A Few Thoughts

A few thoughts

To start with, the five market indexes I track and compare against are down year-to-date by

-38.1%
-32.7%
-25.7%
-23.2%
-19.7%

They average down 27.9%, meaning the $100.00 you started the year with is now worth $72.10. That’s astounding and horrifying.

The “overvalued” stocks in my portfolio, which you are all familiar with, give me a portfolio which is down just 7.1% year-to-date. So my $100.00 at start is now worth $92.90. That is a huge difference in two and a half months.

What that means is that if you conscientiously tried to cushion your portfolio of “overpriced” stocks with nice “safe” market index ETF’s or equivalent, on average the more “safe” general market stocks you added, the worse your portfolio was hit. It’s pretty ironic isn’t it?

And someone on the board wrote off-board to bemoan that in spite of all the warnings about using options, he overused them and went from up 40% to down 27%! A word to the wise is sufficient.

What have I been doing these two weeks? Let’s look alphabetically. Keep in mind though that the changes for the most part (except Afterpay) are just nibbling or adding around the edges without any major changes.

I’ve continued to sell off Afterpay, feeling that retail moderately high-end clothing will slow down hugely with all the craziness. It’s down to a quarter of a percent position.

I’ve added small amounts to Alteryx several of times.

I haven’t touched my Coupa position, which is the smallest of my major positions anyway, at 10%.

I think I should add bunches to Crowdstrike as it fell to ridiculous levels today, but I don’t have the cash or the confidence.

I just added a little once to Datadog, which is still a 19.5% position, but has been edged out of second place by Zoom at 19.8%.

I’ve added multiple times to Okta.

I haven’t touched Red Violet, which reported earnings today, by the way. It’s still a 1.6% position. This was the December quarter so coronavirus wasn’t involved, but revenue was up 92%. If you are interested I suggest you read the earnings report.

As far as Zoom, I have added to it, but most of its increase in proportion of my portfolio comes from it not falling when everything else was falling.

I’ve also added about 2% of margin to pay some of the purchases. As I indicated in the KB, I sometimes allow myself up to 3% or 4% of margin if the circumstances seem to warrant it.

What do I think?

I haven’t a clue when all this will end. I’m pretty sure that Zoom will be a winner. Just reading all the posts about various universities makes it clear that Zoom has become the de facto winner in this space, and when people think of video conferencing or working from home, Zoom has already almost become the standard as far as mind-share, world wide apparently. As far as our other companies, I believe that they will continue to outperform the general market both going down, and in the inevitable rise when this is over.

It has never crossed my mind to get into cash. I’m no good at guessing when to get back in. In the 2008 crash I was down more than the markets, but I was up 110% in 2009 by staying in. This time I’m in safer companies (subscription revenue, high gross margin, low capex, no debt, etc), and am doing considerably better than the indexes, as I described.

Stay well and don’t take health risks.

Saul

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And someone on the board wrote off-board to bemoan that in spite of all the warnings about using options, he overused them and went from up 40% to down 27%! A word to the wise is sufficient.

I used options (covered calls) and my portfolio is down 3.0% YTD instead of down 7.1%. One must learn to use one’s tools.

Denny Schlesinger

8 Likes

re: I’m pretty sure that Zoom will be a winner. Just reading all the posts about various universities makes it clear that Zoom has become the de facto winner in this space, and when people think of video conferencing or working from home, Zoom has already almost become the standard as far as mind-share, world wide apparently.

FWIW, I’m not sure if this is true or if ZM is taking advantage (business wise) of the situation to now upsell those with free accounts. This message just showed up on my account this morning:

“Important Notice: Due to increased demand, dial-in by phone audio conferencing capabilities may be temporarily removed from your free Basic account. During this time, we strongly recommend using our computer audio capabilities. If you require dial-in by phone audio conferencing, please see our other package options.”

And yes, I’ve already had two hosted meetings this morning and the direct dial-in option is not available. A few people on the call pointed this out.

Will this help drive business to the paid, premium packages? Or drive users away to other options? For example, I can easily jump on WeBex instead as that is the official service we have at my company. I personally will deal with the “nuance” of having to use the computer audio for small meetings. However, larger meetings might drive me to use WeBex instead (for now).

Stay healthy…and invested!
Luis
@brandstudere

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And just for those who don’t think I’m crazy, I increased my position in Red Violet today from 1.6% to about 1.9%. Still piddling and cautious, but going up. I like the honest and obsessive way that they describe and explain every little expense, and any little discretionary bonus. And I like 92% growth, in a company with a forward P/S ratio of 4 or 5, instead of 15 to 25.

Best,

Saul

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Crazy like a FOX!

Trying to get my head around what these people do, I tried to read their 10-K. It’s so full of buzz words that my head exploded but I was no wiser.

http://investors.redviolet.com/static-files/9ab07f24-76b0-4e…

Then I decided to google “risk management providers” and found a site that lists risk management software. About a million names, no red violets as far as I can tell…

https://www.capterra.com/risk-management-software/

risk management providers

https://www.google.com/search?newwindow=1&client=safari&…

No go for me.

Denny Schlesinger

7 Likes

Then I decided to google “risk management providers” and found a site that lists risk management software. About a million names, no red violets as far as I can tell…

Hi Denny,

Too small? Only $30 million a year last year, up from $16.3 million a year ago. A drop in the bucket.

But I think the real reason they weren’t on the list is that “risk management” usually refers to how much cash an insurance company or an investor can lose, while they deal with an entirely different kind of risk and information.

Saul

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