As many of you may know a while back I had the good fortune to work on our real-money portfolio service Million Dollar Portfolio. Our time on Million Dollar Portfolio was pretty great. We had an awesome team that enjoyed working together and Matty Argersinger did a hell of a job as our PM. Under our three-year watch not only did we make our members a lot of money but we outperformed the market handily; something we’re all really proud of.

We also ran a monthly feature in the service called Best Buys Now (BBNs). This gave each of us on the team the opportunity to shine a light on one or two ideas each that we felt were the most timely stock recommendations for our members. Today is my update of the returns from my selections. I’m happy to see that as of market-close on August 1, 2019, since inception (May 18, 2015) my portfolio of BBN recommendations has returned a total of 52.1%, outpacing the benchmark’s return of 34.3%. Below is a snapshot of the portfolio as of market close August 1, 2019:

I'll continue to periodically update these numbers. For more here's the link to the original post introducing everything: http://www.jmocapital.com/blog/reflections-recommendations-from-my-time-on-mdp

Stay Foolish,

​JMo

​I recently got a good question from Shayne on Twitter:

I think it’s a good question because while many of us saw this coming from a mile away, still many didn’t. In fact it sounds like a lot of younger, newer investors may have jumped in on the Snap IPO with blind faith that it was going to be a sure thing which is too bad.

There were (and still are) plenty of red flags with this one so I figured if for nothing other than my own benefit it would be worth taking a few minutes to jot down some of the lessons I’ve taken away. If you’re going to invest in individual stocks then you need to have a philosophy and lessons help shape your philosophy. Mistakes I made with Twitter early on I think helped shape my thinking regarding Snap and the risks involved.

Learn from the past: First and foremost learn from the IPOs that came before them in a similar space (think Facebook, LinkedIn, Twitter). What are the metrics they are using to measure their success? What are mistakes they made? What was the market (rightly or wrongly) focused on? Remember how one of the bigger concerns regarding Twitter early on was that it was/is difficult to use? Well it doesn’t take a genius to see that Snap is even more difficult to use than Twitter is. No, maybe not for the seasoned Snap user. But for the new, older Snap user that they’ll likely never get it’s a f***ing mess.

Identity crisis: What in the world does Snap consider themselves? They have been pushing the “we’re a camera company” line since the S-1 but that seems to continue to run counter to what investors really consider it: a social network. And now Spiegel’s focus in his recent memo is about being the “fastest way to communicate.” (That phrase was used 26 times in the memo.) What does that even mean and why does it matter? It’s impossible to build a great (or even good) business when you don’t really know what you are.

Leadership matters a lot: Snap’s share structure puts every ounce of power in Spiegel’s hands. The word visionary gets thrown around a lot and it seems like once the idea is out there everyone else just piles on because if that’s what he’s been seen as in some circles then it must be true. But helping to build a messaging app does not make one a visionary nor does it make them a good leader. Frivolous spending, secrecy, hubris, there were a number of signs that Spiegel was going to be a risky bet.

What’s the competitive advantage?: Take a practical look at what they do. Do the network effects exist as they do with other social platforms? In Snap’s case I don’t think so. As a messaging app it’s more of a one-on-one communication which doesn’t offer the same type of network effects. And there are plenty of messaging apps. As we’ve seen thanks to Instagram, it’s totally replicable.

Forecasts can be evil: They can and often do change significantly in a short period of time. Take ‘em with a big grain of salt.

Does the valuation make any sense at all?: In Snap’s case no. It never has. It still doesn’t. It was always valued at a major premium to Facebook on a price-to-sales basis (we can’t use earnings as Snap doesn’t have any). But is it reasonable to believe they can be as big as Facebook one day? No and that is primarily due to the user demographic. Snapchat is essentially for young people and that’s always been its allure; older people (parents) aren’t on the platform. And to be clear that’s not a bad or a good thing; it’s just a fact. But from an investor’s perspective it keeps a lid on growth estimates for sure in a space that places a big emphasis on the size of the user base.

Understand the timeline: Snap’s a camera company; OK that’s fine. You can make all the VR and AR arguments you want for Snap but we aren’t even to a point where the every day user case for VR and AR make total sense. In other words, it’s a market that still has a way to go to reach the mainstream and even then why is Snap the way to play it? What do they have that bigger competitors don’t? Any material VR/AR implications won’t be realized for a long time if ever.
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We all make mistakes
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These are just some of the most obvious takeaways for me. Investing isn’t about getting it right every time and  learning what you’re doing along the way helps tilt the odds in your favor. And to be clear I'm not saying that Snap can never be successful. I mean hey I still own Twitter shares and they've ended up doing well for me, but it sure took a while to get there and they've still got work to do. I'm not putting any of my money into Snap but maybe they'll get things figured out there one day. Then again, maybe they won't.

