There are several things I want to address, so I figured the easiest way was just to discuss each company in my portfolio. It’s changed a ton since my Feb update: Bear's Portfolio through 02/2023
Here’s the update as of today (but remember it could change drastically at any time):
BILL – Why do I keep adding to BILL? Well, first of all, I’m only adding enough to keep the position just over 20%. You will never see me add enough to take it to say, 40%. IMO, there should always be some limit to how much we trust in any company. That said, the answer is: BILL hasn’t failed us yet. Sure, they weren’t able to raise their FY guide this past quarter, but they haven’t missed. They’ve done everything they’ve promised. They’ve endured this SVB thing, and IMO, they’re handling it amazingly. I just think BILL is misunderstood and undervalued etc. But I’m humble enough to know that maybe the market is right and I’m wrong, so it remains my largest position, but still less than 25% of my portfolio.
Zscaler – I said in my February review that the “watchlist” company I was most interested in was Zscaler. I wanted to see their 3/2 earnings (especially Billings) before getting back in. Everything checked out, and to my surprise the stock has been falling anyway. Part of that is that everything is falling…but otherwise I’m bewildered that the market didn’t like this report. I’m comfortable with a 10% position…I’ve even pushed it a little higher in the last few days because I think this one is way undervalued. This is another company that hasn’t missed (at least not in years).
Datadog – I was very disappointed in Datadog’s guidance a month ago, but as most every company has come in with underwhelming earnings calls, I’ve realized they’re in the short list of companies that still haven’t missed, and have done what they said they would. That’s worth a lot to me. I see no reason to hold more than 10%, and at present I’m a bit below that, as Datadog has only recently fallen to a valuation I think is more reasonable, but it’s not a company I’m concerned about long term.
Global-e – This is not a company I expected to add, but @JabbokRiver42 convinced me that they are really seeing tailwinds when not many of our companies are. I just think the TAM is so huge for e-commerce that even their little niche has a long runway, hence the still 60%+ revenue growth they’re seeing. That will slow a bit I’m sure, but I’m in for a small position. I don’t want it to get much above 5% though, because management hasn’t won my confidence. Guidance has been all over the place as I highlighted here: Global-e Online Q4 2022 results - #3 by PaulWBryant
Snowflake – Well you can see I’ve slashed this one immensely. This report was the most disappointing to me of any company I follow. We know we’re in a tough environment, but Snowflake made the completely unforced error of giving 47% FY guidance early, and then having to pull it back to 40% just 90 days later. They are out of the trustworthy group (BILL, ZS, and DDOG) who have not missed – who have done what they said they would. I expected better from SNOW management. And bafflingly, this is still pretty much the most expensive stock around.
Samsara – This is a new one for me. They’re a software company, but they’re in the logistics space, so a slight bit of diversification from our others. They don’t seem to be facing as many headwinds as most of ours. I’ve only started following them in the last few weeks, though.
Cloudflare – Cloudflare hasn’t failed us yet, either has it? I guess it’s in the trustworthy group with BILL, ZS, and DDOG. That’s why I’m believing their FY guide. I love @rmtzp’s point here that Saul highlighted: Cloudflare (NET) reports Q4 - #12 by rmtzp Perhaps I need to increase this one closer to my 10% comfort level. It doesn’t seem cheap even after falling 8% so far this month…but it rarely gets cheap.
Docusign – I was wrong on this one. The Billings guide was awful. I sold.
Please, please, please: let me know if anyone has thoughts on these companies. I’ve said this before, but sometimes I think we “agree to disagree” too much when we should continue to argue and take things point by point, to try to get to the bottom of things. That’s how we learn together, and that can save us from big mistakes. With companies like Snowflake and Gitlab and SentinelOne failing to do what they said they would, I think it’s more important than ever to discuss possible outcomes and not always give management the benefit of the doubt. I’m realizing I need to listen to my gut more on which mgmt teams to trust, and also I truly want/need to have the eyes of all you other smart people out there on the companies I’m following!