It’s been a pretty wild couple years since I launched our $100K Lock Box portfolio, which is essentially designed to choose small growth stocks and ignore them for five years… and the stories behind some of those stocks have changed dramatically in the interim, so I’ve gotten a lot of questions from newer readers about what we think of those Lock Box stocks now.
Which means it’s time to take a break from ignoring them, and check in — how do these (mostly) risky growth stocks look today? Would I buy them again now? Has the real story of the company changed during the wild boom and bust and re-boom of the past couple years, or is the change just in the volatile stock price?
We’ll go through ’em all. I posted a halftime report update when we got to 10 stocks (out of the planned 20), but that was in December of 2021, quite a long time ago now, and we’re still gradually closing in on a “full” portfolio (we have 17 stocks, so there are three slots left).
As a quick refresh, here are the criteria I use to choose the stocks for this portfolio:
These have to be relatively small companies, to provide for a lot of growth optionality. That means a market cap between $250 million and $10 billion. Growth of at least 25%. Large and growing sector in which they can expand. Growth strategy that is at least somewhat compelling and believable. Management that is committed, trustworthy and good at communicating their message to investors. A valuation that makes sense, but does not have to be perfect. For the full portfolio, some diversification across sectors.The first few picks from early in 2021 are already halfway through their required holding period… so let’s look things over again.
If you want to go back and revisit my initial purchase of any of the current Lock Box stocks, some of which seem wise and prescient and some of which seem quite embarrassing in retrospect, here are the current holdings and the purchase date, each line links to that first writeup:
Schrodinger (SDGR) 3/5/21
Dream Finders Homes (DFH) 3/19/21
Goosehead Insurance (GSHD) 3/25/21
Galaxy Digital (GLXY.TO, BRPHF) 5/7/21
PAR Technology (PAR) 5/14/21
PubMatic (PUBM) 6/11/21
Tiptree (TIPT) 7/16/21
NewLake Capital (NLCP) 9/2/21
Digital Ocean (DOCN) 9/9/21
Mitek Systems (MITK) 10/15/21
Upstart Holdings (UPST) 1/7/22
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