October was a better month than September for sure. Reminded me of February though in that the first half of the month was GANG BUSTERS!! The second half of the month, not so much. I hit my YTD ATH about the middle of the month (60% YTD). The first of my companies report next week so although the past few months have been relatively quiet in terms of my modifying my positions, the next month or two might be a bit different.
My allocation percentage changes this month are almost fully due to the month’s performance because I didn’t do much trading this month.
YTD
51.5%
October
10%
Perf Allocation Sept Allocation
Upstart 1.8% 19% 20%
Sea Limited 7.8% 17% 17%
Data Dog 18.2% 17% 16%
Crowdstrike 14.7% 13% 12%
Snowflake 17.0% 12% 12%
FuboTV 24.4% 11% 10%
Roku -2.7% 11% 12%
Transactions:
Only transactions this month were monthly contribution buys. Bought Fubo with each of these small transactions.
Positions:
Upstart
I mean… nothing really to add. Top conviction.
Sea Limited
Just AMAZING news coming out seemingly every day. Not only have they entered more markets (Spain, Poland), they are doing WELL in them already. Obviously the Free Fire strategy helps with that initial blitz. They are also turning India on soon.
How much might supply chain issues hurt? Not sure but that’s a short-term concern. Company is performing well and long-term looks magnificent, even at this scale.
Data Dog
Expecting this month’s report to accelerate YoY. Very happy where they are in my portfolio. 2/3 in terms of my conviction. Loved their investing slides put out the other day. “usage” based model; companies will grow & new products putting an exclamation mark on it all. AWESOME way to have exposure to the cloud datacenter growth (and much more of a pure-play than AWS, Azure, GCP).
I hear a lot in my world about their competitor, Dynatrace, as I work with a guy who used to be in DT’s sales dept and the consulting company I work with is entering a deal with them. I hear some good things about the DT product and such, but looking at financials, it doesn’t jive with how much better DDOG is performing. Is it truly the product or is there more to it, like the go-to-market strategy. I think its the GTM Strategy based on my conversations with my colleague. If anyone has some information on this, I’d LOVE to hear it.
Crowdstrike
VERY solid company that seems to be slowly decelerating. I expect they will slow into the mid-60s. It’ll be interesting to see where this slowdown settles down at. Might they settle in the high 50s to low 60s? Maybe low 50s like Cloudflare? Cloudflare has done quite well as a low to mid 50s grower. Can Crowdstrike settle in here as well? I know, different companies and different situations. Cloudflare has a HUUUUUUGE TAM and was never growing uber fast like Crowdstrike. So probably overall a bad comparison. Heck, maybe they go down a bit then start to accelerate again ala DDOG.
Snowflake
Higher conviction of mine than Crowdstrike but behind CRWD just marginally in my portfolio. I discussed this a bit last month but I’m VERY bullish here. Of course, the report will be important but I’m expecting at or close to triple digit and a continuing very slow deceleration.
FuboTV
Also a higher conviction of mine than Crowdstrike. I think they’re gearing up to run. They are EVERYWHERE. When I watch my Astros, they’re mentioned on the broadcast. They’re all over soccer, the download data indicates September was a RECORD high and WAY higher than they’ve been for a while. They have deals to be partners with the JETS and CAVS and NASCAR as well as the South American World Cup Qualifying games. I mean… everything they do supports my thesis! They have a path to high profitability WITHOUT sports betting. However the gaming and sports betting, in my eyes, is a GAME CHANGER!!
Sports betting app advertisements are EVERYWHERE. On seemingly every billboard & every 3-4 commercials. Whether its DraftKings or Caesars or … gosh, there are so many. What is the MOAT these apps have? What would keep me on DraftKings? Well, FUBO is building their MOAT. They OWN THE AUDIENCE. They can do fun deals like if you spend bet $100 a month, your streaming service is FREE! Things that’ll give them an edge on their competition.
As I said last month, in hindsight its been dead money this year and I should have waited to get in to closer to when the sports betting was coming online.
Roku
Roku is by far, the company I’m most nervous about in the upcoming earnings season. I see them making all the right moves in regards to building out an advertising CTV machine. However, with a barrage of short-term “battles” further obscuring the path, I start thinking about how the Saul Celebrities (Saul & Bear & SN…) get out when there is the extra stuff… There are tons of companies out there and a lot of very good ones. There are 3 very high on my watch list I want in on, led by MNDY. Perhaps the MNDY story is more straightforward.
Things I’m not concerned about:
- Amazon (Prime or IMDB)
- Google (Youtube)
- Slowing hardware sales (33% of the US population uses Roku, yes, need more international but they ALREADY have the US audience)
What excites me about Roku
- CTV ad dollars flowing to Roku
- Better Targeted ad rates than most other options
- Moving into C-Commerce (CTV Commerce)
- Champion for little guy (smaller studios make more $$ in deals with Roku than thru Youtube & Roku making it easier for them to monetize ads). For my house, the littlest loves Cocomelon and things like that. This can be watched on Youtube, Netflix, The Roku Channel OR on the app they have on Roku. Do they make more if someone watches via the app on Roku than via Youtube? I hope so.
This hammers home the platform stuff.
Concerns
- I should have figured this one out a couple months ago… are the upcoming comps. I’m not worried about what $$ they’ll come in at for Q3. I think they’ll report in the 60% YoY range. What I worry about is their guidance into Q4. A very tough Q4 for them to be sure. The past 2 years, Q4 has had more than DOUBLE the revenue as Q1. If that holds true again, they will ABSOLUELY BLOW THINGS AWAY! They’d come in somewhere in the 1.1B in Q4. HOWEVER, that seems like quite an ask at these higher numbers. They guided for 685, a 6.5% beat is in the 730 range for this quarter. Can they really guide then beat in Q4 at 40% QoQ? I think they will continue to win the CTV platform streaming wars, but maybe they’re no longer one of my best ideas…
WATCH LIST
MNDY - Very interested here. I have a rule (that I’ve violated too often and gotten burned) to not buy before lockup so that gives it about another month. I’d also like to see a bit of a track record on how they report. For example, is their guidance a BIG sandbag? I suspect the answer here is yes, its a big sandbag. They’re guiding for 76% after a 93% report.
NET - It was obviously a mistake for me to sell them earlier this year. I sold for 2 reasons, 1. they were “only” growing at 50% rate and 2. their very high valuation. Lesson is to look at TAM first, but I still can’t get myself to buy into it, mostly due to the valuation.
LSPD - Very interested here though. My biggest hesitation is that I think their TAM is more limited than many other options. Probably need to do more research. Perhaps its so early the TAM doesn’t matter yet or that I’m misunderstanding their TAM.