This is the second month since I got back to hyper growth stocks after I sold all of them in March, 2021. I’ve been thinking: should I continue to write the monthly update? or just keep it to myself? I don’t need to push my stocks. I believe they will perform well without me writing monthly updates.
My investing journey is not over. I no longer have a job.I still need to keep investing as long as I need to pay living expenses. So rather than be a lone wolf. We stay in the online hyper growth community and exchange ideas. We think differently. We don’t always agree. But many times, we can learn something new. When the market crashes 30% or 50% in a month. We cheer each other so we don’t panic. Because stocks can bounce back quickly in a short time, if we sell out, we miss lots of gain. I was lucky to get back in August. August was a earning month. I still missed around 50% gain for the missing 8 months. We are stronger as a group.
October,2021 monthly result:
Portfolio:7.00%
SP500: 7.02%
WCLD: 8.64%
2021 YTD result:
Date Portfolio SP500 WCLD
8/31/2021 19.99% 1.03% 6.60%
9/30/2021 14.91% -3.76% -0.76%
10/29/2021 22.95% 2.99% 7.82%
(2021 YTD numbers are from Aug 13,2021 because I was out of growth stocks between March and August.)
I am very satisfied with the result so far. 23% gain in 2 months is very good. Two more months to go and earnings are coming up this month. I think I may end 2021 with 50% gain after just 4 months. We’ll see. But I am not too worried about getting an exact return per year every year. I am happy with a 30% to 50% range per year return so anything above is a bonus. Have a low expectations and overachieving is my goal. That’s the key to happiness.
Allocations as October 29, 2021:
Ticker Allocation October price change
NVEI 19.68% 5.09%
NET 13.78% 72.85%
BILL 13.71% 10.25%
DCBO 13.48% 3.12%
UPST 11.16% 1.77%
SPT 10.15% 4.70%
MNDY 5.85% 13.99%
GLBE 4.72% -19.42%
DLO 4.41% -11.09%
TASK 3.07% -12.76%
Major Portfolio Changes:
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Sold LSPD (13% allocation) and added some proceeds to MNDY and BILL. I already explained the reasons extensively from earlier posts so I will not repeat again.
Since I did the change as of Oct 29: LSPD: -4.26%. BILL: +6.83%. MNDY: +12%. So it’s a 11% and 16.26% difference. It makes 1 to 2% difference to the portfolio. It’s not going to make a big difference when the portfolio is expected to produce 30% to 50% per year. It’s still a positive move. It’s a bit of lucky timing because all growth stocks went down at the time. If not, MNDY and BILL may not outperform. It’s not about being 100% correct. It’s about making independent decisions according to our own reasons with our best effort. -
I also trimmed a total of 3% from a couple top holdings and added to GLBE. So GLBE moved from 3% to around 6%. For GLBE’s hyper growth rate and large addressable market, it deserves a 6% weight.
Companies:
NUVEI (NVEI)
Nuvei is an integrated payment processor with various payment solutions such as: Proprietary Global Gateway, Independent Acquiring Platform, Global Payout Capabilities, Streamlined Currency Management, Advance Risk Management and Compliance Engine. The majority of Nuvei’s revenue streams are recurring, with significant cross-selling opportunities for its various solutions.The markets it serves include: Regulated Online Gaming, Social Gaming,Online Retail, Online Marketplaces, Digital Goods and Services, Regulated Financial Services,Travel.
It’s been steadily growing at 50% per year for the last few years.
It is finally listed in Nasdaq so it’s more convenient for the investors in the US.
Earning date: Nov 9th.
Cloudflare (NET):
I purchased a tiny 1% back in 2020 at around $20! But I sold out mid 2020 for whatever reason back then. I never increased the position. I only bought back NET at around $120 in Aug, 2021 with a 9.5% position. I thought it was fully valued at that price and didn’t expect much upside. In Sep, 2021, I saw someone on Reddit who made 1 million from NET and wanted to sell out. If he did, he would miss out an additional 50% gain in October. That’s a massive half million dollars. Yes, the valuation for NET is far beyond its current numbers. But the market is forward looking and it’s fairly efficient in the mid to long term. This is not irrational behaviour. It’s well calculated. It’s likely lots of institutional investors are buying by looking at its rapid and consistent price increase action. My point here is it’s never too late to buy in a disruptive company with a large and expanding addressable market. Someone said NET is a story stock. I disagreed. What Saul meant by story stock is stocks with promises with low probability of succeeding but the market bid up the stock price. Example: Lots of zero revenue biotech, SPACs are story stocks.Lots of EV startup stocks are also story stocks. NET has a long history of strong track record and the R2 storage is something much bigger than anything it has offered in the past.
