Disco Gator's March Update

March 2021 Portfolio Update

Monthly Disclaimer: I put together these updates as a sort of record keeping for myself. It helps me to think things through with my investments, and documents the reasoning for most of the moves I make. I do not want to come across as a know-it-all or a braggart just because things are going well. I have always kept records of my investing because I want to see how each of the decisions I make compares with the overall market. Having these records reminds me that it is an absolute certainty that things can and will go south at some point. This is now the fourth year that I have kept detailed information on a monthly basis. Every year, there have been periods of time where my portfolio has dropped from 15-30% and it will happen again. In fact, it happened twice in 2020. Now on to this month’s update…

I plan to continue leading off with this for the next few months. We have developed a rating system for the stocks of the companies that we follow. Although we have partial portfolios completely following the recommendations given, I am personally meshing the two together for my main portfolio. The last four positions I have added to my portfolio were all rated 5?? in our system. Please do not comment or ask questions about this in this thread. Make sure you reply via email as it is off topic here. You can find more information about this on Twitter @PBMMInvestments

From my YTD high of +36.56% on February 12 to March 8, where I finished at -1.17% YTD, my portfolio dropped nearly 28%. Undoubtedly this was one of the occurrences we warn about all the time. After this, we fought back to +16.25% on March 17, but ended the month at +4.64%. I’m very thankful for still being positive when I know a lot of others are not. I have Etsy, Digital Turbine (APPS) and my earlier buy of Fulgent Genetics (FLGT) to thank for this. Again, drops like this are somewhat normal for our companies so we need to try to relax a little bit.

Although I make time to reflect on all of the companies I invest in each month, I think it is very important to be critical of my investments in times when my portfolio seems to be spiraling downward. I still consider them all to be in hyper growth mode, with five of my companies expected to turn in triple digit growth in Q1 (ETSY, FLGT, APPS, ZM, SQ). These are all solid companies and I fully expect they will all continue to turn in great results. One thing I like to keep an eye on is a company’s valuation. People outside our circle of investing would consider all of our companies to be way too expensive. I think they have proven time and time again that they are not. After reviewing my holdings, I felt like Shopify was just too high and therefore I exited the position. I am still a little concerned with how much Crowdstrike has run up in price. It’s probably the main reason I bumped it down to #2 in my portfolio and I may consider further reduction if we don’t start rebounding soon.

As a reminder, I post results the last weekend of the month. For March, there will be a few more days after this weekend, but they will roll into April which will be a 5 week period for us. Our high for the month occurred on March 1st after we went +6.13% for the day, putting us at +26.22% YTD. From there we dropped 22% to our bottom on March 8 at -1.17%. I would be ecstatic if we never hit that low again in 2021, but that is far from a certainty.
Here is a snapshot of how my portfolio has performed over the past month, compared to the broader indexes. As usual, I’ll include the CNN Fear and Greed Index.

W/E Date        Portfolio     S&P 500 %     DJIA %      Nasdaq %    Russ 2000    Fear and
                % change       change       change       change     % change    Greed Index
03/05/2021       -11.14%       +0.81%       +1.82%       -2.06%       -0.40%        51 
03/12/2021        +7.87%       +2.64%       +4.07%       +3.09%       +7.33%        59
03/19/2021        -2.64%       -0.77%       -0.46%       -0.79%       -2.77%        53
03/26/2021        -5.73%       +1.57%       +1.36%       -0.58%       -2.89%        52
  March          -12.01%       +4.29%       +6.92%       -0.41%       +0.93%        52
 February         +5.50%       +2.61%       +3.17%       +0.93%       +5.80%        48 
 January         +12.72%       -1.11%       -2.04%       +1.42%       +5.35%        35
   YTD            +4.64%       +5.82%       +8.06%       +1.94%      +12.49%        52 

We end March down 12.01% for the month as we saw a large transfer out of our high growth stocks. We are still up 4.64% YTD, but trail all but the Nasdaq in comparison to the indexes. The Fear and Green Index closed at 66 on the first day of March, and dropped all the way down to 40 at market close on Thursday, March 25. We end the month at 52 which is close to dead neutral.

