An addition to my End of Month Summary

Something NEW! This will be a new addition to my End of the Month Summaries.


Usually, in my end of month summaries, I show you how my current positions have done this year, year-to-date. I thought however it might be interesting for you to see how they’ve done since I first bought them, even if I bought them in previous years. I’ll arrange them in order of length of time held.

**Crowdstrike from 73.06 to 253.70	up         247.2%	buy in Jul 2019 (24 mo)**
**DataDog from 31.50 to 106.06	    	up	   236.7% 	buy in Oct 2019 (21 mo)**
**Cloudflare from 34.97 to 104.84	        up         199.8%	buy in Jul 2020 (12 mo)**
**Snowflake from 302.40 to 247.09	       down	    18.3%	buy in Dec 2020 ( 7 mo)**
**Upstart from 92.20 to 122.20	        up	    32.5%	buy in Apr 2021 ( 3 mo)**
**ZoomInfo from 47.34 to 53.85          	up	    13.8%	buy in Apr 2021 ( 3 mo)**
**Lightspeed from 58.15 to 84.19          up          44.8%	buy in May 2021 ( 2 mo)**
**Zscaler from 186.70 to 218.84		up	    17.2%	buy in May 2021 ( 2 mo)**
**Docusign from 240.05 to	279.20	        up	    16.3%	buy in Jun 2021 ( 1 mo)**

There’s an important lesson in this! Crowdstrike has tripled and a half in two years, Datadog has almost done the same in a year and nine months, and Cloudflare has tripled in value in one year.

Now how often have you seen people say (even on our board), “ABC has gone up 40% in two months (or 50% or 60%), so it’s valued too high now and I’m selling out to wait for a 20% or 30% pullback.” Note that they didn’t say that the picture for ABC had changed, or that there was anything wrong with ABC’s business, or that there was any bad news, etc, it was just that it had moved up 40% or 50% so they were selling out. Let me point out that if you make a practice out of selling out after a 40% move, you will never get the 6 times 40% (240%) move that you see above in Crowdstrike and Datadog, or the 5 times 40% move you see in Cloudflare.

Yes, I have reduced my Crowdstrike position, but not because it had gone up too much, but because it had grown to be too large a part of my total portfolio (over 33% at one point), where I was uncomfortable in having any one position. Crowdstrike is still the largest position in my portfolio. In fact, Crowdstrike, Cloudflare, and Datadog are the largest three positions in my portfolio. So much for selling out because they have gone up.:grinning:

Now let’s look at a couple of other recent long holds.

Okta. I bought into Okta in January 2018 at $29.95 and held it for three years and three months (39 mo), selling it in April of 2021, this year, at about $235. That’s up 685% in those three and a quarter years, very close to an OCTUPLE! I exited because I felt that their growth rate had collapsed… Just think if I had decided to take profits when I had a quick profit, and had sold out when it was up $15 to $45 for a quick 50% gain, and had left $190 of that $235 (or 635% of that 685%) on the table?

Alteryx. I bought in in December 2017 at $27.72. Several weeks after I bought it, it had risen $19 to a price of $47, or up 70%, where the “smart guys” would have sold out and taken profits. I added more… I held Alteryx for roughly two and a half years (30 mo), selling out in May, June and July of 2020 at an average price of about $148.00, when they just fell apart in the Covid year. That’s up 434%, or more than a quintuple of what I started with in two and a half years. Imagine if I accepted a $19 gain instead, and had sold out at $47!

Now let’s look at the wisdom of selling out when circumstances call for it. If you have any doubt about the wisdom of selling out when the story changes, or feel you are being “disloyal,” Alteryx’s current price is just $83. What a good decision it was selling at $148 a year ago and reallocating the money into stocks that are going up. Obviously some of the money from those June and July 2020 sales went into Cloudflare (bought that July), which is now up 200% in a year, while Alteryx is down 44%.

Some people are still holding Alteryx, and a few years from now, when it regains that $148 price where they could have sold, they will feel justified, “See! I was right. It came back!” However $100 in Alteryx last July, and left in it, is now worth $56, while the same amount taken out and moved into Cloudflare is now worth $300. It’s worth more than 5 TIMES as much. NO, not 50% more. Five TIMES as much!!! That’s the definition of the “Opportunity Cost” of sitting on losers and hoping they will get their act together.

And remember Fastly? Nine months ago, last October, it had hit a new high of about $136, but then the bad news came out, and it plummeted. I sold in the aftermarket and the next morning premarket, and got out of my entire position at about $90, and transferred all that cash into Cloudflare at $56.50. Cloudflare is a competitor which I already had a position in since July (see above).

Many others on the board did the same thing, but there were some who stayed in. They felt we acted too precipitously, that Fastly was already down a lot, that it had great tech, and it would bounce back in time, etc etc etc. Well here we are nine months later and Fastly is at $56.47 at Friday’s close, down 58.5% from its high and down 37.3% from where I sold it. Someone who had a $100 position on Oct 15 and held it, now, after 9 months has only $62.70. On the other hand, if they had moved the money into a stock going up, it would be an entirely different picture. That same money into Cloudflare is now worth $187.96, three times as much. NO! NOT 30% more! It’s 3 TIMES as much. That’s again the definition of the “Opportunity Cost” of sitting on losers and hoping they will get their act together.

Some people are still holding Nutanix, waiting for it to come back. It’s still only at 63% of its high of June 2018. That’s three years and a month ago!!! Think of THAT Opportunity Cost!!!

Sure, sometimes you will be wrong! And some companies you sold out of will keep going up. A lot. But you will avoid having a large part of your portfolio sitting fallow, just waiting, accumulating the positions where you are waiting for a return to the good old days. Some may never bounce back in practical terms.

Two lessons here. First, don’t sell out because the stock has gone up, unless your position has gotten too big, and then just trim it. You will make your big money on the stocks that keep going up. Second, you should sell at bad news, if the picture has changed. I have occasionally been accused of buying and selling too easily, but that is usually me trying to find the right company to hold for the longer term. As you can see above, I make my big money on the rapidly growing companies that I buy, add to, and hold on to.

I hope that this has been clear and useful.