It’s no big secret that the stock market has been quite the rollercoaster ride lately, which, naturally, our investment team has been watching closely.
While normally we rebalance our Spaceship Universe Portfolio quarterly, a correction of this nature does present opportunities to buy new stocks for the portfolios and potentially sell or change the weights of others.
This week, we made some changes to our Spaceship Universe Portfolio.
Bought: Enphase
Enphase Energy is a global energy technology company and leading supplier of solar microinverters. Inverters are typically described as the brains of a solar energy system. A microinverter is needed in solar panels to convert direct current (DC) to the alternating current (AC) (ie sunlight into energy).
Enphase Energy has created smarter solutions through technology and design for solar power. Traditional inverters require solar panels to be connected in a series because the entire solar array is connected to a single inverter, meaning if one panel malfunctions, the whole system goes down.
Instead, Enphase’s microinverters convert energy at the individual solar module level so consumers can maintain power from different functioning panels resulting in a more durable and reliable power supply.
We like the electrification trend and Enphase for a few reasons, one being that the microinverter solar market is expected to grow 14% per year through 2026. We believe that electricity consumption is likely to double as the world’s car fleets are electrified requiring battery storage installations with solar being a major solution. We believe that Enphase is likely to win market share as it introduces new home products such as battery storage and electric vehicle charging.
Sold: Fedex
We’ve had Fedex on our watchlist for a while, as we believe its position in ecommerce delivery against competitors such as USPS and Amazon has been weakening due to Amazon vertically scaling its supply chain (purchasing trucks and planes). Combined with Amazon's insights into customer orders, this is proving to be a major competitive advantage (due to a reduction in costs and increasing shipping efficiency). As such, we decided to sell Fedex.
Sold: Etsy
Since we bought Etsy in 2020, we have watched as management has adopted a new ‘house of brands’ strategy by buying Depop and Elo7, among others.
As well as that, due to Apple’s app tracking changes, we expect Etsy will find it harder to target and advertise to potential customers, and therefore it may suffer from increased customer acquisition costs.
With these two concerns in mind, our investment thesis changed, so we decided to sell Etsy preferring increased trend exposure to home electrification with Enphase.
Sold: A2 Milk
A2 Milk is another stock that has been on our watchlist for a while.
China’s birth rate declined 12% in 2021, following a 18% fall in 2020. This provides a headwind for selling baby formula, which is key in the Chinese market.
A2 Milk has also suffered during the pandemic because of the reduced daigou trade. Travel restrictions, though cyclical, have caused A2 Milk to suffer.
As such, we feel there are better investments we can make and so we sold out of the company.
The Spaceship Earth Portfolio invests in Enphase and Etsy at the time of writing.
Important! We’re sharing with you our thoughts on the companies in which Spaceship Voyager invests for your informational purposes only. We think it’s important (and interesting!) to let you know what’s happening with Spaceship Voyager’s investments. However, we are not making recommendations to buy or sell holdings in a specific company. Past performance isn’t a reliable indicator or guarantee of future performance.
