u/Plane_Web5377

My Performance (Benchmark: S&P 500)

• 2021: -36% (+27%)
• 2022: -76% (-19%)
• 2023: +80% (+24%)
• 2024: +104% (+23%)
• 2025: +85% (+18%)
• As of Oct 2 2026: +46% (+13%)

CAGR

• 1 Year CAGR: +38% (+16%)
• 3 Year CAGR: +90% (+23%)
• 5 Year CAGR: +8% (+14%)

Current portfolio holdings:

• Memory / Storage (35%)
  • SNDK 15%
  • MU 8%
  • SKHY 5%
  • WDC 7%
• Networking / Connectivity (30%)
  • ALAB 14%
  • CRDO 12%
  • AVGO 4%
• Compute / Data Centers (20%)
  • NVDA 5%
  • NBIS 12%
  • IREN 3%
• Timers / Clocking (13%)
  • SITM 13%
• Photonics / Optics / Materials (6%)
  • AXTI 6%
• Specialty Pharma (4%)
  • ETON 4%
• Defense Tech (3%)
  • KRKNF 3%

Portfolio is 111% long and has 14 positions in 7 themes.

Changes in August/September

• Bought
  • WDC, AVGO, NVDA, ETON, AXTI, IREN (Aligned my holdings with my opportunity score)
• Sold
  • CBRS, ONDS, BE, LITE (Due to methodology shift and these names now scoring much lower)

My Methodology - latest update

I have scrapped the concept of QIV now. The idea of catching high volatility paired with high quality was good but I think I have stumbled upon something better.

I now use a new scoring system called Opportunity Score.

Opportunity Score combines three factors - Quality, Trend and Valuation. This is my first attempt to combine high quality businesses that are showing acceleration while still having room for upside move. I have always struggled to combine quality and valuation together. It's still a grand experiment. But so far, I like the look of it.

Here is how it works at a high level:

Opportunity Score ranges from 1 - 100
Quality 50%, Trend 30%, Valuation 20%

Quality is still my old trusted metric. This is now almost two and a half years old. This combines growth, profitability, gross margins and dilution. Very hard to game this score. Gotta be great at some kpi if you are going to suck on one. So if you have -100% profitability, you better have 200%+ growth to mitigate the drawdown. Same with dilution or margins.

Trend is a combination score. It has it's own methodology. It strictly is an acceleration tracking metric across growth, gross margins, analyst estimate raise, ttm vs ntm growth rate change, quality and profitability. As you all know, in growth land rate of change of any kpi matters more than the kpi itself. And this trend score is trying to quantify that for a business.

Valuation is purely using a PEG ratio style approach. It basically does ev by sales by growth and then ties it to quality score rather than 1. The idea is PEG goes against 1 to show how cheap it is relatively. But not all businesses deserve to get to 1. Hence, I tie it against quality score rather than a set 1 score.

Here's my latest Opportunity Scores (Max 100 score)
And all green bars I own.

https://preview.redd.it/k4xo4fhgvath1.png?width=4548&format=png&auto=webp&s=303dd9b3293399203e69c6c3a82f655074c101d9

Why I own what I own:
Note: Sharing my opinion, not advice

From everything we have heard and seen over the last couple of months, the AI story has gotten more weight now. Muse is here now. Compute is still very scarce and the agentic consumer era is just around the corner. So I see no change yet in demand dynamics. And the picks and shovels play is still in full force. From where we are today, around all time highs, the market still doesn't seem to be anywhere near a bubble. Consider this to 2021 and we probably run a lot higher to get close to those multiples.

Memory / Storage (35%)

