Portfolio Analysis with Antoaneta – Chamath Palihapitiya
In this blog, we’re going to continue with our portfolio analysis series. This time, we are taking a peek at the portfolio of one of the great investors of today – Chamath Palihapitiya.
We are going to go through this portfolio, look at the top investments and try to see what we can learn. You may also interested to check out other blogs such as Warren Buffett Portfolio 2021.
As usual, I’m going to ask you to like, comment and share this blog with your friends if you want to see our community grow. Oh, and don’t forget to check out our Private Investing Group for more exclusive content!
Who is Chamath Palihapitiya?
Chamath Palihapitiya is the founder of Social Capital – a venture capital firm with a very impressive track record. In just seven years between 2011 and 2018, Social Capital managed to deliver a gross overall return of 997%. In comparison, the S&P 500 scored 325% over the same period. Still quite significant, but nowhere near as amazing. So, if you were still wondering why I want to discuss this portfolio, well … here’s your answer!
Alright, now let’s talk portfolios.
Social Capital’s portfolio features 74 different companies. But, there’s a catch – a significant portion of these investments are private, meaning that they’re off-limits to us, as individual investors. Additionally, since Social Capital is not a public company, we don’t know each of the positions’ exact size.
But don’t worry, there definitely is a lot we can learn from this portfolio, and I’ll show you exactly how to do it. First, we’re obviously only going to focus on the public companies – the ones that we can actually invest in. Then, we’re going to look for his reasoning – why is he investing in these particular businesses, and can we benefit from doing the same?
We’ll talk about:
Let’s start things off with a quote from Chamath himself:
“One of our biggest investments is a company called Slack, and I still think to myself: Why did we not lead every single round and write the entire of the fund into this company?”
Well, you don’t need me to tell you that he’s obviously a big believer in Slack. He sees Slack as one of the most important tech companies out there, and, given their performance during the recent years, it’s hard to argue with his point.
Currently, Slack is valued at 24 billion dollars. Mr Palihapitiya, however, expects it to eventually be valued in the trillions.
He believes that Slack has what it takes to take on the other industry leaders in the tech field and bring an incredible return further down the line, despite some of the risks.
I doubt this one comes as a surprise to any of you here. Tesla is a big player in the EV & clean energy field, it has shown some incredible growth and delivered absolutely amazing results over the years. And, with the recent push for sustainability, most long-term investors (myself included) see a bright future for Tesla. The market is huge, and there are almost limitless growth possibilities. Chamath himself has noted that the company can be worth a lot more than it currently is, because of this. He believes that there are trillions of dollars of value, sitting in the energy generation infrastructure. Once the world starts moving towards a cleaner and more sustainable future, Tesla will likely get doubled or tripled again.
SoFi Stock is still available to the public, but they will be in the near future. Chamath sees a lot of potential here. SoFI is a personal finance company. They specialise in loans, loan refinancing and personal loans, investing and banking. They have both a mobile and a desktop app, making the entire experience very convenient and user-friendly.
Chamath Palihapitiya said that he found SoFi by analysing patterns. Since his Amazon and Tesla investments are doing so well, he used those as a baseline and tried to, I quote, “map those patterns into financial services”; end quote. He believes that we are currently at a time when people are losing faith in the banking infrastructure since it is struggling to meet the consumer’s needs.
So, he went looking. He tried to find what was “broken” or “missing” from the banks’ model. Then, he used this information to filter the potential companies that offer this type of solution. And that’s where he found SoFi.
SoFi has transparency, fair fees and, probably most importantly, a “one-stop-shop” type of service. He sees this company as the new disruptor in banking.
Okay, now let’s talk about real estate. Check out this quote:
The reality is in the last 20 years, but even specifically in the previous six months, everything that could be bought and sold online has moved online … except for real estate.
And, since Chamath Palihapitiya is based in the US, let us look at the US stats:
- Everyone needs a home.
- Over 67% of Americans own a home.
- About 32% or so probably plan to own one at some point.
- Five million homes are bought and sold per year.
- The real estate market was valued at about 1.6 trillion dollars [info за това не намирам има числа от 16 трилиона до 32 трилиона и всичките са от последната година не съм сигурен за коя част на market-a говори тоя; може би skip тоя bullet point]
This makes the real estate market one of the largest undisrupted markets in the US. And this is where Opendoor comes in the picture. They provide customers with cash offers for the homes within 24 hours. But that’s just the beginning. Their services are all digitised – mortgages, escrow, title and so on. All of the things that once meant mountains of paperwork can now be done online.
One of the largest and most popular e-commerce platforms globally, Amazon has made a lot of money for Chamath. And they have a lot more to offer than “just” e-commerce – they are one of the “Big Five” tech companies in the US (right up there with Google, Apple, Microsoft and Facebook). Amazon is also referred to as one of the most valuable brands in the entire world. Then, they’ve got the AWS segment (or Amazon Web Services), which includes: machine learning, databases, virtual reality, robotics and more.
The final investment that we’re going to look at today is a bit … unconventional for my channel. And that’s crypto.
Now, if this isn’t your first time hearing of Chamath, you probably know that he’s a big fan of cryptocurrency. Or, more specifically – Bitcoin.
He talked positively about bitcoin all the back in 2012 when most people were still very negative towards the idea of cryptocurrencies in general. At the time, Bitcoin was valued at about 200 dollars apiece. And do you know how much a single bitcoin goes for today? 37 097 dollars.
Chamath continues to be a big believer in the future of crypto, and he’s said that he expects bitcoin to go up to 100 or even two hundred thousand dollars.
Now, as a quick side-note, I plan on creating some crypto-focused content in the near future (I’m currently working on a really long piece that might even end up in a book format, depending on how things go), so stay tuned!
People see Bitcoin as a sort of a hedge against all of this economic uncertainty that we’re seeing recently. It’s something to fall back on, in case stuff goes really bad. And as long-term investors, we aren’t exactly fond of uncertainty.
And this concludes our look at Social Capital’s portfolio. Their investments are extremely well-diversified, and Social Capital is in an excellent position moving forward. However, I believe that the most important takeaway here is the approach and long-term vision. Chamath’s success proves once again that these two things are absolutely crucial for every long-term investor.
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Thank you for being with me here today, and I’ll see you all next time!
Recommended for further reading:
- Keys to Success – Napoleon Hill
- The Richest Man In Babylon
- Think and Grow Rich! – Napoleon Hill
- Smarter Investing: Simpler Decisions for Better Results
- Intelligent Investor: The Definitive Book on Value Investing
- Rich Dad’s Increase Your Financial IQ: Get Smarter with Your Money