Bear's Portfolio at the end of September 201

“I guarantee nothing but hard work.” - Bear Bryant, Alabama Football Coach, 1958 - 1982

“exponential compounded growth does not fit the analytical backward looking skill sets of most Wall street analysts” - mauser96

“I presume the thing is to ride the momentum for the short squeeze and exit fast with enough money for a few months supply of whisky before everyone realises it’s a value trap.” - Strelna

Previous Month Summaries

Dec 2016 (contains links to all 2016 monthly posts):…
Jan 2017:…
Feb 2017:…
Mar 2017:…
Apr 2017:…
May 2017:…
June 2017:…
July 2017:…
Aug 2017:…

Portfolio Performance

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.

Also I have added a monthly metric called MyPort_EWNT (equal weight no tinker) that shows the monthly average gain/loss percentage for all positions I held at the end of last month. The idea is that if:

  1. I hadn’t bought or sold anything, and
  2. I just had an equal weighted portfolio, say 14 stocks that were ~7% each

…then this would be the return. It’s a rough estimate, but comparing it to my actual return each month tells me if all my buying and selling is worthwhile.

**This Month**
My Portfolio              +6.54%
MyPort_EWNT               +2.83%
S&P                       +1.93%
Nasdaq                    +1.05%
Russell 2000              +6.05%
My Portfolio              +55.96%
S&P                       +12.53%
Nasdaq                    +20.67%
Russell 2000              + 9.89%

My Current Allocations

Ticker	Curr%	Buy/S	Mo Ch	YTD Ch
SHOP	16.7%	-9%	5.0%	171.7%
HUBS	11.1%	0%	14.6%	78.8%
WIX	10.4%	0%	10.4%	59.8%
SQ	10.1%	0%	10.3%	111.4%
ANET	7.6%	26%	7.6%	95.4%
TWLO	7.3%	0%	1.9%	3.5%
INST	6.3%	NEW	12.0%	69.6%
FB	6.3%	15%	-0.6%	48.5%
TLND	4.6%	40%	3.9%	84.4%
TTD	4.3%	0%	16.1%	122.3%
MELI	4.0%	-29%	0.2%	65.8%
TDOC	3.3%	0%	-1.2%	100.9%
HDP	3.2%	0%	-0.2%	104.0%
ALRM	2.9%	0%	0.6%	62.3%
MULE	1.9%	0%	-7.6%	-13.9%

Stocks I sold

Momo Inc - MOMO - As I said last month, this was a small dalliance I wouldn’t add to. In fact, I sold it.

Stocks I own

SHOPIFY - SHOP (16.7%) - To slightly modify what they say about themselves, Shopify is “the only platform you need to build your [small or medium sized business] empire [online].” They provide a website, a way to take payments, SEO optimization, etc, etc, etc. They’re innovating and growing…and boy are they growing. They make money when businesses sign up with them, and then they make more when those business grow and sell more stuff.

I first bought SHOP in June of 2016. In Q4 2016, I accumulated shares until SHOP became a 25% position for me. When it started to spike in 2017, I took profits (maybe too quickly). In May, I started to add back to my Shopify position. In July I trimmed a bit to add to other things, but in August after fantastic earnings I added a little. Then on 8/10 it ridiculously dropped below $90, and I backed up the truck. My position was again over 20%. I’ve trimmed a couple times since then, including 9% of my position in September.

Shopify continues to grow revenue at a 75% clip. Of course there’s a lot more to the story when you look at how they’re running the company, all the innovations they’re adding, etc…but I’m not really sure how much more you need. As Saul is fond of saying, companies in the real world don’t grow like this. Yes, it’s expensive at a PS ratio usually near 20, but suck it up, buy Shopify, and ride this train for years to come. I think in the not-too-distant future, this company will be worth many multiples of its current 11B price tag.

