In this episode, I dive deep into the story of Etsy, a contrarian bet against the prevailing market sentiment. Once a darling of investors during the pandemic, Etsy's stock has faced a dramatic downturn amidst the bear market 2022. Despite nearly doubling its revenue and tripling its earnings during the pandemic, short-termism and a fear of looming recession have led to a drastic undervaluation of Etsy's stock.

Join me as I unravel the layers of short-sightedness plaguing the market's view on Etsy, shedding light on the platform's true essence, its indispensable role for makers and creatives, and its remarkable resilience and potential for growth beyond the pandemic years.

Discover why Etsy is not just surviving but thriving, poised for significant expansion by aligning its fees with marketplace competitors, and how it continues to define its identity and value in a rapidly evolving digital marketplace.

Etsy's story is more than just numbers; it's about understanding the depth of a business and its ecosystem. Tune in to explore the untold story of Etsy, a testament to the power of long-term vision in the face of herd mentality.

While researching businesses is my true passion, tracking the herd’s movements via stocks is exhilarating! There is so much meaning expressed in the price changes. It's almost never what the headlines say. Things are almost never as they appear on the surface. This week's episode is yet another case study proving this reality.

While the average stock in the Pragmatic portfolio increased just .3%, looking beneath the surface reveals many unfolding stories. In this week's episode, I shed light on several interesting topics, including:

- The implications of Elliott securing 13% ownership in Etsy and appointment to the Board.

- Spotting short sellers in your portfolio and what to do about them.

- Meta’s strong earnings sending shockwaves across advertising, which drove demand for Pinterest, The Trade Desk, and Magnite.

There will be several key questions answered, including:

- What to do when an activist fund opens a large position in two of your stocks?

- What can we infer from Datadog's massive spike ahead of earnings?

- Why over 90% of the stocks in the Pragmatic portfolio beat earnings estimates?

- How can a curation of under 20 stocks give a portfolio substantial diversification without sacrificing performance or lowering your standards?

- How to process a stock that is having wild swings on no news?

Episode Overview

In this week's episode of the Pragmatic Portfolio Manager podcast, we delve into the critical market developments for the week ending January 26. This episode offers insights into the Pragmatic Portfolio's performance and broader market trends.

Key Insights:

• Portfolio Performance Analysis: The episode provides a comprehensive analysis of the Pragmatic Portfolio of concentrated contrarian Investments, highlighting its impressive over 2% growth this week, a continuation of its upward trajectory.
• Understanding Market Recovery: Gain insights into the portfolio's recovery post the early January pullback and what this suggests about its future direction.
• Stock Performance Highlights: The episode sheds light on the remarkable performance of stocks like Children's Place, Oatly, LoveSac, and RH.
• Anticipating February's Market: A forward-looking analysis predicts a robust February for the portfolio, driven by expectations of a strong earnings season.

Detailed Discussions:

1. Market Resilience Post-Pullback: An in-depth look into the early January market dynamics and the resilience of the portfolio, offering a nuanced understanding of market signals.
2. Industry Trend Analysis: Explore the positive trends in industries where the portfolio is invested and their impact on market movements.
3. Economic Data Overview: Analyzing the latest data on consumer spending, GDP, and the PCE price index, and interpreting their implications for the broader economy.
4. S&P Index Analysis: A critical examination of the return to parity between the equal weighted and weighted S&P, with insights into its significance for the market.

Earnings Season Outlook

The episode discusses the upcoming earnings season, highlighting the consistent performance of businesses within the Pragmatic Portfolio in surpassing consensus estimates. This segment offers valuable perspectives for those looking to understand potential catalysts.