Portfolio Update 12/22/2018
Merry Christmas and a Happy New Year to everyone. It’s been a month since I posted my November portfolio update found here; https://discussion.fool.com/november-portfolio-update-and-though…
I have found doing these updates is helping me keep better records of my investing thought processes over the past few months. Much like keeping a journal in life when you re-read in the future it helps you remember what your emotions and thoughts were at the time of writing. Hopefully others find this helpful as well.
Current Portfolio as of 12/22/18. Change since 11/12/18 -4.5%. 2018 return 16.5%.
Stock Current % of Port % Change % Change Inst Owner- Mark
% of Port on 11/22 in port Price 11/22 ship % Cap
AYX 16.8 13.6 +3.2 -7.4 89.6 3.0B
CLNE 0.1 0.2 -0.1 -24.8 27.7 360M
MDB 12.0 11.7 -0.3 -4.2 75.1 3.9B
NTNX 18.7 19.3 +0.6 -8.7 62.8 6.6B
SQ 2.3 16.9 -14.6 -17.3 73.4 22.0B
TWLO 17.8 17.2 +0.6 -5.5 77.0 7.9B
WIX 14.0 11.4 +2.6 -7.1 97.5 4.0B
ZS 10.6 9.7 +0.9 +3.3 24.7 4.2B
TTD 5.7 0 +5.7 -10.7 86.7 4.7B
ESTC 1.8 0 +1.8 -5.4 24.7 4.5B
CASH 0.1 0
I use this link for market cap and institional ownership; https://finviz.com/screener.ashx?v=131&ft=2&ta=0&…
I use this link to determine price change from date to date; https://www.buyupside.com/stockreturncalculator/stockreturnc…
New positions since last portfolio update: TTD, ESTC
Exited positions since last update: None (although working on SQ)
Trades between 11/22-12/22
Sold NTNX (43.99, 44.01); SQ (59.59, 59.70); SQ (71.60, 71.54); ESTC 78.74
Bought AYX (58.13, 54.2); TTD 126; SQ 55.89; ESTC 70; NTNX 38.81; WIX 84.47
One thing I am going to add to my portfolio update posts is my stock trades between posts. I am doing this for my own record although I also think it will be useful for newer investors. One thing that I have learned from Saul, TMF1000 and others is the idea of having trading positions within your stock holdings. For example this past month I bought some SQ only to sell it later for a 28% gain in less than a month. Some may say wait you sold some at a loss also from looks of what you posted. The SQ stock I sold at 59.59 & 59.70 was on an original position that I had held for over six months. I sold it a few days ago when AYX dropped 11% but SQ had only drop less than 3%. I had decided to move out of SQ (which I will discuss in post later) so I saw it as an opportunity.
I think this idea of trading within stock positions is an extremely successful way of increasing your gains within your portfolio. To be honest a few years back when Saul first started posting his portfolio I was skeptical. This was because it always seemed that his overall return would increase even when the stock price of his investments would not increase as much over the same time period. Over time I have come to understand that it is his allocation % between stocks and his maximizing those allocations that gave his portfolio extra “juice” in returns. I am very thankful for Saul and the others who have and continue to teach me so many investing lessons. One reason I have included showing % change of my portfolio is to help understand this concept in more depth.
So how to use this idea. This past month ZS is actually up and MDB is down a small amount relative to other companies. If I thought I was overweight or if I had been considering reducing my position in either companies this maybe a good time to do it. Then pick up another company in my portfolio that I may be interested in accumulating or building a trading position because it dropped more severly in the past month. Obviously SQ and TTD would be two candidates for potential buying. Remember this strategy is only wise if you think the prospects of your companies are equal with one another.
NTNX is my largest position at 18.7%.
Founded in 2009. Went public in September 2016. Headquarters in San Jose, CA
What does NTNX do? Their software allows the ability to manage IT infrastructure and applications across private and public clouds. My understanding is it allows companies to have less money tied up in employees for managing IT and making all things IT play well together.
What I like about NTNX. The stock seems misunderstood. I believe there is an undiscovered growth story that many in the market do not understand. NTNX is moving from legacy software installed on hardware sales to more of a software as a service no matter the hardware. I also like the founder and his life story. This company helps other companies with complex issues and allows them to utilize new technologies while reducing labor costs.
What I do not like about NTNX. Not the easiest company to understand. Some think possibly by design.
TWLO is 2nd largest position at 17.8%.
Founded in 2008. Went public in June 2016. Headquarters in S.F., CA
What does TWLO do? It is a communication cloud software which is powerful and yet simple to use. Best known for Uber, Lyft, Opentable. Companies moving toward digital communication with customers and TWLO software allowing this modernization.