HUBSPOT - HUBS (11.1%) - Hubspot helps companies manage their brand online. This is much more than just buying ads. This is SEO, website, blog, social media, etc, etc. Hubspot is such a powerful and value-adding tool for marketing departments (a CMO’s dream) that I can’t see why any company of a certain size wouldn’t want to use it, and use it increasingly. Of course with a product that’s this much of a value add, there are certainly competitors. Yey it sure seems to me like Hubspot is a leader, if not THE leader, in the space, and the results it continues to acheive seem to confirm this.

In the June quarter, they grew revenue 37% (and almost all of it is recurring), raised guidance (again), and announced some other great trends. Customer growth actually accelerated! You can read a little more about why I like Hubspot here:

I didn’t add to my position in September, but I haven’t sold any either, even as it grew to over 11% of my portfolio. Just a few days ago they partnered with Shopify, and raised guidance for the September quarter, so it seems the hits just keep on coming for Hubspot.

WIX.COM - WIX (10.4%) - Wix is a company that helps users create websites, and then hosts them. It makes most of its money by charging subscription fees for premium content. It has over 100M users, and almost 3M of them pay for premium accounts.

Wix reported an impressive quarter on July 27th. Revenue growth accelerated to 51%, FCF and collections were up…the only down spot was that Avg Coll per New Sub (which I lazily call ARPU) was flat. They had a reason (Easter discounts), so I’m not worried too much. Analysts were concerned growth is slowing, but management didn’t see any signs of that. I think it’s a lot of worry about nothing. Wix shares have dropped and look really attractive. With revenue growing at over 50% and a PS ratio around 9, I really love the value proposition here.

SQUARE - SQ (10.1%) - You might know Square if you’ve ever paid with a credit card at a local vendor – there’s a good chance they used a Square device to take the payment. Square also provides many other services available to their customers. One of the most profitable is Square Capital, which really leverages their data advantages to offer extremely profitable and low-risk loans to their customers.

Square reported their June quarter on 8/2, and it was pretty much aces. Part of me wished they hadn’t increased spending so much, but that’s probably just me being short sighted. They have a big TAM to go after! And just their Services segment would be a decent company on its own:…

I first bought Square in November at 12.24 per share. It’s been an incredible ride, and in July it turned into a double for me. I had trimmed 10% in July, mostly based on valuation, but when they turned in such a great quarter and the price went nowhere, I added it back and more. Even though Square is pricey at a PS of over 13, I’m letting it ride for now.

ARISTA NETWORKS - ANET (7.6%) - Arista sells network switches, just like Cisco, except Arista’s switches use SDN (Software Defined Networking), which I understand makes for better control, performance, and security. Oh, they’re also pretty hard to make, because Cisco is sucking wind trying to catch Arista, but to no avail.

Their June quarter was an absolute thing of beauty. 51% revenue growth (accelerating quite a bit), while OpEx was up only 21%. That’s a way to drop a LOT OF MONEY to the bottom line. Not only that, but Arista is pretty dang reasonably priced at a PE in the mid 40’s.

Obviously I like this company a lot and just wish I would have started paying more attention sooner. I started a position in August, added 26% more shares in September, and I’ll be considering adding more.

TWILIO - TWLO (7.3%) - Twilio makes web service APIs for phone calls and texting. Software developers who subscribe to Twilio’s platform can use these services in their products, and this works out great on both sides: from customers’ perspective they only have to pay when these services get used, and from Twilio’s perspective, the more the services get used, the more Twilio gets paid.

Twilio’s biggest customer, Uber, has decided to multi-source, and thus has reduce their spend with Twilio, but I think the worries are overblown, because Uber really isn’t that big a piece of the pie anymore. When Twilio reported (a fantastic) Q2 in August, Uber accounted only 9% of total revenue. Revenue growth accelerated to 49%, and base revenue (recurring) sans Uber grew an insane 65%. And they added 2,735 customers in the quarter, which handily beats the 2,132 they added in Q2 2016. Demand looks strong.

