Sorry this is a bit more delayed than I usually post. Was taking kids to a theme park the past few days and just rolled up to a computer a bit ago!!
So yeah… my portfolio is DOWN a ton right now. Its UGLY. A week or so ago, I was -71% from the top in November! However, when comparing against the indexes since I started the Saul style, I’m still doing WAY better. What brings me comfort is knowing that learning Saulogy which provides guidance to how I invest is proving to beat indexes, even in an awful environment for our stocks. The future is exciting as once we clear this bear, we should get back to 30%+ returns. My biggest lesson, as I believe a lot of others are harping, is to pay a lot closer attention to what the FED is doing and don’t try to fight the FED. They will win.
From that lower point a week or so ago:
Since 1/1/2020
FF: 57% (20.8% annualized)
SPX: 21.8%
NDX: 32%
DJI: 13%
Back to current year.
YTD = -56%
May April March
Snowflake 23% 19% 20%
ZScaler 22% 20% 19%
Data Dog 20% 20% 20%
SentinelOne 13% 12% 12%
MongoDB 11% 12% 12%
Cloudflare 10% 11% 12%
Bill <1% 5% NEW
Transactions:
My biggest move was selling most of my BILL and putting that into SNOW after the call. Bought shares at prices better than the Oracle of Omaha purchased his 2 YEARS AGO. Note, revenue is 4x what it was then AND margins are a whole lot better as well!! I still have a tiny bit of BILL and likely will get back to the larger-small position of it, eventually.
NET
On Cloudflare. After listening to the call and following what they’re doing this week, I’m much more bullish than I was before their earnings call. Why?
SECURITY company. They are now going head-to-head with best of breed, ZS and winning sometimes; only had their SASE out for 2 years or so!! The stuff they’ve done in Ukraine & Russia is a HUUUUUUGE feather in their cap and you can bet they are utilizing that in sales discussions. How many companies can say and prove they’ve THWARTED multiple attacks from the best of the best hackers?? In addition, sounds like their FED approval is almost finalized. As Prince stated on the call, their sponsor indicated they have passed almost all the hurdles and are basically waiting for their name to be called, like at the DMV.
DATA company. Another advantage when pitching their security offerings is they can talk about how you can BUILD your apps within their EDGE network. You can NOT do this with ZS or PANW. Their R2 storage is going to OPEN beta TOMORROW!! Later this week, I expect to hear them talk about D2 being a DATABASE on the edge. Get it… R2-D2! To this end, Prince tweeted out yesterday a question as to what they should announce tomorrow (today). I tweeted D2 and he responded to little ol nothing me, “Not today”. ITS COMING. This will allow companies to build full blown applications in the edge. I fully expect it to be a document database (similar to MongoDB). My pipe dream is a partnership with Mongo that has Atlas in the NET edge, but this doesn’t seem the NET MO.
On top of those two big things, continuing to chug along with 50% YoY growth. Very steady. Sure, they had a FCF issue this quarter but stated very clearly they expect to be back to FCF + in the 2nd half.
BILL
After listening to their call, I think the biggest issue many people had is they came up with their own expectations for Divvy in the quarter, completely ignoring the guidance that Bill gave for Divvy. The good news is the guidance for Divvy for the upcoming quarter is back in-line with the previous quarter; that with a similar beat as this quarter, is back in the 29% QoQ range. Remember, Divvy will be lapped 1/3 next Q and fully the Q after that. This means that ORGANIC revenue will be POSITIVELY impacted.
ZS
The most exciting part of the ZS call was the talk about FED coming in and increasing. Sure, it only went from low single digits to high single digits but combine that with the AUTHs and the previous call where they were almost dismissive of FED and seemed frustrated with it. This past one though, there was a lot more positive attention paid to it.
The other great thing about the ZS call was they were very clear, NO MACRO EFFECT. If anything, the macro environment might HELP them going forward.
One more bit I ABSOLUTELY LOVED!! ZS is TRAINING Microsoft and Amazon SALES teams!! Not that they’re training their own sales teams how to sell with Azure and AWS. Actually TRAINING HYPERSCALER SALES TEAMS.
FF re-played that last bit a few times!!
SNOW
What a fantastic company. IMO, this is the company most likely to double the fastest once Macro turns around.
I find it almost comical to see some dinging SNOW for DBNRR dropping. Also dinging on how they calculate DBNRR. Since ramp-up is 6-9 months, if they calculated it the traditional way, it would be downright silly. Probably several hundred and would basically be a pointless counter. Trying to use numbers when companies are ramped up is much more useful.
The growth of data will only continue to magnify. SNOW is proving to be the leader; and annointed, much like MDB & as we recently discovered, ZS, by hyperscalers. I loved how the CEO described how MISSION CRITICAL their product is to their customers. Some of the use cases were very interesting.
Excited to hear what the best new feature mentioned in the past 4 years will be. No idea what it is but its tantalizing for sure!
WATCH: CRWD, BILL (only have a tiny bit)