Jason’s Feb Portfolio Summary

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I posted what I did and why during the month of February; therefore this will be quick.

I’m down 0.87% for this month. Up 2.7% year to date. Last months summary here https://discussion.fool.com/jason8217s-jan-port-summary-34738748…

Simply put,my % Allocation should reflect: My level of confidence that the company will continue to grow share price as fast or faster in the next year.

Crowdstrike 24.18%
Cloudflare. 23.16%
Datadog. 18.43%
Docusign. 9.06%
Snowflake. 8.65%
OKTA. 6.97%
Asana. 4.84%
Sea 4.71%

During this month:
I sold more Zoom and Bought more Docu after both went up but Zoom more than Docu and I’m not sure that the verticalization of Zoom, although will be fun to live through, I’m not sure it’ll sell enough to keep them accelerating revenues enough to keep the Mr Market happy, compared to the amount Docusign will if Docusign monetizes the massive increase in customerS obtained in the last few quarters. I believe they will do this by way of continues growth in marketshare for e-Signatures and roll out Lifetime Management.

Looking at the above and DDOG growing revenues 15% Sequentially with easy comparables beginning next Q2, I sold the rest of my Zoom and bought more DDOG after Earnings when share prices dropped 10%.
I said I’d be very happy with 11% in Q4 below.
Revenue Growth in %
YoY% QoQ%
Q219 82% +19%
Q319 88% +15%
Q419 84% +19%
Q120 87% +15%
Q220 68% +7%
Q320 61% +11% +15mil
Q420 56% +14.8% = +23mil/155mil Q3 Revenue

SE being up 55% since purchase last December and my feeling overweight at 13% (my not knowing the effects of post-COVID-19 on Gaming revenue for Sea; and Sea is basically a private company (with the founder and Tencent together having 80% of the shares)and therefore has lumpy spend, likely for the better if you agree with the owner; but, will the share price hold up if they make a sharp turn into some other line of business without notice? and DDOG down 10% after Earnings)
I sold a bunch of my shares of SE and bought a bunch more shares of DDOG with the proceeds.

2/16
After Reading McKinnon at Goldman Sachs: In terms of the time to migration

I sold the rest of Zoom @$437 to buy back a 3.88% portion of my portfolio in OKTA @$277 10% off their ATH. And then after more research specifically this article in CSO Online https://www.csoonline.com/article/3607350/okta-ceo-here-s-wh……
I sold a lot more Sea to by 2nd third of OKTA.

I continue to hold NET at such a high level for many reasons. Relative to OKTA there this from .Mathew Prince, Q4CC
The company has launched a number of products and features that are important to customers, including its zero-trust network security solution, Cloudflare 1, and Magic Transit. CEO Matthew Prince believes Cloudflare’s zero trust solution is the best in the industry, noting that Cloudflare “is the only company with a zero-trust solution that really understands and is built for the needs of developers”. Cloudflare’s mission is to provide value for developers in a way that other companies do not.

And I believe him😁

Best,

Jason

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I am starting to wonder if the market is trying to tell us something re: DDOG. I have been long with a large position since March in the $30s with a lot of this board, and considered selling last year when the stock was above $100 but unfortunately decided not to for tax reasons. But the stock has been flat/slightly down going on 8 months now. There’s still a decent amount of selling pressure on it seemingly from the recent rate shock. They did have the COVID induced revenue hiccup… but they have proved the business has recovered I believe. I told myself I will wait for the Q2/Q3 “acceleration” to see if that boosts the stock, just getting hard to stay patient here. I think its obvious now that the stock just ran up way too fast and hopefully this is a case that the valuation just needs to catch up and once it does the stock can run again. Azure partnership should help when it goes live in H1 too.

Long DDOG
Bnh

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Hi Bnh,

I just read Peter Offringa’s latest article, at Softwarestakeinvestimg.com. He’s been following Datadog for almost a year and just bought in, if I remember correctly a 14% position now. He’s very tech focused; but, he also presents, IMHO, some of the best analysis for why a company will push share prices higher.

Here’s one item I hadn’t fully considered from this article at SSI-
Additionally, large customer growth continues to excel, particularly for those spending more than $1M a year. On the earnings call, the CEO ticked off several 7-figure deals closed in Q4. This reflects the fact that Datadog can support very large customer installations, providing a strong foundation for a much larger revenue base. Finally, customers continue to adopt additional product lines. As Datadog keeps adding more monetized product offerings, this should further drive expansion metrics.

He goes into a lot of detail about the uptake of the now over ten modules Datadog is selling and how larger enterprises are starting off with more of them. The growth in the largest Enterprise adds from the Conference Call-
As of December 31, 2020, we had 97 customers with ARR of $1 million or more, an increase of 94% from 50 as of December 31, 2019. As of December 31, 2020, we had 1,253 customers with ARR of $100,000 or more, an increase of 46% from 858 as of December 31, 2019.

Given the unlimited expansion of the need for what Datadog offers, I’m very confident that the share price will rise more this year than last.

Best,

Jason

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Jason,

Thanks for the reply. The points you noted are reassuring. I will check the article out, and I certainly agree there is no issue with the product/business. I like the fact that that a larger amount of customers are picking up more of their products. It should help strengthen/deepen the moat of the company. The rate of innovation at Datadog has been outstanding.

The issue with the flatline in the price seemed to be purely valuation based, but the stock looks more attractive than it has been since last summer. Because the valuation has “caught up” some with improving fundamentals during that period.

Bnh

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Hi Bnh - for what it’s worth I think you answered your own question. All the but points are reasons to continue to hold not sell. I topped up last week after the results and taking advantage of the recent drop as I think all the qualities you highlight are hiding in plain sight.

It’s a 5% holding for me and frankly I wish it could be higher. It is really just been growing into its valuation given how extreme a P/S it had reached.

Someone recently posted an anecdotal data point that in every single technology stack customer conversation Datadog came up in every single mention - far more than any other SaaS/Software featuring. It also ranked highly in the annual SaaS survey that certain companies publish - I think it might have been Okta.

Buffet would probably observe that patience usually beats impatience in the market - it just feels harder than it should.

Ant

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