OK peeps, I asked and boy did you all answer! In the name of posterity here are all of your responses from earlier today when I asked about your most recent stock purchase. Some of these names are no doubt familiar, some maybe not so much. But if you're looking for an idea this list may just spark something for you. At the very least it's fun to see where everyone's heads are at (note the "Total" column reflects the number of times each company was mentioned). It goes without saying none of these are formal recommendations. But at the very least some food for thought:

Thanks to all who responded. Happy investing!

@TMFJMo

One of the things I love about Twitter (yeah, I love it and I’m not afraid to say it) is that it’s less of a social network and more of an interest network (you’ll make some friends along the way too). I’ve talked before when it comes to networks about quantity versus quality. While the market has for so long viewed Twitter in my opinion based on quantity (Facebook has 6 times the user base as Twitter for example) I personally view Twitter more from the quality perspective. It’s just so damned useful. It’s the network where anything and everything in the world is happening. Sure it’s a smaller (direct) user base but even if you don’t use Twitter you see Tweets all over the place every day coming from reputable sources in whatever vertical interests you.

Speaking of verticals my eyes were opened yesterday to just how important Twitter is in the medical community. Now I’m no doctor and I’ve never played one on TV but I recently started engaging with a radiologist on Twitter who opened my eyes to the growing role Twitter is playing in the medical community. I asked Matt (@MFCovington) if I could share the direct message he sent me as I found it quite fascinating and he’s given me the green light, so here it is below (thanks Matt!):

“This is a fantastic platform. Preferred social network for doctors and a fantastic resource for physicians to network and connect with peers and get up to date, truly relevant info faster than the medical journals. Twitter has become an integral part of many large medical conferences, healthcare tweetchats are common, and the merits of physicians being involved on Twitter is a common theme discussed in medical journals, particularly in my specialty of radiology. LinkedIn doesn’t seem to have this same presence among many physicians. Facebook, Instagram, and the others (does Snapchat even deserve mention here?) are not used as a professional information and networking resource, as is seen with Twitter.”
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I remain convinced that Twitter the network has only scratched the surface of its overall potential which is why I plan on holding my shares for quite some time to come. It sounds like Matt is in the same boat thanks to his experience with the platform. Like we always say here, investing is a marathon not a sprint. And while Twitter got off to a slow start it sure seems like strong leadership has the platform and the business headed in the right direction. I assume they know (at least to a degree) about Matt’s perspective here and the role Twitter can and does play in the medical community; in the age of telemedicine and virtual healthcare it seems like an opportunity. If not then consider this my polite “ahem, Jack you may want to take a look at this” moment. So ahem Jack, you may want to take a look at this.


Jason A. Moser
Senior Analyst, The Motley Fool
@TMFJMo

One of the opportunities my job has afforded me is being a part of Investor Place’s Best Stock of the Year contest for the past three years. The idea is simple: Pick your favorite stock for the given year, put it up against noine other stock pickers and may the best man or woman win. I’ve been part of the contest for the last three years and will gladly keep doing it until they tell me to stop.

My first pick in 2016 was Ellie Mae and while it didn’t win it still did well. Last year I went with TripAdvisor which didn’t have such a hot year. This year I called out Twitter as my idea to beat and so far it’s having a great year.
The important part to note with all three (and any future) picks is that while I’m picking them for a one-year contest, I’m also picking them as businesses I like well beyond just a year. Anyone who knows me knows I invest with a longer timeframe in mind and these are businesses that I think have the potential to do well for years to come. With that in mind I’ll be keeping track of the portfolio’s performance over time for posterity. Below is a snapshot of how the portfolio is performing to date:

So as it stands my portfolio of picks is doing quite well returning 68.7% since inception versus the market's 25.1%; let's hope this continues. For my tracking purposes I kept it simple and assumed $1,000 invested into each individual position based on the closing price on the date each recommendation was published. This was equally weighted with $1,000 also going into the S&P 500 (SPY) based on the closing price of the same date. I use the SPY as it is dividend adjusted. I’ll come back here on occasion to update the returns or offer any opinions on concerns that may arise.

*DIsclosure: At the time of writing I hold shares of ELLI, TRIP & TWTR in my personal portfolio.

​JMo

As many of you may know over the past three years I had the good fortune to work on our real-money portfolio service Million Dollar Portfolio. Unfortunately the time has come to close the service and move on to hopefully bigger and better things. Our time on Million Dollar Portfolio was pretty great. We had an awesome team that enjoyed working together and Matty Argersinger did a hell of a job as our PM. Under our three-year watch not only did we make our members a lot of money but we outperformed the market handily; something we’re all really proud of.