For the third month in a row, I made adjustments to my portfolio. I needed to pull out money to live on as well as to pay for a major renovation that we are going through. Of course, the tax man will want his, so I have some put aside for that as well. Because of the aforementioned reasons, I figured now was a good time to rebalance.

At the end of February, I wrote that I did not see myself making any significant changes in March. So much for that. After digging deeper into Teladoc’s quarterly results, I decided it was time to move on. I was hoping the acquisition of Livongo would pay big dividends for them, but I didn’t like the lack of information they provided about it. It just seems like the business is getting more and more complex, therefore I am out. This also coincided with Teladoc plummeting in our ratings. It now currently stands as a 1??

I also decided to move on from Shopify. It was by far the largest company (EV) I was invested in, but it wasn’t generating the returns that I had hoped for. I feel like the valuation of the company was a bit high and thought the stock price was most likely to go sideways or down for the next few months at a minimum.

Dropping those two companies from the portfolio created the opportunity to add two more. I bought back into Fulgent Genetics (FLGT) at $93.86 as well as initiating a new position in Pinterest (PINS) at $67.38. During this time, I also greatly increased my position in Etsy making it my #1 overall holding. I still feel that Etsy has a tremendous amount of growth in front of them and it is my most under appreciated and lowest valued stocks. More about these three below.

On to the individual results for each company that I invest in. They are listed by allocation from highest to lowest.

Company                Allocation       Initial         Purchase       December       % Change
                                       Purchase          Price         % Change      since Pur
Etsy (ETSY)              21.14%        01/01/21         $177.91         -8.15%         +13.72%
CrowdStrike (CRWD)       19.30%        01/01/21         $211.82        -17.74%         -16.11%
DocuSign (DOCU)          13.56%        01/01/21         $222.30        -10.90%          -9.15%
Square(SQ)               12.50%        01/04/21         $219.15         -7.14%          -2.53%
Zoom (ZM)                 9.47%        01/01/21         $337.32         +0.45%         +10.79%
Pinterest (PINS)          9.52%        03/08/21          $67.38         +2.51%          +2.51%
Digital Turbine (APPS)    8.49%        02/02/21          $60.76         -8.83%         +24.52%
Fulgent Genetics (FLGT)   5.50%        03/12/21          $93.86         +1.46%          +1.46%    

On the chart above, you get a clear picture of how things are currently allocated. For the “Initial Purchase” column I default to the stock price when the year started for stocks I have owned prior to this year, instead of when I purchased it. I want to see how things go from this point forward. My holdings are grouped into four tiers. The top tier contains Etsy and Crowdstrike. Those are the two companies that I have the highest conviction in and expect them to continue turning in great results. Fulgent Genetics is in my bottom tier, mostly due to the expectation that it will be the most volatile.

Now on to the discussion of the individual holdings in my portfolio, listed in alphabetical order.

CrowdStrike (CRWD) - CrowdStrike Holdings offers cybersecurity services through its Falcon platform, which monitors client operations at their endpoint connections to the internet and works to identify and stop threats. The platform learns from attacks made on it and then warns the entire CrowdStrike cybersecurity network about likely avenues for future security issues. I trimmed this position a little bit at $187.14 due to the valuation. I felt that even if they crushed earnings (which they did), that it would still be one of my most expensive stocks. Crowdstrike’s stock has been my worst performer YTD and it is still my most expensive stock based on the valuation that we use. As I continue to mesh my own strategy with that of the PBMM 100, I may consider making some further adjustments here.

Announced earnings on Tuesday, March 6, and crushed analysts estimates. Expectations were for Revenue to come in at +65% Y/Y, but they came in at an astounding +74% Y/Y. This was a beat of $14 million. EPS came in at $0.14 v a target of $0.08. ARR is now over $1 billion driven by a net new ARR of $143 million. They also added 1,480 new customers, which was also a new record. Guidance was raised for Q1 as well as for FY 2022. This company is best in class and in a great position moving forward. For now it remains in my top 2 highest conviction.

