Jason’s July Investing Decisions

WillO2028 · July 29, 2022, 5:39pm

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 that many just do not have.

I keep an investing journal in order to focus/simplify my reasoning for the decisions I make around investing. Included in my monthly summaries are what I see as the most relevant newish information effecting my investment thesis, and therefore my decisions.

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>.     MTD.          YTD
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>.     MTD         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% 
June.       8.17%.       (-)49%
July.       1.51%.       (-)48.3%

           July31 Jun27  May31. April30  Mar31 Feb28 Jan31  Dec 31 Nov 30  Oct 31. Sept 30.  Aug 31
Upstart     **0.0%**   0.0%   0.0%   0.0%   3.30%  3.76% 14.25% 10.47% 11.28%   11.73%.  25.27%  27.52%
Datadog.   **20.22%** 19.23% 18.87% 17.72% 17.39% 14.53% 17.54% 16.60% 16.28%.  11.91%  16.39%.  16.43%
Cloudflare **18.13%** 18.00  15.51% 13.90% 19.24% 18.38% 15.22% 13.48% 14.06%.  13.23%.  9.33%.  14.45%
[Monday.com](http://Monday.com)  **3.50%**  3.32%  0.0%  15.19% 14.52% 13.44%.15.08% 14.39% 17.92%.  10.37%.  8.72%.   0%
Lightspeed. 0.0%   0.0%.  0.0%.  0.0%.  0.0%.  0%.    0%.    0%.    0%.    9.75%.    8.78%.   4.40%
Zscaler.    **0.0%**   0.0%  12.11% 14.87% 13.85% 10.79%. 9.26%  8.99%. 8.64%.   7.06%.  6.51%.   0%
Snowflake  **21.61%** 21.67% 22.73% 20.13% 21.04% 11.98% 13.25%.12.69% 11.35%.   8.84%.  7.51%.  10.32%
ZoomInfo.   **0.0%**   0.0%   0.0%.  0.0%.  0.0%   9.87% 12.69% 11.11%. 9.22%.   6.72%.  7.09%.   7.75%
Crowdstrike **9.92%**  9.98% 12.66%  8.75%  3.91%  6.6%   6.51% 11.45%. 10.81%.  6.84%.  8.14%.  19.12%
Docusign.   0.0%   0.0%   0.0%   0.0%.  0%     0%.    0%.    0%.    0%.      0%.     6.32%.  10.88%
[Bill.com](http://Bill.com)    **9.73%** 11.41% 14.03%  5.01%  5.21%  0.0%
MongoDB    **16.89%** 16.39%  4.08%

Watch List:
Zscaler is the most likely among those I’ll be adding back, given Zscaler being likely to benefit the most from Federal Government switching over to a Zero Trust and thus a SASE architecture, during the next couple years. Because of the stickiness once initiated, the winners from the Federal Zero Trust spend will be known over the next few quarters, IMO. I don’t currently own it because I just can’t get over Zscaler management every quarter calling out Billings as the number to watch and then them presenting Billings with significantly declining growth rates the last three quarters😒.

Also, I can’t help thinking about the fact that Cloudflare’s Zero Trust services are already being used across the Federal gov, including the FBI, State Dept, and Library of Congress. That was done without FedRAMP certification. That’s not to say Cloudflare won’t get FedRAMP, Moderate, soon. But, even without FedRAMP, Cloudflare won these high profile wins. This and Zscalers’ well known elongated implementation time, Cloudflare might possibly in the end take the majority of the spend by the Federal Government, over the next couple years, at least for the SASE elements in their ZeroTrust implementation.

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.

1 Decision this month.

The challenge I set for myself is to accurately assess how each company I own will: efficiently ride the combining waves of adoption for their various proprietary technologies up the hockey-stick (Hypergrowth) toward becoming behemoths.
This is the over simplified iteration of why I should be invested, based on what I’ve learned from reading Saul’s Board (fully explained, to the best of my ability, in my 7/30/21 Portfolio Summary):

The following may or may not include the best bits of some of the new information, that led me to trade this month. Often what I’ve written below has been said before; but, it was like the first time for me because either I re-read it or more likely it was just written out differently compared to the first time I read it.

Here we’re two weeks into the month and my not making any changes, nor expecting to make any decisions, other than to continue to ‘do nothing’ with my holdings (my continuing to fight Action Bias, not sarcasm). I added here a simplified version of my Investing thesis for each of my holdings.
Instead of explaining why these companies have done well up until now, I included where I expect these companies will grow their TAM and I added some up to date reasons for my believing they will do it.

