Bear's Portfolio through July 2018

On July 18th, just a couple weeks ago, I was flying high, up 65% YTD. A lot has happened since then. The 24th was a big down day – I think it was something political but honestly I don’t even remember. Then last Friday (the 27th) and Monday (the 30th) were big days for sector rotation away from tech. Facebook might have had something to do with that. Also, today our beloved Shopify got hit as they reported great earnings. To me, the most confusing part of this was that prior to earnings Shopify was already down about $25/share in the last couple weeks, presumably on concerns about the quarter. When they grew revenue at 62% YoY, you would have thought that was enough to bolster a few of the sellers, but it dropped another 10 bucks or so today. Lastly, I lost a good bit on Instructure today too. With these last 2 days, I’ve now dipped below where I was at the end of June. But even after all this, I remain up about 46% this year.

My 2018 Portfolio Performance

Jan 12.97%
Feb 25.35%
Mar 28.02%
Apr 28.03%
May 40.39%
Jun 53.23%
Jul 46.44%

I’ve decided to simply list how much my portfolio is up (or down) for the YTD. You may wonder why I’ve done away with benchmarks. It’s because I don’t care what the indexes are doing. Yes we’re trouncing them – big deal! I just want to do the best I can, whether that’s 20%, 50%…or even if it is -15%. Whether I do well or poorly, it doesn’t really matter if an index is up 10% or down 10%. Sure it’s interesting to know what the market is doing, but we can tell that from the S&P 500, which is up about 6.5% YTD including dividends. Don’t spend it all in one place!

Previous Month Summaries

Dec 2016 (contains links to all 2016 monthly posts):…
Dec 2017 (contains links to all 2017 monthly posts):…
Jan 2018:…
Feb 2018:…
Mar 2018:…
Apr 2018:…
May 2018:…
June 2018:…

My Current Allocations

Ticker	Curr%	Buy/S	Mo Ch	YTD Ch
WIX	14.5%	11%	-5.3%	65.1%
SHOP	13.6%	-9%	-5.3%	36.8%
SQ	10.2%	0%	4.9%	86.5%
NTNX	9.2%	0%	-5.2%	38.6%
PSTG	7.5%	9%	-9.3%	36.6%
AYX	6.9%	0%	2.2%	54.3%
TLND	5.5%	19%	-5.0%	57.8%
INST	5.3%	40%	-9.0%	16.9%
PAYC	5.2%	NEW	7.5%	32.3%
MDB	5.1%	NEW	9.0%	85.0%
ANET	2.5%	-50%	-0.7%	8.6%
options 2.6%			
cash	11.7%	

New 2018
January - No adds
February - AYX, NEWR, OKTA
March - MDB
April - No adds
May - NTNX
June - PVTL
July - PAYC (again), MDB (again)

Sold 2018
January - TTD
February - TDOC, ALRM
March - NVEE
May - none
June - PVTL, HDP
July - MU, HUBS

I’ll say more about PAYC and MDB below, but regarding the two I sold:

Hubspot (HUBS) had some yellow flags I’ve mentioned…the biggest being, they are getting a ton of new users, but a lot of them are not paying users. The average spent per user is actually going down. I said last month that I’m not convinced their growth is sustainable. The price was over $130/share, and I took the opportunity to sell out for now. I’ll keep an eye on them.

Micron (MU) was one that I often said was just the last vestige of my value investing. I still think they’re incredibly undervalued, but I just can’t get comfortable with the risk. I wanted to have the money available to invest in things I feel more strongly about.

I will now discuss each of the 11 companies of which I hold shares.

WIX.COM - WIX (14.5%)

About the company: Wix is a company that helps users create websites, and then hosts them. It makes most of its money by charging subscription fees for premium content. They are very affordable, so people use them for all sorts of reasons – entry into ecommerce, a personal blog, a professional portfolio. They have some powerful tools for experts, but even a novice like me can create a website for free. Wix has over 125 million users, and more than 3 million of them pay for premium accounts.

Latest Quarter Review:

Recent Action: I added even more Wix this month. I think it’s a huge bargain right now.

Conviction Status: This is a rare company where I think the long term growth will be outstanding and the market cap is actually lower than I would expect (as is the PS ratio). Don’t see many of those right now. I’m happy with up to a 15% position.

SHOPIFY - SHOP (13.6%)

About the company: To slightly modify what they say about themselves, Shopify is “the only platform you need to build your [small or medium sized business] empire [online].” They provide a customizable website you can set up as an online “storefront,” inventory management to track your product, methods of taking payments, etc, etc, etc. They’re innovating and growing…and boy are they growing. They make money when businesses sign up with them, and then they make more when those business grow and sell more stuff.

Latest Quarter Review: Here’s the quick highlights by Darthtaco:…

Recent Action: I trimmed a bit in early July, and added some of it back in the last week or so.

Conviction Status: This is a top confidence position, and I’m in this company for the long haul. I’m happy with up to a 15% position.

