Bear's Portfolio through 06/2023

Investment Analysis Clubs Saul’s Investing Discussions
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Important context for my portfolio reviews: I run a concentrated portfolio and WARNING the swings can be huge. From the 2021 high to the 2022 low, my portfolio fell more than 60%. For every $100 I had at the top I had just $40 left! Staggering. So, before trying this style, even with a small portion of your total net worth, please understand the downside – it’s much steeper than if you own an index, or a bunch of megacaps. Also, don’t follow or copy me, Saul, or anyone. We may sell a position or buy a new one at any time, so it’s impossible to follow anyway. Also, to succeed with a concentrated portfolio, you must rely on your own decisions.

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June was a nice month, with my portfolio up 5.1%…and typically that would mean I’d be likely to trim a little. Instead, my cash went from 48.4% to 36.1% as I found a few new positions to start. I added Axon, Hashicorp, and Celsius to the portfolio (more on those below), and I sold out of Transmedics, mainly just to take profits as it was a very low-conviction holding for me.

Lots of my current positions are mid-sized…mostly because I’m not feeling like any are a huge slam dunk.

BILL - BILL is now my only really large position, and it’s gone from oversized to just large. The shares gained double digits in June so I trimmed as much as I could convince myself to trim, but I just still think it’s a great value here. Revenue guide for next Q is +40% YoY.

Crowdstrike - As I looked over the report CRWD had on 5/31, I didn’t see much not to like, so I took the 10%ish discount as an opportunity to add. I didn’t add much, but it was enough to push CRWD up to #2. I think this one is very fairly valued and still growing well – revenue guide for next Q is +36% YoY.

Zscaler - Zscaler rose a bit more in June (impressive after shares were up more than 50% in May) on a good report. At times it was up double digits, so I did some trimming. Still, all looks good here with a guide of +35% for next Q.

Samsara - Samsara absolutely soared (at some points up 50%+ in June) on a very solid report. I thought this was a bit overdone and slashed my position in half. I’ve added a little back, but shares are dearly valued. Still, with a 36% guide for next Q, this one seems very all systems go.

Aehr Test Systems - I sort of threw caution to the wind here and more than doubled my position in June. They’ve announced some big orders and are exuding confidence. It’s not SaaS, revenues (so far) are super tiny, and I’m a complete novice when it comes to the industry, but electric vehicle demand certainly seems likely to keep soaring. We’ll see if they continue to benefit…I’m betting so. Q guide is 35% (their Q4 ended 5/31) but the FY guide for next fiscal year will be the difference-maker (stock-mover).

Axon - A new position this month, I just thought Axon was the perfect “better than cash” position. They’re close to a monopoly, but still growing pretty well. This Q they grew revenue 34% YoY with ARR growing faster. And they don’t guide by Q but the guide for the year was raised to 23% (and of course should get raised a couple more times). Looks very solid and undervalued.

Enphase - Enphase was one of the few things that was down this month. I added and trimmed and net, accumulated a bit more in June. It’s probably never going to be a large position for me, but I’d be up for adding more if the price falls. Seems very solid long term, even though they sell widgets. The revenue guide for next Q is +41% YoY.

Hashicorp - Here’s another new one – though a good bit smaller than Axon. I added it before they reported and fell 20%+. Oops. The report wasn’t good, but I have enough belief/hope that they’re a growing part of the digital transformation, that I kept it. Next Q guide is for just +22% YoY, so I’m not adding much. But the price is right.

Digital Ocean - At one point in June I sold out of Digital Ocean completely to take gains. But in the last few days I decided this was better than cash. I bought back in and even increased my position to 2.5%. We’ll see what happens. Guide for next Q is +27% YoY, so this one seems crazy undervalued…perhaps revenue is expected to slow a lot more, but we’ll see.

Datadog - Datadog stayed in a fairly tight range this month. I added and trimmed but ended up where I started the month. Not cheap, but not crazy…and I’m just not sure what to expect in the near future from this consumption business. Next Q revenue guide is for +24% YoY.

