January 2019 Performance Review

I first started putting monthly performance reviews together about a year ago after reading some on this board and realizing the tremendous value they added to my understanding of what I do and why I do it. By consistently putting these together I noted many poor decisions and inexplicable trades and negative trends that were sabotaging my overall results. Slowly, I am correcting those issues and when combined with the historical nature of holding yourself accountable, at least in my case, it has all translated into a more disciplined approach and required deeper research and analysis before I pull the trigger. Its a work in progress.

At the beginning of my reports I like to recognize the many great resources that I now use to craft my portfolio. It helps keep me humble and appreciative of the multitude of exceptionally gifted people on the Fool that give freely of their time and wisdom that lifts all of us to greater results than we can achieve on our own:

  1. Saul’s Investing Discussions

Look around you. If everyone here that has benefited from Saul’s profound investing wisdom was asked to raise their hand all of our hands would be in the air. I read many posts reporting great results month after month - all of which have one thing in common: Saul’s influence. Saul hasn’t just led us - he has taught us. I have thanked him privately: now I want to thank him publicly for the economic benefit he has brought to my family.

  1. Tinker and Duma and the NPI board.

https://discussion.fool.com/Messages.asp?mid=34123694&bid=11…

For my money Tinker is the absolute best analyst on the Fool. He looks for world dominating companies that can print cash and limits his portfolio to only a few companies. He can do that because while he hunts rabbits with a 22 - the rest of us, by and large, have to use a shotgun. (I always used a double barrel 410 but they are hard to find anymore.) When he and Duma finish discussing a company there is nothing more to say and they have turned over every stone. Just get some popcorn and read.

  1. TMF1000 and Minions Investing Strategies Board

https://discussion.fool.com/Messages.asp?mid=34119240&bid=12…

TMF1000 is another of those remarkable Fools who shares time and wisdom with anyone who asks a question. He knows what he is doing but this board is behind a Fool paywall I believe and currently this group is focused on tracking 300 public companies to determine great entry points. Well worth the price of admission.

  1. All the great member investors that can be found on the above mentioned boards that take the time to present their opinions and advice pro or con. Its what makes the Fool incredible voyage and learning environment.

Pay Stuff:

  1. Bert Hochfeld and TickerTarget

http://www.tickertarget.com/

Bert Hochfeld is a pro pure and simple. He doesn’t get into the weeds but his general analysis is always completely on point, long, exhaustive and detailed. He is approachable - you can call him up - and he takes the time to answer questions and respond completely. The one thing I would recommend to Bert is that he write slower - I find it hard to keep up and usually have to read his stuff twice. The subscription fee he charges for his work is ridiculously low for the value you get.

  1. Brad Thomas Rhino Real Estate Investing

You can find Brad over on Seeking Alpha and this is obviously a pay site. He doesn’t cover the types of stocks covered here: he is primarily into REITS and my wife follows him to put her collection of SWAN (Sleep Well at Night Stocks) together. If you want to diversify from life in the fast lane you might want to give him a try.

So thats the collection of the remarkable and primary folks I read and pay attention too. I try to remember that despite how great all these guys are they still make mistakes. No one is perfect which is why we don’t follow anyone blindly. Listen - Learn - Grow and do some due diligence before you pull the trigger. Only you can prevent…wait…thats an ad…er…You and only you are responsible for the positions you take and how you manage your portfolio. Now on to January 2019.

This is a review in three parts:

Part A: The Portfolio
Part B: The Bench
Part C: February Starting Gate

January was a great month and I have attained a private video of some of the board members celebrating the great results. I think I captured a board leader trying to restore order and enforce the Monday Morning Rules of the Board but I can’t be sure:

https://www.youtube.com/watch?v=x0y3Izc8riU

My Portfolio Results for January:

22.1%

Here are the Portfolio Positions by Percentage:

Part A - The Portfolio

  1. TWLO 17.3% Ended 2018 at $89.30 and closed January at $111.32 for a monthly gain of 24.6%

The company provides a cloud based platform of communication software. Its website can be found here:

http://www.twilio.com/

A few data points:

Current Price: $111.32
52 Week Range: $23.25/113.32
Market Cap: $10.4B
P/S: 18.27
Currently a couple of bucks below its 52 WK high.

