Bear's Portfolio through Sep 2018

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%

September was a very up and down month for many of our stocks. I was spared from Pivotal, but Nutanix inexplicably fell 25% this month, and a couple of my small positions, Instructure and Arista, each dipped by double digit percentages. Meanwhile Square, Talend, Shopify, and MongoDB rose by double digit percentages. Wix (my largest position) and Twilio also did well in September. Overall, my portfolio only grew a couple percent this month, but is up 82% YTD. I’m more than happy with these results.

I don’t know when a crash or dip is coming for the market as a whole, but I know the S&P500 and Nasdaq were respectively up and down less than 1% this month. I feel like this is a fairly reasonable market. Not tepid, but also not irrationally exuberant. That said, the above 3 sentences are about all the thought I have given it. Attempting to time the market is folly. So we endeavor to find the best businesses. We can play with allocation levels and decide when to hold a little cash (now seems a decent time to me), but in the end it’s about finding companies that are growing orders of magnitude faster than the market as a whole.

This month I let Pure Storage go, but I added Zscaler and Arena Pharm. I wrote about my Zscaler purchase on this board. Arena was Bulwnkl’s recommendation, which I was quick to heed given his past successes.

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…
Jan 2018: http://discussion.fool.com/bear39s-portfolio-through-jan-2018-32…
Feb 2018: http://discussion.fool.com/bear39s-portfolio-through-feb-2018-32…
Mar 2018: http://discussion.fool.com/bear39s-portfolio-through-mar-2018-33…
Apr 2018: http://discussion.fool.com/bear39s-portfolio-through-apr-2018-33…
May 2018: http://discussion.fool.com/bear39s-portfolio-through-may-2018-33…
Jun 2018: http://discussion.fool.com/bear39s-portfolio-through-june-2018-3…
Jul 2018: http://discussion.fool.com/bear39s-portfolio-through-july-2018-3…
Aug 2018: http://discussion.fool.com/bear39s-portfolio-through-aug-2018-33…

My Current Allocations


Ticker	Curr%	Buy/S	Mo Ch	YTD Ch
WIX	12.5%	-16%	7.7%	108.0%
SQ	11.2%	-18%	11.7%	185.6%
TWLO	8.3%	118%	7.0%	265.6%
TLND	7.9%	17%	13.3%	86.1%
NEWR	7.6%	100%	-8.3%	63.1%
AYX	7.4%	0%	-1.4%	126.4%
SHOP	6.9%	-42%	12.9%	62.8%
NTNX	6.5%	0%	-24.1%	21.1%
MDB	5.9%	-5%	13.3%	178.8%
PAYC	3.8%	0%	0.2%	93.5%
INST	2.9%	0%	-13.6%	6.9%
ANET	2.1%	0%	-11.1%	12.9%
ZS	1.9%	NEW	-4.7%	
ARNA	1.4%	NEW	18.5%	27.1%
options	2.5%			
cash	11.2%			

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

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

I let PSTG go because to me they don’t seem wildly undervalued anymore. For one thing, they themselves project a 20% target net margin. If they keep growing revenue at 30% or 40%, that net margin will do just fine. But 20% is low enough that PSTG is not a no-brainer to me anymore. I wanted them to be the next Arista. Easier said than done.

I will now discuss each of the 14 companies in which I hold shares.

WIX.COM - WIX (12.5%)

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: http://discussion.fool.com/wix-june-quarter-33135804.aspx

Recent Action: Trimmed a bit (16% of my shares) as Wix took all time highs. As I said above, this seems like a good time to hold a little cash.

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. If the PS ratio were 15+, I’d probably trim Wix to a normal position, but with the PS at 11, I’m happy with an over-sized position.

SQUARE - SQ (11.2%)

About the company: https://discussion.fool.com/square-about-the-company-34020450.as…

Latest Quarter Review: http://discussion.fool.com/square-june-quarter-more-wow-33137913…

Recent Action: I trimmed a bit (18%) of my SQ position at record highs. This gives me the flexibility to buy it back if it dips (if it doesn’t, even better!), use the money to buy something else, or hold cash for a bit.

Conviction Status: This is not a company I’m uncomfortable about at all. Its high valuation will probably prevent me from adding (barring a dip), but I’m quite comfortable with it as up to a 15% position.

TWILIO - TWLO (8.3%)

About the company: Twilio makes web service APIs for phone calls and texting. Software developers who subscribe to Twilio’s platform can use these services in their products, and this works out great on both sides: from customers’ perspective they only have to pay when these services get used, and from Twilio’s perspective, the more the services get used, the more Twilio gets paid.

Latest Quarter Review: from Saul:
http://discussion.fool.com/my-take-on-twilio39s-results-33142391…
http://discussion.fool.com/my-twilio-conference-call-notes-33143…

Recent Action: I more than doubled my small position, so Twilio now comes in at #3 in the portfolio. I had to make it a full position. Twilio dominates their industry. Hard to see them not continuing to grow and do great.

Conviction Status: I’m comfortable at an 8% position. Clearly I hope it grows higher…but I probably won’t add shares.

