YTD return -19.7%
Portfolio Breakdown
CRWD - 15.1%
DDOG - 14.2%
NET - 12.3%
UPST - 11.2%
DOCU - 10.5%
SE - 10.2%
ROKU - 10.0%
LSPD - 5.4% (NEW)
ZS - 4.2% (NEW)
SNOW - 3.9%
ZI - 3.0%
Sold Out: Lemonade, FuboTV, Twilio, Fiverr, MELI
Summary: I did not post my June update and will keep this one brief as I just finished moving and renting out my old house and it’s a pretty exhausting process. There is a ton of value in posting these monthly write-ups as it forces me to come to terms with my decisions and provides a path for improvement and learning. I’m glad to be down to only 11 positions. I have very high conviction in the top 7 so we’ll see how they do this earnings season.
CRWD (CrowdStrike) - It’s been my top company all year and continues to be my highest confidence position.
On July 21st, CrowdStrike announced the availability of CrowdStrike Falcon for GovCloud — a FedRAMP-authorized endpoint protection platform. Falcon Complete for GovCloud provides cloud-native managed detection and response (MDR) for the public sector, instantly protecting endpoints through powerful AI, comprehensive threat intelligence and 24/7/365 support from defenders who manage, monitor and remediate threats that plague government agencies.
The White House advised federal agencies to develop voluntary cybersecurity goals for critical infrastructure companies as the Biden administration mulls mandatory requirements. https://www.whitehouse.gov/briefing-room/statements-releases…
In the memorandum, the White House establishes an Industrial Control Systems Cybersecurity Initiative with the primary objective of defending critical infrastructure by “encouraging and facilitating deployment of technologies and systems that provide threat visibility, indications, detection, and warnings, and that facilitate response capabilities for cybersecurity in essential control system and operational technology networks.”
A new IBM report says the cost of data breaches among the more than 500 organizations surveyed companies hit $4.24M per incident on average, the highest rate in the report’s 17-year history. The report suggests enterprise security adoption lagged behind the pandemic-fueled remote work shift and cloud migrations. https://newsroom.ibm.com/2021-07-28-IBM-Report-Cost-of-a-Dat…
All things point to more public and private spend on cybersecurity as the world shifts to WFH and larger cloud workloads.
DDOG (Datadog)- They announced some new and expanding partnerships.
Datadog achieved AWS Government Competency Status. According to the company, this exhibits Datadog’s deep expertise working with government clients to deliver mission-critical workloads and applications on AWS. The designation also recognizes the strength of Datadog’s platform in meeting the specific needs of government customers across security, compliance, performance and operational measures. Currently, Datadog has been granted an Authority to Operate (ATO) by 12 Federal Agencies, as listed in the FedRAMP marketplace.
Datadog also announced a new integration with Salesforce that provides admins and security teams with the ability to detect and respond to suspicious behavior. The integration gives Salesforce teams with visibility into who is accessing data and what actions are being performed to detect unusual behavior and potential breaches. “I am excited about this new partnership with Datadog and Salesforce Event Monitoring,” says Amanda Grady, Senior Director, Product Management, Salesforce. “One of our Platform Architects has reported that what normally took up to two weeks to investigate using multiple monitoring tools now only takes minutes and with just a few clicks.”
Datadog Announced Availability on Google Cloud Marketplace to Support Customers’ Cloud Migrations. “By making Datadog available on Google Cloud via Marketplace, customers will have access to Datadog’s advanced monitoring and security capabilities,” said Amy Bray, Global Head, Google Cloud Marketplace, Google. “With Datadog on Google Cloud, customers can quickly begin leveraging its capabilities in application monitoring and security, ultimately helping them accelerate their cloud migrations and digital transformations.”
All these announcements sound great but what I’m really excited about is that this will be the first quarter that Datadog is lapping it’s COVID slowdown. I built up my positon from 1% early in the year to 14%. I can’t wait for earnings on 8/5.
NET (Cloudflare) - They were also added to the FedRAMP marketplace. The valuation is getting a bit out of hand, so they will really need to have a great earnings call for me to keep this large allocation.
UPST (Upstart) - I was excited to see them add some new banks to the mix. I also enjoyed Tom Gardner’s recent interview with the CEO. This stock is a volatile mid-cap but the upside is so juicy I am in for the ride. They have such a huge head-start in AI (Can you say giant MOAT?) and the lending industry is such a predatory mess, I see an incredible amount of upside.
DOCU (Docusign) - Amazing numbers in the new work from anywhere economy. Still probably undervalued. Very high conviction.
SE (Sea Limited) - It’s not SaaS and the law of large numbers will kick in at some point but it’s growing around 150% a year and the lockdowns continue all over Asia so I’m not cutting anytime soon.
Consumer spending on videogames in the second quarter eked out a 2% gain against very tough pandemic comps, giving some backup to bullish analysts who believe the year of stay-at-home orders won’t just be a flash in the pan for the games industry. Data from NPD Group’s Q2 2021 Games Market Dynamics report show overall spending hit $14B for the April-June quarter, with gains across PC, cloud and non-console VR content, mobile and subscription spending as well as hardware.
ROKU - I was excited to see Roku partner with NBC Universal for the Olympics. Tedd Cittadine, Roku’s vice president of content partnerships, said in a statement that working with NBCUniversal is an example of how streaming TV has become more of a force in how people receive their TV programming.
“Streaming has fundamentally changed the way we come together for news, sports and entertainment today,” Cittadine said. “And nothing combines these moments together better and on a bigger scale than the Olympics.”
I’m excited for earnings tomorrow, 8/4. The consensus EPS Estimate is $0.13 (compared to -$0.35 in year ago quarter) and the consensus Revenue Estimate is $618.34M (+73.6% Y/Y).
LSPD (Lightspeed) - I took a small position after reading about it for the last 6 months or so on the board.
ZS (Zscaler)- I used to own this stock a couple of years ago and I used most of the my proceeds from Twilio to purchase it. Twilio failed to add many customers and their operating costs were getting out of control. Adding a bit more cybersecurity exposure seems to make sense given the mega trends I outlined above.
SNOW (Snowflake) - Muji did a great write up on how this company can scale upon scale upon scale. With data being the new oil, I don’t see why this company can’t keep growing at triple digits. I’ll keep it smallish due to the crazy valuation but it’s been a good purchase so far. I’m up 45% since I started purchasing shares on 5/6, which was pretty close to the bottom.
ZI (ZoomInfo) - Great earnings call yesterday. I may add more to this position depending on how my other companies do.
-$174M rev (+57% YoY), this was a 7% beat ($11.6 M)
-GM: 83%
-Cash Flow from Operations of $88.6 million and Unlevered Free Cash Flow of $91.8 million
-uFCF margin: 53%
-1,100 $100k+ ACV customers, +69% YoY
-Q3’21 guide of $184M (+49% YoY)
-FY’21 guide of $707M (+48% YoY), 4.6% raise including $9M contribution from Chorus acquisition)
Previous Posts
https://discussion.fool.com/foolishjeff-january-portfolio-update…
https://discussion.fool.com/foolishjeff-portfolio-at-the-end-of-…
No update in March (I had the COVID)
https://discussion.fool.com/foolishjeff-april-portfolio-update-3…
No update in June (Moving)
-FoolishJeff