TWLO has been putting up awesome quarterly reports with the last four featuring Rev Growth of:

40.6
47.8
54.2
68

Here is their latest announcement and Conf Call Transcript:

https://seekingalpha.com/news/3406035-twilio-beats-0_05-beat…

https://seekingalpha.com/news/3406140-twilio-plus-9-percent-…

They raised guidance during their last report and there next quarterly report is due out in early February

TWLO has been part of the portfolio since early last year. Currently IBD has them rated at:

Composite 99; Relative Strength 99; Accumulation B+

Why am I in TWLO? Its just dominating its space and has a long long runway. My intention is to let is run.
…

  1. ALTERYX 13.5% Ended 2018 at $59.47 and closed January at $71.15 for a monthly gain of 19.6%

AYX is an SaaS company that provides organizations with data analytics software that allows us tech simpletons to execute and understand stuff like real tech nerds. Their website is here:

http://www.alteryx.com/

A few data Points:

Current Price: $71.15
52 Week Range: $24.46/74.24
Market Cap: $4.3B
P/S: 23.77
4.1% Below 52 WK High

Their last 4 reports featured the following Rev Growth:

54.6
49.9
54.4
58.7

Their latest announcement and Conf Call Transcript can be found here:

https://seekingalpha.com/news/3406808-alteryx-beats-0_13-bea…

https://seekingalpha.com/article/4220239

Their next report should come out in early February. The company pre-announced around 1/24 and Gclever88 started a thread on it here:

https://discussion.fool.com/Message.aspx?mid=34118151

Ethan1234 posted his thoughts in a really good summary here:

https://discussion.fool.com/Message.aspx?mid=34118575

This is another company I have had since last year and currently IBD ranks them like this:

Composite 93; Relative Strength 99; Acc/Dis D+

They have had 7 consecutive QTRS of increased Fund ownership.

Why am I in AYX: I am a tech moron and any company that can turn everyday employees into tech analysts and move the momentum of a business forward collectively as a team has a golden ticket
to success.
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  1. MONGODB 11.2% Ended 2018 at $83.74 and closed January at $92.36 for a monthly gain of 10.2%

MDB wants Oracle’s data base job. Where Oracle is the old norm using SQL Mongo is built for more modern data base use using antiSQL or noSQL - or something like that. Everything was moving along pretty good until earlier this month Amazon announced it was implementing a new data base using Mongo’s free source code as a base. The stock dropped 12-14% overnight - lots of discussion on the issue both pro and con - some people sold out - some sold part - some just held tight. I held tight then decided the Amazon move wasn’t offensive in nature but defensive. So I bought a large block at around $74+ or so - thought better of it when the stock recovered - and then sold the same block when the stock crossed back over $85. Just luck and MDB could have just kept going down.

You can view the website here:

http://www.mongodb.com/

A few data points:

Current Price: $92.36
52 Week Range: $25.16/93.23
Market Cap: $4.75B
P/S: 21.91

Their last 4 reports featured Revenue Growth of:

50.4
48.9
61.5
56.7

Their last announcement and Conf Call Transcript here:

https://seekingalpha.com/news/3414474-mongodb-reports-q3-res…

https://seekingalpha.com/article/4226352

During the Conf Call the company Raised FY Guidance with their next report coming in early March.

This is another company that has been in the portfolio since 2018 and IBD has them rated like this:

Composite 74; Relative Strength 99; Acc/Dis D-

The stock was strong in the rally today gaining 4.73% but volume fell off by 29%. Something to watch especially if analysts are beginning to gauge the weight of the growing competition.

