Jason’s April Portolio Review

April 30, 2021
This investment portfolio is now more than 95% of what my wife and I will live on during retirement. I’m 53 and she’s 51 years old. This investment portfolio consists entirely of two Roth IRAs and my Rollover IRA. We plan to retire in about 4 years.

We are each working full time, raising a fourteen year old son, and I am managing our investments with many of your’alls help. I’m well aware that my posts of what I’m doing and why are much abbreviated compared to many here. My family and I are extremely grateful for those who post here thoughtfully, following the Rules of The Board.

When reading the following keep in mind that to buy something I sell something else. And I don’t trade options or use any leverage. I stay fully invested at all times and keep less than 1% in cash if any.

January Porfolio Summary here: https://discussion.fool.com/jason8217s-jan-port-summary-34738748…
February Portfolio Summary here: https://discussion.fool.com/jason8217s-feb-portfolio-summary-347…
March Portfolio Summary here: https://discussion.fool.com/jason8217s-march-portfolio-review-34…

Last All Time High: 2/19/21…14% more than today. This ATH was 532% more than what I started with 3 years ago when in February 2018 I started trying to implement the principles Saul Teaches.

Last month I took all the criteria for making my investment decisions, written out in the January 2021 Portfolio Summary above, and I tried to chunk them down. I did this grouping or chunking down so as to ‘keeps things simple”’ in my own mind for how I make my investing decisions. I modified it just a little this month:

  1. Buy Cloud Category Crushing companies
  2. Category Crushing Companies will always be expensive. Buy on the way up, on the dips if possible (Still Looking at you Snowflake). Sell only if the story and/or the numbers change for the worse. Or, I have more confidence on another company’s performance going forward.

To help make portfolio allocation simpler, I try to focus on one idea.

  1. My confidence in owning more or less of a company is determined more now than ever by: What level of confidence do I have in the CEO/Founders of each company and their ability to manage my money for me.
    My confidence in the CEO is determined by their ability to communicate their vision of (my being able to understand) how the growth trend of the company will be exponential from here and then how well do they execute,
    as measured by top and bottom line numbers.

Total Portfolio%-/+: Year to date +1.37% month of March+13.56%

Current Portfolio.
Cloudflare 25.12%
Crowdstrike 24.05%
Datadog 16.83%
Snowflake 15.68%
Docusign 7.53%
ZoomInfo 6.32%
Pinterest 4.46%

What I did in April to get here and Why:

Portfolio on 3/27/21
Crowdstrike 24.51%
Cloudflare 23.82%
Snowflake 18.01%
Datadog 17.85%
Docusign 7.74%
Okta 4.89%
Pinterest 3.18%

Last month Snowflake became an 18% position for me, from my adding to it to make it a 16% position in February. Snowflake going from 16% to 18% of my portfolio happened when everything else declined in share price and the share price of Snowflake stayed the same. It’s now back to a 15.5% position because the share price of everything else came back up and more, in this first week and a half of April. Snowflake has acted like a ballast and I’m not sure what to make of that yet.

I sold 2/3rds of my 4.8% position in OKTA and put 1/2 into Cloudflare and 1/2 into Pinterest. I share why less thoroughly below (when I sell the rest of OKTA). But if you didn’t read Saul’s post and then mine here’s a link to my more specific reasons https://discussion.fool.com/hi-saul-yes-i-definitely-had-similar…

Crowdstrike 25.80%
Cloudflare 25.57%
Datadog 18.30%
Snowflake 15.76%
Docusign 7.42%
Pinterest 5.38%
OKTA 1.76%
Back to just above even for this year to date on this day.

Cloudflare’s Durable Objects went GA yesterday!!! I see Durable Objects as big or a bigger accomplishment than NVDA’s partnership with Cloudflare today. https://discussion.fool.com/nvda-announced-partnership-with-clou…. Durable objects capabilities enable data storage, in a way. I recommend reading what Muji’s written at HHHypergrowth.com for more details. Gartner reported that 75% of all data will go through the edge networks by 2025. I believe that the expanding capabilities of the edge networks, like Cloudflare’s Durable Objects alongside compute…at the edge is why this may happen sooner than 2025.
I am fascinated by the technology; but, I try not to let the tech determine investing decisions, as a principle.. This principle, I learned here from Saul.
Specifics of tech aside, Cloudflare’s pace of innovation, the 10,000 customer adds and more than 50,000 new developers writing and deploying their first Cloudflare worker all in Just this last quarter has me believing Cloudflare could be my largest position and I’d be happy with that.

