Traveling so if this month’s report is a bit jumbled, that’s why.
Humbling. That is the word of the month for me.
Started the month out great by hitting All-time highs and moving from 50% YTD to a tad over 60%. Then it began…
This month was full of learning some lessons and re-learning other lessons. I took a long hard look at my portfolio and holdings this year. I see many many mistakes. Most of my mistakes are around getting away from the core of what Saul stocks are all about, SaaS. Many of the months I posted, SaaS represented 40% or LESS of my total portfolio. This isn’t to say that I will ONLY invest in SaaS stocks. Not only that, but I also built up stocks I identified and described as speculative to be much too risky of a bet.
Some of the lessons:
- Keep majority of portfolio in SaaS, preferably above 65%+. I really liked horseplay’s rule of not more than 10-15% for a non-SaaS investment. That’s similar to what I’m doing here.
- No need for speculative plays, no matter how the R/R looks
- Don’t allow outsized positions-to-confidence ratio, especially if a position doubles/triples very quickly (within a month or so). Trim back to conviction level
- Valuation. FinallyFoolin is really really bad at valuation. STOP over-valuing valuation. Note, I still can’t bring myself to buy Cloudflare, even though I love what they are doing.
Monthly
-16.6%
YTD
26.1%
Monthly performance November
Data Dog 7.9% 24.5%
Monday -2.7% 18.0%
Snowflake -4.9% 14.9%
ZScaler 8.9% 14.3%
Upstart -40.5% 11.7%
Sea Limited -18.6% 11.1%
Crowdstrike -19.3% 5.7%
FuboTV SOLD
Roku SOLD
Transactions:
Sells:
Roku
Sold some ROKU going into earnings and sold the rest right away after earnings. Put some of the money into DDOG (great move) and the rest into Fubo (really really bad move). The reason for selling was due to the growth rates falling so much. I still believe they will win the CTV wars, but it might be a much slower progression to that end. In the meantime, its better for me to have my money in more predictable SaaS investments.
Fubo
The weekend before Thanksgiving, I finally came around and decided to sell out of Fubo. It is difficult for me to ascertain if my thoughts toward this was due to price action or real, that’s why it took me so long. I went thru my reports for this year (another advantage to doing these), and realized that from the beginning, I referred to this as a much more speculative move. Somewhere along the line, I stopped thinking of it as speculative although it really was. I sold out and learned my lesson the very hard way about overly speculative investments.
The question, is it better to invest in something with a very high valuation or a lower valuation with a high r/r? My decision is the high valuation. I knew this but lost my way here.
Buys:
Opened positions into MNDY & ZS. I had been talking about opening a MNDY position for a while now and finally did it around the 2nd week of November. Sold the Fubo that I had bought with my Roku funds as well as a little here and there to open the MNDY position.
I used to own ZS and re-opened a position in them. Used the rest of my funds from my Fubo sales the week of Thanksgiving as well as selling a tad of CRWD & SE. Thanks mostly to Muji but also others, I have a much better understanding of ZS and am very excited for this position going into the future. The SASE networking angle is a game changer. So glad they got their sales team turned around!
Other position notes
Many of my positions are well-covered here so I don’t have a ton to add. I’ll stick to what isn’t as covered.
SE
Outstanding revenue growth numbers coming from their ECommerce platform. They continue to do an excellent job of funding their ECommerce growth mostly thru the profits from their gaming business. Yes, gaming is slowing down and makes most of the profits, but most of the revenue comes from ECommerce. Their expansion into markets around the world is impressive. I’m especially excited to see how their expansion into the world’s second most populous country goes. There certainly is a ton of opportunity going forward. They have sold off a lot with fears that their gaming is slowing, and that’s valid, if that is the reason for owning them.
As with UPST, limiting their exposure in my portfolio due to not being SaaS
Watch list:
DOCN
I know it wasn’t the first time it was brought to the board but CloudL’s writeup this week has really gotten me interested. Its kind of a pure-play for cloud infrastructure (Azure, AWS, GCP) but they don’t really compete directly with the bigguns.
AMPL
My big hesitation here is two-fold. 1. How big is their TAM? 2. Customer concentration. Over half their revenue is from something like 25 very large companies (Q2 revenue of 39M, they had 22 companies > 1M; I don’t have their Q3 total companies but revenue was 45.5M, so even without additional 1M companies, at the bare minimum of 1M per customer, it gets close to half the total revenue). Heck, if these companies AVERAGE 1.2M, that’d be 67% of total revenue.