Bear's Portfolio through Dec 2018

PaulWBryant · January 3, 2019, 4:41pm

My 2018 Portfolio Performance YTD as of


Jan +12.97%
Feb +25.35%
Mar +28.02%
Apr +28.03%
May +40.39%
Jun +53.23%
Jul +46.44%
Aug +78.67%
Sep +82.00%
Oct +63.92%
Nov +71.47%
Dec +66.15%

In December, fear prevailed in the market, and the S&P and Nasdaq turned from 5% and 6% up for the year to ~4% down for the year. The Russell 2000 ended the year down more than 12%.

In times like these, I’m extremely grateful for this board. Being up 66% for the year when the market is actually down…that’s a game-changer. I hope it’s eye opening to those of you newer to Saul’s methods. This isn’t voodoo, it isn’t for geniuses only, and it is very real.

As I discussed here (https://discussion.fool.com/discriminate-selling-34090917.aspx), I’m taking advantage of the volatility by trimming to raise cash when valuations are near their highs, and buying opportunistically when valuations dip. Doesn’t change what I buy – just the allocation levels.

Previous Month Summaries

My Current Allocations


Ticker	Curr%	Buy/S	Mo Ch	YTD Ch
MDB	11.3%	0%	1.0%	186.3%
WIX	10.5%	0%	-4.1%	57.0%
TWLO	10.4%	18%	-5.5%	278.4%
NEWR	9.5%	4%	-7.1%	40.2%
AYX	8.5%	-20%	-1.2%	135.3%
OKTA	6.9%	NEW	0.2%	149.1%
PSTG	4.6%	0%	-15.0%	1.4%
TDOC	3.6%	100%	-20.6%	42.2%
SMAR	2.7%	NEW	-7.6%
SHOP	2.5%	0%	-9.3%	37.1%
ZS	2.1%	-65%	-0.1%	
ARNA	2.1%	0%	-5.0%	7.6%
ZEN	2.1%	NEW	-1.8%	72.5%
SQ	2.0%	100%	-19.7%	61.8%
options	4.3%			
cash	16.9%

New 2018
January - No adds
February - AYX, NEWR, OKTA
March - MDB
April - No adds
May - NTNX
June - PVTL
July - PAYC (again), MDB (again)
August - NEWR (again), TWLO (again)
September - ZS, ARNA
October - ESTC, TDOC (again)
November - PSTG (again)
December - OKTA, SMAR, ZEN

Sold 2018
January - TTD
February - TDOC, ALRM
March - NVEE
April - MDB, OKTA, NEWR
May - none
June - PVTL, HDP
July - MU, HUBS
August - none
September - PSTG
October - INST
November - TLND, NTNX
December - PAYC, ANET, ESTC

Positions in companies I love
MongoDB 11.3%
Wix 10.5%
Twilio 10.4%
New Relic 9.5%
Alteryx 8.5%
Okta 6.9%
Smartsheet 2.7%
Zscaler 2.1%
Elastic 0%
Paycom 0%

These are all candidates to be 10% (or even slightly larger) positions. They are either rapidly increasing in profitability (WIX, NEWR, PAYC) or growing at insane rates of ~60% or even ~70% (MDB, TWLO, AYX, OKTA, SMAR, ZS, ESTC).

In December, I reduced Zscaler and sold out of Elastic and Paycom to raise cash. These decisions were largely made on valuation reasons – PAYC was down very little, so it made sense to raise cash there. The other two were down little, and also still had very high valuations. Sometimes you have to sell something you love just to raise cash for something you love more. In this case, I felt Okta was a screaming buy and I needed to create a position fast.

But that doesn’t mean I’m not interested in adding back. In fact, I got back into ESTC today (Jan 3). I also really like my new purchase, Smartsheet, and hope to do a post about it soon. Definitely one I’ll be looking to add to.

Positions I’m unlikely to add much to and may not even keep.
Pure Storage 4.6%
Teladoc 3.6%
Shopify 2.5%
Arena 2.1%
Zendesk 2.1% – This one is a new tryout position
Square 2.0%

I sold out of Arista this month, also to raise cash. It’s a good company at a great price, but I’m simply less certain about their future than the companies I own here. Might look at it again someday, but bargains on more exciting companies are coming too frequently these days.

Wrapping Up

I’d just like to take this opportunity to thank Saul, and all the other fine posters on this board. We really do help each other, and I’m grateful every day that I found this community. I’d like to thank the Motley Fool as well for hosting this board and many others.

My best to all in 2019!

Bear

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

“A man’s gotta know his limitations.” - Dirty Harry

“If you must tell me your opinions, tell me what you believe in. I have plenty of doubts of my own.” attributed to Goethe (but not sourced)

“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

“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

kiplin · January 3, 2019, 9:05pm

Bear, thank you (again) for the outstanding monthly summary. I’m curious about PAYC, a company you’ve been invested in but few others in this community follow. I’ve been holding PAYC for over two years now, adding once since my initial purchase, and since well before I started on the path to a concentrated portfolio.

You say there were down very little, so you sold to raise cash, yet PAYC remains on your ‘watch list.’ What triggers / price do you look for to get back in, or do you believe the growth thesis has run its course? Thanks for any additional insight.

-kiplin

tchalla · January 4, 2019, 4:23am

Congratulations Bear. Amazing results and I really like reading your thoughts.

I’ve been looking hard at SMAR. The big question for the board was previously about CAP and competition, but I think that the revenue growth is a worthy answer to that at the moment.

It has also come down in EV/Sales to what I feel is an attractive risk /reward compared to its rev growth peers:

https://docs.google.com/spreadsheets/d/1T9AO9ZMUAtVms4hzvbtX…

One to consider for sure

PaulWBryant · January 4, 2019, 8:56am

I’m curious about PAYC…You say there were down very little, so you sold to raise cash, yet PAYC remains on your ‘watch list.’ What triggers / price do you look for to get back in, or do you believe the growth thesis has run its course? Thanks for any additional insight.

If I believed the thesis had run its course it wouldn’t be on my watchlist! No crystal ball here (at all), but I think it’s a great buy at current prices. I’m just saving cash for even better buys, but if I give up on that, I’d gladly buy Paycom at $120 and probably higher. I really think it will do well.

Bear