As long as they keep adding tons of customers, and current customers keep increasing their spend, I really like Twilio’s value here. They are growing way too fast for a company with a PS of 8 or so. I held pat this month, but I will be looking to add more before September quarter is reported.

INSTRUCTURE - INST (6.3%) - This is a new company I brought to the board in September.…

Instructure is a cloud-based learning management platform for academic institutions and companies across the world. Their platform enables virtual learning, and they’ve gotten so good at it in the education context (since they started in 2008) that they’re now (actually since early 2015) offering it in a business context as well. Their classroom product is called Canvas, and their business solution is called Bridge. They are constantly signing school districts and businesses to expand their reach to hundreds of thousands of new users.

Revenue growth has been well over 40% (47% last quarter) and incredibly the PS ratio when I bought was 6.5. It’s up to 7.2 now, but obviously that’s still very attractive. A full 88% of revenue is recurring, and they also have a ton deferred.

This is one I’m excited about, and I will be considering adding more.

FACEBOOK - FB (6.3%) - I sold Facebook back in May because I thought their ad business had to be getting close to a saturation point, and that they probably didn’t have a lot of levers left to pull for growth and profit. But then I started using “Marketplace” to sell some items around the house. They should absolutely put eBay and Craigslist and who knows who else out of business! This is just a small example, but to me it was a totally new line of business for them. Then they added a video section. I don’t know how that will work out, but my point is simply that FB is far from done growing. When you have 2B users (ponder than number for a moment) you can do almost anything you want.

I added 15% more shares in September. When I look at growth percentages, FB (although much much larger) actually fits in well with the other companies I own. Revenue was up 45% YoY in the June quarter, and EPS were up 69% in the same time. With FB sporting a PE ratio of just 38, I just can’t ignore that kind of growth. They have incredible net margins, so their EPS are actually a bigger percentage of a smaller overall revenue base than other huge companies…say, Amazon or Google. So I think FB still has plenty of growing to do. And again, 2B eyeballs to sell to.

TALEND - TLND (4.6%) - Talend has carved out a niche within big data integrations by specializing in Hadoop, an expertise that will not be easily disrupted. Saul has called them a “category crusher,” a leader with no viable competition in its niche. I tend to agree, though others will not ignore this space forever. Hopefully Talend will continue to build up years of subscription revenues while they occupy the catbird seat.

I first invested in Talend in February, and added in March, April, and May. In June and July I trimmed it, and in August I sold quite a lot to invest in other things. I added back quite a bit in September, but I’m not opposed to adding more in the coming weeks, before earnings.

THE TRADE DESK - TTD (4.3%) - The Trade Desk plays in the somewhat crowded world of advertising tech, but it seems the way they’ve positioned themselves to work with ad agencies (instead of companies placing ads) has really made them a preferred tool for the buy side. They also don’t buy inventory but just facilitate, so that streamlines their process and enables them to serve their customers without conflict. Their growth is phenomenal: revenue grew by 78% for the year in 2016. And they’re profitable with a PE around 50, which given their growth, seems quite low.

On 8/10, TTD reported another sensational quarter. Revenue was up 54% and EPS grew to 52 cents from just 22 cents in the June quarter of 2016.

TTD was up 16% in September alone – the best of any stock in my portfolio this month. Despite great returns on the stock, and pretty much perfect performance by this company, I still have jitters about the ad tech space in general, and specifically whether or not they can maintain both their incredible growth and their profitability. I’ve decided to keep my position on the smaller side for now.

MERCADOLIBRE - MELI (4.0%) - Most Fools have heard of Mercado. It’s been called the South American Ebay/Amazon. They have been growing like a weed, expanding offerings, taking payments, etc, etc. Mad growth. But they’ve added free shipping, and especially since this is South America, the market is taking a wait-and-see approach as Mercado spends a lot of money getting it going. In fact, this translated into an almost 20% discount to recent highs, so I added some Mercado during August.

