Changes in my portfolio

Investment Analysis Clubs Saul’s Investing Discussions
#1

Since I gave my end of January report on Friday, and here it is just Tuesday, and it’s still January, and I’ve made some significant changes, I thought that, in all fairness, I should let you know.

On Monday, I sold out of my smallish position in Wix and doubled my position in Nvidia, bringing it up to about 7.6%, from 3.6%.

On Tuesday, I sold out of my quite small position in Mimecast, and used it to build my position in Pure Storage - with tiny additions also to Nutanix, Twilio and Okta, but the primary focus on on Pure Storage, now about 4.0%, up from 3.3%. (Mime was only a 1.3% position and 0.7% went to Pure. It’s a lot smaller add than my add to Nvidia.)

No bad news or bad feelings about Wix and Mimecast. It’s just that I liked the ones I added to more.

Hope this helps

Saul

41 Likes
#2

Yes, it helps.

I just started a small position in PSTG with the plan for growing it as I make cash available. If you recall, I brought Brinks to the board last August. It’s not done much of anything since. I’m waiting for their next earnings report, if it’s just more of the same, I’ll close the position and buy more Pure.

Still scratching my head about your sale of LGIH, I’ve got an 11+% position - watching. You have an uncanny sense for when to get out. I won’t call it “timing” but it amounts to the same thing.

#3

Still scratching my head about your sale of LGIH, I’ve got an 11+% position - watching. You have an uncanny sense for when to get out. I won’t call it “timing” but it amounts to the same thing.

In noting the 10-ish percent drop for LGIH over the past 5 days, I almost wonder to myself just how many folks with decent-to-large sized pockets pay attention to this board. Perhaps uncanny, with a slight tinge of self-fulfilling prophecy.

Note, I do not mean to suggest that Saul’s board has the level of market-moving impact that say a new small cap Stock Advisor recommendation can be able to have.

1 Like
#4

I may be wrong but I don’t think Saul sold out completely of LGIH…?

#5

tracking charts
http://stockcharts.com/freecharts/candleglance.html?TOP:,SHO…
http://stockcharts.com/freecharts/candleglance.html?MIDD:,TL…

http://stockcharts.com/freecharts/candleglance.html?SMALL:,P…

#6

In noting the 10-ish percent drop for LGIH over the past 5 days, I almost wonder to myself just how many folks with decent-to-large sized pockets pay attention to this board. Perhaps uncanny, with a slight tinge of self-fulfilling prophecy

A large homebuilder report bad numbers and they all sold off. I might have benn NVR. Any, I sold my LEN the other day and LGIH today. May move into some Pure Storage and add to AYX soon.

#7

Saul, I noticed how many of your current stocks (SHOP, SQ, NTNX, HUBS, TLND, NKTR, AYX) aren’t yet profitable. Has some of your thinking changed a bit since you last updated your knowledgebase? I know there are always exceptions. I own SHOP myself. But it struck me how many holdings you have that are a ways from profitability. Would like to better understand how you think through these kinds of stocks. I’m sure you are looking at runway/addressable market, competitive advantage and the usual, but I’d appreciate any insight into the abundance you have of these kinds of stocks and any metrics that make you take notice.

12 Likes
#8

Ha.

I thought you were talking about a portfolio change similar to mine, profits down $xx,xxx in 2 days.
Oops, I forgot. That doesn’t happen to you. Wish it would rub off a little.

Change? Did buy AYX Monday, thank you for the idea. It’s even up! (Of course it is, Saul owns it.) :slight_smile:

Dan

#9

Saul, I noticed how many of your current stocks (SHOP, SQ, NTNX, HUBS, TLND, NKTR, AYX) aren’t yet profitable. Has some of your thinking changed a bit since you last updated your knowledgebase? I know there are always exceptions. I own SHOP myself. But it struck me how many holdings you have that are a ways from profitability. Would like to better understand how you think through these kinds of stocks. I’m sure you are looking at runway/addressable market, competitive advantage and the usual, but I’d appreciate any insight into the abundance you have of these kinds of stocks and any metrics that make you take notice.

Good question smee. Actually of the stocks you mention, SQ has been profitable for the last six quarters, SHOP was just profitable for the first time last quarter, HUBS has been profitable for the last three quarters, AYX was profitable last quarter, so when you refer to how many holdings I have that are “a ways from profitability” perhaps these aren’t good examples. I have also said that Nektar was a speculation, plain and simple, to give me a toehold in the biotech area.

In the knowledgebase, what I said I look for are:
easy to follow
rapidly growing revenue,
rapidly growing earnings and reasonable PE
recurring revenue
insider ownership
founder led
long runway
possibility to triple at least
does something special, a rule breaker

In the past year, I’ve become more involved with rapidly growing tech stocks that use a SaaS model. That means most of their revenue is recurring, which gives a cushion. It also means that most of them have deferred revenue (money they’ve collected but can’t count yet) and that means they often have positive cash flow in spite of small negative earnings. Most of my stocks have all the attributes I listed above with the exception of the earnings, and that’s mostly because they are growing so fast they want to build up their base of recurring revenue as fast as they can, while they can, so they can lock it in before competition arrives. I can live with that.

Hope that that helps,

Sual

43 Likes
#10

Thanks Saul. I have not been looking closely enough at deferred revenue. I appreciate that and the other items you mention. It helps to remember each of them.

1 Like
#11

Hi Saul,

Congrats on another great month.

I notice that AYX just started making money last Q as you noted, but their CEO has sold 200k shares since then. Does this concern you at all?

tks,

#12

edit: a different source says that’s 160k shares in the past 2 months on top of the 600k shares in September.

#13

I went digging in the Form 4 data on the NASDAQ site. For anyone interested in inside sales I suggest learning your way around the NASDAQ site. It is the best place I know to see the actual data, not some reports about it. You can find reports saying what happened, but only the Form 4 data has the details and can be considered complete. All I found in my short look is the usual, a CEO receiving shares or options and selling a lot of them, but still owning a lot more. Keep in mind that it is common for most of an officer’s pay to be in options and shares.

http://www.nasdaq.com/symbol/ayx/sec-filings

Sorry for these being out of order, I wrote this as I looked at them.

Here is one Form 4 from early this month, 5 January 2018: http://secfilings.nasdaq.com/filingFrameset.asp?FilingID=124…

On that date the CEO, Stoecker, added 153471 shares worth of options owned directly, which vests and becomes exercisable as to 1/4th of the shares subject to the option on January 1, 2019, and thereafter vests as to 1/48th of the shares in equal monthly installments, until such time as the option is 100% vested…

It also shows that at that point he owned 240000 shares indirectly through some sort of limited partnership, plus 64673 shares directly.

The next one is for January 11. http://secfilings.nasdaq.com/filingFrameset.asp?FilingID=124…

It shows two sales by that partnership, each of 20k shares, leaving a balance of 200k shares.

The most recent form 4 for the CEO is for Jan 22: http://secfilings.nasdaq.com/filingFrameset.asp?FilingID=124…

This is essentially just like the last one, two sales by that partnership, each of 20k shares, leaving a balance of 160k shares.

Then I went back to his last form 4 of 2017, http://secfilings.nasdaq.com/filingFrameset.asp?FilingID=124…

If I read this right, that partnership received a block of class B shares, convertible to A, and started the cycle of selling the converted A shares in 20k blocks.

6 Likes
#14

Thanks for this.

So, he’s sold 760k shares since Sept, beneficially owns 160k shares, plus whatever options he’s been granted.