WARNING: I was down roughly 54% YTD at one point this year. That means I only had about 46% remaining of what I started the year with! No one can prepare you for what it feels like losing more than half your net worth, even “on paper”…it’s not easy for most of us to tolerate. Don’t copy me or Saul or anyone – figure 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 when the portfolio is up, but also drags return up when the portfolio is down. I’m constantly adding to and trimming positions, so my cash level fluctuates all the time – and I won’t be able to share my real time moves, just the monthly snapshot.
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
May -49.0% YTD
Jun -47.7% YTD
Jul -41.3% YTD
Here’s what I did in July:
I made plenty of adds and trims, most notably trimming CRWD quite a bit when it was up above $185, but I actually didn’t sell out of any positions in July, or buy anything new. Still at 7 holdings varying in size from 27.3% to 1.5%.
One thing I’m focused on is building up positions very slowly and not to a level that outstrips my conviction in each company. It’s probably worth defining what my level of conviction is in each. Considering what I expect for long term durability of growth, and also paths to profitability, I come up with something like:
Extremely high conviction (comfortable up to 35%) – DDOG
High conviction (comfortable up to 20%) – MDB, SNOW
Moderately high conviction (comfortable up to 12%) – CRWD, BILL, NET, ZS
I would only approach these levels if I think a company is extremely cheap, like when DDOG hit $85 or so in June and again in July and I added so much it got to 30%+.
But I also need to make sure not to let these positions be too small, otherwise I might have trouble staying invested in times like early and mid 2021. Specifically, I plan to not let High conviction positions get below about 8-10%, even if they look too expensive.
And I probably want to keep cash between 5% and 30%. Any more and I’m really limiting my portfolio’s upside. Any less and I might have to sell something at the worst possible time, just to pay the power bill.
Ticker Curr% Jun Mo Ch YTD Ch
DDOG 27.3% 28.6% 7.1% -42.7%
MDB 12.4% 13.7% 20.4% -41.0%
BILL 10.0% 11.5% 22.9% -45.8%
SNOW 9.7% 7.7% 7.8% -55.7%
NET 7.7% 7.5% 15.0% -61.7%
CRWD 3.6% 7.5% 8.9% -10.3%
ZS 1.5% 1.7% 3.7% -51.7%
cash 27.7% 21.2%
**Sold in 2022**
S 0.0% 0.0% 6.5% -50.8%
AMPL 0.0% 0.0% 3.4% -72.1%
MNDY 0.0% 0.0% -0.4% -69.4%
UPST 0.0% 0.0% -23.1% -83.9%
TWLO 0.0% 0.0% 1.2% -67.8%
MY COMPANIES
Datadog (DDOG)
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)
05/31/2022: $95.39 (Market Cap Approx: $33b, TTM Revenue: $1,193m)
06/30/2022: $95.24 (Market Cap Approx: $33b, TTM Revenue: $1,193m)
07/29/2022: $102.01 (Market Cap Approx: $36b, TTM Revenue: $1,193m)
I certainly hope Datadog will be able to raise their guidance again when they report this Thursday morning. But even if it’s a “meh” report as this year has set us up to expect, the story/trends/trajectory for this company’s future are right on track, in my opinion. Though many companies might never again attain their 2021 highs, I believe Datadog will someday be worth much more than the $65b or so it fetched at its peak last year.
MongoDB (MDB)
04/29/2022: $354.93 (Market Cap Approx. $24b, TTM Revenue: $874m)
05/31/2022: $237.15 (Market Cap Approx. $16b, TTM Revenue: $874m)
06/30/2022: $259.50 (Market Cap Approx. $20b, TTM Revenue: $978m) I corrected the diluted share count I was using (to calculate market cap), because they turned profitable and began to publish it on the press release
07/29/2022: $312.47 (Market Cap Approx. $24b, TTM Revenue: $978m)
Mongo continues to bounce higher off the ridiculous May low. As I said last month after the quarterly report, Even though management acknowledged headwinds when they reported on 6/1, the stock has done well since. The way I see it, the bad news has been absorbed, and things should be solid from here. I love Mongo’s lock in with customers, and I love plays on the growth of data, like this and Snowflake. Mongo seems extremely mission critical, which is even better. And they’ve just started to throw some profits to the bottom line.
Bill.com (BILL)
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)
03/31/2022: $226.79 (Market Cap Approx. 23b, TTM Revenue: $411m)
04/29/2022: $170.71 (Market Cap Approx. 18b, TTM Revenue: $411m)
05/31/2022: $118.24 (Market Cap Approx. 12b, TTM Revenue: $518m)
06/30/2022: $109.94 (Market Cap Approx. 12b, TTM Revenue: $518m) I corrected the diluted share count I was using (to calculate market cap) by adding in the 7.4 million potentially dilutive securities from the 10-Q.
