The Six Moonshots Classifications
We have developed a novel classification system to guide your investments in our portfolio of Moonshots stocks.
In the spirit of our Moonshots theme, each of the six classifications are designated by a symbol — each corresponding to a specific portfolio weight. For example, a 1% portfolio weight suggests that investors should not invest more than 1% of their overall equity portfolio in the stock. Now, these are our suggestions based on our experience. Everyone’s situation is different. So how you allocate your portfolio is completely up to you and your own personal risk tolerance. With that, let’s run through the designations:
Liftoff
Emerging technology companies that are at a very early stage of commercialization, but that have disruptive products that indicate a tremendous potential to generate outsized investment returns in the future. Liftoff companies are designated by a 1% portfolio weight in an investor’s total equity portfolio due to the risk inherent in this type of company.
Escape Velocity
Technology companies that are gaining traction in their respective market segments through increased product/service adoption, have strong competitive positions and management teams and are growing at a relatively fast pace. Escape Velocity companies are designated by a 2% portfolio weight in an investor’s total equity portfolio to reflect the degree of risk associated with these types of companies.
Orbit
When a company is deemed to reach orbit, it is maturing, stabilizing, staying in its lane, making incremental improvements to its products, and perhaps positioning itself for a new trajectory as technologies and market conditions converge. Such companies are designated by a 3% portfolio weight in an investor’s total equity portfolio.
Course Correction
These are proven technology companies that have reached orbit but have encountered operational difficulties and may even be at risk of falling out of orbit. In any case, these are companies that have very recently undergone, or are in need of, a turnaround and/or pivot. Often a turnaround is accomplished through executive management changes (e.g., the appointment of a new CEO). A successful course correction can dramatically boost a company’s valuation. Course Correction companies are designated by a 4% portfolio weight in an investor’s total equity portfolio, signifying a large potential upside.
Deep Space
A company designated as being a Deep Space company is growing rapidly via increasing market demand, acquisitions, strategic partnerships, and other value-creative initiatives. Such companies are executing at a high level in the marketplace and deserving of the highest portfolio weight (5%) in our rating system.
Test Flight
These are companies with breakthrough technologies about which we have a strong conviction, considering their short history and small size. These are companies we don’t want to miss, but we don’t want to top off the fuel tanks either just in case they crash and burn. Test Flight companies should represent no more than 0.5% portfolio weight in an investor’s total equity portfolio.
Note also that these designations are not fixed. A company’s status within this system can change as it evolves, moving from Liftoff to Escape Velocity to Orbit to Deep Space. As such, the mix is quite dynamic. So, look for the designation symbols as we present new stock picks and update others in the portfolio. Make your allocation adjustments accordingly and enjoy the journey to greater investment returns!