Saul brought ZoomInfo to the board demonstrating unbelievable numbers. https://discussion.fool.com/would-you-be-interested-in-this-comp… . I loved the last Conference call and started a 3% position. To purchase ZI, I sold the remaining position in OKTA due to their showing serious difficulty with their Workforce Product sales, CIAM remaining above 50% as a revenue grower for them while their very recent guidance for over all revenue growth was to be about 38%.

After reading about all the accolades ZoomInfo received, many of which Saul posted here https://discussion.fool.com/the-business-as-i-understand-it-is-e… and here https://discussion.fool.com/zi-for-those-so-worried-re-privacy-i… , I felt my confidence grow and wanted to buy more. My Crowdstrike had gotten above 28% of my entire portfolio and so I trimmed there for my own comfort level. I wouldn’t have sold any Crowdstrike otherwise; but, did you see the bottom line numbers on ZI. And well I felt like having so much in one great company while so little in another amazing company just didn’t make sense.

I do realize I’m beginning to sound a lot like Saul as I’m writing this here. I see that as a very good thing😊.

Crowdstrike 25.46%
Cloudflare 24.65%
Datadog 17.62%
Snowflake 15.78%
Docusign 7.79%
ZoomInfo 4.67%
Pinterest 4.03%

Cloudflare’s share price has been on a tear upward (up 29% in the last month) and has gotten to be my largest holding :partying_face:, up to about 27% of my portfolio. When share price hit $87.31, I sold 2% and added to ZoomInfo at $52.94. I just don’t feel comfortable with so much in any one company, not even Cloudflare. I really liked what Henry Shuck, CEO/Founder of ZoomInfo said about guidance when asked about it on the last Conference call. He said, “Sure. I guess there’s one takeaway from this call is that we are seeing a positive momentum across all areas of the business. And we’re coming off the strongest quarter and the strongest year we’ve ever had. Our initial guidance is while higher than consensus. It is our expectation that these guidance levels take account a wide range of potential outcomes.”.

I believe in Pinterest; but I chose ZoomInfo to add to because of their execution of their business model, primarily. As I wrote in last months summary, I don’t value the business model of a company without Annual Recurring Revenue as much as one that does, all else being equal. The companies in my portfolio, other than Pinterest, have gobs of growing Remaining Performance Obligations and Annual Recurring Revenue. [RPO and ARR to a slightly lessor extent says to me that a company has less chance of being disrupted, as measured by their customers confidence.] .

I did add a little to my Pinterest position today. I sold a little of an overweighted position in Cloudflare to buy it.
Pinterest reported a great quarter.
Revenue Growth was 78% this quarter. Gross Profit Margins was 74.5% Guide for Q2 Revenue Growth is 105% - at 559m vs 485m. That is 15.2% sequentially, that’s not accounting for a beat!
I especially like, in the Pinterest Confernce Call CEO/Founder Ben Silberman pointed out, ‘The best retention/stickiness observed is for those engaging with their newly developed direct selling features (Pinterest reported this quarter that they increased up to date product cataloguing including price by 14x this quarter, YoY . Pinterest also reported increasing the number of product searches by 20x this quarter, YoY . Because of Pinterest building a more seamless Point of Sale operation, per the call, “The number of Pinners engaging with shopping surfaces of Pinterest as Pinners look to go from inspiration to purchase increased 200%, YoY this quarter.) , GenZ are the fastest growing of all users, and we’re just getting started at scale’- which all aligns well with my long term investment thesis.
My investment thesis focuses on this company being a Cloud native programmatic/targeted digital advertising play, I love that Pinterest has been positioning down in the funnel allowing them to charge more for advertisements. And I expect global ad spend to rocket higher the second half of this year adding huge tailwinds with why I am bullish on continued hyper growth for this company.

Some would say, the other Companies in my portfolio have overall growth prospects determined by the growth of data and Pinterest growth depends on the number of people in the world. I say Pinterest is set to monetize 500Million MAUs globally this year. This number of MAUs is 25% of the total number of all the people to purchase anything utilizing eCommerce globally last year, per Statistica. I believe Pinterest is going to disrupt Digital Advertising particularly and eCommerce somewhat. Pinterest is becoming The Storefront for most of eCommerce. I do see room for Pinterest in my portfolio albeit kept at under 5%.

Overall I’m very happy owning shares in these amazing companies. Heartfelt thanks to every one on Saul’s Investing Discussions for following the rules of this great Board!

Special thanks to Saul for insisting on these rules and his tireless efforts in making this, IMO, the Best place to discuss Hyper-growth Companies. There is something synergistic about creating success that a group of like minded individuals can produce…that no one alone can match.