Bear's Portfolio at the end of June 2017

Wow, that’s a lot…I forgot Gilead and Square were out there when I mentally reviewed my own portfolio’s geography. Visa’s HQ is in San Francisco too, I believe.

Matt
Long GILD, SQ

Thanks Bear, assumed as much, shopify is now firmly on my radar!

have you considered Shopify?

I also like SHOP – I bought it a couple of months ago, mostly for the dividend.

OTT

I also like SHOP – I bought it a couple of months ago, mostly for the dividend.

As far as I know, SHOP does not pay a dividend…

I also like SHOP – I bought it a couple of months ago, mostly for the dividend.

As far as I know, SHOP does not pay a dividend…

Hence his name offtopictom :slight_smile:

Andy

SHOP does not pay a dividend

I was misinformed:

https://www.youtube.com/watch?v=u2inLcR_1jc

OTT

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So happy I could set you up for that punchline, OTT!

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how did you get SHOP only down by 5.4% in June? it was close to triple that- down 15%.

I may be missing something but in all those concentrated portfolios spoken about here, all seems to show a slight gain this month. Considering the composition, I cannot square they were all up slightly. What is the stock that pull the rest up? are trading and edging kept you up? in that case that is a lot of work and a lot of skillful work.

tj

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SHOP:

May 31 close: $91.86
June 30 close: $86.90

Difference: $4.96

4.96 / 91.86 = 5.39%

TJ,

It seems like you post in quite a bit of a hurry. I for one would appreciate it if you would look a little more carefully before filling up the board with things you could easily look up.

Bear

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The other thing that gets me is when people look at a stock, “see see, SHOP is down 15%, NVDA is down 12%…” yeah, but each are up more than 200% since we bought them in the last two years, 6 months, etc.

I hate cynics and nit pickers. I love honest and good faith critics. That is what this board is about. Not cynics and nit pickers.

People put themselves out there on this board. They get $0 in compensation for it. they don’t necessarily want cheerleaders. What they want, and what they are owed is honest and good-faith critics, and honest and good-faith supporters. That is what makes this board great.

Tinker

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Hi Bear,

I was reading back through your post and noted this quote again:

I said to myself: “I own 12 of the most exciting, fastest growing, innovative companies I know of…and Yelp.” When I realized that, I sold it immediately.

I LOVE IT! You should frame it and hang it on your wall. And anyone who is still hanging on to some legacy holding which is going nowhere, and just tying up funds in his or her portfolio, ought to reread what you just said.

Thanks,

Saul

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I said to myself: “I own 12 of the most exciting, fastest growing, innovative companies I know of…and Yelp.” When I realized that, I sold it immediately.

I LOVE IT! You should frame it and hang it on your wall. And anyone who is still hanging on to some legacy holding which is going nowhere, and just tying up funds in his or her portfolio, ought to reread what you just said.

Thanks, Saul. It really was a watershed moment for me. But just in case anybody isn’t really following our enthusiasm on this point, here’s another example:

My dad recently owned Chevron stock. He was starting to come around to the idea that the future is uncertain for the legacy energy companies, and that his money might be better placed with companies like Amazon, Facebook, and Google/Alphabet – companies where the future looks bright. Even though he felt this way, it was hard for him to cut Chevron loose, partially because it was down (maybe 5%) since he had bought it. He said to me, “I just don’t want to sell now, because I know it will come back up.” I said, “It may very well come back up, but what if that happens in summer 2018? Or even this December? Look at all the time and opportunity you will have lost! Amazon could very well be up 10%, 20% or 30% by the time Chevron breaks even. So you avoid losing 5% on Chevron by losing several times that in potential gains on AMZN. That’s opportunity cost.”

Now of course I don’t know what will happen with Chevron and Amazon – I just feel the opportunity with one is better than the other. Same with Yelp, and the rest of my holdings. As I said before, Yelp will probably go up from here. But I’m more convinced - and actually excited about - the companies I continue to own.

Bear

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SHOP: yes it is quite volatile. Two days later it was up 10% then down 15% from there. Still it is surprising when most components are down to be up in aggregate. Maybe it is just a wrong impression.
Sometimes you want it to go up and it just does not and then you don’t pay attention to it it is up by a large amount.

It was a simple question- quite neutral really. The interesting thing is the strong reaction.

tj

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Maybe it is just a wrong impression.

If you are really trying to learn, here is a lesson.

Do not go by impressions when there are actual numbers available. As you have shown, impressions are subject to wild inaccuracy. Use the actual numbers!

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GauchoChris -
Bizklkr already responded. I don’t have a lot to add. I worked at a fortune 50 Company in the IT department. Virtually every company of any size these days protects its data and its IT operations by mirroring the data at multiple remote locations as well as making sure that all line of business critical applications are hosted and functional in separate locations as well.

For sure, a natural disaster at HQ would be a disruption, no one would deny that. But it would not cripple operations for an extended time period. Especially asset light businesses (i.e., s/w oriented tech companies) are able to continue operations with very little down time.

