HorsePlayAndrew Update Dec 2021

HorsePlayAndrew · January 7, 2022, 1:20am

Summary

Happy New year to all! It’s not exactly been that to kick off 2022 though has it? I’m a little late to write up my year end review because I’ve been mostly offline, exploring the wonderful island of Sumba, in Indonesia. Most certainly a good thing to be away from the markets for a while.

This is a very sobering and tough period to be invested in tech growth stocks but as many have said, this shall pass, we are invested in world class companies with real revenues and customers, don’t listen to the fearmongers calling for a Year 2000 bubble and crash.

December was a rough month, lots of emotions flying around, seeing the years hard earned gains evaporate. Some of my key learnings and mistakes below:

Don’t go chasing moonshots - I felt I needed to unearth pots of gold in order to keep up the stellar yearly performance, 209% in 2020. This led to me investing in some terrible stocks like Skillz, Mohawk and Fubo. I got caught up in the stories but should have a stronger check list in place to prevent me falling for them.

Better portfolio management - there were definitely times position sizes got too big (hello Upstart) and utilising a few technical tools out there, I could have raised cash at higher prices.
Don’t stray too far from SaaS. Being a SaaS entrepreneur, you would have thought I would heed this lesson! 2022 I am only allocating small percentages to non SaaS stocks

Complicated stories - I fell for too many of these companies. Affirm being one. It’s also why I am at the moment staying out of $BILL as I think the story there is just a bit too hard to follow

With a more positive outlook, I have been fortunate to get in early with the likes of Livongo, Fastly, Upstart and Zoom, so I need to be decisive when opportunities like that come again but take plenty of reality checks along the way after explosive share price gains.

My background

Entrepreneur, ex-founder of SaaS & marketplace business, exited, now founder of horseplay.ventures, angel investing & building other startups. Normally live & work in London but currently residing in Bali, Indonesia. Tweeting here:
https://twitter.com/andrewwebster11

See further details here. https://discussion.fool.com/horseplayandrew-update-nov-2020-from…

Performance

2021 >21%
2020 > 209%

January > 29%
February > 23%
March > 1.7%
April > -6%
May > 11%
June >21%
July >15%
August >51%
September >61%
October >75%
November >42%
December >21%

Dec 2021 Portfolio

MNDY - 20.3%
DDOG - 18.1%
UPST - 9.9%
S - 9.7%
SNOW - 8.6%
ZI - 7.9%
ZS - 7.5%
DOCN - 5.6%
AMPL - 5.5%

Cash - 7.1%

SOLD

Affirm I had mentioned they were on a short leash. I needed to raise cash for other positions so they were the number one candidate. There was a lot of noise out there regarding the BNPL market and I felt that I didn’t have the stomach to ride $AFRM and $UPST where both carried a lot of uncertainty.

Crypto As I saw the market going into freefall, I decided to use my crypto funds to balance out the portfolio, with cash ready to buy.

I also trimmed $DOCN significantly to reflect the fact their revenue is still fairly modest. I like the FCF and profitability profile with them though so they survived the cull on the basis of providing balance vs the loss making revenue machines.

BUYS

ZS Much has been said about their stellar Q3 report. I had a good look at the numbers and the company and felt like I wanted to be a part of it. They are accelerating, carrying a lot of momentum into a cybersecurity space that will continue in 2022 to be critical for enterprise budgets.

Snowflake I thought their Q3 earrings were jaw droppingly good. I have always admired them from afar, and have dabbled with them in the past, but I felt like this was finally the time to get serious and open up a position. When you have NRR at 173%, you can have a high degree of confidence that the company will be posting consistently high revenue numbers above 100% for a fair while. That’s hard to ignore alongside the fact they are a pure play on the expansion of data so I felt the time was right to add them to the portfolio.

SentinelOne There have been some exceptional write ups and contributions around this company eg https://discussion.fool.com/sentinelone-follow-the-numbers-35002…. I have had half an eye on them since their IPO but felt like they were absurdly priced. Now they have somewhat come down to earth, I spent a good amount of time digging in. Founder led, the best revenue growth numbers out there, exploding enterprise customer numbers, disruptive product and a red hot industry. However, they do have competition whereas it felt like CRWD had a fairly free run at it for their first few public market years where they delivered their hypergrowth. Hopefully the TAM is as big as they think it is.

My companies

Monday.com Despite the volatility in price, it remains a top tier holding for me. No significant news this month.

Datadog Nothing of note, a top tier conviction and holding for me.

Upstart Hindsight is a wonderful thing, I should have sold out completely and waited for bargain basement prices after such a shock earnings. I am still confident they can get things back on track enough to hold them but the story is a lot less certain now. Traffic numbers look fairly steady https://www.similarweb.com/website/upstart.com/#overview Management really needs to deliver one hell of a strong Q4 earnings update both in terms of numbers and shareholder communication.

SentinelOne Discussed above

Snowflake Discussed above

Zoominfo Happy and holding here, price held up considerably well relative to the other big sell offs. Should be a steady performer in 2022 with what is becoming an essential tool for sales and marketing.

ZS Discussed above

DigitalOcean As I mentioned, they just survived my cash cull. I will need to see revenue uptick again in order to justify this position but I am bullish on the cloud space going into 2022 and I think they have the potential to do great things with their large customer base of 600,000+.

Amplitude This is another company I probably should have held out longer on to see what the market thought of their earnings. Nothing has changed in terms of my conviction and news, I am looking forward to seeing what they can deliver in 2022 as product analytics is in its infancy in terms of enterprise spend.

Watch List

Cloudflare, NVDA, Affirm, Global-e

Previous updates

I wish everyone on the board a happy and successful 2022!

Andrew