WARNING: I was down more than 40% YTD at one point this year. If you haven’t experienced that before, know that not everyone can tolerate it. I don’t suggest investing like I do. I suggest figuring out what works for you.
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 Mar -26.0% YTD Apr -35.5% YTD (so I’m at 64.5% of what I stated with)
Here’s what I did in April:
To quote Saul, “April was an awful month in the market.” The Nasdaq dropped more than 13% and the S&P lost almost 9%. Fear and doubt ruled the day. But lower stock prices aren’t a problem when you invest long term, in healthy, rapidly growing companies. Lower prices today mean more room for them to rise in the future. Because ultimately the market is a “weighing machine,” no matter where the “voting machine” (which in the short term is much more powerful) pushes prices currently.
I only mitigated the damage by being willing to keep a large cash position and using it to trade – I increase my position sizes when things are down, and I reduce them back to normal when things go back up. That only works a little bit, and if things do not go back up, I have to decide whether or not to take a loss, or hold the larger position. Again, I recommend not copying my ways, here. But it seems to work for me, not that it saved April from being “awful.”
I trimmed Monday.com considerably. I added a Snowflake position and a MongoDB position. I added a very small Twilio position, and a tiny Upstart position. (More on all that below)
I didn’t sell out of anything, so I now hold 10 companies, plus cash. But almost 80% is in my top 3 companies and cash. Hopefully I’m through with letting my enthusiasm get ahead of my conviction – I’ll try to build up positions in new companies more slowly from now on.
**Current Holdings** Ticker Curr% Mar Mo Ch YTD Ch DDOG 21.3% 18.0% -20.3% -32.2% BILL 20.3% 19.1% -24.7% -31.5% ZS 19.6% 19.4% -16.0% -36.9% MDB 6.3% 0.0% -20.0% -32.9% MNDY 4.6% 13.9% -18.1% -58.1% SNOW 4.5% 0.0% -25.2% -49.4% S 2.2% 2.2% -14.1% -34.1% TWLO 2.0% 0.0% -32.2% -57.5% AMPL 0.8% 1.4% -5.3% -67.0% UPST 0.4% 0.0% -31.2% -50.4% cash 18.1% 25.9% **Sold in 2022** NET 0.0% 0.0% -28.0% -34.5%
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)
03/31/2022: $151.47 (Market Cap Approx: $53b, TTM Revenue: $1,029m)
04/29/2022: $120.78 (Market Cap Approx: $42b, TTM Revenue: $1,029m)
Daatadog was down 20.3% in April, mostly (I believe) because as I referenced above, the Nasdaq was down more than 13% this month. I liked DDOG enough to make it my #3 position last month when it was a $53b company. Now, at $42b, I’ve made it #1 (again). Looking forward to earnings this week.
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!
03/31/2022: $226.79 (Market Cap Approx. 23b, TTM Revenue: $411m)
04/29/2022: $170.71 (Market Cap Approx. 18b, TTM Revenue: $411m)
Confusingly, Bill.com was down 24.7% in April. Perhaps the market has forgotten the blowout quarter they reported in early February, which rocketed the shares up to $250+. Bill shares have fallen all the way back down to below where it was at the end of January, before that quarter even happened. Amazing. I added a lot to BILL this month, and I can’t wait to see their Q1 numbers this week. They’ve been exploding, and I hope that continues.
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)
03/31/2022: $241.28 (Market Cap Approx. $36b, TTM Revenue: $860m)
04/29/2022: $202.74 (Market Cap Approx. $30b, TTM Revenue: $860m)
Steady eddy Zscaler “only” lost 16% this month, just a little more than the Nasdaq. I added a little, but not as much as I did to DDOG and BILL. I think Zscaler is as solid as they get, but I don’t expect them to grow quite as fast as the likes of Datadog. Still, I have a high level of conviction that the business will keep growing well.
04/29/2022: $354.93 (Market Cap Approx. $24b, TTM Revenue: $874m)
Like Saul, I was impressed by the growth of Atlas as it drives the overall company more and more. I’ve also come to believe they’ve emerged as the winner in their space – thanks very much to Peter Offringa for his writings, ExponentialDave for his Youtube video, and other techies who have weighed in. A skittish market might sell the seasonally low Q1 they are soon to report, so I’ll be waiting and ready to buy more if so.
