Bear's Portfolio through Jun 2019

PaulWBryant · June 28, 2019, 4:40pm

My 2019 Portfolio Performance YTD as of


Jan +22.48%
Feb +33.46%
Mar +38.27%
Apr +46.86%
May +43.50%
Jun +58.27%

New 2019
January - DOCU
February - SAIL
March - TTD (again), ESTC (again) and MDB (again)
April - None
May - SQ (again), ZS (again), EVBG, PLAN
Jun - CRWD, FSLY, WORK, TWOU

Sold 2018
January - SHOP, SQ
February - WIX, MDB
March - PSTG, ZS
April - None
May - SAIL, ZEN, NEWR, OKTA
Jun - MDB, ARNA

My Current Allocations


Ticker	Curr%	Buy/S	Mo Ch	YTD Ch
AYX	10.9%	-20%	25.6%	83.5%
TWLO	10.2%	20%	3.3%	52.7%
TTD	8.5%	7%	14.6%	96.2%
DOCU	8.2%	56%	-11.3%	24.0%
SMAR	7.8%	73%	12.6%	94.7%
ESTC	6.5%	133%	-9.0%	4.4%
TDOC	4.1%	-29%	14.3%	34.0%
PLAN	3.1%	0%	16.0%	90.2%
EVBG	3.3%	20%	13.7%	57.5%
SQ	2.7%	0%	17.1%	29.3%
ZS	2.9%	200%	11.7%	95.5%
CRWD	2.6%	NEW
FSLY	1.3%	NEW
TWOU	1.2%	NEW	-0.9%	-24.3%
options	0.6%			
cash	26.1%

WHY I DID WHAT I DID THIS MONTH

Bought

Crowdstrike (CRWD) - recent IPO. PS > 40, but revenue growth has been triple digits. On July 18 they will report on their quarter ending April 30, 2019. Zoom-like growth, and for half the price, so I had to check it out. (If Zoom was at a PS of 40 or 50, I’d probably buy a little of it too.)

I also bought a couple tiny 1% positions just to keep these on my radar:

2U (TWOU) - growth slowing, but still ~30%. PS is about 4…not 40, but 4. They have an awful lot of revenue for a $2.5b software company (with high gross margins). If the growth weren’t slowing, this would be 3x the price it’s at now. But the question marks are definitely there, so I understand why it’s not. I’m betting it can keep growing, but we’ll see.

Fastly (FSLY) - recent IPO that Bert wrote about in a Seeking Alpha article. Growing around 40%…PS ratio below 15. I’ll follow it, and see what they report in the coming quarter or two.

Sold

MongoDB (MDB) - I sold after a CC where I saw growth starting to slow, and next quarter guidance a lot lower, and comments about difficult comps in the latter half of this year, and mLab deterioration. That was around $150. Then it ran up over $180, so others clearly saw the quarter differently. It’s back down since then, so maybe the enthusiasm has waned a bit, or it could just be tracking with the market a bit. Does anyone have thoughts on my post here asking if you feel that slowing growth would be a problem? https://discussion.fool.com/management-comments-from-q4-our-reve…

Arena Pharm (ARNA) - I sold on Bulwnkl’s concerns: https://discussion.fool.com/arna-34236064.aspx

Added to or Trimmed

Docusign (DOCU) - Added a bunch. See this post…I miscalculated next Q guidance (it’s not 40%), so revenue growth is not accelerating, but the rest holds: https://discussion.fool.com/docu-narrative-vs-reality-34226932.a…

Smartsheet (SMAR) - Added a bunch. I agree with Darth here: https://discussion.fool.com/smar-q1-34224157.aspx

Elastic (ESTC) - More than doubled my position. I wrote about the Q here: https://discussion.fool.com/estc-apr19-q-update-34224536.aspx Also, I very much agree with what Ethan said here: https://discussion.fool.com/i-just-wanted-to-briefly-weigh-in-he…

Teladoc (TDOC) - Trimmed it a bit, as I want it to be a small to mid sized position. I had only added on a dip. Happy to trim it back down now.

Zscaler ((ZS) - I tripled my 1% position to a 3% position. Sold $90 Nov calls to make a little money for my time, because I don’t think ZS has much room to run by then.