Celsius - This energy drink company is growing revenue at a triple digit clip. That’s pretty darn impressive, but with their recent deal with Pepsi, it could possibly even grow faster. Worth following. They don’t give a guide for the Q or Y, as far as I know.

cash - Yes, it’s still my largest position, but not by design. I put whatever allocation I’m comfortable with into whichever companies I believe in…and typically some cash is left over. Right now, it’s a lot. But I’m happy it came down a lot in June.

The goal is still to pick the best companies. But what does that mean? How do we know which companies are best? The numbers in isolation don’t tell the whole story. You can’t just look at revenue growth rate, NRR, RPO, or even customer additions. You also can’t ignore these and focus only on the narrative – AI or data or whatever you think will drive demand. To have high confidence in a company, we need to see harmony between numbers and narrative.

Have a great July!

Bear

“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): Bear's Portfolio at the end of 2016 - Saul’s Investing Discussions - Motley Fool Community

Dec 2017 (contains links to all 2017 monthly posts): Bear's Portfolio through Dec 2017 - Saul’s Investing Discussions - Motley Fool Community

Dec 2018 (contains links to all 2018 monthly posts): Bear's Portfolio through Dec 2018 - Saul’s Investing Discussions - Motley Fool Community

Dec 2019 (contains links to all 2019 monthly posts): Bear's Portfolio through Dec 2019 - Saul’s Investing Discussions - Motley Fool Community

Dec 2020 (contains links to all 2020 monthly posts): Bear's Portfolio through Dec 2020 - Saul’s Investing Discussions - Motley Fool Community

Dec 2021 (contains links to all 2021 monthly posts): Bear's Portfolio through 12/2021 - Saul’s Investing Discussions - Motley Fool Community

Dec 2022 (contains links to all 2022 monthly posts): Bear's Portfolio through 12/2022

Jan 2023: Bear's Portfolio through 01/2023

Feb 2023: Bear's Portfolio through 02/2023

mid-Mar 2023: Bear's Mid-March Update

Mar 2023: Bear's Portfolio through 03/2023

Apr 2023: Bear's Portfolio through 04/2023

May 2023: Bear's Portfolio through 05/2023

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Congrats on a nice month, Bear. And thanks for your always honest disclosures.
CRWD was one my larger positions and I’ve always been an advocate (vs S, for instance). But I didn’t like that in their last report they stopped disclosing the number of customers. I found this odd. A small detail, apparently. But it doesn’t smell good, to me. So I sold out after the ER.
Silvio

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If you look back to their Q4 report, they announced that they would only give this yearly going forward. I don’t love it either, but to be consistent I guess you should have sold out then! :wink:

I think we either trust mgmt or we don’t. We either trust that they’re giving us the metrics they think are important, or we don’t. Number of customer adds might not mean much if the new ones are on average much smaller (or much larger) than current customers. New ARR is much more telling.

Incidentally, new ARR was a little lower than I would have liked, so I’ll be watching that next Q.

Bear

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Hi Bear, do you have a methodology behind your trimming? I get the sense it is more gut feel after a strong price movement but I could be wrong.

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Seems like a simple question, but I could probably write you an essay on it, because I think about it so much.

Short answer: yes, typically if something is up a lot in a short time, I trim a little.

Longer answer: While that’s typical, the amount I trim can vary based on how I feel about the company’s prospects and the size of the allocation. (Example, though AEHR was up 33% in May and 25% in June, my position has been growing…because it was so small to begin with, and because I think the company’s prospects could be greater than the market expects.)

Longest answer: Actually I’ll spare you most of my thoughts. But the general concept is that adding and trimming are most certainly NOT something I try to systematize. My only methodology is to allocate based on conviction. I think I’m different than some folks, in that just because a stock is going up like crazy (see Samsara), that doesn’t necessarily strengthen my conviction (although it obviously doesn’t hurt). I try to look at it with fresh eyes as often as possible, and ask myself if I would buy at the current price. Sometimes the answer is that I would, but I would allocate less than I currently have. That usually means I trim.

Bear

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