Why I am in MDB: I like the story and the fact that they are David taking on Goliath. They are either going to slug their way through it all to the top of the hill - or - they will still take enough market share to continue and create a wonderful investment. This is an investing adventure and I don’t want to miss it.
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  1. Zscaler 10.7% Ended 2018 at $39.21 and closed January at $48.37 for a monthly gain of 23.3%

ZS does internet security but differently: instead of trying to stop the barbarians at a company’s website gate Zscaler maintains fortress like data centers that encircle a company’s data like a protective moat. To hack the website you first have to hack the Zscaler data center. At least I think thats a pretty good description of it all. The company website is here:

http://www.zscaler.com/

A few data points:

Current Price: $48.37
52 Week Range: $24.76/$48.85
Market Cap: $5.56B
P/S: 26.02
The company is right on top of its high.

ZS has only had 3 earnings reports as a public company and reported the following Revenue Growth:

49.2
53.7
63.3

The company run rate is tiny and its valuation is nosebleed. Its latest earnings announcement and Conf Call Transcript here:

https://seekingalpha.com/news/3414504-zscaler-reports-q1-bea…

https://seekingalpha.com/article/4226351

During the call the company Raised Guidance. This is another company that has been in the portfolio since 2018 and IBD rates them like this:

Composite 93; Relative Strength 97; Acc/Dis C

Note: During todays trading the stock gained 6.25% with volume increasing 105%.

Why am I in ZS: The company has developed an entirely new way to protect a company from the prying eyes of internet spies and hackers. While the company is expensive beyond belief this is a great business to own.
…

  1. THE TRADE DESK 10.7% Ended 2018 at $116.06 and Closed January at $142.68 for a monthly gain of
    22.9%.

TTD is revolutionizing advertising by offering a cloud based tech platform that aggregates available opportunities for the independent advertising agencies. The company believes that
the future of advertising lies within digital streaming and is targeting that market segment. A few data points:

Current Price: $142.68
52 Week Range: $40.79/161.50
Market Cap: $6.12B
P/S: 14.42
Price is 11.6% Below the 52 WK High

The last 4 earnings reports featured Revenue Growth of:

49.9
60.6
54.3
49.6

Its latest report here:

https://seekingalpha.com/news/3407602-trade-desk-beats-0_15-…

https://seekingalpha.com/article/4220235

Despite a great report and Raised Guidance the company stock dropped by over 10%. Their next report should come in early February.

TTD has been in the portfolio since early in 2018 and IBD currently ranks them like this:

Composite 99; Relative Strength 99; Acc/Dis C

Why am I in TTD: Love what they are doing as well as their razor focus on digital streaming marketing and advertising. This journey is in the early innings and TTD is already making a lot of inroads into territories that hence were closed.
…

  1. ABIOMED 7.7% Ended 2018 at $325.04 and Closed January at $351.07 for a monthly gain of 8%.

ABMD markets the Impella heart pump that saves lives and helps heart surgery patients recovery times. It is a monopoly hardware company that has a competitive advantage period that could last years. I purchased a position last year but sold out when the stock price breached $400. Then in November HeartMD posted a great review on both Saul’s and Tinker’s boards, respectively. You can see it here:

https://discussion.fool.com/Message.aspx?mid=34073252

I started accumulating a position and frankly overdid it. Then the stock began a lot of roller coaster ups and downs in the time frame of mid to late December reaching a low of about $274 or so and I bumped the position really high. Too high. Recently ABMD pre-announced earnings and the stock climbed to just over $350. I trimmed a great deal today but am keeping a normal position for the long run. You can see the announcement and Conf Call Transcript here:

https://seekingalpha.com/news/3428021-abiomed-beats-0_03-bea…

https://seekingalpha.com/article/4237140

During the conference call they announced that the Impella had been fully approved for Europe and that the Impella now has a mobile app that allows doctors to check on patients status from their phones or tablets.

A few data points:

Current Price: $351.07
52 Week High: $219.13/459.75
Market Cap: $15.3B
P/S: 22.16
The stock remains 23.6% off its 52 Wk High

The company website is here:

http://www.abiomed.com/

IBD sees it this way:

Composite 98; Relative Strength 99; Acc/Dis C

Of special note is that todays rise subsequent to earnings was powered by an 87% increase in
volume.

