Bear's Portfolio through June 2018

June was a wild ride. At one point I was up almost 20 percent for the MONTH. That has never happened before, to my recollection. And then we had some very rough days, but even after that, I’m still up a good bit.

I continue to be convinced that the #1 mistake people make in investing is not being aggressive enough. Sure there are plenty of other errors that will cost you big, like buying high and selling low, or investing too much in a company that fails. But for my money, the one that really stings is opportunity cost. But so many people want to avoid risk.

I get it. Seeing my portfolio hit highs I didn’t think I’d reach for years, and then just days later seeing it lose so much of those gains…it takes a little getting used to. But it’s worth trying to cultivate the discipline to ride it out, because there’s a lot of money to be made. It’s worth trying to understand that risk and volatility are actually separate concepts. That if your portfolio is going down FAST, but you are still confident in the future of the companies you own, you must simply remember that it can go up fast, too. And in the end, that the performance of the stocks will more or less match up with the performance of the companies.

At first, it’s really hard to understand companies. Even harder to understand how company performance relates to its stock price. It takes a long time to figure out what you can really know, and what signs to look for. But it’s so worth it. It’s worth the time, and worth the risk. Because the opportunity cost of not doing it is huge. But all that said, I’m sure it’s not for everyone.

My Portfolio Performance

**This Month**
My Portfolio             9.15%
S&P                      0.62%
Nasdaq                   0.92%
Russell 2000             0.61%
My Portfolio            53.23%
S&P                      2.65%
Nasdaq                   8.79%
Russell 2000             7.42%

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:…

My Current Allocations

Ticker	Curr%	Buy/S	Mo Ch	YTD Ch
SHOP	15.1%	10%	-1.5%	44.4%
WIX	13.3%	-7%	15.4%	74.3%
SQ	9.3%	-16%	5.8%	77.8%
NTNX	9.2%	138%	-3.5%	46.2%
PSTG	7.2%	-9%	11.3%	50.6%
AYX	6.5%	-42%	12.2%	51.0%
ANET	4.9%	-33%	2.4%	9.3%
TLND	4.7%	33%	9.7%	66.2%
INST	4.0%	150%	-1.0%	28.5%
MU	3.0%	0%	-8.9%	27.5%
HUBS	2.4%	-50%	3.5%	41.9%
options	1.3%			
cash	19.1%			

First, let me say a little about that cash balance. That is historically very high for me. It had been creeping toward 10% (as high as 9% at the end of May), and in June more than doubled as I trimmed things at their highs. I intend to redeploy a lot of it soon…but I haven’t been in a hurry. I still feel like a lot of things are expensive, so I’m not in a rush. That said, I have found a couple things I’m looking into, as well as NTNX which I have identified as a bargain right now, and bought quite a bit of.

What’s interesting is that even carrying the cash, my returns have greatly exceeded my expectations this year. Definitely doesn’t light a fire under me to rush to redeploy.

New 2018
January - No adds
February - AYX, NEWR, OKTA
March - MDB
April - No adds
May - NTNX
June - PVTL

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

I explained my thoughts on Pivotal here:…

With HDP, I was planning to give it one more quarter, but when shares rose in June I took the opportunity to exit, though I retain a long position through call options. I will see what the next quarter looks like, but Hadoop has always been a head scratcher for me.

I now have shares in 11 companies, compared to 12 at the end of May. I will now discuss each.

SHOPIFY - SHOP (15.1%)

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: Thanks, FourthStooge!…

Recent Action: I added 10% more SHOP shares in June. I couldn’t believe the price went from highs around 175 back down to 145. Sure, it was pricey at 175…but it’s always pricey. Happy to get some more shares before the price goes back up.

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.

WIX.COM - WIX (13.3%)

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 trimmed a net 7% of my Wix shares in June. I had actually trimmed a bit more, but added back on the dip.

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.

SQUARE - SQ (9.3%)

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:

Recent Action: I trimmed 16% of my SQ shares. It’s trading at a higher PS ratio than SHOP based on adjusted revenue. That’s pretty rich. I haven’t added back, but I don’t think I will trim more. If it falls any more I’ll be looking to add.

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: I had said last month that I might bump this one up to as high as 8% after another quarter. Because I sold out of some other things, and because of the dip, I went ahead and bumped this one up - even a little higher than I had planned. Plus with the true (camouflaged) growth rate and reasonable valuation, this one has so much room to run.

Conviction Status: I’m comfortable with roughly an 8% position. As the valuation is extremely favorable, I’m inclined to stretch that to 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 trimmed my position just 9% in June.

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 (6.5%)

About the company: A very familiar friend to many on this board (most of all its eponymous leader), 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: I noted that I was uncomfortable with my 10% position in May, so when share price rose in June, I trimmed.

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


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 trimmed this one in June. I’m not incredibly worried about them, but this just isn’t as high-confidence as some of my others.

Conviction Status: I’m comfortable with up to an 8% position, but I’m fine with it being more like 5% until we see how the next quarter goes. If there’s a buying opportunity I might add back then.

TALEND - TLND (4.7%)

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 back 33% more shares than I held at the end of May. The dip was all the incentive I needed. A fast grower with a reasonable valuation.

Conviction Status: I’m comfortable with up to a 5% 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: I never managed to write up Instructure’s quarter, but Brian Stoffel did an excellent one:…

Recent Action: Finally decided to add. Quite simply, this one has been lingering too long. The business is becoming more valuable but the share price hasn’t moved since February. In fact, in June it dipped, and I more than doubled my position.