• SNDK
  • The story is becoming less cyclical than the market may realize. And basically that's the bet. If you see pure numbers, Sandisk is actually going to make more money than it's NTM growth rate. So that I am not a fan of. But the ntm growth rate is still north of 50% and at current multiples, my hunch is it sustains it. I will probably move it to a Tier 2 holding - given the profitability above growth trend.
• MU
  • The HBM shortage is not going away anytime soon. The more inference grows, the more memory is needed for each user and to keep track of their behavioral preferences. And supply will drip in slowly into the market. All of this leads me to believe, Micron has ways to go before things inevitably slow down. However, using my new current quarter as ttm numbers and where ntm sales estimates stand today, Micron looks to be incrementally growing about 40%+. Pretty good but the same problem. Profitability is much higher at this stage of the cycle. Again, I am not a fan of that. So keeping a close eye and probably a 7-8% sounds enough exposure for the reward at hand.
• SKHY
  • Absolute monster numbers. SK Hynix began mass shipments of HBM4 in Q2, while HBM4E samples have already gone to major customers. Trades at a discount to the other players in this space due to being a foreign stock. This is the only reason SK Hynix is a 5% bet for me. Otherwise, if I purely go by numbers this is a Tier 1 holding.
• WDC
  • The thesis went from AI may actually strengthen the HDD business rather than kill it. The main reason I got yet another memory/storage space exposure is because of the trend Western Digital is showing. Across the board this thing is a juggernaut. There are three names I own that is a pure acceleration play for trends. WDC, SITM and AXTI. Great entry at these levels - as I expect even a back to ath is a double.

Networking / Connectivity (30%)

• ALAB
  • Monster last quarter and huge sales ramp incoming. Scorpio was expected to become its largest product family in Q3, a full quarter earlier than previously expected. NTM sales looks more in the realm of 80-90% even if you take this quarter as the floor for ttm numbers. That's insane when you consider it's highly profitable. So pure Tier 1 play right now.
• CRDO
  • The backward looking numbers look terrible. Huge ramp down. The trend is not good either. AEC may have been the wedge, not the end-state. The optics revenue ramp is coming and I think this dip is a buying opportunity. I expect when you will look back in a year, Credo will have put up 70%+ ttm numbers. And if they deliver, we should be much higher from today's price action. Let's see.
• AVGO
  • Custom AI silicon has gone from optionality to a second compute ecosystem. I am slowly starting to get back into mega cap names. AVGO and NVDA seems too mis-priced. Broadcom is probably going to do 60% forward revenue and even if it slips a little bit on the multiple, I think 30-40% appreciation in stock price is very possible. Hence, the entry.

Compute/Data Centers (20%)

• NVDA
  • Undervalued. I think everyone knows it too. I see an easy 30% return, park your money kind of business. So for now, stashing some cash here. 10T market cap is coming if they keep this up. If SpaceX and Anthropic can get 2T valuation, I think Nvidia deserves 10T valuation in the near future.
• NBIS & IREN
  • I am split between Nebius and Iren. Both look good to me in terms of forward growth. Demand is no longer the question. Execution per dollar of capital is. Nebius is a bit ahead on the execution curve. But IREN time is coming soon. So I want to keep this neo-cloud space exposure around 10-20%. No idea who will be the winner but I feel there is leges in this thesis. The life of an older chip is extending and compute is very scarce right now. So as long as they execute, the demand side should hold up for the next few quarters. And then we will see.

Timers / Clocking (13%)

• SITM
  • One of the few profitable companies that is most likely to grow 100%+ in the next 12 months. As AI systems become bigger, faster and more distributed, keeping thousands of high-speed components synchronized becomes harder, not easier. SiTime can now potentially own much more of that signal chain. Last qtr was great and though it's a 20B business, I see it becoming a 50B business easily in the near future.

Photonics / Optics / Materials (6%)

• AXTI
  • Since AXTI sits underneath the optics companies, Indium phosphide substrates ultimately enable lasers and other high-performance optoelectronic components used in datacenter connectivity. If 800G → 1.6T → 3.2T causes optical content and laser demand to keep rising, AXTI does not need to pick the winning transceiver vendor. High risk high reward play here. Not that high of a quality business yet but trend is an absolute monster. That is why I am bullish.

Specialty Pharma (4%)

• ETON
  • I fumbled this one badly. Got it at $14 and sold at $18 and now it's at $55. Oh boy! I increasingly view this as a rare-disease platform, not a biotech bet. It's not cheap but forward multi year growth visibility is real. Hence, I feel the multiples will hold around 15 ish. Growth is still at 50%+ pace and the business is highly profitable. Great pipeline and successful commercialization is a potent mix for the next 12-18 month timeline.