Manufacturing companies have a much harder time with respect to recovery from natural disaster. The '65 Puget Sound earthquake crippled Boeing operations due to the fact that both plants in South Seattle and Renton (the Everett plant had not yet been built at the time) were built on landfill/mud flats which undergoes liquefaction more easily than locations with more solid underpinnings.

There is no place that is immune from some potential natural hazard. Given the potential hazard from climate change which possibly endangers the entire planet where would you suggest we look for company locations, mars perhaps?

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For sure, a natural disaster at HQ would be a disruption, no one would deny that. But it would not cripple operations for an extended time period. Especially asset light businesses (i.e., s/w oriented tech companies) are able to continue operations with very little down time.

Brittlerock,

You are underestimating the effect of a major earthquake in a populated region. I am talking about a major earthquake striking a populated area. In 1906 the population was small. In 1989 the earthquake was epicentered about 70 miles away so the damage was not devastating. A major earthquake would be many times worse than Katrina was to New Orleans and there would be zero advanced warning. New Orleans had warning so evacuations could begin before the event hit.

The risk is not to IT or data; those are largely backed up. The risk is to operations specifically to the employees’ ability to continue working. Many could not get to work potentially for months. Many would not have electricity, water, internet, etc potentially for months. Many would have working spouses and children in school which must be considered…point here is that a company could not simply relocated to a location outside the region and expect all employees to move there. Furthermore, all of Bear’s companies that are SF based are in SF or on the peninsula to the South. SF is on the Northern top of the Peninsula. If the Bay Bridge and Golden Gate Bridge get damaged then there is only one way in or out making transportation a major issue. Who is going to worry about commuting when thousands are homeless, repair crews can’t easily get in or out, there is no electricity or water, food can’t be easily delivered to stores (and it spoils without refrigeration). You think people are going to think out going to work?

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When your read about Katrina you would think it was some third world country. Social order broke down, the “authorities” mostly did nothing , joined in the looting, or made things worse by turning away volunteer help. At the federal level they mostly shuffled papers . I doubt if anything has changed.

It would be worse in a bad earthquake, the flooding prevented many of the bad guys from leaving their homes.

But I suppose while a major earthquake is inevitable the risk of it occurring during a stock holding period is small. A meteorite might strike NYC too, but the risk is so small we ignore it.

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Hi Paul - not sure if you saw this article about New Relic but thought you might be interested…
https://seekingalpha.com/article/4086426-new-relic-relativel…
Ant

Thanks, Ant. While I actually think New Relic is fairly easy to understand (I can describe what they do in one word: monitoring), it does kind of blow one’s mind to consider all the possible use cases. Their software allows companies to digitally monitor everything (and consider Mulesoft and how many products are linked together to form the digital landscape for most companies) in real time to figure out:

If something breaks or is about to
Where customer pain points are
Areas where they could improve functionality
Areas they could engage with customers better and upsell
Ways to enhance customer experience on their products
New data points to consider in evaluating their solutions
Ideas for future products and upgrades
How to better troubleshoot for developers
How to better troubleshoot for customers
Where customers spend time
How customers spend money
What captivates customers attention
…and this list could probably go on forever. Because they monitor billions of things. Literally.

So that is kind of exciting when you think about it, and I also agree with his point about market cap. That is something I would also say is downright exciting with all of the companies I own. Seeing them grow from $1 and $2 billion market caps by literally increasing sales by tens or hundreds of millions of dollars each year as they grow into their TAMs is…for lack of a better word, fun.

Bear

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I live in the Puget Sound region, a seismically active area. I was at work on Feb 28, 2001 when the 6.8 Nisqually earthquake hit. This was before internet access to the company’s core IT products was available. The building I was in (a low rise south of Seattle that was closer to the epicenter) suffered structural damage and was closed for two days until it could be inspected and declared safe.

So yes, an earthquake is disruptive, no doubt about it. And everything I said does not apply to manufacturing companies as well as B&M retail and some others. Those businesses are hit hard. But, that’s not what we are talking about. For the most part the companies in question are predominantly intellectual property s/w companies. These companies have a lot more resilience than others.

Yes, absolutely I think people are going to think about going to work. You see people every day that come back to work shortly after a personal tragedy like the death of a spouse or child, this would be no different. If they can’t get to the office, they would perform work from home. I think you exaggerate the interruption to communication services, but even if you are partially correct many of the technical folks could and would continue to work from home even without a connection to the office. I know, I have done so myself, not under emergency conditions, but because I was able to.

So I’ll grant that an earthquake, any natural disaster or even a big snow storm is disruptive. But to think that the disruptions would persist for “months” is ludicrous. Days, maybe even a couple of weeks if the damage is really severe, but that’s it. Workarounds would quickly be determined and implemented. Business would carry on, maybe somewhat hampered, but it would not come to screeching halt.

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