It’s obvious to me the market didn’t bid up NET stock for revenue growth this quarter. It’s as if the stock is pricing NET as if it’s growing revenue at 100% per year! No, the earning on Thursday is not going to show a 100% YoY growth. It’s not going to happen. It’s pricing in the future revenue of R2 storage. I’ll pay attention to the update on R2 storage during the earning release rather than its revenue.
Earning date: Nov 4th.
BILL.COM (BILL)
Transaction revenue is accelerating and constitutes more and more of total revenue. Its organic growth alone is close to 100% per year. Plus the acquisitions, the growth is more impressive.
BILL is a late bloomer and network effects have started to take effect in recent years.It guided a 32% sequential growth this quarter. I am excited for their earnings report on Nov 4th. BILL is my top conviction stock. I don’t automatically sell others and allocate more to top convictions for my own reasons. I know if we allocate more to high conviction companies, our return will likely be higher but if we are wrong, our return suffers. Many of my holdings have similar high quality so there’s not much room I can change for allocations.I tend to let them grow into bigger positions. I became more conservative that I am not seeking maximum return but focusing on risk control and staple return.
Earning date: Nov 4th.
DOCEBO(DCBO)
DOCEBO focuses on serving the enterprise learning management system. It’s been growing at around 50% per year for the last few years and revenue is accelerating in recent quarters.
It is quickly approaching profitability. Its operating cash flow has turned positive for the last 2 years. Its stock is volatile. Maybe the market thinks DOCEBO got a COVID boost. As the company mentioned companies are investing in learning for ROI not just COVID remote learning and they will continue to do so.
Earning date: Nov 11th.
Upstart(UPST)
I try to limit UPST to around 10% weight. It’s my personal risk management.
I am sure UPST will continue to grow because of its early stage of growth and it keeps signing up more banks and credit unions every month.
Earning date: Nov 9th.
Sprout Social(SPT)
It’s growing at a steady 40% to 50%. Social media management is a boring but stable business. It piggybacks on the successes of social media such as Facebook, twitter and many others. Social media is a new norm and here’s to stay for long time.
Sprout Social is quickly approaching profitability. It’s operating cash flow became less negative and went positive 2 quarters ago. I expect it to reach positive EPS in 1 to 2 years.
Earning date: Nov 2th.
Monday (MNDY)
Monday is also my top conviction. I don’t allocate more for the same reasons I mentioned about BILLcom. Its revenue growth is close to 100% per year and enterprise customers are growing at a rapid rate. Its upcoming lockup expiration is holding the stock back. The Israeli origin is irreverent. Look at InMode and ZIM, they are from Israel and their stocks have done very well.
Earning date: Nov 10th.
Global-E (GLBE)
I bought it for its fast revenue growth rate and large addressable market. Shopify has a stake in GLBE and they won’t threaten GLBE’s business.
I believe the share price is being held back by lockup expiration because it’s not responding to SHOP’s good earning report.
Global-E had a non-dilutive offering from major shareholders. This put pressure on stock price
DLocal (DLO)
DLO released preliminary earnings because of a non-dilutive Secondary Offering. According to SEC rules, they have to do it because it’s close to the earning date. It’s selling by big shareholders. No new shares are created. It has no effect on the financials rather than putting pressure on the stock price.
46% sequential growth from last quarter set a high bar for this quarter.
They estimate the revenue for the three months ended September 30, 2021 to be between $67 million and $68 million which is 13.55% increase from last quarter of 59m. It’s a 66% annualized growth. I am okay with that. Payment processors are not Saas and their quarterly growth rate fluctuates… I am sure DLO will continue to grow because of the large market in payment processing. And Latin America’s economy will grow at above average rate vs developed countries.
Earning date: Nov 16th.
Taskus(Task)
Taskus also released preliminary earnings because of a non-dilutive offering.
Taskus is my lowest conviction company. It needs to hire lots of people to keep growing. It’s Human resource intensive. But it serves hyper growth companies so It’ll continue hyper growth.
Sometimes I feel like selling it. But I want to develop a habit of sticking with a company longer. There’s nothing wrong with Taskus right now. The preliminary earning release is a little slowdown from last quarter but it’s still hyper growth. 200m revenue/ 180m = 11% sequential growth. or 52% / year annualized growth. Not bad at all!
There’s a new competitor: TDCX
TDCX has a higher profit margin but it’s based in Singapore and has a low glassdoor rating. Growth rate is similar to Taskus. I’ll stick with Taskus.
Earning date: Nov 10th.