Watchlist: OLO

Olo is a New York City-based B2B SaaS company that develops digital ordering and delivery programs for restaurants. The company’s platform allows customers to place restaurant orders from multiple origination points – from a brand’s own website or app, third party marketplaces, social media platforms, smart speakers, and home assistants. It also provides restaurants with order analytics and other services.

- Olo allows restaurant chains to own the customer experience and the customer. This is very important to brands. When people order through Door-dash or Uber eats - it's those delivery services who own the customer.

- Olo has 69,000 locations served - 42% growth Yoy

- Average revenue per unit up 61% to $525M

- retention rate - over 120%

- Revenue grew 125% to $36M

- Gross margine - 81%

- $6M Net income

- $4M profit.

- Company has $180M in cash (after Feb 2021 IPO)

- Outback restaurants moved to use 100% Olo. Company also added "Nandos" and Union square hospitality group.

Selling Lumentum Holdings @ $81.86 (2.52% Gain)

 Lumentum recently acquired Coherant INC for $5.7B.

- Seems like the company over paid.

- I don't like trying to increase earnings through huge acquisitions.

- Coherent has almost the same market cap of Lumentum - so I expect it will take a long time to digest this acquisition and start seeing synergies materialise.

- Taking the small profit to invest in better opportunities.

Buying Brookfield Renewable Corporation Inc (BEPC) @ $38.67

 General Thesis:

With Democrats controlling the presidency and both houses it is quite clear that renewable energy will be getting a very big boost in the coming years.

The US Government is committed to promote and subsidise green energy initiatives across the board.

Brookfield energy partners are one of the best run companies in the field. 

- The company generated 10% more electricity than the previous year, which created a double digit increase in cash flow.

- Strong performance for all segments: Wind, Solar and Energy transition.

- Brookfield is benefiting from the global decarbonisation megatrend.

- The company makes over half of it's revenue from hydroelectric power.

- The company has a 27,000 Megawatt development pipeline - most of it focused on wind and solar. Current megawatt capacity is 21,000.

- Dividend yield above 3%

- Excellent management team. BEPC has been spun off from the Brookfield Energy group which has an impressive track record of smart and responsible capital allocation.

- Given the tail winds for the renewable energy industry, it's hard to see where this investment can go wrong.

Buying Medpace Holdings (MEDP) @ $180.73

 

Medpace is a Contract Research Organisation (CRO). Basically allowing entities that are looking to introduce new drugs, treatments or medical devices for FDA approval. 

The FDA filing process is extremely complicated and filing mistakes could mean long delays and big losses.

Medpace allows these companies to streamline the process by providing experts as well as software that the company use throughout the initial development and testing stages and eventually submitting to the FDA.

- Founded in 1992 by Dr. August Troendle, who came from the FDA. He's still CEO today.

- The company IPO's in 2016.

- Dr. Troendle still owns 20% of the company. He also invested $20M in his own IPO..

- The company is 100% debt free.

- Company has $278M in cash and free cash flow is growing annually at 23.4% to $277M last year.

- I like the field the company is working in. Plenty of demand and no serious competition.

- The company is founder led, 'under the radar' with very experienced management. 

- At a P/E of 48 - the company is expensive, but I wouldn't expect to get such quality on the cheap.

Selling Teva (TEVA) @ $10.80 (35.04% Gain)

 Bought Teva in March 2020. The assumption was that Teva had been beaten down way more than it should have. The stock rebounded quickly and has been pretty much flat ever since.

Looking 3-5 years ahead, I don't see any prospects that would make me think this will be a market beater, so I'm taking profits and will be investing in a higher growth potential stock soon.

Buying Trulieve Cannabis (TCNNF) @ $47.86

 Trulieve Cannabis cultivates, produces in-house and distributes it's products to Trulieve branded stores (dispensaries) in Florida, California, Massachusetts, Connecticut, Pennsylvania and West Virginia, as well as directly to patients via home delivery.

I've been following this company for a while. 

The core of it's business is in Florida where Cannabis is only legal for medical use. As the Biden administration is ushered in and with Democrats controlling the entire legislative process it seems next to certain that full state legalisation will follow Federal legalisation. This is tremendous news for the industry and my main basic thesis for increasing my Cannabis investments. 

It should also be considered that states all across the US are going to be struggling with their budgets as Covid has shocked their economies. To find new revenue, states will be legalising (and taxing) Cannabis, in my opinion.

- Cannabis is now 8% of my portfolio.

- Florida is a big weed state and Trulieve has already got 78 dispensaries set up. When weed goes legal, they will have an entire infrastructure already set up.

- The company is well run and profitable (!!) showing me that management is not selling pipe dreams but actually building a viable brand today.

- 4th Quarter revenue grew 23.6% yoy to $168.4M.

- Finished 2020 profitable with net income of $63M

- Management predicts sales will climb to $85M in 2021 compared with $525M in 2020 = 63% growth.

- The company has recently acquired Mountaineer Holdings, giving Trulieve two additional dispensary licensers in West Virginia.  

- The company is in a position to fund it's own growth (Without having to borrow) with $100M in cash from operating activities in 2020.

- Price to Sales ratio is at 11 - fair enough for such a high growth profitable business.

- The stock has risen 640% in the last 12 months so you can expect a bumpy ride, but if the company executes on it's plans and legislation goes favourably as I assume - this should make for a great investment in the following years.

- As usual, starting a position at 2% of total portfolio value.

 

Selling Baozun (BZUN) @ $34.38 (3.95% Gain)

 Baozun is a Chinese e-commerce and social media services company operating in China. The Thesis for buying was the business Baozun was doing with American brands in China.

- After holding for 12.5 months the stock price has remained basically flat. 

- US - China tensions aren't good news as far as future prospects are concerned.

- I was expecting stronger results and growth.

- Selling the position with a small gain and making room for a new investment.

- I will keep looking at China for opportunities but will currently take a 'wait and see' approach with regards to this market.