We also ran a monthly feature in the service called Best Buys Now (BBNs). This gave each of us on the team the opportunity to shine a light on one or two ideas each that we felt were the most timely stock recommendations for our members. I’m happy to see that as of market-close on May 18, 2018, since inception (May 18, 2015) my portfolio of BBN recommendations has returned a total of 20.7%, outpacing the benchmark’s return of 20.6% by a tenth of a percentage point. Not much of a delta of course, but hey winning is winning at the end of the day. Below is a snapshot of the portfolio as of market close on May 18, 2018: 

The closing price for the SPY in 2015 was $213.10 and in 2018 it was $271.33. By this math, from point A to point B the market is up 27.3% so it’s worth noting a few things:
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• For my tracking purposes I kept it simple and assumed $1,000 invested into each individual BBN position based on the closing price on the date each recommendation was published for our members. This was equally weighted with $1,000 also going into the S&P 500 (SPY) based on the closing price of the same date. I use the SPY as it is dividend adjusted.
• The logic behind my scoring is that BBNs by their very nature were time-sensitive recommendations for the service. We were telling our members at that moment we felt these were our best ideas so it’s only natural that they should be compared to the market at that same point in time.
• We were all afforded the same opportunity to choose the stocks we felt most strongly about out of our entire portfolio of holdings (around 32 or so companies). If there was overlap that was just fine, it only added to our service’s conviction at the time.
• When we closed the portfolio I had recommended 51 total positions in 17 different companies.
• Some months I picked one idea, many months I picked two.
• Stocks on hold in the portfolio could not be chosen. We didn’t like the potential conflicting message that communicated to our members.
• Some positions were subsequently sold from the portfolio after we had chosen them for BBNs. My portfolio of recommendations assumes we simply held onto those positions as it’s in line with my general portfolio strategy anyway. However once a position was sold it was no longer on the table for future BBNs as it wasn’t in the portfolio anymore.
• My largest position is Ellie Mae (ELLI) which was recommended seven times.
• My smallest positions are Boston Beer (SAM) and Walt Disney (DIS) which were recommended one time each.

I'll continue to keep track of this portfolio going forward as I believe there will be plenty to learn from it on an ongoing basis. It’s fascinating to see that the portfolio is actually outperforming the market when I consider that three of my biggest disappointments in Chipotle (CMG), Under Armour (UA) and TripAdvisor (TRIP) have had such a drag on results and represent 12 of the 51 total positions. The upside to this is that it is certainly possible that these three companies are all starting to recover a bit from self-inflicted wounds suffered over the past few years. If so this may be a catalyst that could help widen the gap between the portfolio’s returns and the market’s over the coming quarters and years. I reckon time will tell us all we need to know.
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Click here for my personal holdings.

So we had our first Teladoc experience over the weekend with our daughter's sore throat (we were concerned she had strep). Some thoughts on the experience:
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• They were busy (it was Friday afternoon) but the wait was reasonable (20 minutes).
• You are waiting in your home with your phone so you can keep on doing other stuff.
• Slick app, easy to upload pictures of her throat I took with my phone for the doctor to see.
• You build profiles in the app for each family member. They keep your history to consult.
• You can link to your primary care provider as well in the app for better sharing of information.
• Connected to our choice of pharmacy in the area to pick up any potential prescriptions.
• The doctor was very friendly and pleasant to speak with.
• More than satisfied with follow-up.
• We had to shell out $15 for the virtual visit; more than reasonable in my opinion.

Based on the virtual visit a strep diagnosis was not clear. I was therefore very happy to see that the doctor would not prescribe antibiotics based on our visit. She advised us to go get a strep test from an actual walk-in clinic. This was very easy to do for us and within 30 minutes we had the test done and she thankfully did not have strep. Prescription was only possible when the symptoms were overwhelmingly clear and this was determined by a checklist the doctor went by. She had to check at least four of the symptoms in order to be able to make a prescription.

Now you can ask “What was the benefit of the virtual visit then?” A fair question, but to us the benefit was that it was a far better first step in the process. Rather than having to jump in the car and go to a clinic there was another option that could potentially solve the problem without having to get in the car and go to the doctor. The fact that our doctor did not just reach for the prescription pad was very encouraging. I understand that concern of overprescribing and really do hope that our experience continues to be the standard across the entire country.

The bottom line is that from a consumer’s perspective having access to Teladoc is an excellent complement to our health plan. It’s not meant to replace something; it’s meant to make what we have better. Our Blue Cross Blue Shield plan recently added the Teladoc membership to our coverage and I hope we keep it. As a consumer it’s a win.

From the investor’s perspective, well I’ll refer you back to the consumer’s perspective. If our experience is indicative of the level of service Teladoc provides on a national scale then I’m very encouraged. They’re the largest pure-play in the space and they’ve built out a massive network of providers that can offer many meaningful services. Retention is high, customers on the whole seem very pleased with what they have to offer and the market opportunity is absolutely massive. The regulatory environment is changing quickly and adapting to the benefits of virtual healthcare. It’s no longer a matter of “if, just a matter of “when.” So I hope our provider keeps our Teladoc membership and I’ll definitely be hanging on to my shares in the company.