Why I am in ABMD: They are a monopoly in a life saving/ heart surgery recovery medical field with high and ongoing demand and little to no competition. Recent developments have only made the story better and better and as I think about it this rainy evening I am regretting selling a single share today. This may not be a sexy SaaS story but long term the company has nothing but upside. Hope it sells off again soon so I can stock back up.
…

  1. NUTANIX 7.5% Ended 2018 at $41.59 and Closed January at $51.23 for a monthly gain of 23.1%

I re-entered NTNX based on the comments by Bert Hochfeld, the progress the company is making in transitioning from Hardware to Software and a few other positive developments. But I am shaky on the holding and have the feeling I may be a little early to have built the position to this size.
The fact that Saul has re-entered helps bolster my confidence as well but I just might reduce this position a little. Maybe…maybe not.

The company website is here:

http://www.nutanix.com/

A few data points:

Current Price: $51.23
52 Week Range: $29.34/64.87
Market Cap: $9.3B
P/S: 7.54
The stock remains 21% off its 52 wk High

The company’s last 4 earnings reports reflect the transition they are going through and produced the following Revenue Growth:

46.2
40.7
20.3
13.7

The latest report and Conf Call Transcript here:

https://seekingalpha.com/news/3412548-nutanix-beats-0_14-bea…

https://seekingalpha.com/article/4224969

Their next report should be out in late February or early March.

IBD sees them this way:

Composite 79; Relative Strength 94; Acc/Dis B

Why am I in Nutanix: I like a comeback story and always seem to root for the underdogs - if the points are good. And the points on NTNX appear to be particularly good. And I’m a lemming.
…

  1. ELASTIC 5.4% Ended 2018 at $71.48 and Closed January at $85.00 for a monthly gain of 18.9%.

Elastic went public in October of 2018 and closed its first day of trading at $70.00. Since then its been on a yo-yo string up and down. Its got Rock Star status and a nosebleed valuation. I started a position at about $66 and wish I had bought more. Might anyway.

The company is a Search Engine and so much more. Its a different sort of Search Engine with a focus on the enterprise level analytics. And its fast. Wow Fast. The company website can be found here:

http://www.elastic.co/

A few data points:

Current Price: $85.00
52 Week Range: $58.55/87.32
Market Cap: $5.97B
P/S: 28.22
The stock price is sitting right on top of its High.

The company has only had one Earnings Report and reported Revenue Growth of 71.7%. Announcement and Conf Call Transcript here:

https://seekingalpha.com/news/3414482-elastic-reports-q2-res…

https://seekingalpha.com/article/4226355

IBD has them rated like this:

Composite 67; Relative Strength 95; Acc/Dis D

Ok - so…IBD doesn’t think much of where the company stands today. But…read the conference call. Its phenomenal…and thats no exaggeration. It will pump you up. Reminds me of these guys:

https://www.youtube.com/watch?v=PTxA35jKufc

So why I am in ESTC: The company is fresh - unique - high performance - and provides a unique and productive tool for businesses. If it dips again - and its brief history says it will - then I will add. Fly in the ointment is that they don’t report again until March - thats a long, long time to be held up by wing and a prayer regardless of how much promise you offer. But just go ahead and dip into the 60s again. Go on…I dare you.
…

  1. DOCUSIGN 4.7% Ended 2018 at $40.08 and Closed January at $49.45 for a monthly gain of 23.3%

DOCU went public in late April of 2018 and closed its first day as public company at $39.73. Its chart features twin peaks of wild success at $63.90 in June followed by a long ragged valley of lower closes with another peak around $68 in August. Since then its been a return round trip to its original price range.

The company is the ubiquitous electronic signature thing that follows you around as you buy real estate (Just one of its niches) and is attempting to branch into something called System of Agreement stuff to expand its TAM. You can find its website here:

http://www.docusign.com/

A few data points:

Current Price: $49.45
52 Week Range: $35.06/68.35
Market Cap: $8.2B
P/S: 11.94
27.5% Below its 52 Week High

The company has produced three earnings reports since it went public with the following Revenue Growth results:

37.3
33.1
36.6

You can see the latest announcement and Conf Call here:

https://seekingalpha.com/news/3415124-docusign-reports-q3-be…

https://seekingalpha.com/article/4226916

During the Conf Call the company reported upside guidance and the next earnings report is due out in early March.

