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Congrats on the stellar results. My 2 cents: I disagree with the first Druckenmiller quote - I have not found taking a small position while doing the research (if it's looking promising) to be helpful. I find that, especially if the stock drops after I buy a small amount, it biases me far too much towards taking a substantial position in the company - I become less inclined to believe negatives about the business, or more willing to hand-wave them away, and more inclined to seek out and believe positive reports. I recently wrote a piece called 'Fighting System 1' about my struggles against my emotional desires (or 'intuitions', as we may prefer to call them) in investing. The aforementioned process sends this into overdrive. I think it's best to take your time to fully vet the company, and when you finish that process make the decision, without having any emotional investment (other than the sunk cost of the time spent researching). It's important to remember than in the short term the stock market is pretty damn random, and there's almost an equal chance of the stock going down as up between now and the end of the research process.

One other thing - I wouldn't beat yourself up too much about not selling at your price target. Assuming these are quality companies and you believe in them long-term, successful investor after investor have said the much more common and consequential errors tend to be selling too early. Cutting your flowers and watering your weeds. Especially if there have been positive developments since the PT was set, I wouldn't be too attached to it.

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Thank you Matt for your kind words of encouragement. Everyone's wired differently - Druckenmiller's probably one of the greatest traders of all time, and adopting his rules straight-up is probably quite risky without the same temperament. You are quite right that it increases the likelihood of confirmation bias, and also risks looser discipline; overconfidence in "gut feel" is an extreme danger.

The GigaCloud thesis has deteriorated a little bit, but nothing too drastic yet. The LH Group though, if there are further signs of deterioration without improvement, then it may make more sense to trim exposure. It is more of an income play rather than a potential multibagger like GigaCloud.

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Well done!!

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Thank you Jam!

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Nice reports - enjoyed reading it.

For GCT: Forward P/E of 5, Q2 revenue growth rate of 100+% YoY with Q3's guidance of 80+% YoY, P/B of 2.1, etc. It looks ~5X undervalued purely based on fundamentals. Plus, the stock didn't move much even after stellar Q2 earnings results.

I think it's likely that GCT is fabricating the numbers, though the company itself is legit (like Luckin coffee). Example: https://www.reddit.com/r/wallstreetbets/comments/1bjhunm/is_gigacloud_technology_nasdaq_gct_a_scam/?rdt=62826

Delaying regulatory reports, CFO leaving, heavy insider sells, etc seem to be red flags. Any thoughts on that?

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You are referring to revenues more than doubling from around $ 150 million in Q2'23 to $310 million in Q2'24? The bulk of that would probably be from the Noble House & Wondersign (to a much lesser extent) acquisitions; to assess organic growth would require separate modeling.

The delayed 10-k is hardly surprising: they were changing domiciles, and consolidating two M&As in the same period. Of course, releasing those unaudited earnings, only to then announce the delayed 10-k, does expose them to the risk of an audit changing results.

Similarly for the CFO departure - David Lau's an IPO and M&A specialist, and appeared to have joined in May 2022 to work on the IPO and M&A deals - now those are complete, it makes sense for him to move on.

The insider sales sales are somewhat more questionable, but the CEO - Larry Wu - has a regular automated selling order set up, while it's pretty much the last holding in Franklin's fund that he's winding down (he held the investment for something like two decades now). Instead, there may be questions around why Iman Shrock was selling (and also multiple valid possibilities that have nothing to do with fraud or poor financial results).

There are more details in the full slide deck on https://www.alphaexponent.net/p/1-jan-24-24-gigacloud - it is a few months old now, but historical context is still relevant here.

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Thanks for the very detailed response!

I didn't realize the inorganic portion of the jump due to acquisitions - good clarification. In any case, the revenue jump was what made me really interested in buying the stock, so I'd wait to see the organic growth part. I already have a good exposure to China through BABA & exposure to various individual smallcaps in the US & Europe, so I'll wait out GCT till atleast the Q3 earnings report.

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