Big Ideas for 2022 (3/9 Update)

Old Ideas

China Tech

I’m mostly off of this idea. I sold my Alibaba position and am holding, but not adding to, my Tencent and Naspers ADRs. I just don’t see a near-term catalyst for Alibaba. I had been hoping that a new calendar year and some distance from the delisting panic would spark a rally in the stock price; if it hasn’t started rising yet, I don’t know when it will.

I’m holding Tencent because their shareholder-friendly policies make me willing to hold the stock long term.

Roku

Still like it, nothing has changed except the valuation of the tech sector generally.

Energy

Still like it, though tempted to take some profits here. Haven’t done so yet, may soon.

New Ideas

Shopify

I thought I'd never get another chance to buy SHOP, as despite being a growth investor I just can't pull the trigger at 30x sales. Looks like I will!

Outside of 2020-2021, the market has consistently under-rated this company, and is back to doing so again. Shopify has recently initiated a number of partnerships with other tech companies: with JD.com to make Shopify sellers’ products available to Chinese consumers, with Roku for Shopify merchants to advertise on Roku’s ad platform, and with Facebook, Apple, and Google for payments.

These partnerships are a sign that Shopify is becoming the single point of access to SMB merchants (at least in the e-commerce arena and maybe beyond). If you are a tech company and want to serve SMBs, you will need to go through them. SMBs don't have the time to interact with 20 different tech platforms, they will have a Shopify account and do everything through that. This makes Shopify a gatekeeper, and they'll be able to charge significant tolls for anyone who wants to sell services to SMBs.

Google, Facebook, Amazon have gotten rich aggregating demand; Shopify is going to get rich aggregating supply. Specifically the long tail of supply, which is where the position of the aggregator is most important.

Netflix

They’re supposedly warming to an ad-supported tier. This will unlock price discrimination, which is a hugely valuable tool for a company selling low-marginal-cost goods. Plenty of households will pay $40 / month for a Netflix subscription, but plenty won’t, and an ad-supported tier will allow Netflix to extract more revenue from both groups. This just makes so much business sense that unless Reed Hastings is “religiously" opposed to ads, it’s got to happen eventually.

According to CFO Spencer Neumann, it sounds like he isn't.