IBD sees them this way:

Composite 94; Relative Strength 92; Acc/Dis B

Why I am in DOCU: I like the company and what they do although you have to acknowledge that there is immense competition in the field. They added about 25,000 customers in the last QTR and have a dollar retention rate of about 115%. Along with that they have a very large international opportunity with that particular revenue segment growing 40% Y/Y. I was also impressed with the positive write-up on them by Bert Hochfeld enough to take the position.
…

  1. EVERBRIDGE 3.7% Ended 2018 at $56.76 and Closed January at $61.86 for a monthly gain of 9%.

EVBG does CEM (Critical Event Management) and they do it very well. They offer software solutions that “automate and accelerate an organizations response to critical events”. You can see their website here:

http://www.everbridge.com/

A few data points:

Current Price: $61.86
52 Week Range: $29.56/63.00
Market Cap: $1.96B
P/S: 13.38
The company is right on top of its High

The company went public in September of 2016 and closed its first day of trading at $15.25. In just 28 months or so the stock price has quadrupled. The company’s last 4 earnings reports produced Revenue Growth of:

37.1
33.5
43.1
42.5

Their latest earnings report announcement and Conf Call Transcript can be found here:

https://seekingalpha.com/news/3405407-everbridge-beats-0_02-…

https://seekingalpha.com/article/4218520

During the QTR they increased their enterprise customer base by 29% Y/Y while dollar based
retention is steady in the 90s range. Average sales prices during the QTR increased to $55.000 representing 33% Y/Y.

IBD rates them like this:

Composite 74; Relative Strength 98; Acc/Dis B-

Why I am in EVBG: I really like what the company does and that they are signing new contracts right and left. While the dollar based retention is a little lower than those normally found in companies on this board - the upside here is vast.
…

  1. SQUARE 3.7% Ended 2018 at $56.09 and Closed January at 71.35 for monthly gain of 27.2%.

SQ started as a mobile credit card payments system and has evolved into a multi-faceted financial and marketing services organization - and thats not including their meal delivery service or their banking ambitions. The company website is here:

http://www.squareup.com/

A few data points:

Current Price: $71.35
52 Week Range: $36.76/101.15
Market Cap: $29.7B
P/S: 9.89
The stock is 29.4% Below its 52 WK High

Square’s last four earnings reports have been nothing short of phenomenal featuring rapidly increasing Revenue Growth:

36.6
50.7
60.1
67.7

The latest report and Conf Call Transcript can be found here:

https://seekingalpha.com/news/3406844-square-slips-4_5-perce…

https://seekingalpha.com/article/4221765

The guidance provided in the Conf Call was deemed “light” and then the stock tanked 6% or so when Morgan Stanley came out and stated that such light guidance could “embolden shorts”.

Here is how IBD rates the company:

Composite: 96; Relative Strength 94; Acc/Dis B-

Why I am in Square: The company was doing fine until it ran into an incredible series of unfortunate events. The top Exec left - light guidance that it is guaranteed to beat - analyst downgrades…etc,coupled with a somewhat flaky CEO Jack Dorsey. But through it all - if you just keep looking at the bottom line things are no where near as bad as the sell off in shares would have you believe. SQ is on my list of candidates for 2019 Comeback Company of the Year and I think the next earnings report in February should provide a great holiday season boost.
…

  1. Smartsheets 1.8% Ended 2018 at $24.86 and Closed January at $31.38 for a monthly gain of 26.2%.

SMAR wants Excel’s job - but won’t get it. They don’t have too. There are enough potential clients out there that a small percentage of the market will be more than enough to provide a very nice return. The company has somewhere around 70-75K customers and they are continuously upgrading their capabilities

The company went public in late April 2018 and closed its first day of trading at $19.50. It has climbed as high as $33.98 and sunk as low as $18.06. The company website can be found here:

http://www.smartsheet.com/

A few data points:

