You have had some very detailed responses, so I’ll just try to go of the gaps from my point of view.
No issues with your top 6, although I am more cautious about OKTA and ESTC…but maybe that is why my results lag yours.
GH: I had over 10 years experience in life sciences earlier in my career and have a pretty good understanding of the underlying forces, which are highly stochastic in nature. I would either be investing in several, playing a binary event strategy with options rather than stock, or running an income strategy - non of which are in your playbook.
DOCU: Don’t hold it but am interested, driven by its success in the market place (becoming a verb etc).
COUPA: Don’t hold it and probably won’t. I despise the space from a product point-of-view, speaking as a vendor who has to deal with large companies who use platforms such as Ariba and Hiperos. From an investment point of view my concern would be that the TAM is pretty much defined now by Ariba/SAP.
ZUO: Don’t hold and probably won’t. There are plenty of pricing companies out there. I remember reading early on that ZUO’s USP was the way that it made accounting under ASC 606 more straightforward…which gives it a target market for its USP of all US public companies with significant subscription business. A decent sized market to be sure, but not huge. I also read that their business model included being paid a % of each transaction…just not going to happen. Any company needs to understand where it comes in the pecking order of services for its customers: a vendor that is contributing to the end product may be able to justify a % of the selling price, but no sensible company is going to give that just for keeping the books.
What I do hold instead (I like to find Financials + Product + Management, most of my comments will center on Product as you have the others pretty well covered):
PAYC: This was a rec from MF Pro and has performed very well for me. One key driver that Pro noticed which I have not seen mentioned anywhere else is geography: the company is systematically opening up sales offices in a few new states each year. This gives them a significant chunk of new business to attack each year, while they grow what they already had.
TEAM. Lots written on this, but Jira is to developers a bit like quickbooks is to small company bookkeepers…when they go to a new company that doesn’t have a ‘system’ they will champion what they know because they know it works, and all of the new team become proseletized for when they move on. And there is a lot of career movement with software developers. (And Jira is a great product whereas Quickbooks is Quickbooks).
MDB: lots written. Evolving standard.
ZEN: Fantastic product, revolutionizes a company’s approach to customer support & works out of the box. Have held it since 2015.
ANET: I like the ‘hardware’ diversification this gives me and has products that I can roughly understand. Stellar management. (So at least 2 things that I now realize NTNX does not have)
CLDR: This one is down to Bert: he seems to really believe in the potential acquisition synergies and thinks that the market are ignoring them. The 2 companies were probably young enough that he may be right. They report later this week, so you might want to prioritize this for a research look.
I hope this is useful - I don’t tend to contribute much on this board, so it felt appropriate to do so here.