In September Mercado bounced back (as high as $294/share) and I took the opportunity to shed 29% of my position. It’s back down to $259 at present, and should remain volatile. I like it for the long term, but I want to see how the shipping works out in the next few quarters before I consider adding more…unless it drops precipitously again – then I might add.

TELADOC - TDOC (3.3%) - Teladoc is a rapidly growing (though partly by acquisition) telehealth company. What’s a telehealth company? Well, you can actually meet with a doctor via a Skype-like visit online, rather than going into the doctor’s office. Sounds like the future, huh? I’ve been tracking them for a year or so – the company I work for actually got Teladoc coverage a couple years ago. I wrote them up in June:

There’s been a lot of news, including the Best Doctors merger, which was large. A recent big win for them was Blue Cross selecting them. Seems like a lot is happening with this company, which makes it fun to follow.

Teladoc is far from profitability and it’s a wild idea and I still have my questions about their finances, and their prospects in general (not to mention possible competition, competitive advantages, etc). It’s the wild west, so I’m keeping my position small for now.

HORTONWORKS - HDP (3.2%) - Hortonworks helps companies manage big data with Hadoop. Customers subscribe to the HDP software platform, and Hortonworks stores, processes, and analyzes their data.

On July 18th, Hortonworks announced that the COO was leaving the company. We had lots of discussion on the board about what this might mean for their pipeline, and this led me to decrease my position substantially. However, no bombs were dropped in the June quarter conference call, and results were right in line with what I’d hoped, so I added a little back in August. Still, I know about as much about Hadoop as rocket science, so I’m gonna keep this one relatively small.

ALARM.COM - ALRM (2.9%) - As stenlis, who brought Alarm to Saul’s board, puts it: Holdings, Inc. provides cloud-based software platform solutions for the smart homes and businesses in the United States and internationally. The company provides interactive security solutions to control and monitor their security systems, as well as connected security devices, including door locks, garage doors, and video cameras.

I wrote them up here:…

This is a profitable company that’s growing nicely with a cloud subscription component. I’m fairly new to them, but intrigued! Keeping my position small for now, but tell me more!

MULESOFT - MULE (1.9%) - MuleSoft integrates applications. Wikipedia actually calls their directory of API’s a “social network for developers.” When Saul originally described MuleSoft, some thought it sounded a lot like Talend. It actually does a type of integration so different from what Talend is doing, that I think it has more in common with Twilio. It facilitates communications – not between apps and their user’s phones (like Twilio does), but rather between apps and other apps.

Saul has pointed out several times that they’re not only growing by winning tons of contracts, but also by a drastically increased contract value. Another incredible revenue force multiplier like so many of today’s great young companies have (e.g. SHOP, WIX, SQ, TWLO, MELI, etc). Chris breaks it down here:…

Chris also lists customer count, though, and growth there seems to be slowing. Recurring revenue growth may be slowing as well. I reduced this one to a shell position in August, and the market seems to have taken a breather on it here in September. I’ll be watching in a few weeks when they report the September quarter, and I’ll probably decide then whether to increase my position or let it go.

Random Thoughts and Conclusions

I am constantly reeling by the way this year’s success has realigned my perspective. It’s quite simply better than I would have believed:…

I was listening to Tim Ferriss, one of my favorite author/podcasters, talk about how when people lose 50-60 pounds, they start to believe other things are possible as well. That’s what it’s been like for me with investing this year. I’m not naive enough to think I’ll be able to do this every year, but I think doing it has given me a new appreciation for what’s even possible. I believed in active investing in individual stocks conceptually…now I believe because I have seen.

I guess all I’m saying is, a lot more is possible than most people think.

My best to all,


I am constantly reeling by the way this year’s success has realigned my perspective. It’s quite simply better than I would have believed
Agreed Bear - all I would add is that the journey is pretty enjoyable too. I’m glad this board is made up of such a super bunch of interesting, intelligent and generous folks and long may that continue far beyond this year’s perspective realignment!