Twilio (TWLO) - I added to my position, but much like with ZS, I sold a call option on just a small portion of my position. It caps my upside on that portion of my shares, but it’s better than holding more cash (I have enough!) instead of the shares. [REMINDER - please don’t start a discussion of options on Saul’s board. I’m including this just for full disclosure. If you must ask me about it, please email me. Also note that Saul doesn’t recommend selling calls. He refers to it as “Picking up pennies in front of a steamroller.” So caveat emptor.]

Alteryx (AYX) - Trimmed slightly, as I feel it’s now fully valued.

The Trade Desk (TTD) and Everbridge (EVBG) - added small amounts on dips.

Passed

Zoom (ZM) - I continue to re-evaluate, but I believe it’s hugely overvalued: https://discussion.fool.com/my-case-for-zoom-but-against-zm-3422…

Slack (WORK) - At a PS of about 50, and growing much slower than CRWD or ZM, I’m nonplussed.

Wrapping Up

Now seems like a good time to trim overgrown positions and to look for new ideas. As I said in a post yesterday (https://discussion.fool.com/consider-2-years-of-growth-at-100-an…), we probably shouldn’t expect multiple expansion from here on the average SaaS company (whose PS is in the mid 20’s). That’s fine! Everything always changes. We were fortunate to jump on this train early…and we should be careful not to jump off our proven winners too soon, but perhaps we can also find some diamonds in the rough, and maybe even key in on some wholly different opportunities in the months to come!

Good luck, everyone!

Bear

“I guarantee nothing but hard work.” - Bear Bryant, Alabama Football Coach, 1958 - 1982

“A man’s gotta know his limitations.” - Dirty Harry

“If you must tell me your opinions, tell me what you believe in. I have plenty of doubts of my own.” attributed to Goethe (but not sourced)

“Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.” - Attributed to Albert Einstein

“exponential compounded growth does not fit the analytical backward looking skill sets of most Wall street analysts” - mauser96

“I presume the thing is to ride the momentum for the short squeeze and exit fast with enough money for a few months supply of whisky before everyone realises it’s a value trap.” - Strelna

stocknovice · June 28, 2019, 8:22pm

Does anyone have thoughts on my post here asking if you feel that slowing growth would be a problem? https://discussion.fool.com/management-comments-from-q4-our-reve…

Bear -

My general thoughts on MDB are in my review, but I can’t dispute any of your concerns. There’s clear softness to next quarter’s guide and they’ve commented twice now on the tough comps in the two quarters beyond that. My plan for now is to wait for Q2’s result and go from there.

Your estimated 67% growth sounds about right to me since last quarter’s guide was 67.5% with an actual of 78.3%. While 67% would indeed be a decline, it would be hard for me to call it an outright disappointment considering very few companies can trumpet that kind of growth. It also doesn’t look THAT far out of line when you consider their prior five quarters went 49%, 62%, 57%, 71% and 78%. I’m not exactly sure how 606 vs 605 might affect everything, but something mid-to-high 60’s doesn’t bother me much unless it’s tied together with a guide or call comments that show they are facing more than just tough comps.

In the end I’m betting MDB has enough TAM and CAP that the stock price still has room to run. Big data is only going to grow and get more complex. I can’t say I’ll keep my allocation as high as it is currently, but I also can’t see it sliding out of the top half of my portfolio. I’m just not seeing any alternatives I find that much more appealing.

Thanks for restarting that conversation. It’s clearly worth having.

Ares0628 · June 28, 2019, 11:19pm

I sold out all my position last week since I had some concern about the TAM that MongoDB has and the competitive advantage in this crowded field. In addition, I’m worried if these tiny DBaaS vendors like MDB or ETSC can fight against those cloud service platforms which provide from storage to analyze and more complete multimodel DB service.

There are some insights in this report:
https://blocksandfiles.com/wp-content/uploads/2019/03/Databa…

MongoDB’s strength is the Document-Database which is grouped in DDMS(Dynamic Data management System). I’m not sure the proportion of document-Database in DDMS. However, what I knew is that MongoDB only accounted for 4% in this group and it’s YOY growth is slower than the entire group.
5 years CAGR of DDMS was predicted 30.94% (from $976M in 2017 to $3.7B in 2022)
I totally agree that NoSQL will grow very fast in the near future. Hence, it’s a very competitive market. MDB indeed has the edge in one of many use-cases but it’s just one of many players. I’m not very confident about its future since it’s just too competitive and uncertain. And, the valuation is so expensive.

