April Fools, suckers! Here’s the real March report:
Previous Month Summaries
Dec 2016 (contains links to all 2016 monthly posts): http://discussion.fool.com/bear39s-portfolio-at-the-end-of-2016-…
Jan 2017: http://discussion.fool.com/bear39s-portfolio-at-the-end-of-janua…
Feb 2017: http://discussion.fool.com/bear39s-portfolio-at-the-end-of-febru…
note that I use tickers .INX, .IXIC, and IWM to benchmark. These do not include dividends, I don’t think. If anyone can suggest tickers that do, I will switch over.
My Portfolio 0.86%
Russell 2000 -0.26%
My Portfolio 18.98%
Russell 2000 1.95%
Changes this month, and why I made them
SSW - Do you really need to ask? This was just my last stronghold in trying to outsmart the market. Spoiler alert: it didn’t work.
BOFI - Sold this at the very beginning of March. I would say I lost interest, but I never really had any. Turns out my timing was good as BOFI was down roughly 17% in March, but I don’t think I’ll mess around with it any more right now (by buying back in and hoping for another pop or something). Bank stocks are not really in my area of competence.
LGIH - I took the earnings report as an opportunity to exit. My reasons:
- Not my area of competence
- Too many external factors are affecting them, in my opinion (whims of the housing market, interest rates, sales prices of other real estate, etc.)
- Sounds like revenue growth & EPS growth are both going to be negative YoY in Q1, even by their own updated guidance.
- Because of #3, I expect the shares will be on offer at a lower price soon (May?) and I can always re-evaluate then.
AMZN - Really just sold to raise some money. Not worried about AMZN in any way and I hope to own again soon. Will probably wait and see if I can get a lower price, though.
TASR - Brian Stoffel, my current favorite Fool writer, picked this as his favorite stock to buy for March. (Feb was PAYC, Jan was MELI, Dec was SHOP, Nov was also PAYC. He’s got a decent track record.) When I looked into TASR, I was impressed. Here’s what I wrote on the Rule Breakers board:
[Stoffel gives] a lot of impressive news and not really any bad news. Why on earth has the stock been dropping? What’s the bear case?
TASR is not exactly a recent IPO or something – they’ve been publicly traded since 2001. The fact that they appear to now be spending to grow might be confusing to some, especially since EPS has not moved up in years. Margins have expanded as fast as revenues. The market appears to doubt that they will ever see an inflection point. But this is how SaaS works.
I think Stoffel’s point is that the market is not seeing the impact of the wild growth in Axon services. From 12.7M in 2015 to 29.7M in 2016, that’s pretty heady. Still only 11% of all revenue, so maybe they’re not getting that much credit for it yet. I also saw in the CC that they said annual recurring revenue was up to 40.2M, so maybe that’s more of a run rate? If so, that would be even better, because it increased 26% sequentially. And considering they already have over 350M in future contracted revenue, I feel like that’s likely to grow and grow. To put it mildly, this is looking really, really good. Those recurring revenues haven’t quite affected the bottom line yet, like they inevitably will. Now might be the time to buy.
Trims, Adds, and Holds:
I was up 30% on TTD in just a couple weeks. I took a little off the table in hopes to buy back lower…which I did. And a lot lower. Almost as low as I bought the first time around. I bought so much in fact, that this is now my #2 position. I’m not entirely comfortable with them yet, so I’ve stopped adding, but I do think this could be a great opportunity. 9% is enough, though.
Added to YELP - Can’t believe this thing is so cheap. I could see a near-term double unless things take an ugly turn or something. Fundamentals are improving fast. 2016 CFFO was 18% of revenue, up from 2015 CFFO that was only 10% of revenue! They’ve also got almost half a billion in cash, and mkt cap is < 3B.
Added to TWLO - I’m starting to realize how dominant this company is. It’s becoming another “Why would you not use X?” situation. I keep hearing about competition, but then I also hear TWLO has 80% market share or something. The dollar based net expansion rate is off the charts. But it ain’t cheap. Still a mid-sized position for me.
SPLK got cut because I wanted to shift into other things. I still like it, but it’s not one of my favorites, so I figured a small position was best. So many others are growing faster and far less complicated.