Defense (3%)

• KRKNF
  • Absolute disaster in my portfolio. 30% drawdown and counting. The story looks great on paper. But mr. market has been ruthless towards it. Sure, Kraken has it's issues but boy is it cheap. It will all come down to the next two quarters. I am holding until then. The revenue jump post merger from 19 mil. to 81 mil. If the land this anywhere near that number, I think shareholders will be ok. But super high risk high reward here. If they miss or push timelines, I will be out too.

Wrapping Up

Apologies, I have a two year toddler and my job takes a big chunk of my time. I post on X at RyshabTalks regularly and put out my weekly portfolio updates every friday. But I don't think I can do justice to monthly reviews. I find these exercises for me extremely valuable but I think I will switch to quarterly from here on.

Overall, I am quite pleased with my performance this year. Through three quarters, this will be year four of beating the markets handily. And I think my process has gotten much stronger over this period. I think I am pretty sure is I will have 50% drawdowns multiple times a year. There is no way to avoid that. At least not anything reliable that I have found till now. But hopefully the good years will take care of the ugly ones.

Wishing everyone a great fourth quarter of investing. Cheers!

My Performance (Benchmark: S&P 500)

• 2021: -36% (+27%)
• 2022: -76% (-19%)
• 2023: +80% (+24%)
• 2024: +104% (+23%)
• 2025: +85% (+18%)
• July 2026: +12% (+9%)

CAGR

• 1 Year CAGR: +28% (+22%)
• 3 Year CAGR: +63% (+21%)
• 5 Year CAGR: +15% (+13%)

Current portfolio holdings:

• Networking/Connectivity (41%)
  • ALAB 16%
  • CRDO 15%
  • SITM 10%
• Memory/Storage (27%)
  • SNDK 12%
  • MU 10%
  • SKHY 5%
• Compute/Data Centers (24%)
  • CBRS 12%
  • NBIS 12%
• Photonics/Optics (11%)
  • LITE 11%
• Power/Energy (7%)
  • BE 7%
• Defense (10%)
  • KRKNF 5%
  • ONDS 5%

Portfolio is 120% long and has 12 positions in 6 AI driven themes.

https://preview.redd.it/oq471z1urrgh1.png?width=1578&format=png&auto=webp&s=39aecd24c3bdac2e68d2f21f5fe533368accd0c0

Changes in June

• Bought
  • CBRS, SKHY, ONDS, KRKNF (all names were bought in accordance with my high QIV scores)

My Methodology - introducing a concept called QIV:

QIV = (Quality × IV) ÷ 100

Quality is a business score (growth, margins, FCF, dilution). Below is a very basic formula, I have a lot of overrides built in on it.
Quality = (NTM Growth Rate + FCF - Dilution) x Gross Margin
IV = the blended implied vol — the move the options market is pricing over 30/90/180/365 days.

The idea: a wide market-priced range on a business I actually trust is where an edge pays off. Quality and IV are near-uncorrelated across my names, so IV adds information Quality doesn't already contain. This is a very early stage experiment of trying to find a process to identify high quality and high directional movement names. My rationale is if my quality score is doing it's job, then volatility is my friend. If not, it will hurt. So the key is to track the relative change of score for QIV week to week to see trajectory. And that I have already introduced in my system. Unfortunately, trend data takes time, so I can't reliably say until 3/6/12 months how well this is working.

What QIV does well: Surface high to relatively high quality businesses that are high volatility. So it is a mix of usually high quality names and some speculative but directionally moving in the right trajectory fundamentally. It takes out giants that are usually very ow IV but very high Quality - NVDA, PLTR, AVGO

What QIV doesn't do well: It misses good quality but not high IV names. Examples: SEZL, ETON, RDDT.

https://preview.redd.it/l4m3jts0srgh1.png?width=1246&format=png&auto=webp&s=4c5322f85713c06916fc897fdcc189187e4fb0d2

Why I own what I own:
Note: Sharing my opinion, not advice

The basic idea here is as demand for compute grows rapidly and hyper scalers raise capex, the amount of picks and shovels needed are huge. We are still in the middle of infrastructure build out phase. If we can identify from the many high growth names in this space, businesses that is moving towards profitability or is already profitable, the opportunity is enormous. One of the ways to measure how early we are is how much analysts are having to raise their guides on these businesses. Break it down and there are two parts of it. One - just the pure velocity of increase of analyst upgrade trend. And secondly, how fast is the further years moving away from current year's estimates. This is acceleration. Why markets like this is because it shows growth is durable as it's broadening out into year 2 and 3. And markets love further visibility and stability. This allows for high multiples. The other part is supply constrain. With rising demand, when you pair supply constraints, you not only see growth acceleration but also margin expansion, mainly due to pricing power.