​If it’s possible for something to have a less than zero percent chance of succeeding I’d say that the rumored Facebook Portal fits the bill.

At $499 (again, rumor from what we can tell today) Facebook apparently thinks that it can bring a device to market that consumers would pay twice as much for versus the Echo Show. Yeah I don’t think so. If the selling point is that it’s an easy way to connect with family and friends from a hands free hub in your kitchen that’s some pretty weak sauce. And it most certainly doesn’t command any sort of pricing power for a company with no proven track record whatsoever in the hardware business.
 
And you know what else? It doesn’t matter.
 
This is an easy bet for Zuck to make. Nobody with a head on their shoulders expects it to do well. Nobody. And if you think it will I think you may want to have your head checked. Facebook isn’t a hardware company and with the limited track record of the Facebook phone effort a few years back they’ve really got nothing to lose.

So why do it? Given Zuckerberg’s penchant for viewing things over long time horizons my bet is he sees it as a learning experience and even more importantly the whole process is probably a lot of fun. It shows he’s willing to step outside the box and try something new. And it’s also distinctly possible that he gleans something from the Portal that leads to some success on other fronts down the line. Remember Facebook owns Oculus too so there is a hardware company somewhere in there.
 
Remember what Jeff Bezos said of his Fire Phone failure? He said, “If you think that’s a big failure, we’re working on much bigger failures right now - and I am not kidding. Some of them are going to make the Fire Phone look like a tiny little blip.”
 
Hey listen I don’t like any of Facebook's platforms as a consumer (must be why I don't use them). But I recognize the company's reach and power as a platform and how investors can win from it. I think Zuckerberg wants to be seen as taking this Bezos-style mentality. I can’t hold that against him at all and if you're an investor in Facebook you shouldn't either.
 
So yeah, Facebook Portal can (and likely will) totally fail. And it won’t matter one bit.

Most weeks I link up with two smart analysts (@rorycarron and @TMFWillSommers) on Skype for 30 minutes or so to talk shop. Rory is covering stocks for our friends over at Rubicoin and Brendan is getting stuff done for us here at The Motley Fool. These are not service specific talks, just a chance for the three of us to link up and chat. I figured it's easy enough to just keep our notes here for posterity and for anyone else who may be interested. Enjoy!  

ULTA Salon (ULTA)

• Recent earnings looked great, the stock is still having a poor year down almost 20%. Why was there a negative reaction to what seemed like a positive quarter?
• The market may be pricing in margin challenges going forward. They will be competing on pricing more in the future. Will that large store base become a drag at some point?
• The stock is down from our last update on the MDP watch list when shares were trading at $230. I pegged our interest range of $200 - $220 as where we would want to being this more into the discussion.
• Management sees a range of 1,400 – 1,700 stores total. They are at 1,000 now.
• Loyalty program of 25.4 million members likely overstates how many are actually meaningful to the company’s base. Probably makes sense to discount it by half to find the true number of customers that will be long-term drivers versus the one-timers who sign up for a discount on the spot. An ULTA loyalty membership is not like a Prime membership. This is important as 90% of ULTA’s sales come from loyalty members.
• Positive market characteristics: Makeup is a resilient segment, folks like to get to the stores to physically see offerings, they have a lot of good SKUs/brands available, wide selection, the salon/services segment ULTA offers is a bit of a differentiator. There are some Home Depot-like characteristics in play here.
• What’s driving these strong comp numbers? Part of it has to do with the pace of new openings. They are opening around 100 stores per year give or take and it takes two to three years for new stores to reach mature comps. This could be an indicator perhaps of comps normalizing at some point but that should still be at least a few years out, possibly even five or more. This is a good thing, means that they could continue to post impressive comps for some time to come.
• This is a good retailer in a sea of really bad ones. The market will pay up for strong retailers.
• How many more stores can they open? This isn’t one to buy and hold blindly, but it is one that could offer some attractive upside in the coming years.

American Tower (AMT)

• Play on the long-term trend of wireless data, this is the largest wireless tower operator. Non-cancelable leases and price escalators in contracts make for predictable cash flows.
• REIT structure allows for very attractive income yields for long-term investors.

Atlassian (TEAM)

• High growth company growing the top line at impressive rates early on that focuses on collaborative software like Trello for example.
• This is an interesting name, but a high growth company that is still unprofitable. It is cash flow positive, but stock based comp is still notable. Very difficult to determine what a reasonable price is for a company with no real obvious competitive advantages.
• A key to the model is that they don’t employ a sales force. Early on word of mouth and grass roots can work, but is this sustainable in the longer-run? Is the model based on some early successes or is this something they can continue to replicate and iterate?