Believe me, SOME day, the losing will stop and our stocks will get back to their outperformance.
Market since November: THE CLOUD IS DEAD
Earnings reports: LONG LIVE THE CLOUD
The tea leaves are looking good for our CLOUD stocks. AWS, Azure & GCP all reporting outstanding growth numbers!! This is especially encouraging for $SNOW and $MDB. Cloud growth will continue at huge numbers despite current economic conditions. We’ll find out for sure if these tea leaves are accurate starting next week!!
I have seen a lot of talk lately about what people should have done back in November. Things such as selling out of the market or hedging. Its such an easy thing to say after the fact, however, I think for the VAST majority of investors, (myself included, at least at this stage), hedging/selling out is riskier than not doing so. Sure, this most recent time, it was definitely riskier to hold off. However, you know what… I know people who did this in March 2020 as well. Then in April, May, June, July… they kept being out of the market because their perceived risk was too high. In the meantime, I took my beating then returned 20% per month in each of those months. Do I expect this kind of bounce this time? No. However, I’m MUCH MORE afraid of missing out on another big run-up than I am of getting hit by something like we are experiencing.
Ok ok, having said that, off-topic, I know, but having said that, on to see how much of a beating I took this month!!
YTD
-41.04%
April March February January
ZScaler 20% 19% 19% 19%
Data Dog 20% 20% 25% 24%
Snowflake 19% 20% 22% 22%
SentinelOne 12% 12% 12% 15%
MongoDB 12% 12% 5% NEW
Cloudflare 11% 12% 11% 3%
Bill 5% NEW
Monday SOLD 5% 4% 14%
Transactions:
So… sometimes I’m earlier than most on the board to recognize a winner and other times I’m late. I came to decision this month that I’m late to the BILL bandwagon. I corrected that with a move, giving me about a 5% position. I asked some questions, did some due diligence and realized I most definitely have missed out here. My hesitation was COMPLETELY due to my personal fear of transactional revenue. However, the fact that the majority of these transactions are B to B really helps me reconcile that potential risk.
The question for me was… WHAT DO I SELL?? For me to open a position of significance, I have to sell something of significance. I could do a bit here and a bit there and have done that in the past but with companies I ABSOLUTELY LOVE, like DDOG, ZS, SNOW, being this discounted, I just couldn’t get myself to pull the trigger on those. So it went down to “FF, what is your lowest conviction”. Well, that was an easy question to answer and for any who have followed my monthly writeups, you could probably name it. MNDY. I said last month that if I were building my portfolio from scratch, MNDY would probably not be in it. While I really like the company, my biggest reason for still being in it was due to it being beaten down so much. The biggest reasons for my lower conviction in it is my concerns of how fragmented its industry is and no company really separating themselves. Will keep watching them and if they start showing progress in these areas, I may re-enter.
Random thoughts
As I said last month, the news on earnings calls that AWS & Azure are now CO-SELLING Snowflake, in my opinion, is a megaphone saying that while competition will remain, $SNOW is the winner, ok ok, a bit too far. $SNOW has a HUUUUUUGE lead. Sure, we’re in the first minute of the first quarter of this DATA game, so comebacks are possible, but its kinda like the other teams are still just arriving at the stadium while $SNOW is scoring TDs like Tom Brady throwing TDs to Gronk with a 7th grade team playing defense. I mean really… Amazon’s e-commerce letting companies get their data FROM $SNOW!!
To extend this a tad, $MDB is in a similar boat. They aren’t quite the pure cloud play, but Atlas is getting to be a larger and larger percent of overall revenue. Almost ALL new clients are ATLAS clients. Currently 58% of overall revenue is ATLAS. What will the ancillary numbers look like when it hits 80%? MDB is the WINNER in document databases. Ok, going overboard again. MDB has a HUUUUUUUUGE lead here too.
Watch list:
CRWD, TSLA, MNDY