💼 The Hermit Portfolio 06/24: Origins
Detailed explanation of The Hermit Portfolio positions and construction
My dear fellow Hermits 👋
Welcome back to 🧙♂️ The Hermit 🧙♂️
ICYMI:
📈 Investment Thesis: Cardlytics
🧗 Our Investing Journey: 3 Investing Books
📝 Company Updates: Cardlytics Dilution
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Index
Briefing
This first post is focused on introducing the processes underpinned in this series. It will discuss the base principle highlighting business selection, capital allocation, and position turnover of The Hermit Portfolio.
Please note that this portfolio faithfully reflects the author’s personal seven-figure investment portfolio.
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None of the following should be construed as investment advice. Please consult a financial advisor before making any investment decision. You will find a full disclaimer at the end of this post.
Brief Portfolio Commentary
The portfolio is heavily skewed toward the longest-held positions. Here is a brief commentary about sizing and purchase timing for the 3 oldest positions.
Cardlytics is a company I first bought in 2019 as a tracker. I bought about 1/3 of the position throughout late 2021 and early 2022, but the biggest break came between March and June 2023. During that period, I purchased about 2/3 of the position at an average cost of ~$4.60. This position is the highest conviction as the company can potentially reach a valuation of >$20 bn, and has little to no downside, especially after the latest capital restructuring. I’ve been through 2 entirely different sets of managers for this company, and the new cohort seems headed in the right direction. Execution is everything for this company.
Limes Schloss Clinics is a company I first spotted in 2019, but it wasn’t until mid-2020 that I started buying. Within a few months, I allocated 10% of my (then) portfolio to this company. I purchased a few additional shares (1.5% of the portfolio) in October 2022. Most of the thesis was confirmed by a fellow German investor who started to talk about the company in forums at the start of 2022. I’ve yet to sell a share of this company and deeply admire Dr. Frank (CEO). Solving succession seems to be the largest catalyst for the continued compounding of this company.
Trupanion is a company I set buy orders in May 2023 while attending the Berkshire meeting. I was familiar with the company, but a meeting with Daryl (CEO) during the weekend tied the knot. I set orders in descending order starting at $22 to about $14. In October 2023, a few of these got triggered and I bought at $22, $21, and $20. I then learned a few additional things about the company that made me cancel the remaining orders. Given the price and size of the position, I believe it makes no sense to sell. However, if I need cash for a new position, this will probably be the first company to go.