Digital Turbine (APPS) - Digital Turbine simplifies content discovery and delivers it directly to the device. Its on-device media platform powers frictionless app and content discovery, user acquisition and engagement, operational efficiency and monetization opportunities. Digital Turbine has been very busy in the acquisition market, adding three more companies to their fold since February. Their latest purchase was for Fyber, which was a leading mobile advertising monetization platform. Fyber has an extensive network which should mesh well with Digital Turbines business. These acquisition will definitely inflate revenues, but their organic growth is very strong as well.

Digital Turbine has been rated a 5?? every week they have been in our system which is for nine weeks now. In spite of the beating our companies have been taking the past six weeks, this stock is still up nearly 25% since we purchased it on February 2nd.

DocuSign (DOCU) - DocuSign is the market leader in providing electronic signature technology and automation of the agreement process through its cloud platform. DocuSign’s solution addresses the core of every business transaction - the agreement - and makes the process much more efficient, resulting in lower processing cost and time. Announced earnings on March 11. Revenue for Q4 was $431M (+57% Y/Y) which beat analysts estimates by $23M. Non-GAAP EPS was $0.37 which beat by $0.15! Net Dollar Retention rate was 123% and further acceleration. This has now accelerated for nearly 7 straight quarters with the exception of Q3 FY20 where it went sideways. For the FY, they added 50k additional Enterprise customers, which was an increase of 67% Y/Y. Q1 FY22 revenue guidance is +47% on the high end. In turn, they raised guidance for FY22 to the range of $1.96B-$1.97B. I believe they will continue to push near 50% increases as they continue to dominate their sector.

I keep hearing of new companies getting on board with DocuSign all of the time. In fact, I recently heard my former employer just started utilizing their service for a form that is filled out by tens of thousands of associates each year. On top of this, my wife had surgery this month and we were tasked with filling out multiple forms for the physician. There were 3 different packets of approximately 20 pages each. They told us to take it home to read over, sign them, and then scan them and send them back via email. I asked if they had another option or if I could just drive them back to the office. I was told that they also offer the forms via DocuSign if that interested me. (?!?). Who in their right mind would want to do this any way other than DocuSign??

Currently a 5?? in our PBMM 100 rating system and it remains in my second tier of conviction behind Etsy and Crowdstrike. I feel very comfortable with this position and expect further stock appreciation throughout the year.

Etsy (ETSY) - Etsy operates a global marketplace where people can make, sell, and buy unique goods online. The company also offers various services to support its sellers. Due to my high level of conviction in Etsy, I added to it once again, making it my largest overall holding. I figure now I can finally just enjoy the ride. Etsy has been a 5?? rated stock in our ratings system for 15 straight weeks. Its valuation is still relatively low and is one of the reasons I have moved it up to my #1 position. The only reason I think the stock price hasn’t run up more is because leadership cautioned that they wouldn’t be seeing triple digit returns throughout the year. Other than that, this company should continue to thrive. Please remember that Etsy has become the 4th largest e-commerce site in the US. Although that ranking in itself isn’t reason for price appreciation, this tells me that we should expect to see continuing quarters of strong growth.

I read someone’s post (I forget who) that said they were buying a table off of Etsy. I hadn’t even considered buying a table to be an option. I happen to be in the market for some new furniture, and being able to have it custom made to the size of my rooms is a huge bonus. After settling on which table we wanted, I messaged the seller about the details. I was told that they are booked up until mid-July delivery. Sounds great to me! I’ll just be waiting a bit longer to get the tables I want.

Fulgent Genetics (FLGT) - Fulgent Genetics is a technology company that provides comprehensive diagnostic genetic testing using its proprietary platform, which integrates data comparison and suppression algorithms, adaptive learning software, advanced genetic diagnostics tools, and integrated laboratory processes. I re-entered this position at $93.86 on March 12, after they shattered earnings estimates the week before. As I mentioned last month, I wanted to wait until this settled down to get back into it. As a recap to then, I initially purchased this at $53.67 early January and sold it at $142.11 on February 1. It was bid way up during the short squeeze phenomena and I exited due to not wanting to continue playing along. I still expect this to be a very volatile position, so I started it off as my smallest at 5%.

