from the lower number of impressions FB generated. What’s more is that a significant amount of engagement time lost on core-FB goes to another FB platform that may have equal or greater CPMs for that user, now or in the future.

Second, FB accounts for hundreds of billions in global GDP by connecting low-scale businesses with customers. This is not possible without a large, multi-faceted network that can combine video, time hold, interest-based discovery, text, and real world relationships across demographics and lifestyles. Yes, other competitors can become large and compete with FB for engagement, but no other platform can replicate its maximum targeting efficiency and throughput. To the extent any future platform displaces FB’s current line-up to more efficiently connect massive numbers of people to each other or with advertisers, it’s probable that such a platform will come from within FB itself.

So why is FB my largest position?

Despite what the echo-chamber of fundamental investing circles would lead you to believe, long-FB is actually a contrarian position. If your concern is “Facebook is dead,” the market certainly agrees with you by placing a 14x NTM EBITDA multiple on a business substantially increasing capex investment, with no debt, and with double-digit top-line growth.

Getting a core business that throws off immense FCF at a high ROIC with underappreciated resiliency, a fast-growing Instagram, and WhatsApp in its first inning of monetization with a young, top-5 CEO of all time is a great deal.


Cardlytics enjoyed an end-of-year run-up along with all SMID-tech names. As more digital advertising flows into walled gardens, CDLX benefits by having its own. With the roll-out of a self-serve platform, reorientation of marketing budgets toward digital, UI redesigns, and easy comps next year, I continue to see CDLX as worth holding.

Match Group

Match is an “inevitable” company. It has a monopoly over online dating and online dating will only grow: from 60% to 80/90% in the West and from 0% to 60% in emerging markets. A simple DCF yields little forward returns but does not fully reflect another s-curve-type move in online dating penetration, engagement, and monetization.

Credit Acceptance Corporation

Credit Acceptance has been misunderstood since it went public. Since its current CEO took over about 19 years ago, the company is up 5,000%. That whole time, it has employed an aggressive buyback strategy. The only way the company was able to generate this level of return without multiple expansion (currently trades at 10x PE) is because the business was undervalued for much of its life based on the same exact theses it is now.

History repeats itself. The Mass. AG regulatory lawsuit created an amazing buy opportunity. This lawsuit is without teeth, and a fierce litigator heads CACC’s novel legal strategy. Regardless of outcome, regulatory hardening only helps the best run players. CACC has proven it is the most effective, low-cost, and highly-aware operator in this space. Therefore, it will continue to underwrite great business (fueled by 1-2% cost of capital from long-term ABS and warehouse facilities).

GoodFood Market

I added this company later in the year. It is a small meal-kit delivery business in Canada that is rapidly pivoting to grocery delivery. With significant lead-time in a last-mile logistics network, it stands to capture a substantial portion of the grocery delivery market in Canada while it expands into multiple complementary verticals. Furthermore, highly motivated founders who understand that the success of their business will be based on operational efficiency and customer satisfaction run it.

I may write more about this one later.


A battleground company that blew it out of the water this year. Conservative inventory positioning constrained its remarkable growth. Reintroduction of Cyber Monday, continued build-out of the logistics network, and manageable comps next year as inventory pressure eases have me holding on. I am comfortable holding after having trimmed throughout the year.

Liberty Broadband

Given the late run-up in the market, Liberty Broadband remained a good value. I always wanted to own GLIBA, but passed because 1) I disliked TREE and 2) it was twice-removed from main Charter. With the merger of GLIBA and LBRDK and disposition of TREE, both these concerns are gone, and I finally decided to gain exposure to Charter Communications.

The underlying Charter Communications is a take-it-or-leave-it bet. Either you don’t believe the Telcos pose an existential threat or you do. If the Telcos do not pose this existential threat, Charter has enough margin slack, pricing power, and capex leverage to deliver high-teens, tax-efficient returns for a long time.

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