I Sold it All
Summary
Parkev explains the decision to exit a multi-year investment in PayPal, citing a lack of tangible progress in the company's recovery efforts. Initially, Parkev was attracted to PayPal because of its competitive advantage in online shopping convenience and its massive network of over 400 million active users. Parkev had hoped the company would scale to become a significant fraction of Visa's size, but those expectations were met with leadership instability and a failure to effectively counter rising competition.
Another major factor in the decision was portfolio management and cash allocation. Parkev notes that Parkev's cash and money market holdings dropped from over 40% at the start of 2022 to less than 10%, necessitating the sale of underperforming assets to fund new positions. Parkev emphasizes that while the business appears statistically cheap, the lack of confidence in the management team's execution makes it a less attractive hold compared to other available market opportunities.
Mentioned Stocks
Reasoning: Parkev sold the PayPal position at a small loss because Parkev saw no significant progress in a business turnaround despite holding for several years. Parkev mentions concerns over leadership changes and a failure to defend against competition since the economic reopening in 2022. While Parkev estimates a fair value of $81 based on a discounted cash flow model and notes a cheap forward P/E of 9.7, Parkev lacks confidence in management's ability to capture that value and decided to reallocate capital to other stocks.