2025 Mid-Year Portfolio Review
The Hedge Vision portfolio has returned 18.71% YTD
In June, the Hedge Vision portfolio increased by 6.07%. In comparison, the S&P 500 increased by 4.64% while the Nasdaq 100 notched a 5.60% gain.
The portfolio has now returned 18.71% year-to-date while the S&P 500 and Nasdaq 100 have returned 6.44% and 8.53%, respectively.
Total Positions: 26 compared to 27 as of December 2024
Top 10 Positions Concentration: 75.4% compared to 75.9% as of December 2024
Cash: 7.0% compared to 1.5% as of December 2024
June was another strong month for the market as investors placed inflation and tariff fears in the back seat with CPI coming in lower than expected.
It seems that sentiment is nearing levels last seen during the meme stock frenzy of 2020 and 2021. Except this time, interest rates are in a range between 4.25% and 4.50% instead of 0%.
I sent this message to my Substack Chat a few weeks ago:
If it isn’t clear, we are currently in the part of the cycle where new/beginner investors bid unprofitable and low-quality companies to unsustainable highs. They think the easy money will last forever. It won’t.
If you remember 2020-2021, names like FSLY, TDOC, PTON, LCID, SPCE traded at insane levels. There are many parallels to those today, like RKLB, IONQ, QBTS. Dare I add PLTR and HOOD, which are profitable but trading at absurd valuations?
Don’t be the last one holding the bag when the selloff begins.
When will the selloff start? Your guess is as good as mine.
It’s important to stick to your investment thesis when you see low-quality companies being bid up. If you are a trader, go ahead and try to make a profit. If you are a long-term investor, like I am, it’s best to avoid these companies. Greed is your worst enemy.
A great example of this is Stanley Druckenmiller finally giving in to speculative companies right before the Dot-Com Bubble crash in the 2000s, resulting in a $3 billion loss.
“So like around March I could feel it coming. I just — I had to play. I couldn’t help myself. And three times the same week I pick up a — don’t do it. Don’t do it. Anyway, I pick up the phone finally. I think I missed the top by an hour. I bought $6 billion worth of tech stocks, and in six weeks I had left Soros and I had lost $3 billion in that one play.”
-Stanley Druckenmiller in a 2015 interview
What did Druckenmiller learn from his mistake? Nothing.
“You asked me what I learned. I didn’t learn anything. I already knew that I wasn’t supposed to do that. I was just an emotional basket case and couldn’t help myself. So, maybe I learned not to do it again. But I already knew that.”
The current market rally isn’t anything comparable to the Dot-Com Bubble. However, investors can still make the same mistakes that plagued market veterans in the 2000s.
June 2025 Buys
New Positions: None
Increased Positions: Alibaba (BABA)
Yahoo Finance recently reached out to me and asked if I wanted to write an article that would be featured on their website for a specific stock.
I chose Alibaba (BABA). The piece is now live on the Yahoo BABA ticker page below the “Recent News” section. I’ve attached the link below:
Here’s the full article:
Alibaba's Triple-Threat: E-commerce, AI, and Cloud
Recency bias has turned many investors away from Chinese companies. Between 2016 and 2020, Chinese stocks were the talk of the town, handing out market-beating returns. However, strict government regulations on technology companies and a housing downturn led to a bear market for these stocks between 2021 and 2024. Now, the tide has turned.
Alibaba (BABA) is widely recognized as a proxy for Chinese e-commerce. At the same time, the company also has a major hand in cloud and AI.
“This year, we focused on our two core businesses — e-commerce and “AI + Cloud” — which are the twin engines powering our long-term growth,” said Chairman Joe Tsai and CEO Eddie Wu in a June letter to shareholders. “With AI at the heart of our future, we significantly increased investments in cloud computing and AI infrastructure to accelerate innovation and drive the industrial adoption of AI technologies.”
Since 2024, China’s government has shifted from a strict regulator to a more pragmatic and data-driven entity. Beijing has actively encouraged consumption, and the data shows retail sales trending higher since August 2024. China also commands the largest e-commerce market in the world.
In addition, Alibaba has emerged as a major AI contender. In February, the company announced that it would partner with Apple to provide iPhones with AI features. On top of that, Alibaba’s AI-related products revenue has grown by triple-digits for seven consecutive quarters.
China has the second largest cloud market in the world, trailing only behind the U.S. What’s more, China’s cloud market is rapidly growing and is expected to be worth $90 billion this year, up from $32 billion in 2021, according to McKinsey & Company.
Furthermore, China’s cloud market is becoming more consolidated, led by Alibaba Cloud’s 36% market share, according to Canalys. Alibaba is also the top cloud services provider in the Asia Pacific region.
But don’t just take my word for it. Alibaba itself has demonstrated confidence in its offerings by executing a massive buyback program. For the year ended March 31, the company bought back $11.9 billion of shares, or a 5.1% reduction in shares outstanding when factoring in shares issued under the company’s employee stock ownership plan (ESOP).
As for the threat of tariffs, Alibaba is largely insulated from this risk. International revenue contributed to 13% of Alibaba’s total revenue during the past 12 months. While Alibaba doesn't provide a geographic breakdown of its international revenue, the U.S. likely represents only a fraction. The vast majority of Alibaba’s revenue comes from within China where tariffs aren’t a concern.
June 2025 Sales
Exited Positions: None
Reduced Positions: None
My buys and sales in real time, as well as further analysis and commentary, are shared with contributing members on Substack Chat:
Outlook for June
Both the S&P 500 and the Nasdaq 100 have made a series of new all-time highs during the past few days. Buying at record highs may feel daunting, although history has shown that it actually pays off.
Buying the S&P 500 at a record high yields better returns than buying on any other day on a 6-month, 1-year, 2-year, 3-year, and 5-year timeframe. Buying the index on any other day yields a better 3-month return than buying on a record-high day. The data, from J.P. Morgan, was collected between 1968 and 2023.
You may be thinking that this data contrasts with my previous warning about staying away from low-quality companies. If the market goes up, won’t everything else go up?
No. The data signals that the S&P 500, which is a basket of profitable and liquid stocks, has a knack for continuing its momentum when it reaches a record high. Most of the 26 companies within my portfolio are already included in the S&P 500 or the Nasdaq 100.
Additionally, between the timeframes shown on the chart, like the 3-year and 5-year, the market can be subject to volatile swings. While the market has a 100% rate of recovery, low-quality stocks do not.
The chart below illustrates the meme stocks of 2020 and 2021 that I mentioned earlier. They absolutely crushed the S&P 500 during those years. Today? They’re dead money with a minimum loss of 67% and likely to never surpass their all-time highs ever again. Meanwhile, the S&P 500 has continued to march higher.
Finally, I’d like to give a special shoutout to one of my oldest positions, Datadog (DDOG), which received an invitation to join the S&P 500 last week.
Hedge Vision
Thanks for reading!
📖 Join the conversation on Substack Chat
🕊️ Get real-time insights on X/Twitter: @HedgeVision
📧 Old school is cool too: HedgeVisions@gmail.com