Jason’s Investing Decisions for May

I’m just a working husband and father that was lucky enough to find Saul’s Board and be that guy able to take full advantage of his generosity in sharing his method for investing in Companies experiencing Hypergrowth. I apparently have a risk profile and a conviction in Saul’s reasoning, as it applies to investing in Hypergrowth Companies, that many just do not have. That doesn’t mean I’m smarter or better informed than many here.

I believe myself to have been convinced more by the clarity of Saul’s method and transparency of his decision making than his actual results. So, when share prices go up or down I’m not much phased by it, sincerely. If Global Pandemic or Putin going to War with the world hasn’t made me question my investment choices, I think that says a lot.

At the lowest point during this downturn, this month, I was still up 336% for the last 4 years and 5 months, that’s 436% of what I had when I started trying to learn Saul’s method of investing.

Even so, I can’t say I’m not tempted to say I woulda, coulda, shoulda. I will say, I continue to believe in Saul’s proven method of investing in Hyper-growth. After my portfolio achieving a 203% gain in 2020 and getting as high as 91.7% in additional gains in 2021, I believe that a pullback was inevitable. I expected one at some point, maybe not as big as this one​:person_shrugging:???; nonetheless, **I’m not going to try and time the market.**If I did, I’d likely have sold out after the first 75% or 100% or 150% gain or something like that, :unamused:.

Some say we’re at the end of the growth cycle. I say each of the indicators for believing this are transitory. And then we’re off to the next part of the cycle. IMO, the companies in my portfolio will grow revenues hand over fist throughout the cycle.

My performance for each of the last four years, when I started trying to follow the recommendations in Sauls’ Knowledge Base and his chosen posts in the Right Side Panel, here.

2018 > +38.9%.
2019 > +32.9%
2020 > +203% 
2021 > +46.8% 
2021>.     Month.          YTD
June >.    +15.2%.        +23%
July >.    +5%.           +29%
August >.  +24.3%.        +60.5%
Sept>      +2.9%          +65.22%
Oct>     . +16%.          +91.7%
Nov>.     (-)14%.         +54.38%(given in error).  Actual YTD 64.8%
Dec>      (-)11%          +46.8%

2022>.     Month         YTD
January: (-)22.3%        (-)22.3%
February:   6.4%.        (-)17.3%
March:   (-)1.77%.       (-)18.8%
April.   (-)21.76%.      (-)36.5%
May.     (-)25.8%.       (-)52.9% 
          May 31. April30 Mar 31 Feb 28 Jan 31 Dec 31 Nov 30  Oct 31. Sept 30.  Aug 31. July 31
Upstart     **0.0%**  3.30%   3.76%  14.25% 10.47% 11.28% 11.73%.  25.27%  27.52%.  22.47%.  14.76%. 13.85%
Datadog.   **18.87%** 17.72% 17.39%  14.53% 17.54% 16.60% 16.28%.  11.91%  16.39%.  16.43%.  16.42%.  16.21%.  16.63%
Cloudflare **15.51%** 13.90% 19.24%  18.38% 15.22% 13.48% 14.06%.  13.23%.  9.33%.  14.45%   17.60%.  16.48%.  18.92%
[Monday.com](http://Monday.com)  **0.0%**  15.19% 14.52%  13.44%.15.08% 14.39% 17.92%.  10.37%.  8.72%.   0%.      0%.      0%.      0%
Lightspeed. 0.0%.  0.0%.  0.0%.   0%.    0%.    0%.    0%.      9.75%.  8.78%.   4.40%.   0%.      0%.      0%.     0%.   **12.11%** 14.87%13.85% 10.79%. 9.26%  8.99%. 8.64%.   7.06%.  6.51%.   0%.      2.75%.   0%.      0%
Snowflake  **22.73%** 20.13% 21.04%  11.98% 13.25%.12.69% 11.35%.   8.84%.  7.51%.  10.32%.  12.67%.  12.10%
ZoomInfo.   **0.0%**   0.0%   0.0%    9.87% 12.69% 11.11%. 9.22%.   6.72%.  7.09%.   7.75%.   7.98%.   8.12%.  10.50%
Crowdstrike**12.66%**  8.75%  3.91%   6.6%   6.51% 11.45%. 10.81%.  6.84%.  8.14%.  19.12%   21.50%.  22.36%.  24.19%
Docusign.   0.0%   0.0%.  0%      0%.    0%.   0%.     0%.      0%.      6.32%.  10.88%    6.46%. 7.75%
[Bill.com](http://Bill.com)   **14.03%**  5.01%  5.21%   0.0%
Palantir    **0.0%**   1.12%  1.09%   0.8%