TALEND - TLND (7.9%)

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: (I meant Q2) http://discussion.fool.com/bear39s-talend-q1-thoughts-33142874.a…

Recent Action: Added a bit more this month. There’s a camouflaged growth situation with cloud and big data revenue.

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

NEW RELIC -NEWR (7.6%)

About the company: New Relic monitors web and mobile applications in real time, detecting issues before they become problems, and helping companies figure out where the pain points may be before it costs them sales, or even customers. Along with Cisco’s recent acquisition, AppDynamics, and a private company called Dynatrace, New Relic is one of the main leaders in the APM space (Application Performance Monitoring). Also, they partner with Splunk.

Latest Quarter Review: from Fish - http://discussion.fool.com/new-relic-q1-2019-earnings-33143321.a…

Recent Action: Doubled my position in September. Not sure why they’ve hit the skids since their last report, but I loved it.

Conviction Status: I’m comfortable with a full-sized (8%) position. Probably not adding more, though.

ALTERYX - AYX (7.4%)

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: http://discussion.fool.com/gross-margin-of-89i-mean-that39s-not-…

Recent Action: No action in September. I had trimmed a bit last month, and it didn’t dip enough for my to start considering adding back.

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

SHOPIFY - SHOP (6.9%)

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 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: http://discussion.fool.com/shop-plus-mrr-grows-91-yoy-33136307.a…

Recent Action: I trimmed more in September. I’m still very hopeful for Shopify, but a couple things they said in the call were concerning. I think they have a clear mandate: if revenue is going to decelerate, spending must also. We’ll see how this shakes out the next couple quarters.

Conviction Status: I’m not selling now, and no plans to trim further, but I can’t see myself adding, either. I’m happy with a position in the 5% - 8% range. There are a few questions they need to answer before I’ll again be as confident as I once was.

NUTANIX - NTNX (6.5%)

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: I appreciated both Chris and Saul sharing their thoughts:
http://discussion.fool.com/ntnx-thoughts-33995148.aspx
http://discussion.fool.com/my-thoughts-about-nutanix8217s-result…

Recent Action: I neither bought nor sold shares in September (though I added a few options)

Conviction Status: I’d be comfortable with up to an 8% position. But I haven’t rushed to buy, yet. As I said last month, NTNX seems undervalued, but it may take the market a couple quarters to catch on. (It seems 25% more undervalued now!)

MONGODB - MDB (5.9%)

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.”
https://www.mongodb.com/company

Latest Quarter Review: here are two great posts by Wouter28:
https://discussion.fool.com/mdb-results-33999589.aspx
https://discussion.fool.com/mdb-call-33999873.aspx

Recent Action: I trimmed a tiny bit (5%) in September at all time highs.

Conviction Status: Here’s another where I don’t really get the industry…just following the money. I probably won’t be adding, but I’m comfortable with a 5% or 6% position. Might go up to 8% if it wasn’t so expensive.

PAYCOM - PAYC (3.8%)

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: Starrob did a pretty good write up on the PAYC board for you premium members: http://discussion.fool.com/4056/payc-12702-2077-1955-paycom-soft…

Recent Action: No action in September. It’s solid, but not cheap.

Conviction Status: I’ll probably keep this between 4% and 6%. Should steadily improve profitability and generate good returns, but it’s no Square.

INSTRUCTURE - INST (2.9%)

About the company: I brought Instructure to the board in September 2017. http://discussion.fool.com/why-i-bought-instructure-inst-3283437… It 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: http://discussion.fool.com/i-guess-my-thoughts-would-be-no-longe…

Recent Action: None in September.

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

ARISTA NETWORKS - ANET (2.1%)

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: Jim’s is good, and I agree they continue to print cash: http://discussion.fool.com/anet-33139472.aspx

Recent Action: None in September.

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.

ZSCALER - ZS (1.9%)

About the company: Zscaler provides native cloud-based security, and here’s how they describe it: “Back in the day when your users were all on the network and your applications resided in your physical data center, it made sense to establish a secure perimeter around your network. But those days are over, the perimeter is gone, and network security is all but irrelevant. Instead, you need to put your defenses and controls where the connections occur— the internet — so that every connection is fast and secure, no matter how or where users connect or where their applications reside.” https://www.zscaler.com/company/about-zscaler

Latest Quarter Review: from Saul: https://discussion.fool.com/zscaler39s-results-my-thoughts-34000…

Recent Action: https://discussion.fool.com/zscaler-wading-in-34015154.aspx

Conviction Status: I’d be comfortable with a 5% position if the price was a little lower. Might add anyway…but I still don’t know the company all that well yet.

ARENA PHARMACEUTICALS - ARNA (1.4%)

This one is completely speculative and my only excuse is that Bulwnkl has a great track record: https://discussion.fool.com/binary-event-3-arena-pharmaceuticals…. That said, I bought a ~1% position and won’t be adding much, if any. But big thanks to Bulwnkl for sharing!

My best to all!

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

116 Likes

You didn’t get any replies but I’m pretty sure everyone is watching you like a hawk.
Different stocks than Saul but equally great results. I think even Saul mentioned that.

John
Man who buys before dips

7 Likes