What I like about TWLO. Company just seems to be firing on all cylindeers performance wise. Another company that allows companies to reduce labor and solve complex problems. The fact this is Saul’s largest position gives me confidence.
What I do not like about TWLO. Not sure, probably shows that I need to learn more about them. Possibly oversized position for my familiarity with the business.
AYX is 3rd largest position at 16.8%.
Founded in 1997. Went public in March 2017. Headquarters in Irvine, CA
What does AYX do? Software that can connect to and clean data from data warehouses, cloud applications, spreadsheets, etc. Allows for data to more easily be managed and analysed.
What I like about AYX. Working on my M.S. over 20 years ago most difficult and hated part was trying to manage the data and analysis writing SAS code. Wish, wish, wish AYX software was around back then. I can personally understand how this companies software would improves ones life, operation, etc.
What I do not like about AYX. Seems a bit pricey and has since I bought the stock originally. Lack of buying opportunities.
WIX is 4th largest position at 14%.
Founded in 2006. Went public in November of 2013. Headquarters in Tel Aviv, Israel
What does WIX do? Cloud based website builder. Allows for the easy set up and management of a website for whatever purpose.
What I like about WIX. Company is very transparent. I love how they present their business metrics and evaluate their business performance. I like that they are international company with an international focus. I feel like they are undervalued for their performance.
What I do not like about WIX. I think they have a massive opportunity in front of them to compete with the likes of SHOP. Would not mind seeing them step up spending to try and up the growth a notch.
MDB is fifth largest position at 12%
Founded in 2007. Went public in October 2017. Headquarters in N.Y., N.Y.
What does MDB do? They are a database platform for the cloud. Allows multiple user access of the same data. Development of tools for the presentation of data.
What I like about MDB. Seems to be growing and excuting business well. Most likely needed as more and more data being collected everyday.
What I do not like about MDB. Do they and AYX compete? How good are there data tools?
ZS is the sixth largest position at 10.6%
Founded in 2008. Went public in March of 2018. Headquarters in San Jose, CA
What does ZS do? Operates a global cloud security network, which allows devices such as phones, at home computers and business mainframes to all communicate with one another safely.
What I like about ZS. I think it has the biggest potential of any of my investments. It seems to be the only game in town and has an early lead. Very, very important in the world we live in and will only become more so in the future.
What I do not like about ZS. Everyone points out that it is very pricey.
I decided to sell SQ due to its Market Cap size (22B). I had this thought then literally the next day Bear posted this same thought as a reason he sold out of SQ. I did not sell right away obviously as I still own a small percentage. However 2 or 3 days ago SQ had fallen a few % while other stocks I was interested in fell 9-11%. I decided to sell SQ and pick up more shares of companies that had fallen (AYX, TTD). I personally am not concerned about Sarah F. leaving, I also am not concerned about Jack D. and his weird personality. It was strickly a feeling that it is hard for larger cap companies to grow as rapidly.
I bought some ESTC and sold it for ~12% gain in a few weeks. However my limit order only partially filled, then ESTC drop tremedously. I will continue to hold until I see a better opportunity. I may hold for a long time or I may sell next week. It is obviously not a high convection stock for me. Many here on this board and NPI make great case for TTD. I needed to put some of the SQ money into another stock. My top six holdings are full positions and I did not have a good idea other than TTD. Again not a high convection stock for me, but I do feel it is undervalued at the moment. I continue to keep an eye on CLNE as I have followed it many years and it is starting to get into buy territory for me even thought it does not fit Sauls critea.
As always I would love to hear feedback or correction on my investment thoughts.
Sauls Critea for stock selection
Rapidly growing revenue. 40-70%
Dollar based retention rate of 120% or greater
Accounting loss as percentage of revenue. Should be low.
Need to have plenty of cash and no debt.
Low Capex requirements.
Leader in a new field or disrupter in an older field
Founder Led. Plenty of inside ownership.
Long way to grow. Large TAM.
Need to feel comfortable owning the company.
Easy to follow.
Highly recommended posts of others since last update. These types of post influence my thinking on stock selection and portfolio management.
NTNX
https://discussion.fool.com/ntnx-quick-initial-thoughts-on-q1-34…
https://discussion.fool.com/on-investing-styles-and-nutanix-3407…
https://discussion.fool.com/ntnx-my-summary-of-latest-conf-call-…
ZS
https://discussion.fool.com/zs-gartner-magic-quadrant-2018-34072…
https://discussion.fool.com/bear39s-zs-octq-review-34076857.aspx…
MDB
https://discussion.fool.com/bear39s-mdb-octq-review-34077060.asp…
https://discussion.fool.com/mongo-my-take-on-its-oct-q-results-3…
Of interest
https://discussion.fool.com/the-key-est-numbers-34077907.aspx
https://discussion.fool.com/valuing-our-high-ps-co39s-3-years-ou…