Where Rationality Ends and Curiosity Begins
Most of my holdings are stable, compounding mid-to-large caps with impressive moats and solid valuations — offering a strong risk/reward opportunity. However, around 5% of my portfolio is designated for the crazy stuff — the ones that wouldn’t reliably qualify for the core portfolio. Usually, I hold around three companies in this category. Today, I sold one and bought another. In my main portfolio, I don’t want to switch around too much unless positions hit my price targets, but these 5% have more leeway. Still, don’t get the impression that I’m not thinking through the stocks I’m betting on. They go through rigorous analysis before I invest, but I wouldn’t be comfortable making them proper positions (yet). It’s for companies I find intriguing, like faraway disruptors or innovative space players. But exactly for that reason, the 5% are a hard cap. Even if one of these bets tripled and I sold, I would limit it back to 5%, because bets can crash as fast as they explode.
Insurance disruptor Oscar had to leave for The Real Brokerage today, after a nearly 50% gain and the intriguing opportunity I see in REAX. The broker is asset-light, on the verge of profitability, dirt-cheap (EV/Revenue around 0.4), and growing explosively. Obviously, margins are thin for a cloud real estate broker only taking a small cut of commissions, but the network is massive with over 30,000 agents across the U.S. And quite frankly, if the company continues to grow revenues at mid double-digit rates, then margins don’t need to be phenomenal. Furthermore, the company predicts a weaker Q3 compared to Q1 and Q2 — however, in 2023 and 2024, it was the other way around, so let’s see if we’re in for a little surprise.
This part of my portfolio is not only about returns but also about engaging with exciting new disruptors and industries. At the moment, I’m looking into all kinds of drone companies because I love the business and see future upside, especially with growing demand for unmanned and cheap alternatives amid rising geopolitical tensions.
Another company I’m “investigating” right now is QXO. Its low valuation (EV/Revenue below 2) and visionary, constantly-winning CEO Brad Jacobs are impressive. But as I said, I’m not rushing into everything — analysis is still a vital part of this “bet section.”
And while this post is all about my long-shots, don’t think I’ve been completely inactive with the remaining 95%. There’s been a bit of shuffling, a couple of trims and adds — the kind of quiet portfolio housekeeping that doesn’t make headlines but keeps things efficient. I’ll go into more detail on that soon, but let’s just say October didn’t start slow.
