Disclaimer: I post my portfolio to share ideas and track my results. Please do not try to copy anything I do – it may not be right for your style, but even more than that: you have to understand for yourself why you hold the companies you hold. Please don’t email me portfolio management questions. I have absolutely no idea what you should do, because only you can know how best to run your portfolio – and if you’re like I was when I was first running a concentrated portfolio, it will take months of rapt learning (including following along on this board) – and plenty of trial and error – to figure out what works for you. Here are a few answers to some questions I get frequently:
Q: Does your return percentage include the cash you hold?
A: YES, the 0% return from cash held is included in the overall return and obviously drags it down. But options trading (off topic for this board!) and other trims and adds can also affect return (sometimes positively, sometimes negatively) – and I won’t be able to share my real time moves, because I make little changes all the time.
Q: Are stocks overvalued? Is that why you hold so much cash?
A: I never know when anything is overvalued. I just do what works for me.
Q: Should I hold cash to be able to buy on pullbacks?
A: Probably not if you have new money coming into your portfolio regularly (like from a paycheck), right? But when you’re retired you just have to figure out what works for you. The closest thing to advice I’ll say is this: You will never time it perfectly anyway, so just use your judgment and do what helps you sleep at night.
**Port Return** Jan -21.2% YTD Feb -23.8% YTD
Here’s what I did in February:
This month, like last month, I did a lot of adding and trimming of my positions. Some days I had 4% cash and some days 15% or more. Importantly, nothing I did was perfect in execution or in plan. It’s not necessarily imitable. I make a lot of mistakes and can’t always explain my decisions. I make the best decisions I can, and I hope I continue to get better!
The position I added to the most was Zscaler – it went from a 6.8% position at the end of January to now an 18.1% position, my second largest after Bill.com. In the course of February through all my adding and trimming, I ended up with more Bill.com and Amplitude shares than I started the month with, and fewer Datadog and Monday.com and SentinelOne shares. More about all this below as I review what I’m thinking on each company.
On days that I was trimming I actually sold out of my tiny Cloudflare position (which was only 2.4% at the end of January anyway) and also sold out of my tiny Upstart position (which was only 1.9% at the end of January), and both of these sales were mainly because I just can’t seem to get comfortable with these companies. I know a lot of people like them both, and the techies I know all love Cloudflare, but I could never really understand it. Nor could I get my head around the bank/lending world with Upstart. I hope those of you who still own these do very well.
I didn’t buy any new positions in February, so now I’m down to 6 companies, plus cash.
**Allocations** Ticker Curr% Jan Mo Ch YTD Ch BILL 18.9% 13.9% 26.4% -4.5% ZS 18.1% 6.8% -7.0% -25.6% DDOG 15.5% 15.8% 10.3% -9.5% MNDY 12.5% 18.8% -24.1% -48.5% S 12.0% 15.8% -7.3% -17.8% AMPL 7.1% 12.1% -45.5% -59.5% cash 15.9% 12.3% **Sold** NET 0.0% 2.4% 20.8% -11.5% UPST 0.0% 1.9% 44.9% 4.4%
11/30/2021: $280.85 (Market Cap Approx: $29b, TTM Revenue: $308m)
12/31/2021: $249.15 (Market Cap Approx: $26b, TTM Revenue: $308m)
01/31/2022: $188.21 (Market Cap Approx: $19b, TTM Revenue: $308m)
02/28/2022: $237.88 (Market Cap Approx. 25b, TTM Revenue: $411m) Look how much that revenue jumped!
Bill reported on February 3rd and it was a blowout. Here are some thoughts I posted about it: https://discussion.fool.com/great-follow-up-rmtzp-and-nice-to-se… There’s a lot in the thread if you want to learn more – my post is just a small part of it.
Bill was one of the few stocks of mine that was up this month. But unlike Cloudflare and Upstart which I sold, and Datadog which I trimmed, I actually added to Bill.com – even after it became my largest position. I think this story is just beginning. They seem to pretty much own their category without a reasonable “Pepsi” to their “Coke.” And they are exploding both organically and thanks to Divvy (which they acquired). Happy shareholder here.
