Portfolio Change

Reallocating 5% of the Portfolio

I am increasing my position in Opendoor from 20% to 25%. Opendoor has been left out of the recent high growth stock rally, and has given up most of its modest gains over the past week. I consider the current share price extremely attractive for this business, hence allocating my maximum position size (at cost). Opendoor has reported a blowout Q2 earnings report. While the Q3 guidance indicates a significant slowdown for the quarter, the business is proving way more resilient than expected by the naysayers. According to recent transaction data, the number of “pending” sales has increased substantially in the last week. The 30y mortgage rate is stabilizing well under 5%, after increasing above 6% with the interest rate shock. With cash reserves of $2.5b, the business is well-positioned to weather any additional or continued macro-storm. My base case however, is that the interest rate shock is behind us and the real estate market is about to stabilize from here, demonstrating healthy margins already in the next 2023 year, while the business is still scaling.

As I am always 100% invested, I need to sell a position to fund the Opendoor purchase.