SQUARE - SQ (10.2%)

About the company: If you’ve ever paid with a credit card at a local vendor, there’s a good chance they used a Square device to take the payment. Square also provides many other services available to their customers. One of the most profitable is Square Capital, which really leverages their data advantages to offer extremely profitable and low-risk loans to their customers.

Latest Quarter Review: They report on the June quarter tomorrow.

Recent Action: None in July.

Conviction Status: Despite a high valuation, I wouldn’t be surprised if this was the lowest price we ever see again on SQ. I’d like to keep it close to a 10% position at the smallest…and I’d go up to 15% if the price ever fell.


About the company: Nutanix provides a single point of control to for IT professionals to manage infrastructure and applications, on-prem and in the cloud, at any scale.

Latest Quarter Review: summary by xenotedvr1:
Pertinent comment from Saul:…

Recent Action: None in July.

Conviction Status: I’m comfortable with roughly an 8% position. As the valuation is extremely favorable, I’m inclined to stretch that toward 10%.


About the company: Pure Storage provides flash storage arrays. Storage arrays are nothing new, but flash is different. How different? Bert Hochfeld says it’s the biggest change in storage since spinning discs replaced tape:…

Latest Quarter Review: Saul provided a brief one:…
My take is that they seem to be continuing to do everything they promise. Growth is great, and they seem to keep making best in class products that are in demand. They also have some great partners. My favorite part was Number of customers up 45% from a year ago

Recent Action: I added back some shares in the last couple days on the pullback.

Conviction Status: Pure is a best in class leader with a lot of room to run, growing fast and on the verge of becoming profitable. I’m comfortable with an 8% position here.

ALTERYX - AYX (6.9%)

About the company: Alteryx is a little company that is changing the landscape of data integration and analysis for data scientists. They have a product that from all accounts is inexpensive, easy to implement, and saves users incredible amounts of time while enhancing accuracy. The companies who try it seem to love it, because every year they spend (on average) 30%+ more money with Alteryx!

Latest Quarter Review: Thanks, Ethan!

Recent Action: None in July. It got pricey but I didn’t want to reduce my position.

Conviction Status: I’m comfortable with this position in a 6% to 8% range.

TALEND - TLND (5.5%)

About the company: Talend has carved out a niche within big data integrations by specializing in Hadoop, an expertise that will not be easily disrupted. Saul has called them a “category crusher,” a leader with no viable competition in its niche. I tend to agree, though others will not ignore this space forever. Hopefully Talend will continue to build up years of subscription revenues while they occupy the catbird seat.

Latest Quarter Review: from rdutt:…
And me:…

Recent Action: Added about 20% in July. This one seems steady as she goes.

Conviction Status: I’m comfortable with up to an 8% position.


About the company: I brought Instructure to the board in September 2017.… It’s is a cloud-based learning management platform for academic institutions and companies across the world. Their platform enables virtual learning, and they’ve gotten so good at it in the education context (since they started in 2008) that they’re now (actually since early 2015) offering it in a business context as well. Their classroom product is called Canvas, and their business solution is called Bridge. They are constantly signing school districts and businesses to expand their reach to hundreds of thousands of new users.

Latest Quarter Review: This came out yesterday:…

Recent Action: I added a significant number of shares on today’s drop. Instructure may grow at more like 30% instead of 40%, but it is a great bargain at a PS of 7.

Conviction Status: I am comfortable with about a 5% position.

PAYCOM - PAYC (5.2%)

About the company: Paycom’s offers a comprehensive payroll / HCM solution highlighted by their single-database software as a service solution. This greatly simplifies things for small to medium sized companies who want their HR data to be in one place.

Latest Quarter Review: This came out just minutes ago:…

I have been excited to see that as Paycom grows, they’ve been able to corral spending, which increased only 5% YoY in the June quarter!

Recent Action: I restarted a position in PAYC during July.

Conviction Status: I am comfortable with up to a 10% position here, but I’m not sure I’ll let it get that large.

MONGODB - MDB (5.1%)

About the company: “MongoDB is the leading modern, general purpose database platform, designed to unleash the power of software and data for developers and the applications they build. Headquartered in New York, with offices across North America, Europe, and Asia-Pacific, we are close to where you do business. MongoDB has more than 6,600 customers in more than 100 countries. The MongoDB database platform has been downloaded over 40 million times and there have been more than 1 million MongoDB University registrations.”

Latest Quarter Review:…

Here’s Saul’s fantastic notes on the quarter:…

Recent Action: I bought back in during July.

Conviction Status: I’m somewhere around a 7 out of 10 on this one, but I love the upside. Probably won’t be adding, but I’m comfortable with a 5% position.


About the company: Arista sells network switches, just like Cisco, except Arista’s switches use SDN (Software Defined Networking), which I understand makes for better control, performance, and security. It also really seems like Arista has the best in class product.