Added to FB - This company really provides tons of upside with very little downside, if you ask me. That’s a powerful punch. The incredible growth they’re experiencing and all the places they have left to grow…considering they’ve already got more earnings than almost all other companies in the world…it’s truly staggering. This is my highest conviction pick right now.
Added to TLND - Still smaller than my average position, because it is illiquid and volatile, but I really like it. The increasing growth rate is especially encouraging.
Took some more SHOP off the table - Still love SHOP – the company and the stock. I’m a very happy owner, but I can’t let it be a top position at this valuation. I’m content with a mid-sized holding as long as it’s over $65/share.
HDP. I still love it. It’s still a top 5 position. I just have a lot of it already. Too weird and too complicated for me to let it grow into an oversized position right now.
SQ - Ditto what I said for HDP. Also, this one is not cheap.
PAYC - Not cheap, but fundies are so great. Net Margin is rising, and 2016 CFFO was 99M, or 30% of revenue!
XPO - Great value, but not growing like some of my others. I’ve considered adding, but I’m just waiting for now. If it drops much more I’ll probably have to add.
HUBS - Went on a tear, pulled back a little. I still think it’s undervalued, but it’s volatile. I’m fine with a 5-6% position and I’m content to hold.
STMP - My enthusiasm has been tempered a little, due to some insider selling. I still think it has a great opportunity ahead, but I want to see how much growth slows in the next quarter or two, so I’m just holding for now.
So where does that leave us? I hold 14 stocks right now, and have about 5.6% in cash. Here’s a breakdown of my positions:
My Current Allocations
NOTE: The “YTD Ch” column lists the % change in share price in 2017.
Ticker Curr% Add/Sub Mo Ch YTD Ch
FB 12.6% + 4.8% 23.5%
TTD 9.3% + -11.8% 34.6%
YELP 8.2% + -2.8% -14.1%
HDP 8.3% -1.3% 18.1%
SQ 7.9% -0.2% 26.8%
PAYC 7.8% 6.8% 26.4%
XPO 7.3% -6.1% 11.0%
TLND 6.8% + 9.8% 34.1%
SHOP 5.9% - 15.0% 58.8%
HUBS 5.5% 1.8% 28.8%
TWLO 5.2% + -9.0% 0.1%
TASR 4.1% NEW -11.2% -7.3%
SPLK 2.8% - 0.9% 21.8%
STMP 2.7% -6.1% 3.2%
ANET - Well, I sure have missed out so far. I’m eager to see if growth continues to beat their expectations or slows a bit. They do seem to be just kicking CSCO’s tail, and obviously they have some very impressive leadership. I’ll keep thinking about it.
CYBR and VEEV and TEAM are still on the watchlist long term, but none is growing fast enough for me to pay what they’re going for. I like MELI and ZEN too, but again, not at all cheap. VEEV reported earnings on the last day of February. I was not impressed with their guidance: For the year, we expect revenue in the range of $655 million to $660 million, which is an increase from our initial guidance of roughly $650 million. We currently expect subscription revenue to grow at least 25% for the full year. Additionally, we expect subscription revenue from our Commercial Cloud products to increase roughly 15% over last year and subscription revenue from Vault to grow at least 50%.
GOOG/GOOGL - have thought about parking a little money in this low risk investment. They do look like a pretty good buy. I just keep adding to FB instead, for now.
SKX - I’ve been thinking about getting back in because I do like the company and their prospects. It’s just not a rocketship like some other things seem to be, but it’s on my radar.
DY - Great report. Demand seems to remain strong. Good guidance too. The Company also announced its outlook for the third quarter of fiscal 2017. The Company currently expects total contract revenues for the third quarter of fiscal 2017 to range from $715 million to $745 million. On a GAAP basis, diluted earnings per common share for the third quarter of fiscal 2017 is expected to range from $1.02 to $1.15. Non-GAAP Adjusted Diluted Earnings per Common Share is expected to range from $1.11 to $1.24.
Random Thoughts and Conclusions
Things in March were a little more up and down than the first two months of the year, and I’m still not seeing many stupid bargains (like SHOP at 40 was). But I am letting FB grow as I believe it has a lot of upside with little downside, and I’m still a big fan of all the companies I own, and I find myself looking forward to the next earnings reports!
Hope everyone else had a good March and good luck going forward!
My best to all,