Watch List:
Monday.com and ZoomInfo are interesting investments and will likely reinvest in them in the future. I see Tesla and Upstart as extremely interesting (super fun to read about); but, I’ll likely never invest in them going forward.

I made some money from Upstart (I now own a larger number of shares in the other companies in my current portfolio due to repeated sells when my % allocation in Upstart went too high for my comfort); but, I no longer trust management with their apparent propensities in shareholder management. Managements predilections regarding shareholders, IMO, could not have been fully known prior to this last quarter (see more info on this below).

My recent attempts in learning to lighten positions prior to earnings and add back on the rise in share price, given the new information provided at the Earnings release, saved me from a huge loss. Thanks Saul for teaching the ‘adding on the way up’ and ‘staying fully invested’ aspects of investing.]

When reading the following keep in mind that this portfolio remains ~95% of what my immediate family will live on when I retire in three years. This portfolio is what is in our non-taxable Roth and Rollover IRAs only. We have not added any money to these accounts for many years. To buy something I’ve sold something else. I don’t trade options or use any leverage. I stay fully invested at all times and keep less than 1% in cash.

9 Decisions this month.

Bill, NET and DDOG report tomorrow. Q1 is historically low for Bill. I’m looking to sell Upstart to add to Bill, depending on if Management on the CC covers everything else well.

What I did: Sold 1/2 of my 4% position in Upstart @$91 to add that to my already ~4.5% position in Bill.com @ $161

Why I did it:
Preparing for Bill.com Earnings and again seeing how explosive the growth was last quarter, both organically and from acquisitions, and my re-reading their Earnings Call led me to feel more confident in their Management.
Despite the early signs of Upstarts movement into small business loans with the Salesforce partnership, my not having any ability to foresee future numbers, bad or good, doesn’t give me the same level of confidence that I have now in Bill.com’s future (with Bill’s Transaction revenue being 80% recurring). I will miss out on the upside gains when Upstart produces what I see as inevitable upside surprises to Mr. Market. But, even if I consider Upstarts massive moat and TAM or how many Upstart customers were repeat customers, This would not take away enough of the uncertainty I feel at this time, when looking at my portfolio🤷???.

What I did:
Sold my 1% in Palantir to top up Cloudflare.

Why I did it.
In the face of fear, keep moving forward. I didn’t love the Cloudflare report; but, I believe Cloudflare is doing what it takes to build for later upside surprises and I continue to trust Cloudflare management and did you read those employee adds this quarter! I don’t see any slow down in business here. Cloudflare share price was down 20% when the rest of my portfolio is down 10%.

Upstart reported. Share price was down 40% AH at one point. The CC was upbeat? When management talks about a ‘clear path’ toward growth into huge markets, I don’t think I had fully appreciated the smoothness of a Saas model. Upstart has earned a capital “L” in their Lumpy results.

What I did:
I sold the rest of Upstart (the 2% position that got cut in half a couple days ago) and topped up Cloudflare with it.