Latest Quarter Review: Arista revenue grew 41% and everything else did what it was supposed to do except a lot of folks are worried that they guided for mid 20’s percentage growth. Here’s my two reminders about that:……

Recent Action: I was getting a little nervous as the price rose to $275 or so, and I took the opportunity to lighten up some more, but I just can’t quit Arista yet. Unless I’m proved wrong when earnings come out in a couple days, I might add some back.

Conviction Status: I don’t feel like I have superb insights to this business, but judging by the likely outcomes, I do think it’s undervalued. I’m comfortable with up to a 5% position.

My best to all!


“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


The reason for a benchmark is simply to find out if the hard work, time reading posts and gasping at the risk is worth it. If you had simply held a basket of MSFT, ADBE and CRM instead, you would be up 31%. So you are doing very well and trouncing the basket. The basket is representative and a reasonable benchmark. The S&P is not.

I am interested in the continuing charge into our sub-sector by the big, blue chip players, indeed I should probably have separated out and included Amazon’s in the basket above. Will they buy our companies at stunning premia or invent in-house? A bit of both I expect. For my part, I have decided to stick in this poker-game; not buy or fold. I am starting to sniff multiple-contraction on the breeze. Encouraged by the 21% rise yesterday in a company in my portfolio which long ago came through the screen and the DD and has nothing whatever to do with tech. brought to my attention that perhaps I should be spending more time with the remaining 93% of my portfolio! The plain fact is that I should have had far more in that company and had I not been at the racecourse looking at the runners in the ring here I might have done so.

I will look in sometimes - after all, I am holding what I have - but for me, it is time to get my own priorities right. Those of us who are appalled at the way we got here, by no fewer than three forms of artificial stimulation of the stock market, wait anxiously to see how the growing debt and the bond market plays out. I want less far to fall, only pristine balance sheets, negligible debt and some pricing power as we enter this new era in the months ahead. So I am going to concentrate on that.

Thank you Saul for hosting a remarkable board at a remarkable time and for your sage and generous commentary. Needless to say, I have benefitted from it. Paul and Chris especially have also written indispensable accounts of their holdings and insights.

Finally, (as I may not always be around!) please remind novice investors that they have no business being here at all. Be harsh with them. It is a place for people who know exactly what they are doing and there are far too many who will be appalled, and who will freeze, when they should be either resolute or calmly but rapidly evacuating the area. They will simply not understand what has happened as they double-up, and double-up again until the market finally hands them a life-changing impairment of their capital they will never forget. But then, I still do not really know what people mean when they say they have 10% in some individual company without earnings and on a PS north of 15. Maybe I am wrong; hope so!


Admonish me if you will.
Tell me there is no place on this board for flames and insults.

I understand.

But I am beyond tired of the patronizing unsolicited advice of pompous wise antagonists, stabbing incessantly with the needle of passive aggressiveness.

I dont go on value boards and question their benchmarks or point out that their cute little sub-sector makes up but a mere pittance of my majesticly diversified portfolio.

If i wanted to shove a pencil in my ear or eye, i would stop on over to boards in which i disagree completely with their methods and strategies.

When 50% of fortune 500 from a couple decades ago have disappeared and been replaced by strange new growth monsters in technology, it is unsurprising that legacy mid-20th century investors can be so set in their ways as to never accept the economics of cloud or saas, etc…

I like AC and fact women can vote. I like debit cards and the demise of the checkbook. I like the option of working from home that tech provides me.

Strelna now goes on the Ignored Fools list.

See? Change can be a good thing.



If you had simply held a basket of MSFT, ADBE and CRM instead, you would be up 31%. So you are doing very well and trouncing the basket. The basket is representative and a reasonable benchmark. The S&P is not.

A 3-stock basket as a representative and reasonable benchmark? That seems to lack sufficient diversification even for a Saul-style concentrated portfolio.

Even Tinker is starting to come around to the idea of holding 4+ companies.


Admonish me if you will.

ok - here goes

*if you don’t like a post, ignore it
*if you don’t like a poster, put the poster on ignore
*if you don’t like this at all, let Saul deal with it

After all, that post was not done out of malice but fear, and if you don’t agree with the fear then simply defuse it.

Like in reply to this:

But then, I still do not really know what people mean when they say they have 10% in some individual company without earnings and on a PS north of 15.


But GAAP does not sufficiently account for the land grab associated with the recurring earnings these companies are getting, a point validated by the prices being paid in acquisitions in the space. Thus, just saying ‘without earnings’ is not an appropriate way to look at valuation within these subsets of companies.

Or, as Saul says:…

The other poster might not agree but that’s the point of a debate. Personally, I like Cassandra’s at this point in my life cause often times they provide a counterpoint to what I’m already thinking. It is up to you and me to figure out the validity of the prophecy.

just 2c


I appreciate your take on INST. I have held this since I saw your write up last October. I had a more sizable gain before the recent drop but I’m still up about 11%. Seekingalpha had a recent update which supports holding it longer term due to a “wide moat,” a “lack of competition” and valuation at only 6 times sales. It’s the best in its niche and still has a strong growth trajectory although growth is slowing a bit to 30% annually.…

I likely will add a little as well on the drop.


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