05/28/2021: $194.20 (Market Cap Approx: $28b, TTM Revenue: $536m)
06/30/2021: $216.06 (Market Cap Approx: $32b, TTM Revenue: $602m)
07/30/2021: $235.91 (Market Cap Approx: $34b, TTM Revenue: $602m)
08/31/2021: $278.34 (Market Cap Approx: $41b, TTM Revenue: $602m)
09/30/2021: $262.22 (Market Cap Approx: $39b, TTM Revenue: $673m)
10/29/2021: $318.86 (Market Cap Approx: $47b, TTM Revenue: $673m)
11/30/2021: $346.97 (Market Cap Approx: $52b, TTM Revenue: $761m)
12/31/2021: $321.33 (Market Cap Approx: $49b, TTM Revenue: $761m)
01/31/2022: $257.11 (Market Cap Approx: $39b, TTM Revenue: $761m)
02/28/2022: $239.15 (Market Cap Approx. $36b, TTM Revenue: $860m)
Zscaler reported on February 24, and it was a great quarter. Maybe not the blowout that Bill.com put up, but still incredibly solid. So the market sold it off. And I loaded up. I had added quite a bit this month before the earnings, but I added a bunch more at ridiculous prices ($210-220 if I remember correctly). The market irrationality on ZS seems to be dissipating already, as it has been up each day this week, but I still think the price is right. I’m not trimming yet. (This is a cool example of why I provide the somewhat “busy”-looking monthly history above. Back in August Zscaler’s TTM revenue was only $602m and it was a $41b company. Now with $860m revenue in the last 12 months, you can buy it for the low low price of $36b!
02/26/2021: $95.41 (Market Cap Approx: $33b, TTM Revenue: $604m)
03/31/2021: $83.34 (Market Cap Approx: $29b, TTM Revenue: $604m)
04/30/2021: $85.77 (Market Cap Approx: $30b, TTM Revenue: $604m)
05/28/2021: $91.05 (Market Cap Approx: $31b, TTM Revenue: $671m)
06/30/2021: $104.08 (Market Cap Approx: $36b, TTM Revenue: $671m)
07/30/2021: $110.70 (Market Cap Approx: $38b, TTM Revenue: $671m)
08/31/2021: $137.80 (Market Cap Approx: $47b, TTM Revenue: $765m)
09/30/2021: $141.35 (Market Cap Approx: $49b, TTM Revenue: $765m)
10/29/2021: $167.05 (Market Cap Approx: $58b, TTM Revenue: $765m)
11/30/2021: $178.29 (Market Cap Approx: $62b, TTM Revenue: $880m)
12/31/2021: $178.11 (Market Cap Approx: $62b, TTM Revenue: $880m)
01/31/2022: $146.11 (Market Cap Approx: $51b, TTM Revenue: $880m)
02/28/2022: $161.11 (Market Cap Approx: $56b, TTM Revenue: $1,029m)
Last month I said, “If they crush it as hard as they did in Q3 I’ll be amazed. But Datadog seems to amaze me all the time.” Well, they did it again. On Feb 10 they reported another blowout quarter. The market actually responded reasonably and bid DDOG up to more than $180/share briefly, but it has fallen back since. Still, DDOG is actually down only single digits this year – that’s a top hypergrowth company down less than the Nasdaq. (Same with Bill, btw.) My trimming has been minimal, but it has mostly been other opportunities (like ZS dropping after earnings) that I’ve been adding to lately. I did add back some DDOG when we got a crazy-low price (below $140) on the morning of 2/24, but unfortunately that was one of those times where I was close to 100% invested, so I didn’t have much cash left to put into it. Perhaps I will look to do so now, as my cash position is back up to 15%+.
08/31/2021: $379.36 (Market Cap Approx: $17b, TTM Revenue: $223m)
09/30/2021: $326.20 (Market Cap Approx: $14b, TTM Revenue: $223m)
10/29/2021: $371.83 (Market Cap Approx: $16b, TTM Revenue: $223m)
11/30/2021: $359.80 (Market Cap Approx: $16b, TTM Revenue: $263m)
12/31/2021: $308.72 (Market Cap Approx: $14b, TTM Revenue: $263m)
01/31/2022: $209.32 (Market Cap Approx: $9.3b, TTM Revenue: $263m)
02/28/2022: $158.87 (Market Cap Approx: $7.1b, TTM Revenue: $308m)
Coming into February, Monday.com was down to such a level that I almost thought they had to bounce back. Instead they fell another 24.1% this month (and more than that for a few days). Shows what I know. Monday reported a quarter on February 23 that I am tempted to call a blowout. I saw absolutely nothing wrong with the numbers – just a company growing at a 90%+ clip, trying to keep the pedal to the metal. The $50k+ customers growth was way stronger than I expected. Check out the trend!