Why I did it:
I don’t even know why it was so difficult to sell this remaining 1% position in Upstart. After acknowledging their difficulty in hiring during the Conference Call (something our other companies (Cloudflare in particular) are not experiencing and I would expect to exacerbate for Upstart going forward), I was surprised that management appeared to me as just so happy reporting their situation. In my opinion they’re out of touch with how to take their shareholder through the painful process needed for Upstart to grow their business into their next s-curve, of proving the basis on which others take the financial risk for auto lending. After my investing perhaps a hundred hours of research, I am even less certain of the growth trajectory for Upstart now.

What I did: I sold 25% of my Monday position, adding equal amounts to both Crowdstrike and Bill.com

Why I did it:
I expect decreased YoY revenue growth, maintaining 15% QoQ
Monday is the market leader in Work Automation (70% of sales in the non-tech sectors), has profitable cash flow margin of 10% with 90% NonGAAP Gross Margins and is likely growing Revenue at greater than 70% YoY in Q1; but, Management stated in Q4 CC, “We are frontloading expenses in Q1 to drive the growth”, increase partner channel, generate leads, aggressively hiring sales people.”
I won’t be phased when they report decreased FCF and increased Expenses. I am not however confident in how much over 70% Revenue growth I can expect.

Despite the weak guide from Q4:
I just don’t see a company I want to own more than the allocations I currently have. If Monday.com share price drops below $100 I might buy more, depending on the Recenue growth being above 80% or not.

Snowflake 21%
Datadog 20%
Cloudflare 14% (I expect Cloudflare to continue to perform near Zscaler growth levels in the Security space. And Cloudflare has set up well their next s-Curve, third act.)
Zscaler 14%
Monday.com 11.5%
Crowdstrike 10%
Bill.com 8.5%

What I did: Monday reported a top line above my expectations.
I sold all but a 2% of what was an 11.5% stake in Monday after press release and before the Confrence Call. I added ~30% more to Bill, ~30% more to Crowdstrike added ~18% more to my Cloudflare position.

Why I did it: After my posting here pre-earnings. I read what I wrote and wished I’d sold more going in.
YoY of +84% was good; but, fortunately Monday guided for next quarter. It was not great.
I don’t usually pay attention to guides. But, after the last one was so significant and now with next quarter also and they’ve already got a month of insight into next quarter, I think it’s safe believe there will be additional slow down in YoY company revenue growth and that their not just setting up for positive surprise. That’s just my read on managements tenor. I continue to like much of their growth story otherwise. I believe they provide the best low/no code work automation products that once set into a companies work flows are not going to be replaced unless something 10x better comes along. And with their continued innovation this moat will be maintained. Although I don’t see a regulatory moat as with Cloudflare or Snowflake or Bill.com.

Snowflake 22.63%
Datadog 19.44%
Cloudflare 16.60%
Zscaler 13.68%
Crowdstrike 12.98%
Bill.com 12.70%
Monday.com 1.97%

No there wasn’t enough in the Conference Call to make me change my mind. I sold the remaining 2% allocation in Monday and bought MongoDB with it.
Re: Why Mongo-
I was happy to see Cloudflare introduce their new relational database and also happy to see their integration with MongoDB continue, as a Document store Database. This was what put me over the edge, given Mongo’s ever improving metrics and Peter Offringas’ convincing argument that the Hyperscalers are no longer significantly competing against Mongo.

Reubenslash posted his view of Monday.com Earnings Report and has me wishing I hadn’t been so hasty, in my getting entirely out of this company https://discussion.fool.com/my-take-revenue-in-line-with-market-…. He wrote out everything I was thinking; but, I didn’t write it out. I kept my posts about it ‘balanced’ and wish I didn’t. My maintaining an opinion, supporting my general feeling without concern for what others think, is not necessarily falling into confirmation bias. Now I must fight confirmation bias by not letting the fact that I sold too much and bought others, each of which lost me money so far, keep me from getting back into Monday.com.