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)
03/31/2022: $158.07 (Market Cap Approx: $7.1b, TTM Revenue: $308m)
04/29/2022: $129.40 (Market Cap Approx: $5.8b, TTM Revenue: $308m)
As I said above, I trimmed Monday.com considerably. Why? As with SentinelOne, I believe with Monday I let my enthusiasm and excitement get ahead of my conviction. They have both shown some great numbers, but neither has been public for more than a matter of months. SentinelOne at least provides a mission critical product, despite many competitors. With Monday, I still don’t know if the product is a must have. It’s doing something that seems cool and super useful in our 2022 world – offering software that helps employees work from anywhere. But the numbers seem to have spiked and now seem like they’re starting to slow, so perhaps it’s just an open question how the market for these products will develop. Monday could surprise with a blowout, but based on the trends, I just don’t see that as likely. Raw dollars of revenue added has really stagnated the last couple quarters.
04/29/2022: $171.44 (Market Cap Approx: $62b, TTM Revenue: $1,219m)
I sold Snowflake last August, because I thought the slow down would make it hard for the market cap to grow. At that point, the market cap was over $90 billion. At $62b, I think it’s reasonable again. Not enough for a large position, as I won’t have any FOMO if it jumps back to crazy-expensive. But enough to start to build a position again. Long term, it’s a high conviction winner.
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)
03/31/2022: $38.74 (Market Cap Approx: $10b, TTM Revenue: $205m)
04/29/2022: $33.27 (Market Cap Approx: $8.8b, TTM Revenue: $205m)
SentinelOne fell just 14.1% in April, showing some strength relative to others. Maybe I’m off the mark doubting them. But they are still at such a tiny, tiny base of revenue. I’d just like to see a little more, so I just held my small position for now.
04/29/2022: $111.82 (Market Cap Approx: $20b, TTM Revenue: $2,842m)
Twilio dropped 32.2% in April (why??? my only guess is that people are selling anything Cathie Wood touches), and it’s now 73% off it’s ATH. That just seems odd for a SaaS company that seems to dominate its space. Sure, organic growth is more like 40% or maybe 35% these days, but at this scale, that’s impressive! They’ve got everything we love, except for a slightly lower gross margin. I think that’s more than priced in. They report this week, so I’ll check out what they have to say, but I thought this former high-confidence company might be a little too beaten down here. We’ll see.
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)
03/31/2022: $18.43 (Market Cap Approx: $2.1b, TTM Revenue: $167m)
04/29/2022: $17.46 (Market Cap Approx: $2.0b, TTM Revenue: $167m)
Amplitude just dropped 5.3% in April. Basically flat compared to these other companies! I guess the market felt it had been beaten down enough. I just held, as I’m not touching it until I see what they report this week. They’d really have to surprise to get me interested again, but we’ll see.
Upstart (UPST) – Obviously this is a tiny watch-and-see position. I’ll just say that I am surprised to see it this low, and I think the market has absolutely no idea what Upstart is worth. But I really don’t either. I’d probably be better ignoring it, but I can’t shake the idea that there’s a ton of upside if they can just beat their guidance.
I believe we are at our best as investors when we are relentlessly pursuing the best companies, and more and more – to me – that means SaaS businesses with durable growth. The trick is figuring out which companies have growth that will be very durable. I feel like there are only so many high confidence companies to be found, and some have to be sold when growth slows (like Mongo a few years ago) or the valuation just gets crazy-expensive (like Snowflake in times past). That leaves very few high confidence positions to concentrate into – namely 3 for me right now, DDOG, BILL, and ZS. But I’m happy I’ve been able to add a few others back in April. I am learning not to let positions get too large just too fast-- conviction in a company has to be built over time, no matter how fast its revenue is growing.
Even with all my mistakes and changing my mind a lot, and even with the storms the market throws at us (like the last several months), my portfolio’s growth over the last several years has amazed me. There are scary times, though, and you should figure out what works for you!
“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…
Feb 2022: https://discussion.fool.com/bear39s-portfolio-through-022022-350…
Mar 2022: https://discussion.fool.com/bear39s-portfolio-through-032022-350…