What I'm Trading - Adam

Occupation: Part-time investment banker and student studying Economics, Finance and Philosophy
Hobbies: I co-host a podcast with a mate called ‘The Sachin and Adam Show’. We interview various business leaders, entrepreneurs and investors.
Age: 21
Location: Australia
Stake Portfolio Size: $20,000

How much time do you spend on your portfolio each week?

I keep up to date with most of the stocks I hold whether that be by reading their investor presentations, watching commentary on youtube or checking their twitter page. I’d say that would be a couple hours per week at max. Most of my time goes into researching potential investments which I’d say I spend 3+ hours on per week. This might just be time spent reading news articles on the investments, doing casual valuation analysis on capital IQ or talking to my friends about the company.

How much of your income do you put into the market?

Around 80% of my wealth is in the stock market. I also hold bitcoin and physical gold. I’m pretty risk on.

What’s in your portfolio right now?

In the US I’m holding Opendoor (ticker is IPOB, it is a real estate tech platform), MP Minerals (US rare earths company) and Alphabet. I sold my Tesla stock a couple days ago. I’m looking to purchase Cloverhealth (IPOC) and Metromile (INAQ) soon. In Aus I’m holding Marleyspoon, ZIP, Tyro Payments, EML Payments and Beach Energy.

What do you love about being in the US market?

The US market gives the opportunity to invest in some of the most exciting technology companies globally. A lot of these companies are going public through SPAC’s, which are all located in the US.

Being in the US market also gives me the opportunity to follow advice from my favourite investors like Chamath Palihapitiya. I love being able to see his investment tips on twitter, researching them for a week or two and then making purchases. You sort of feel like you are on the ride with him.

What’s the best trade you’ve made?

I jumped on the Tesla bandwagon for a bit last year and earned over 80% which was nice but I’m a bit afraid of its current valuation and the investor sentiment at the moment. I’m sure I’ll buy Tesla again one day.

In the Aussie market I earned 300% on a small-cap gold stock called Carnaby Natural Resources. The company was worth roughly $20 million when I invested and one of its projects had an NPV of $30 million which made the valuation fairly absurd. At the time investors were either placing a massive discount on the stock due to riskiness of its projects or just not enough people knew about it. After spending a heap of time researching the company, how gold mining works and even talking to geologists, I realised the potential risk-adjusted return was significant. I made 300% in around 3 months but I’ve since exited that position.

And the dumbest?

I bought Disney before the pandemic hit and sold it in September just because I wanted the money for more exciting investments. Since there was a fair bit of vaccine talk at the time I probably should have just held strong and waited for it to rebound off the new announcements. Instead I didn’t have patience and It’s since gone up around 30%. That one taught me a lesson about patience and foresight.

Is there anything you’re trying to improve about your strategy?

I’m trying to build a high-conviction strategy where I hold 8-15 equities but have extreme confidence in each of them. So the main thing I want to improve is finding more great high-growth companies that I think can achieve 10-50x returns and doing the research that allows me to have comfort to hold them for 3-10 years.

I’m also trying to think more deeply about the competitive landscapes of companies and the economic moats they have. Sometimes I can love a particular company’s product and business model so much that I tend to overlook the strength of their competition.

Who do you lean on for advice with trading?

100% Chamath Palihapitiya. He is my absolute idol and inspiration. I think he’s an incredibly intelligent person who only wants to invest in companies that can change the world and increase 10x or 50x. He publicly releases all his investment strategies on twitter which I find fascinating to read. Though beware, most of the ventures he invests in would be labelled as quite high risk. His investment vehicle, Social Capital, is something I want to replicate in my lifetime.

I’m also really enjoying commentary by Catherine Wood of ARK Invest who has a bunch of interesting ETFs in the market that invest in innovation, fintech, genomics, electric vehicles etc. She is great for learning about innovation, macroeconomics and technology.

What was your first trade on Stake?

I bought Blackstone after reading ‘What it Takes’ by Stephen Schwarzman. I realised it was an amazing company that was helpful to a portfolio because of its diversification benefits of private equity. I think it was a decent investment because investing in Blackstone is like relying on all the smart people who work there to make private equity decisions for you.

Any lessons you’d give to someone who’s never invested or traded before?

I think it’s important to spend a lot of time finding great companies that have industry tailwinds and economic moats and then not caring too much about economic conditions. There will always be fluctuations in the economy which we can’t predict so I don’t think market timing is too important but what’s more important is just holding great companies for the long-term.

The reason I say this is that I saw a lot of friends start investing during COVID and they would make heaps of trades and sometimes sell stocks after a month or so. This didn’t seem like a great strategy from my point of view. Instead, proper research, conviction and patience are qualities I deem to be important now.

If you were to buy a US stock or ETF right now, what would you buy?

I’m keen to invest in some of ARK Invest’s ETFs. I’ll probably enter their Fintech ETF. Cathie Woods is a great investor and the ETF diversifies your money into a whole lot of great technology companies.

Stockwise, I’m very keen to invest in Metromile which is an AI enabled car insurance company that is trying to revolutionise the way insurance is priced and change the way claims are made. INAQ, a SPAC, is going to be merging with Metromile as a way to put the company on the public markets.

ICYMI: make your own decisions

This is not investment advice, just my opinion. It doesn’t reflect any opinions of Stake. I’m as fresh to this as the next person off the street. Do your own research and make your own decisions.