Whilst there are some exceptions, just about every stock on this list has (in our view) wildly unrealistic embedded earnings expectations, in turn raising the prospect of material disappointment.
Note that the embedded expectation for Afterpay is still north of 60%, even after halving. In other words, the growth assumptions are still extraordinarily difficult to achieve.
Now, there is a very prominent, successful manager with great returns who owns many of these names. And they hold them in fairly mammoth concentration, routinely owning 10% positions across stocks where their conviction is highest.
Good for them, it’s an an approach more aggressive than we are willing to take. However it does make them very vulnerable to any downturn in style, or appetite for, those kinds of companies. December, with only the slightest of backups in real rates, speaks to the kind of correction you could see.
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