We’ve trimmed a few outsized holdings for clients in our Flagship strategy to replenish our strategic cash reserve.
A touch of risk management
The current earnings period has proven to be a volatile one in markets, with several portfolio holdings experiencing single-day moves in excess of 15% following recent reports. Investors are holding high-growth, low free-cash-flow businesses to a particularly high standard in this environment.
As a result, we have reduced our exposure to the vast majority of high EV / Sales (aka expensive) and high beta (aka volatile) stocks that we’re still invested in. We continued to trim expensive growth exposure this week by selling small pieces of our stakes in Uber (UBER), Twilio (TWLO) and Coinbase (COIN).
Even with reduced positions, each of these stocks may have enough upside skew that we could still be positioned to capture excess returns. At the time of publish, UBER is trading down ~4% on the day with TWLO trading up ~3.5%, and Coinbase reports earnings at the end of the month. We were very pleased with Q4 results and the future guidance both companies reported yesterday, and believe that our long-term theses are tracking well.
By shoring up cash now, we believe we may be able to redeploy capital into these or other names as the environment settles down. In our view, these moves helped to de-risk portfolios for the near-term while creating high-upside conditions we may capitalize on over the long-term.
As always, let us know if you have any questions about these moves.
Onwards, Titan Investment Team
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