2024 In Review: Performance & Investment Lessons
A breakdown of my results, lessons learned, and how I'm positioned moving into 2025.
Disclosure: I may add, reduce, or sell any positions without notice. This portfolio is strictly informative, includes my opinions, and does not constitute as financial advice. Please do your own due diligence.
2024 was a frustrating year.
In a year where many are posting triple digit returns, I ended 2024 at: 19.4%, vs. SPY at 24.9% YTD. 44.15% Money-weighted IRR compounded over last 3 years. In reflecting on the year, my two biggest faults came via:
Impatience
An incomplete investing process
Impatience:
My most painful moment came in selling Applovin (APP) at a small gain, a mere 60 or so days after posting an elaborate thesis. APP would proceed to run another 200% in FOUR MONTHS. Agonizing. Not only did the market reward my thesis, the business was cheap in context to growth, and was VERY high quality. I did the hard work, but missed the alpha due to impatience.
Lesson #1: Don’t get cute with the allure of new ideas (given the quantity of ideas investigated), when cash flows are defensible, growth is present and specifically, the potential for multiple re-rating is present. In short, I need to get more comfortable doing nothing, while sitting on cash.
An Incomplete Investing Process:
My third year of investing helped me recognize that my process for screening around 600-800+ ideas enables me to find ~50+ “investable” ideas a year. I maintain a strong bias in managing capital in a concentrated pool of less than 10 ideas. As I’ve learned, this often restricts my ability to move in and out of ideas without impacting my yearly results. Where my process hurt me was being too trigger happy, particularly when conviction was only 50% of where it could have been. I have found that mentally limited myself to 10 ideas, forces me to size an idea as “core”, often with incomplete conviction. Some of this stems back to “FOMO” or frustration around averaging up, however, I’d rather evaluate an idea as a long “no” than realize in a short period that I’ve made a mistake (particularly given my concentration).
Secondly, the action of initiating a position or liquidating was a messy one. I have since started to use technical analysis for trends and ranges in which support and resistance occurs. Although more art than science, some investors I look up to use them as indications of a when to go long a position. Currently, I’m keeping my setup simple, and using support / resistance lines, RSI, and 21, 50, 200 day moving averages. My process for initiating a position is conducting fundamental research, then waiting for strong volume to cross the 200 day moving average. Depending on the security being oversold / overbought, this is how I want to pair TA with fundamentals. Time will tell if I’m able to more accurately catch a falling knife, or avoid doing so.
Lesson #2: There will be times of more or less “high-quality” ideas, and I need to adapt the portfolio to reflect that, instead of mentally capping position count. Second, charting can be used to understand market sentiment at key levels, enabling long positions to be taken with fewer down days.
Portfolio for 2025:
Markets tend to prices assets 9-12 months in advance, so here’s how I’ve positioned the portfolio moving into 2025:
Talen Energy (TLN) - 32.3%
ADF Group (DRX.TO) - 20.7%
META Platforms (META) - 14.7%
Adyen N.V. (ADYEY) - 9.8%
Nebius Group N.V. (NBIS) - 8.2%
Iris Energy (IREN) - 5.4%
ASP Isotopes (ASPI) - 3.6%
Comstock Holding Companies (CHCI) - 3.6%
Vistry Group (VTY.L) - 1.6%
I’m not going to spend too much time discussing the current holdings, as I tend to disclose my thoughts on my X page: @microcapmindset and this Substack.
However, Talen Energy (TLN) continues to be the most compelling opportunity I see, given my cost basis, and the immensely valuable Susquehanna nuclear power plant servicing the most desirable PJM electrical market. Management’s phenomenal execution in the last two years now enables them to return capital to shareholders at otherwise cheap prices relative to IPP comp’s. I feel very confident that buybacks will substantially boost FCF / share and drive shares exponentially higher in 2025. Additionally, there is an AWS data center co-location verdict being decided upon, that will likely set the precedent for agreements moving forth. I anticipate an eventual settlement between all parties involved, radically boosting earnings and FCF in years to come… despite the run-up, it’s still early days for TLN shares.
ADF Group (DRX) continues to be my 2nd largest position, as I “averaged up” after a run-up in middle of 2024. Although that looks very dumb at the moment, I continue to believe there is a multi-year tailwind in the steel markets. Second, I feel that the business will not be incrementally impacted from Trump tariff’s, and a currency exchange tailwind is a nice cherry on top. Finally, I believe that DRX margins will remain strong, and there’s enough projects in the United States to keep backlog filled, enabling continued capital return to shareholders (pre-dominantly via buybacks). I feel the CFO’s latest comments in last quarters release said it all…
META has been a long-term holding, and has grown exponentially in the portfolio. I still believe it’s fairly valued based on tailwinds for growth, legendary management, and remains one of the top 5 greatest businesses I’ve ever studied. I have no intention to sell a share.
Adyen (ADYEY) is also a name accumulated at the bottom of 2023. After my thesis (which was posted on this Substack), I came to the conclusion that it is a structurally superior company than competitor, Stripe. Although shares look expensive today (on a forward basis), I believe ADYEY will continue scaling at a consistent 20%+ scale for many years to come. Businesses this good do not come around often at my cost basis, therefore, I have no plan of selling a share.
Nebius (NBIS) is my latest writeup (check it out here if you haven’t read it). I still think we’re in early days of price discovery, and this will become a market darling after leadership proves they’re the real deal. This story is reliant upon execution, however, I think NBIS will end 2025 as one of the market’s darlings, potentially being my biggest winner next year.
Iris Energy Ltd (IREN) is a new position taken in December, which I am planning a writeup to be released in early 2025. However, it’s a company with two data center assets in West Texas, that are being priced like a Bitcoin mining company. More to come on this idea soon…
My last three positions won’t be discussed in this writeup, however, ASPI is a battleground stock that suffered from a short report by Fuzzy Panda. Personally, I think this business will look radically different in 2025, and isn’t being properly priced based on NTM’s numbers. I want to keep it small, however, I am drawn to the long-term tailwinds. Comstock (CHCI) is a name I’m considering liquidating, and Vistry is only around because I have a small position in my Roth, as a very long-term hold.
Couples Names I’m Researching for 2025:
Build-A-Bear Workshop (BBW)
Power Solutions Inc. (PSIX)
Taboola (TBLA)
Despite a disappointing 2024, I have continued to expand my investable horizon, feel more refined at screening, evaluating ideas, and believe the portfolio is positioned to outperform SPY in 2025 and the coming years. I will be providing a 1st half & end of 2025 update along the way.
PS - if you’re still reading this, thank you! Selfishly I write these to reflect on my work in the coming years, as my process evolves. And realized today that I just hit 300 subscribers. Even though I don’t post on a schedule, I want to thank everyone who views my write-ups! Happy New Year.
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God bless.
looks like a very fruitful 2024. maybe not by absolute returns, but by how the portfolio is set up for the future.
why do you not like Vistry (at current prices)?