Happy new year 2024!! Turns out, I only end up writing on this blog once a year which happens to be at the turn of each given year. Even though I tell myself each new year I'll be writing more, obstacles get in the way of writing.

2023 was a great year investing wise. Likely because if someone was a bit contrarian like I was at the beginning of 2023, and kept most of your positions long, Mr. Market provided a nice reward. I suspect 2024 won't be as easy since it'll be a more crowded setup, where the consensus seems to be a positive year.

My first acquisition of 2023 was increasing my positions on Tesla (first hour of market open on January 3rd). This year, there are 2 main stories that I also increased my positions in:

• Redfin
• Upwork

Those are both small cap with some very interesting upside. Both are somewhat consumer focused. Let's talk a bit about the Redfin case. We can keep upwork for another post.

Redfin runs a real estate marketplace. Most of their revenues are coming from selling leads to realtor (which is how traditionally most people make money with real estate).

The main reason I like the space is the following :

• Real estate is a huge part of the economy
• Real estate hasn't been disrupted (yet)
• Redfin valuation seems attractive

Real estate is a huge part of the economy

Depending on where you look, it is one of the biggest share of the economy, but comprise of many things. Based on which statistics you look at, it is roughly around 20% of the US GDP.

Real estate hasn't been disrupted (yet)

Real estate hasn't really been disrupted by technology companies. Business operates very similarly as it did in the 1950s. Recently the NAR (National realtor association) got sued and lost a key verdict of colluding to keep RE transactions fee high and was forced to pay damages in the range of 1.8b$. It might impact or even kill the NAR, but that's beside the point. What I find interesting is this is the perfect setup for a technology company to innovate in the space, whereas previously the NAR would have been very active in preventing such innovations. With the verdict, it will distract the NAR and there is a higher change of innovation to happen in the field. But again, this doesn't mean Redfin will be successful.

Redfin valuation seems attractive

When looking around real estate tech plays, I always end up looking at Redfin. First because I do love their products. I've used them for looking/searching for houses, I visited houses with them, and even made a few offers with Redfin although without success in closing a house.

At the low point, the company did trade around 500M$ which is 0.5 P/S with ~30% Gross margin. The company grew by -16% which is impressive for a market that is pretty much shut down due to high mortgage rates. My bet is once mortgage rates cool down a bit, revenues will back roaring with a vengeance.

All the value accrues in the long tail

On a different topic, this idea came from the NZS acquired interview. Most of the value (in absolute terms) come in the long tail of your investments, or your time doing something or even your life. This is the magic of compounding. This is why focusing on activities that allow compounding, learning is a perfect example where compounding applies perfectly. They have an awesome whitepaper detailing more of those ideas here

The example the NZS team provided was with Warren Buffet, where he made most of his money on the long tail with Apple. He originally spent around 36b$ accumulating about 1 billion shares which are now worth about 190$b over a period of 5 years. This means, he managed to generate about 150b$ (in absolute terms) which is by itself a huge amount of money. Let that sink in.