I don’t have a hard and fast limit on the number of positions that I have in the Freedom Portfolio, but in general I prefer to try to keep a more concentrated portfolio focused on my best ideas. I’ve generally found that around 20 positions seems to be the sweet spot of providing enough diversification to allow me to get in early on companies like Shopify (which was at one point was around my 15th largest position) while not having so many companies to follow where it gets difficult to keep track of things. Keeping the number of positions that low can be a challenge, though, as at any given time there are usually 30-40 companies that I find intriguing for one reason or another. It takes constant vigilance to prune out lower conviction positions in order to prevent the number of positions in my portfolio from getting too bloated. For the past few quarters, the number of positions in the Freedom Portfolio have hovered closer to 27 / 28 instead of 20, so it has felt like long past time to focus on concentrating the portfolio a bit.

To that end, here are some changes I have made to my portfolio over the past few months. Interested in getting more immediate feedback on when I make changes to my portfolio? Consider following the Freedom Portfolio on Stockcard where VIP members can see portfolio changes that I make on the same day that I make them. There’s a 14 day free trial and you can get 10% off using the promo code “paul”.

With that out of the way, let’s talk portfolio changes.

Sold entirety of Magnite (MGNI) for a loss of 44%: I had really rotten timing with Magnite, formerly Rubicon Project, and also formerly Telaria. I first bought shares before the Telaria / Rubicon merger after getting enticed by the idea of getting more exposure to connected TV advertising and perhaps finding a cheaper Trade Desk (TTD). I ended up selling shortly after the merger pretty much right before the stock took off in late 2020. Eventually I fell for the FOMO and re-bought right around the top this past February. I’ve been reconsidering my investment thesis for Magnite recently and I came to the conclusion there were better places for my money. Why? Simply put, why own Magnite when I could own The Trade Desk? There seem to be more advantages to being a leading demand side platform versus a supply side platform, and I have more faith in Jeff Green (the CEO of The Trade Desk) than I do in the management of Magnite. It felt increasingly like keeping a “second best” position. That, combined with the poor performance, convinced me that it was time to sell.

Sold entirety of Butterfly Network (BFLY) for a loss of 48%: I’ve had a fair amount of luck recently with medical device companies like Novocure (NVCR) and Shockwave (SWAV). Perhaps that is why I got a little trigger happy and bought shares of Butterfly Network a little earlier than I should have. I’m still intrigued by the promise of increasing accessibility of ultrasounds, but I should’ve been more patient with a newly public company and waited a bit to see how it performed. I’m leaving open the possibility of restarting a position at some point, but for now, I have higher conviction positions that I want my money in. Such as….

Added to Redfin (RDFN): I didn’t think it was possible, but I recently listened to a Glenn Kelman interview on Twitter spaces which increased my conviction in the company even more. I really really love the long term outlook for this company and, as an added bonus, the stock is down nearly 50% from recent highs so shares are on sale. I think the stock is suffering from perceived weakness in the housing market relative to earlier in the year, but the company has been executing well and taking market share. I would be shocked if this wasn’t a significantly larger company in 5-10 years, which is my intended holding period.

Added to Zoom Video (ZM): I believe the death of video calls and remote work is being greatly exaggerated. Anecdotally, I’ve seen companies more and more listing fully remote positions and video meetings being more tightly integrated into regular work. New business areas like virtual murder mystery parties and virtual comedy shows are cropping up while existing businesses are working in virtual options for things like exercise classes. Will growth see a slowdown? Absolutely. But Zoom stock is back to where it was in June of 2020 despite putting up some of the best earnings reports I have ever seen since then. I’m happy to add here.