Answer to email question

Could you help point me in the direction of how you build out your positions? Meaning take something like TWLO where you are very confident. Did you take 2-3 positions to build that out? Over what time frame? What were you looking for as you deployed more capital - dips? Or ?I want more?? Same goes for exiting…from your posts it looks like you may not typically dump a position all at once.

Also curious about cash reserves - not for living expenses but for deploying new capital and taking opportunities like December to buy at lower prices. I’ve read you stay almost fully invested so and trim usually to get the cash. Just trying to understand a little better.

Someone sent me this question off board, but I thought I should answer it on the board.

On taking a position in Twilio I started last January, when I wasn’t nearly as confident in Twilio as now. I took a small position at an average price about $25.75. It went nowhere for about 6 weeks and then shot up in one week from $24.50 to $33.50. I started buying at $29 and finished at $33, and essentially doubled my position at an average price of about $31.15. Then a month or two later I added about the same amount again at about $41.25. After that it was no more major purchases but scattered buying between $54.50 and $62.90. Then added a little at $75 and a little at $83.

You’ve probably figured out that I don’t look for dips or I would still have just my little starter position. I look for good results, good information, and prefer to buy a company that is going up than one that is going down. If there’s a dip for what I consider a misunderstood reason, I will take advantage of that.

On exiting a position, I will usually taper gradually if I’m unsure, and use the cash to buy other things. If something really striking happens I will certainly get out all at once, but that doesn’t happen very often.

On cash reserves for buying bargains, that’s not me. I stay fully invested except for my “living off” cash reserves, but I won’t use those to invest in “bargains” as that invalidates the whole point of having reserves.