Although a definite Covid play short term, they are building a foundation to benefit long after Covid. They continue to gain market share and many of their contracts are multiple years. They have signed some very large contracts with different factions of the government which should keep them going strong long into the next 12 months or more. Fulgent Genetics has been rated a 5?? in our rankings system for 7 straight weeks.

Pinterest (PINS) - Pinterest is an image-sharing social media site that allows users to collect links and create virtual pin boards for personal photos, ideas, decorations, places to visit, recipes and other items. Advertisers use Promoted Pins to reach users across the full purchasing funnel. I initiated a position on March 8 after exiting Teladoc. This is a company that had been on my radar for nearly a year, as a couple people in our group chat had been on them for quite a while. It recently reached 5?? status in our rating system and continues to look strong in all areas.

Q1 revenue results should be really strong in the mid 70% range, and Q2 will be significantly higher due to the drop they had in Q2 last year. I think where the stock punishment comes in is that the expectation for Q3 will be that all of the good times will be behind them. Looking at the numbers, and international growth, I don’t expect them to drop off nearly as much.

Square (SQ) - Square is a commerce enablement platform focused on providing card acceptance, business analytics, and other ancillary products to help small merchants grow their businesses, as well as well as utilizing the Cash App ecosystem to broaden their reach to people that are under banked, and wanting to trade including crypto currencies etc. Square is my holding in the fintech sector as well as being my Bitcoin holding. As mentioned previously, the main reason I am into Square is due to the expanding use and functionality of Cash App. In fact, last year over 3 million people used Cash App to buy or sell Bitcoin. My biggest hangup with Square is my uncertainty in how to value them. Revenue is inflated due to Bitcoin transactions and this is countered with a lower gross margin. It makes things a little more confusing than I like them, but I’m a big believer in this company and it remains in my second tier.

Zoom (ZM) - Zoom Video Communications provides telecommunications services that allow people to connect via video, voice, and chat as well as sharing content. The dedicated cloud-based platform aims to offer a superior user experience compared to traditional teleconferencing options, and its device-agnostic features offer high-quality communications regardless of how users connect to the platform. Zoom announced earnings on March 1 and once again exceeded my expectations. Last month I wrote that I was looking for revenue to come in at a range between +335% and +350%. Their actual result was a +369% increase in revenue, which was an acceleration from the previous quarter! For the large dollar amounts they are turning in, those are really big numbers. EPS was $1.22 which was more than 50% ahead of what analysts were expecting. FCF is closing in on $400M and they continue to expand their customer base. Q1 revenue guidance was a range of $900M - $995M, as they get increasingly close to a $1 Billion quarter.

Although many articles and posters are becoming increasingly bearish, I’m still very bullish on Zoom. Most of the punishment to their stock seems to come from the fear of growth coming to a screeching halt. I don’t see that happening. They are the best in class and continue to expand their platform. I plan to hold this another quarter at a minimum to see how their ancillary revenue continues to expand.

The first quarter is now in the books. I’m very happy to be up 4.64% thus far and would happily take that for each of the three remaining quarters. This would put me right near +20% for the year. If only things were that easy…

I will continue to monitor our companies on a daily basis and make any adjustments that I feel are warranted. I have no idea what the rest of the year holds for us, but the one thing I am certain about is that I am invested in some amazing companies.


It’s my understanding that Digital Turbine broke off the acquisition and paid an exit fee to Fyber due to the fact that Fyber fell short on some performance metrics. Yet, you state that Fyber was acquired. I’m confused.

It’s my understanding that Digital Turbine broke off the acquisition and paid an exit fee to Fyber due to the fact that Fyber fell short on some performance metrics. Yet, you state that Fyber was acquired. I’m confused.

I tried googling it and didn’t find anything where they weren’t buying them. I got the information from Digital Turbine’s IR page


I read this morning (Wednesday) that Digital Turbine complete their acquisition of Fyber on Monday. I must have been in error when I posted that it was my understanding that Digital Turbine paid a break-up fee to cancel the deal. Sorry about that.