07/29/2022: $135.08 (Market Cap Approx. 15b, TTM Revenue: $518m)
In my May review I said, this quarter for Bill.com wasn’t as explosive as the previous one had been. Everything sounded fine, and I think the explanation was simply that this is their seasonal low. Still, it bears watching. This one has as much upside potential as anything, in my opinion. We’ll just have to see what they can do. We’ll find out when BILL reports on Aug 18.
Snowflake (SNOW)
03/31/2021: $229.28 (Market Cap Approx: $68b, TTM Revenue: $592m)
04/30/2021: $231.59 (Market Cap Approx: $68b, TTM Revenue: $592m)
05/28/2021: $238.03 (Market Cap Approx: $71b, TTM Revenue: $712m)
06/30/2021: $241.80 (Market Cap Approx: $72b, TTM Revenue: $712m)
07/30/2021: $265.72 (Market Cap Approx: $79b, TTM Revenue: $712m)
08/31/2021: $304.35 (Market Cap Approx: $92b, TTM Revenue: $851)
09/30/2021: $302.43 (Market Cap Approx: $92b, TTM Revenue: $851m)
10/29/2021: $353.84 (Market Cap Approx: $107b, TTM Revenue: $851m)
11/30/2021: $340.15 (Market Cap Approx: $103b, TTM Revenue: $851m)
12/31/2021: $338.75 (Market Cap Approx: $121b, TTM Revenue: $1,026m) I corrected the diluted share count I was using (to calculate market cap), because they turned profitable and began to publish it on the press release
01/31/2022: $275.90 (Market Cap Approx: $99b, TTM Revenue: $1,026m)
02/28/2022: $265.66 (Market Cap Approx. $95b, TTM Revenue: $1,026m)
03/31/2022: $229.44 (Market Cap Approx. $83b, TTM Revenue: $1,219m)
04/29/2022: $171.44 (Market Cap Approx: $62b, TTM Revenue: $1,219m)
05/31/2022: $127.65 (Market Cap Approx: $46b, TTM Revenue: $1,413m)
06/30/2022: $139.06 (Market Cap Approx: $50b, TTM Revenue: $1,413m)
07/29/2022: $149.91 (Market Cap Approx: $54b, TTM Revenue: $1,413m)
It’s the long term vs the short term here. This is what I said in May, and it hasn’t really changed: Snowflake made some progress this quarter, especially with cash flow, but they beat by a tiny amount and did not raise the FY revenue guide. I just think other companies are thriving more than Snowflake in the short term. In the long term I still believe they will be a big winner, so I will keep a small position and think about whether or not it makes sense to add. I wish I understood their potential better myself, but every techie I know assures me their TAM is enormous. Because of the long term, I’m making sure to keep a decent sized position. But I can’t promise I won’t take a little off the table before the next report, especially if the price continues to rise.
Cloudflare (NET)
05/31/2022: $56.00 (Market Cap Approx: $19b, TTM Revenue: $731m)
06/30/2022: $43.75 (Market Cap Approx: $15b, TTM Revenue: $731m)
07/29/2022: $50.32 (Market Cap Approx: $17b, TTM Revenue: $731m)
I can’t claim to understand Cloudflare as well as my techie friends, but they have always put up rock steady numbers. We’ll see if they can continue that trend this Thursday.
Crowdstrike (CRWD)
05/31/2022: $159.99 (Market Cap Approx: $39b, TTM Revenue: $1,452m)
06/30/2022: $168.56 (Market Cap Approx: $41b, TTM Revenue: $1,637m)
07/29/2022: $183.60 (Market Cap Approx: $44b, TTM Revenue: $1,637m)
Crowdstrike had a fantastic “business as usual” quarter, reported on 6/2. Growth rate seems to have stabilized around 60%, and profits are soaring. EPS was 31 cents this quarter vs 10 cents in the same quarter last year. I’m hoping that will continue for many quarters, but long term I always worry there will be a better mousetrap.
ZScaler (ZS) – A tiny position that I’m mainly keeping because it’s in a taxable account and I feel no rush to take the loss. I explained why my conviction has dropped here: https://discussion.fool.com/maybe-zscaler39s-billings-slow-down-…
CLOSING THOUGHTS
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.
Valuation matters of course, but if a company will 5x or 10x its revenue in a few years, we have some serious room for error regarding what we pay for shares today. If a company might only grow 5% or 10% or not at all, the price you pay for the shares matters a lot more, because there is less room for error.
I’ve seen this play out over the years. 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!
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): 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…
Apr 2022: https://discussion.fool.com/bear39s-portfolio-through-042022-351…
May 2022: https://discussion.fool.com/bear39s-portfolio-through-052022-351…
Mid-June 2022: https://discussion.fool.com/bear39s-mid-month-review-35130695.as…
Jun 2022: https://discussion.fool.com/bear39s-portfolio-through-062022-351…