Current Price: $31.38
52 Week Range: $18.06/33.98
Market Cap: $3.4B
P/S: 19.54
The stock is a couple of bucks off its high

The company has reported three times since going public with the following Revenue Growth:

63.3
58.9
59.5

Its latest report and Conf Call Transcript can be found here:

https://seekingalpha.com/news/3414078-smartsheet-beats-0_07-…

https://seekingalpha.com/article/4226045

During the Conf Call the company Raised Guidance. They reported that they have 4.5 million users along with a dollar based net retention of 132%. Their next report should be in early March.

IBD rates the company like this:

Composite 79; Relative Strength 97; ACC/Dis B+

Why I am in SMAR: Revenue Growth - improving capabilities (read the conf call transcript); high net retention and Raised Guidance all appealed to me. The fact that people are buying given the Accumulation Rating of B+ on IBD and the manageable Market Cap with upside are very positive to me.
…

  1. PIVOTAL SOFTWARE 1.5% Ended 2018 at $16.35 and Closed January at $18.49 for a monthly gain of 13%.

PVTL went public in April of 2018 and closed its first day of trading at $15.73. During the year it climbed all the way up to $31.24 before falling back to its current level. The company specializes in software that helps companies transition their businesses to the cloud. The company website can be found here:

http://www.pivotal.io/

A few data points:

Current Price: $18.49
52 Week Range: $14.43/31.24
Market Cap: $4.9B
P/S: 7.81
40.8% Below its 52 Week High.

The company has reported three times with the following Revenue Growth:

28.5
30.5
30.4

The latest earnings announcement and Conf Call Transcript here:

https://seekingalpha.com/news/3416172-pivotal-software-beats…

https://seekingalpha.com/article/4227805

During the conference call the company Raised Guidance with its next report coming out in mid- March.

IBD sees them this way:

Composite 48; Relative Strength 56; Acc/Dis B

Why I am in PVTL: The company hit rock bottom after reporting molasses type customer growth and investors fled - the stock tanked - and then Lock-up Expiration further pounded the stock which was then beaten down further by tax selling. Not a pretty picture. However, I look at the albeit short history of revenue growth of 30% - take into account the Raised Guidance for the next QTR - and then simply decided it was worth the risk for a small position. Many have advised against it, brought up really valid points and concerns, and all of them are much more savvy investors than I am; but, I have made the decision to stick it out until at least the next earnings report.
I already have a nice return in the company and I don’t think its going out of business. We’ll see.

This ends Part A: The Portfolio review

Next in Part B I intend to lay out the companies that I am watching and why I am interested in them. Or maybe I won’t - this takes a lot of time, Sigh.

I would love to hear any thoughts - pro or con - that would be important to consider going forward.

All the Best,

111 Likes

Interesting layout and thanks for taking the time.

Just skimming the surface Square screams out as the best value from a growth vs P/S position (although admittedly some of their growth acceleration is acquisition related). Possibly has one of the largest TAMs too.

Once Nutanix resolves its business model transition that will look extremely cheap too.

Ant

3 Likes

Ant:

Its early but I keep looking at SMAR here with its lower Market Cap and its B+ accumulation rating from IBD. If you read the conference call they make it plain that they are aware of their somewhat limited TAM and are taking steps to improve it. Makes me wish I had added more earlier. There are also some strong companies on the bench just begging for starter positions. We’ll see.

All the Best!

1 Like

What an awesome write-up Champico. Thanks so much for posting it!
Saul

An important distinction is that SQ adjusted revenue (the important one) is 1.406 billion TTM making the P/S more like 20.6 rather than 9.89.

Kyle

6 Likes

Hi Kyle:

Thanks and I appreciate your taking the time to bring that up.

All the Bset

Thanks, there have been some excellent portfolio reviews on this board the last couple of days, and this is one of them.

I am looking forward to Part B and C.

Thank you Loecke.

The benefits of this exercise are so self enlightening and so productive to bottom
line performance that I would encourage everyone to do it.

All the Best

1 Like