Portfolio Update 6/28/20
It’s been a little over a month since I posted my May portfolio update found here; https://discussion.fool.com/portfolio-update-526-34521721.aspx
I have found doing these updates is helping me keep better records of my investing thought processes over time. Much like keeping a journal in life when you re-read in the future it helps you remember what your thoughts were at the time of writing. Hopefully others find this helpful as well.
Current Portfolio as of 6/28/20.
Change since 5/26/20 +4.5% YTD +104.1%.
YTD S&P 500 -1.1% Nasdaq +7.5% Dow -12.3%
Stock Current % of Port % Change Market
% of Port on 5/26 in port since 5/26 Cap
AYX 10.4 23.0 -12.6 10.8B
CRWD 16.1 25.4 -9.3 22.8B
LVGO 9.2 7.5 +1.7 7.0B
ESTC 0 8.1 -8.1
DDOG 11.5 15.5 -4.0 26.8B
ZM 19.4 15.4 +4.0 73.2B
CASH 33.4 5.1 +28.3
New positions since last portfolio update: None
Exited positions since last update: ESTC
Trades between 5/26-6/28
Bought: LVGO 6/5 57.32; 58.85
Sold: ESTC 6/4 83.80; 84.20; 84.85
CRWD 6/9, 6/11 96.33; 96.20; 96.85
DDOG 6/11 77.35
AYX 6/9, 6/15 140.00; 141.93; 140.25
Thoughts on trades and companies for the month.
66.6% of portfolio in stocks and 33.4% in cash. I obviously have put some money to the side. Some of it is in my children’s college fund, which they will be using in 2-4 years. I did not feel comfortable with valuations and that time frame. I differ from Saul on holding cash in my portfolio, he does not do it. I have posted in the past about why I like holding cash. I do not want to get into a long debate about it as this board is not really about portfolio management. Feel free to email me if you want to discuss that particular line of thinking.
I bought more LVGO this month. Right after writing my April review I sold some LVGO just before they crushed there quartely results. I was concerned that Covid would negatively effect their business, I was wrong. In fact I believe LVGO may end up benefiting as much as ZM over this Covid crisis. I just took this from a friends facebook page
I will share some anecdotal science I read yesterday. 23 AND ME the DNA gathering company has been analyzing data regarding who is getting the more severe or fatal effects of covid19. I was very surprised about what they are finding. There are many pre-existing conditions which make people very vulnerable to this virus. Of the more common pre-conditions Type Two Diabetes stood out as the highest risk factor, even more than heart disease or lung disease. They did not draw conclusions, just point out what they are seeing.
Now I am not a doctor and I do not know if this is 100 percent accurate statement. However I think the jist of it is clear from an investor stand point. Covid is not good for anyone, but really, really bad if you have diabetes. LVGO allows you to manage diabetes and is proven to reduce the amount of hospitalization visits for that patient population. This allows you to stay clear of a hospital stop where Covid positive patiets are located. I am not sure if this information is even baked into the price of LVGO yet. I definitely am not selling any of my shares, I may possibly buy more very soon.
I mentinoed last month that Saul’s banging of the table for ZM brought me back to owning it. This month I thought about buying more ZM after an outstanding earnings report. However its almost up to 20% of my portfolio and I think I will hold. I do not plan on selling any of my shares any time soon and if it happens to fall in price I would be a buyer. I think the company will continue to make large strides. Remember there are parts of the world that did not even have Covid during Q1 timeframe for ZM. I do not think the company will stop growing at a ridiculous pace anytime soon.
One thing this board has taught me over the years is its hard to value a company that is growing quickly. ZM fits the quickly description better than any of the stocks we follow or ever have. I literally went from zero Zoom meetings before the month of March to 2-3 a week. I know plenty of other people that have way more than that…and the number of Zoom meetings only seems to be growing.
I also sold the rest of ESTC. I just got tired of waiting on it. Plus it is a hard company to describe and understand how it makes money. I really am not sure the CEO is interested in making money versus building something really cool and that thought scares me. I realized I was not being a ruthless allocator of capitol by staying in it. I would rather sit on cash and wait for an opportunity to buy.
I sold off a large portion of AYX. Why? Because the numbers on last earnings report were down slightly but the company is projecting downward. Last time I did not reduce when company projected down was ZS, that was a mistake and I learned it the hard way. I try not to fall in love with my companies, in an attempt to be a ruthless allocator of capital. It really is a hard thing to do. You really start to root for your companies and there leadership in every way, like being a fan of a sports team.
What if AYX does have a low quarter as they project and then projects another low quarter? I think many investors on this board would get out. I like the company and their leadership. However my gut told me to reduce. Now few weeks later price is up from where I sold, but I still feel good about my decision. I was overweight and the company basically told us they were having a slow down. Why should I not believe them? Why should I stay overweight?
I reduce some of both DDOG and CRWD. I really like both company, they both are executing well. I still own them and still plan on owning them for a long time. Just wanted some cash on sideline. If they continue to go up will I kick myself? No, I will cheer as I own them. If they go down, I will cheer as I have some cash to buy them at cheaper prices. Stagnation would be the worst scenario.
Now Number 1 holding ZM 19.4% To say this companies growth trajectory is straight up, probably an understatement. How to value? I have no idea. Reminds me of when I owned AAPL when the iphone came out or NFLX after Blockbuster went bankrupt. Could go down in hurry, but just got a feeling it will keep going up. As Covid continues to ramp up, so will ZM meetings.
Now number 2 holding CRWD 16.1%. Killed its last earnings report again. Why do I like this company? Low touch sales model. This company was made for these times. It has been brought up on the board that CRWD already had a work from home culture BEFORE Covid-19.
Still Number 3 holding DDOG 11.5% Another company on fire. Seems Covid is just excellerating sales. The company is set up for digital transformation and work from home environment. Why do I like this company? Seems to be straight forward company that is growing rapidly. Its position has grown in my portfolio. Must admit not the highest of conviction, could see selling quickly if I thought the need too.
Now Number 4 holding AYX 23.0%. Rock solid financials. No real competition. Covid slowed them down. Temporary blip as far as I am concerned. Why do I like this company? Data analysis is the future. The world will just gather more and more data. The need to easily analysis this data will increase.
Number 5 holding LVGO 9.2 Company helps monitor and give advice to patients with cronic diseases such as diabetes. It lowers prices for insurance company, so they pay the cost for the patient. Patients are healthier and save money and insurance companies save money. Add the factor of potentially keeping patients out fo the hospital an added benefit. One company that I am most likely to add to in my portfolio.
I underperformed the market in 2019. The Nasdaq beat me by 20%. I openly shared my results all year, just as I am doing this year. Here we are a short six months later and I am crushing the Nasdaq by 96.6%. If I had lost faith in my own abilities and put it all in index funds, I would have greatly missed out on serious wealth appreciation. I bring this up as an example particularly to the newer investors on the board.
As always any suggestions or questions on portfolio structure feel free to email me. Any questions on why I like or dislike certain companies post it to the board.