CloudL Sep 30, 2021 portfolio update

This month, there’s pressure on growth stocks AGAIN from rising yield.

I think the interest rate effect on hyper growth stock is temporary. Think about it this way: 10 year bond yield rose 1% vs last year, growth stocks crashed but rebounded and proceeded to go up 50% or 100% vs last year. Did the 1% increase in yield have any long term effect on growth stocks return? I don’t think so. Reason is simple: Do I buy a bond paying 1.5% or buy growth stocks growing 30% to 100% per year? Of course growth stocks. Even if bond yields rose to 20%, I still invest most of my funds in companies growing 50% per year because it’s a better opportunity. At that point, inflation will be close to 20%. Bonds can just match inflation where growth stocks beat inflation.

In September, my portfolio was up 10% at the peak and ended up down -4.24% at the end of September. Total since Aug 13, 2021 is: 14.91%.

I was out of stock for 8 months of the year. There’s no YTD performance but only performance since Aug 13.

Performance and allocation:


Stock	       Aug-13-To-Sept.	 Sept.	    Weight(%)
NVEI (CAD)	11.44%	        -11.27%     21.97%
NUVCF(USD)			
DCBO	        2.89%	        -12.75%     15.40%
UPST	        55.66%	         38.11%	    14.28%
SPT	        19.36%	         0.29%	    11.38%
NET	       -7.47%	         -6.70%	    10.51%
BILL	        28.43%	        -2.71%	    9.76%
DLO	        8.66%	        -14.75%     5.89%
TASK	        65.88%	         5.52%	    4.13%
MNDY	        21.76%	        -14.01%	    3.90%
GLBE	        2.50%	        -9.07%	    2.77%

**Performance Comparison** 		
My Portfolio	14.91%	       -4.24%	
SP500	         -3.76%	       -4.97%	
WCLD	         -0.76%	       -5.42%	

My portfolio squeezed a tiny beat in September vs SP500 and WCLD despite the huge drop from the top holdings.

Change:

Sold out LSPD. My reasons are explained here: https://discussion.fool.com/why-i-sold-out-of-lspd-34945220.aspx…

I might use half of the proceeds from LSPD and add to BILL and Monday.

I want to add that:

We have COVID stock: ZM, Peloton which got boosted during COVID. Their post COVID QoQ comparisons make them look bad and their stock went nowhere for months.

I think LSPD is a post-COVID recovery stock. Post-COVID recovery stock gets a boost after COVID. After the recovery, their QoQ comparison will look bad and stock will get downward pressure for a while. Before the short seller attack, I was willing to wait until next earning to see what will happen. I think this short seller attack accelerated the eventual stock price decline in the next few months.

As for Upstart, I don’t think it’s a post-COVID recovery stock since it’s just started vs the huge addressable market. It may slow down a bit from strong quarters but won’t be too bad.

Taskus:

It started as an under-valued play and I bought it with a target exit price.
I found I became more interested in holding this stock. It’s not SaaS but I am willing to hold and see where Task will go. It’s interesting company because they focus on serving hyper growth tech companies in the digital economy similar to we invest in hyper growth companies.

I see only one competitor to Taskus: Concentrix and their growth rate is extremely slow at 2.5% QoQ for the past 4 quarters where Taskus is accelerating rapidly. Taskus grew revenue 17.8% QoQ last quarter. They are expanding their office around the world. “TaskUs continues its growth with six new office locations—on top of growing its existing presence in Mexico and its global headquarters, New Braunfels, TX.”

Some highlights:
-60% CAGR 2017 to 2020.
-125% net revenue retention rate.
-Focused on serving fast growing tech companies in digital economy
-They claim the total addressable market across the specialized services is over $100 billion, and demand for some of these services is growing up to 50% annually.

Five areas of growth:
-The first is our current clients who are growing extremely fast and accelerating their outsourcing spend.
-The second is introducing new specialized service offerings.
-The third is expanding our global delivery footprint.
-The fourth is adding new clients.
-The final area of focus will be M&A. (Until now, all growth are organic)

Hyper growth:
-Fintech business grew an astounding 300% year over year.
-Digital customer experience business generated $113.6 million for a year-over-year growth rate of 59.2 percent.

  • Content security business grew 38.4 percent to deliver $43 million,
    -AI operations business grew 95.9 percent for revenues of $23.5 million.

BILL.COM
It did a massive 1.38B offering of common stocks and $575m convertible senior notes due 2027.
That’s a huge capital raise. Something is in the acquisition pipeline?

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