Mar 2021: 335 (71 added)
Jun 2021: 470 (135 added)
Sep 2021: 613 (143 added)
Dec 2021: 793 (180 added)
Massive growth. I also loved the 10.1m free cash flow! As Saul said, they showed that they could leverage. And yet I guess some people were worried about the Operating Loss guidance. But look how that’s worked in the limited experience we have – they’ve improved it massively each quarter. It’s just another way to play the beat and raise game. Let me be clear: The number they guided for, Non-GAAP operating loss of $147 million to $142 million (for the full year), will not happen. Next quarter it will get “revised.” And the next quarter, etc. Heck, they may break even for all I know.
With all that said, I feel like I should be adding to Monday. But actually, I had trimmed it before earnings and I’ve added back a little bit less than I trimmed. I am trying to balance my enthusiasm with the fact that this is a company we have a limited history with, as they’ve been public for less than a year. I guess I’ll be happy with Monday as a large position, but not my largest.
12/31/2021: $50.49 (Market Cap Approx: $13b, TTM Revenue: $169m)
01/31/2022: $44.14 (Market Cap Approx: $12b, TTM Revenue: $169m)
02/28/2022: $41.50 (Market Cap Approx: $11b, TTM Revenue: $169m)
As I pondered all that with Monday, I also looked at my SentinelOne position, which coming into February was 15.8% – tied for my second largest, and I realized I was letting my enthusiasm get ahead of my conviction. I pared it back a bit, but it too is still a large position. All the news seems awesome, and I’m sure they will blow it out when they report on March 15.
09/30/2021: $54.34 (Market Cap Approx: $7.0b, TTM Revenue: $129m)
10/29/2021: $74.29 (Market Cap Approx: $9.6b, TTM Revenue: $129m)
11/30/2021: $65.00 (Market Cap Approx: $8.4b, TTM Revenue: $148m)
12/31/2021: $52.94 (Market Cap Approx: $6.9b, TTM Revenue: $148m)
01/31/2022: $39.31 (Market Cap Approx: $5.1b, TTM Revenue: $148m)
02/28/2022: $21.44 (Market Cap Approx: $2.4b, TTM Revenue: $167m)
Even though Amplitude was my 5th largest position coming into February, I feel like I made a mistake here – it was too large. We had only had a single quarter of experience with them as a public company before the quarter they reported on February 16. I was rocking a large position as if I knew things I couldn’t yet know. Those things (like AMPL being a 70% grower) seem to have been incorrect. So why haven’t I sold? I admit that trying to value a company that isn’t growing quite as fast as I would hope…is not what I do best. I admit that I feel Amplitude has been oversold and is now far too cheap. I admit that I’m also hoping next quarter will be a bounce back that shows the business is growing well, if not quite as fast as we thought. I added a little at ridiculous prices around $20 (it actually got under $17 at one point). I don’t plan to add more, and I may well trim. But I wouldn’t be surprised if there’s a lot of upside here. Still, I don’t really recommend this risky play. And it will remain a small position for me.
I believe we are at our best as investors when we are relentlessly pursuing the best companies. This leads me to concentrate my portfolio to just a handful of companies that I follow closely. To do this I have to say no to good companies that in my opinion are simply not the best companies.
I think it’s also important to see that we can be wrong about stuff ALL THE TIME (as I was and still may be about Amplitude), and also that we can weather the storms the market throws at us like the last few months, and we can still do incredibly well. Though I make many mistakes, my portfolio’s growth over the last several years has amazed me. Let’s see what we can do in 2022!!!
“Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.” - Attributed to Albert Einstein
Previous Month Summaries
Dec 2016 (contains links to all 2016 monthly posts): http://discussion.fool.com/bear39s-portfolio-at-the-end-of-2016-…
Dec 2017 (contains links to all 2017 monthly posts): http://discussion.fool.com/bear39s-portfolio-through-dec-2017-32…
Dec 2018 (contains links to all 2018 monthly posts): https://discussion.fool.com/bear39s-portfolio-through-dec-2018-3…
Dec 2019 (contains links to all 2019 monthly posts): https://discussion.fool.com/bear39s-portfolio-through-dec-2019-3…
Dec 2020 (contains links to all 2020 monthly posts): https://discussion.fool.com/bear39s-portfolio-through-dec-2020-3…
Dec 2021 (contains links to all 2020 monthly posts): https://discussion.fool.com/bear39s-portfolio-through-122021-350…
Jan 2022: https://discussion.fool.com/bear39s-portfolio-through-012022-350…