What I did: I sold 2% of my ~13% Crowdstrike position to buy back some Monday.com

Why I did it:
Thanks Rubenslash😉. I wouldn’t say VALUATION MATTERS, as Rubenslash did. It’s a little vague. I’d say how I value a company matters. Seems a lot of people try to guess what Mr. Market Values by watching share price. I agree with Saul, that’ll make you crazy :stuck_out_tongue_winking_eye:. I remember, in past portfolio summaries, when I tried to breakdown how I value a company in a short list, to keep things simple. I still need permission from people like Rubenslash to even consider EV/S as small part of how I value a company.

I sometimes sell if I think a company will no longer be discussed here, Saul’s Board being such a valuable resource with people like Rubenslash posting counter arguments without breaking any rules.
Monday is not a turn around story or broken in anyway. And they did warn of their ‘frontloading’ expenses to the first quarter in particular last CC. I’m confident we’ll continue to hear from many others about Mondays company performance going forward.

What I did:
I trimmed Zscaler 20% and doubled my 2% in Mongo, adding a smidge to my 2% in Monday.

Why I did it:
I’m trying to get into the habit of trimming before earnings. This trimming before earnings is not based on prior ‘bad’ experiences. There is simply more reasons to add if earnings are good, despite possible share price rise. And if there aren’t reasons to add, I’ll be glad I trimmed.

What I did:
I sold my 2.25% position in Monday.com to add to my 21% position in Snowflake, after hours at $115/share.

Why I did it:
I believe what Snowflake’ offers their customers as a value proposition , the company not the PS, and Snowflake’s moat are much greater than Monday.com. If the $100M loss this next year due to Snowflake choosing to discount pricing, which management called out in Q4, is divided with the bulk of this taken out of this quarters’ revenue number, so say if $35-45M of this is added back into this quarters’ revenue number, then one could say this quarter again showed +100% Revenue growth.
Despite some time value to money, I believe Snowflake being a consumption based vs a subscription based business model and them dealing with recently discounting price/benefit is going to lead to Mr Market needing to correct for future upside when Snowflakes revenue number is no longer effected by his temporary YoY decline in revenue growth. And I love to see the 43% FCF this quarter, as a percentage of revenue, even if called out as temporary also. That shows an incredible ability to leverage profits!

As a habit, when I make investing decisions I’m thinking out 1-3 years. When I do make a short term decision, it’s almost alway based on an obvious market disconnect between how the companies are performing and a share price over reaction based on something outside of what the companies are doing.

Heartfelt thanks to those following the rules of this great Board! I’m grateful to be one in a group of individuals who’ve come together with these rules as an agreed upon standard.

Special thanks to Saul and all the Board Managers for insisting on these now absolutely necessary standards of conduct. https://discussion.fool.com/monday-morning-rules-of-the-board-34…

2020 Portfolio Summaries here: https://discussion.fool.com/jason8217s-2020-port-review-34708368…
2021: Porfolio Summaries here: https://discussion.fool.com/jason8217s-december-portfolio-decisi…
1/31/22 Monthly Portfolio Summary here: https://discussion.fool.com/jason8217s-january-investing-decisio…
2/28/22 Monthly Portfolio Summary here: https://discussion.fool.com/jason8217s-feb-investing-decisions-3…
3/31/22 Monthly Portfolio Summary here: https://discussion.fool.com/jason8217s-march-portfolio-summary- portfolio-summary-35083947.aspx
4/30/22 Monthly Portfolio Summary here: https://discussion.fool.com/jason8217s-april-monthly-summary-351…

I received a question by email if I was 16% cash. Somehow Zscaler ~14% and MongoDB ~4% were deleted whilst I haggled with the columns and rows I provided🥴.

        May 31. April30  Mar 31 Feb 28  Jan 31  Dec 31 Nov 30  Oct 31. Sept 30.  Aug 31. July 31
Zscaler **12.11%**  14.87%.  13.85% 10.79%.  9.26%  8.99%. 8.64%.   7.06%.  6.51%.   0%.      2.75%.   0%.      0%
MongoDB **4.08%**

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