None of this is new information. But just because we know about it doesn't mean the trajectory has reversed. As long the the acceleration trajectory is moving higher or moving fast at a high level (doesn't have to be higher), we should see the AI wave continue.

Networking/Connectivity

• ALAB
  • The ability for ALAB to be full stack connectivity provider for hyper scalers is a huge differentiator. Essentially for all connectivity needs, hyper scalers can just come to ALAB. They get convenience and ALAB gets bigger contracts and higher margin due to scale. Perfect execution so far and the only issue is it is not cheap. But when AI selloff happens, I would rather go down with Astera Labs than some other speculative name. Because I know the chances recovery for ALAB with the numbers they have now, is very very high.
• CRDO
  • They are the king of copper connectivity. I know it's a hated term but they still are the kings. Add to that, they have the best product that is the most cost efficient and you can see why they are selling such high numbers. Just the positioning of them getting into optics is great, even if they can't be the top dog in the arena.
• SITM
  • Basically a monopoly in timers that drives tighter synchronization across systems. Category creator and leader with very impressive numbers

Memory/Storage

• SNDK
  • pure play NAND storage. increasing demand and severe supply constraint. It might be at peak margins and growth rate but what we don't know is how long will it stay here. I will get out once numbers deteriorate. Until then, it's all speculation of when it will happen. Everyone knows the story but the trajectory of change is what will help find an exit point before we see permanent decline.
• MU
  • In the midst of HBM/DRAM super cycle, same story of supply shortage and demand through the roof. Again, numbers are at peak, trying to follow change in trajectory
• SKHY
  • one of the best financial metrics in the space. Biggest HBM maker and closest to NVIDIA. Foreign company so I expect lesser premium. Hence my third level conviction in the area.

Compute/Data Centers

• CBRS
  • The challenger to NVIDIA. Winning the inference speed race. As inference grows in demand, this compute layer business is well positioned to be a category leader for future years. And most of the growth is ahead of it and not behind, that is a key.
• NBIS
  • a pure play full stack neo-cloud that is showing great improvement in underlying fundamentals while having one of the best growth rates and execution

Photonics/Optics

• LITE
  • The leader in data movement using lasers and photonics. This is where the industry is moving to. As the distance grows, LITE is positioned as a leader in this space to capture connectivity share.

Power/Energy

• BE
  • Solving AI's power bottleneck with on-site fuel cells that generate 24/7 electricity faster than the grid can be built. Growth is accelerating and one of the few businesses that is just now showing velocity but acceleration in trajectory data.

Defense

• KRKNF
  • Defense is a key sector in today's world. And Kraken is "picks and shovels" of undersea drones — sonar, imaging, and power systems for naval mine-hunting and offshore energy. Best in class product in this area and is expected to have huge growth hitting over next 12 months. The story for this is next two quarter execution. If they do, I think they fly. Right now, it is priced as market doesn't believe it. I am skeptical too but the opportunity is huge if they execute. Hence, a Tier 3 position.
• ONDS
  • Pure play on autonomous defense. The drone play that is heavily integrated into military contracts and is growing by mass scale acquisition. Again, another speculative play completely dependent on execution.

Wrapping Up

July was brutal. Portfolio fell from +40% to +12%, a 28% decline. Semis index was down -18% and that is probably the closest index to my portfolio currently. I am fine with the decline. I am fine with my stock selection. I am fine with my position sizing. But I and NOT FINE with my exposure management. I need to work on that. I keep running out of capital within the first leg down of the market. So my goal out of this drawdown is to get to 10 to 20% cash when we get past all time highs. Because I have leaned into volatility, I don't need 100% exposure all the time. I have the horses that will get the job done if the wind is behind. I need to protect in months like this one, when everything is headwind. I am working on it.

Hope you had a better July and best to all in their investing journey. Cheers!