MSFT AMZN GOOG MDB Others TOTAL
2015 221 386 115 56 1,310 598
2016 409 598 211 88 932 2,150
2017 974 858 304 134 1,264 3,400

Growth YOY
MSFT AMZN GOOG MDB TOTAL
2016 93% 55% 84% 56% 64%
2017 138% 44% 44% 53% 58%

Market Share
MSFT AMZN GOOG MDB
2015 16% 29% 9% 4%
2016 19% 28% 10% 4%
2017 29% 25% 9% 4%

I’m not an expert in this filed but I would like to know why the market gave MDB such high expectation.

Phoolio18 · June 28, 2019, 11:57pm

In addition, I’m worried if these tiny DBaaS vendors like MDB or ETSC can fight against those cloud service platforms which provide from storage to analyze and more complete multimodel DB service.

What evidence is there of the Cloud players disrupting either of these spaces?

MDB indeed has the edge in one of many use-cases but it’s just one of many players.

And the fastest growing one with the most developer mindshare.

AJ

ethan1234 · June 29, 2019, 12:43am

Ares0628, you must be reading this report totally differently than I did. I’ve gone through it in some detail.

There are a few confusing things because in the report they use data from different reports (IDC etc) which define the groups differently. So you can’t compare all the data directly without some massaging.

However, what I knew is that MongoDB only accounted for 4% in this group and it’s YOY growth is slower than the entire group.

A few things

It is good they list MDB’s marketshare as only 4%, that means they have a HUGE amount of growth ahead of them (more on that below). The 4% doesn’t match up to the numbers below because for this part the report you linked to included the “NDBMS” as well as the “DDMS” to calculate that number. THe NDBMS is a segment that is shrinking that is served by old mainframes and such. These databases are not inherently relational, usually information can be obtained without a SQL statement, and this market is usually associated with legacy mainframe vendors like IBM or Intersystems
2016 to 2017, MDB grew about 50% (depends if you use ASC 605 or 606), 2017 to 2018 it grew about 60%. You are selling a company that is growing FASTER not slower than its market. Its market is growing 30% and mongo is growing >60%
In 2017 the DDMS (Dynamic Database Market segment) was 976 million. MDB did approximately 160 million in revenue, so they had about 16% of the DDMS segment. In 2018 the DDMS was approximately 1.27 billion, Mongo did 267 million of revenue so about 21% of their segment.
Mongo is expanding their use cases in fact in this report they mention that databases like mongo specifically as a multimodel database, i.e. it can serve beyond just document store applications further expanding its TAM. Other databases do this too, postgres is a prime example.

and finally, the key takeaway from the report.

MongoDB has emerged as the most viable next-generation database player. MongoDB’s highly successful IPO in October 2017—the first IPO of an operational database player in more than 20 years—was a milestone event that heralded the tectonic shifts occurring in the database market…With calendar 2018 revenue of $267 million, the company has established critical mass and separated itself from the crowded field of upstart vendors.

I’d say this is why the market has such high expectations. MDB is the leader in the fastest growing segment of the database world which is inherently sticky. We are seeing the rise of a new generational leader. Obviously things can still go wrong, who can predict the future? Certainly not I. I do know that I wouldn’t sell my MDB based on this report though. The report was incredibly bullish on Mongo.

best,
Ethan

brittlerock · June 29, 2019, 6:13pm

Just an observation, for what it’s worth - - -

I am up 68%, about 10% more than Bear. I’ve been up around 80% recently but with the sell off of SaaS stocks in particular last week, my holdings came down in value.

Am I a “smarter” investor than Bear? I don’t think so. I consistently read his posts and learn from them. I think he’s a much more attentive investor than I. He massages the numbers and digs into the available information much more regularly and aggressively than I.

Yet, my performance is better. Why? I can only come up with one answer. I am less active. I am far less prone to trade than Bear is. I’m more complacent. I have 11 positions (if you eliminate tiny holdings under 1%). One of them is a pot stock that has performed very well. The rest are SaaS companies. I have a lot of confidence in the positions I hold. I’m not all that likely to sell some so that I can buy some new IPO. I tend to let the dust settle before I buy a new issue. I was very reluctant to buy ZM, but finally took a small position (~3%).

Maybe doing nothing has merit.

SoonerAJ · June 29, 2019, 7:34pm

Why? I can only come up with one answer. I am less active.

From my perspective 1 year is statistically irrelevant. Maybe if we compared 3,5, and 10 year results we could draw some conclusions. I’m absolutely not trying to be insulting. Your results are phenomenal! Just saying a small percentage over the 6 months of this year may not mean much.

-AJ