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

MICRON - MU (3.0%)

About the company: Micron (MU) makes chips for four different business units: Compute and Networking (CNBU) - read: DRAM, Storage (SBU) - read: SSDs, Mobile (MBU) - read: NAND, Embedded (EBU) - read: Auto. I’ve talked about how cheap they are before, and how they’re seen as a commodity (and may be). The numbers seem too good to be true.

Latest Quarter Review: Ant wrote this one up: (Looks like everything is solid here)

Recent Action: Still just holding. Micron is incredibly cheap, but perhaps for a reason. It’s a learning experience. With a 3% position I can afford to wait it out and see what happens.

Conviction Status: I think there’s still a ton of upside. But I won’t be adding more, and will trim if it ever approaches a 4.5% - 5% position.


About the company: Hubspot helps companies manage their brand online. This is much more than just buying ads. This is SEO, website, blog, social media, etc, etc. Hubspot is such a powerful and value-adding tool for marketing departments (a CMO’s dream) that I can’t see why any company of a certain size wouldn’t want to use it, and use it increasingly. Of course with a product that’s this much of a value add, there are certainly competitors. Yet it sure seems to me like Hubspot is a leader, if not THE leader, in the space, and the results it continues to achieve seem to confirm this.

Latest Quarter Review: Here’s one from Pete:
The key in my mind is this part: Grew total customers to 44,894 at March 31, 2018, up 44% from March 31, 2017.
Total average subscription revenue per customer was $10,016 during the first quarter of 2018 down 3% from the first quarter of 2017.
Phenomenal growth, but ARPU dropped a bit. They probably know what they’re doing, but it bears watching.

Recent Action: Cut this one in half this month. It was up substantially, and I still have a lot of questions about it, so it seemed a good time to trim.

Conviction Status: Not strong. I’m just not convinced their growth is sustainable.

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


Hi Bear,

Great update… thanks for sharing.
good to see you remain convinced on WIX and PSTG… two names I also own but have seen reduced momentum on this board. Although I have much smaller % in these two

  • WIX because of non-US company (small cap, non-US have harder time to get to premium valuation)
  • PSTG because i am still not clear if they have created switching cost for their customers… i.e. are they somewhat insured against next better mouse!

Also interesting to see you have much higher percentage on SHOP compared to SQ.
Somehow, I see them very similar (I have both at ~8% right now) but certainly I put SQ at a higher conviction than SHOP. Just because they seem to do well with both offline and online markets and may be a bit more transparent. (They recently shown details of their bitcoin exchange business almost telling investors not to get too carried away!).

I have found hard to get in and out and so remain aggressively invested but also raised cash (to ~10%) recently selling some SHOP (yes I had higher % in SHOP primarily because I got in SQ later and SHOP grew much bigger from same $ value invested at origination of each holding)and few other names due to valuation.



It was a pleasure to read your discussion of risk. You’ve obviously put a lot of thought into it.
In addition, you show how you worked your concept of risk into your investing strategy. It was
easy to understand and instructive.

Just to expand a bit on a couple of your points…

…the one that really stings is opportunity cost.

Aswath Damodaran has a famous (if you’re a finance nerd) take on this. He says risk is traditionally
viewed as a ‘negative’. For example, the dictionary defines risk as “exposure to danger”. However,
he says the Chinese have two symbols for risk. Taken together they give a much better description
of risk. The first is the symbol for “danger”, while the second is the symbol for “opportunity”.
Risk is a mix of the two. It sounds like you would bold the symbol for opportunity.

Sure there are plenty of other errors that will cost you big…

This is a key point. But it’s not always obvious why.

First, let’s take a case that is obvious. Suppose I offer you $10 million to play Russian
roulette. You’re given a revolver with six chambers with a bullet in one of them. You hold the
muzzle to your head and pull the trigger. If it’s an empty chamber you can retire early.

Your probability of a loss here is one in six. But in this case, probability is irrelevant. Your
risk needs to be judged by the magnitude of the outcome.

Now suppose I offer you the same bet, but this time give you a revolver with 60 chambers? Or
600 chambers? Or 6,000 chambers? Does the probability change at all your willingness to take
the bet?

Unlike a game of Russian roulette, where the probabilities and outcomes are precise, we can’t
give any meaningful odds or anticipate the outcomes in the stock market. Nassim Taleb
describes this as the capability of unwittingly playing Russian roulette. People see the wealth
being generated but have little or no visibility into the alternative odds and outcomes.

As Morgan Housel says: “The idea is that you have to take risk to get ahead, but no risk that
could wipe you out is ever worth taking.”



Bear, about wix, does it bother you that management has a low share holding? Just 1.2% according to SA.

Bear, about wix, does it bother you that management has a low share holding? Just 1.2% according to SA.

I don’t really pay much attention to insider holdings, Marko. Still, that’s almost 60 million dollars worth of Wix…If I were management, that would be enough to make me care. But as I said, I don’t base my conviction on this, but rather on results. I’ve seen companies held by 50%+ insiders that have done extremely poorly.




another question, whyd youd sell New Relic, i couldnt find the thread.

another question, whyd youd sell New Relic, i couldnt find the thread.

I explained here, but the short version is just that it was not down and other stuff was, and the other stuff looked more attractive.…

I’ve seriously considered getting back in…as recently as yesterday. Revenue growth has been in the 30%-35% range, though. I find it much harder to pay 16x sales for that than something like AYX where revenue is growing at 50%+. But I think New Relic is a pretty cool company. Brian Stoffel, my favorite TMF writer, analyzed them recently:…

…for those of you with access to the premium side of TMF. Short version: it was VERY favorable.