Friday File: Some Rebalancing, with a new Asset Class

This week I’ve been playing a little bit of musical chairs with our portfolios, with some sales from the Lock Box and a bit of rebalancing in my Real Money Portfolio… so we’ve got plenty to talk about.

But first, a few readers asked about my position in Celsius Holdings (CELH), I guess because I didn’t update my thinking in any detail after their first quarter report earlier in the month… so let’s get into that a bit.

Really, nothing is radically different than it was a quarter ago — they had a good start to the year, largely from the load-in of Alani Nu inventory into the Pepsi distribution system, and their three “functional beverage” brands together are taking up most of the energy drink market that isn’t controlled by Monster and Red Bull (those leaders have about 40% each, Celsius has the remaining 20% — Celsius and Alani Nu, which are both skewed young/female/healthy, and Rockstar, which is Pepsi’s legacy energy brand that they took over last year).  We own Keurig Dr Pepper (KDP) for the resilience and value they represent in the beverage space, which has seen extraordinary brand loyalty and generally very strong earnings growth over long periods of time… and we own Celsius for their growth as they build out new markets and attract new buyers for functional/energy drinks.   KDP is safer, and maybe even more likely to have a very strong year in 2026, given their planned coffee spinoff, but CELH is more of a growth story.

So the good news is that the energy drink market has recovered pretty over the past couple quarters, including with better sales in the key convenience store market, after really being hurt by the inflation shock in 2024 and beginning their gradual recovery last year.   The bad news is that hasn’t yet turned into a strong resumption of earnings growth at Celsius, which could turn around with a strong second and third quarter, and that’s what analysts expect, but it’s possible their key seasonal period this year will disappoint, too.  They are getting more shelf space, and their brands are doing well and at least holding market share, perhaps growing it a little, even though Monster and Red Bull are both also trying to appeal to the sugar free/healthier part of the energy drink market… but pricing is also a bit of a challenge, with investors pushing …