7/15/22
Investment Theses for each of my seven holdings. These seven holdings make up 95% of what my family will live on during retirement; retirement for us begining in just about three three years from today:

Snowflake will efficiently sell Compute for Applications that benefit from utilizing Snowflakes Data sharing capabilities and when the best parts of each of the Hyperscalers cloud environments are needed. These Applications will be increasingly created and remain on Snowflake’s App Development Platform. 22% of portfolio. Peter Offringa, Softwarestackinvesting.com 7/8/22- Snowflake started as a cloud-based data warehouse and has been gradually moving into enabling more advanced data processing through their Snowpark runtime. With the ability to run scripts in Python, Java and other languages directly against a customer’s data set, this is increasingly supporting more sophisticated data analytics, data engineering and data science workloads. These go beyond simple SQL scripts run directly against the data warehouse. Particularly with the addition of full Python support and Anaconda libraries, customers are more empowered to address data science workloads without having to move data outside of Snowflake … the market for analysis of historical data is at least as large as that for predictive at this point. As predictive data processing becomes more accurate at actually determining in advance what will happen, that balance will certainly shift.
Datadog will efficiently sell the ability to best coordinate betwixt the desparate (increasingly)automated systems for every enterprise. 19% of portfolio. Datadog.com 7/10/22- “With the increasing complexity of cloud-based environments and the constantly growing volumes of telemetry data, businesses are finding it challenging to separate key signals from all the noise when they are monitoring their technology stack,” said Omri Sass, Group Product Manager of Application Performance Monitoring at Datadog. “We built Watchdog as a ubiquitous layer of intelligence that serves in-context insights directly in the user’s workflow and points them to the areas that need their attention the most.”
Cloudflare will efficiently sell This Better Internet to every enterprise. 18% of portfolio. Muji, HHHypergrowth.com 7/9/22- Cloudflare has added extensible policies in Access, which can tie Cloudflare One into any API to make Zero Trust decisions. Instead of solely having hard-coded methods for policy determination (over identity & endpoint factors provided by integrated partners, as well as internal features like CASB- and DLP-driven rules), this greatly opens the door to how organizations can manage their Zero Trust. This makes Zero Trust programmable. This feels like a disruptive change over other Zero Trust providers, plus will likely tie heavily into Workers from here. (This type of programmability is exactly what Workers-as-a-Platoform stresses, in that you can customize any 3rd-party platform.)
MongoDB will efficiently sell the Database Platform (library) needed to develop modern software. 17% of portfolio. From MongoDB.com- An ecosystem of intuitive, interlinked services, Atlas (Mongo’s current Cloud offering, growing 82% YoY and now 60% of total revenue) includes a full array of built-in data tools, all centered around the MongoDB Atlas database. Features are native to MongoDB, work with a common API, are designed for compatibility, and are intended to support any number of use cases or workloads, from transactional to operational, analytics to search, and anything in between. Equally important, Atlas removes the hidden, manual work of running a sprawling architecture, from scaling infrastructure to building integrations between two or more products. With these rote tasks automated or cleared away, developers are free to focus on what they do best: build, iterate, and release new products.
Bill.com will efficiently sell all the benefits of the cloud for back office tasks that require some kind of accounting to all enterprises. 11% of portfolio. Bert Hochfeld, TickerTarget.com September 2020 - Accountants using BILL can increase their productivity so that they can increase the number of clients handled and expand the scope of work they handle. I expect this channel to become increasingly significant for the company overtime, as more and more potential clients look to outsource back office functionality and automate as many back office tasks as possible. The company also has banking partners who use this tool with their clients to best manage cash flow and to maximize payable and minimize receivable balances. BILL’s software is already integrated with BofA, Chase and American Express, Wells Fargo became a partner last quarter. The banks use the BILL software on a white-label basis as part of their own platform-they generally brand the offering as something like a Commercial Electronic Office with an on-line portal. These are very early days for this kind of offering which I believe is likely to become a major revenue tailwind.
Crowdstrike will efficiently sell the best endpoint protection, as a unified security platform, by way of prevention (Crowdstrike being in the best position to feed the most information into their AI enabled Threat Graph and thus ‘crush this cloud category’) by selling into every enterprise. 10% of portfolio.
Monday.com will efficiently sell the ability to custom build automation for specific enterprise processes with low/no code in a Cloud enabled environment to all enterprises (70% of sales are in the non-tech sectors). 3% of portfolio. Monday.com taking more market share, perhaps with some market consolidation would convince me to add here.

Each company above is executing well on achieving their grand vision. Given the expected adoption rates for the technology these companies are selling https://www.gartner.com/en/information-technology/insights/t… and each company’s proven ability toScale their customer count, Scale their Operations, Scale their Platform, and keep on Expanding their Market, IMO, these companies are destined to become Cloud Category Crushing behemoths. The allocations they have in my portfolio reflect my confidence level in each company’s likelyhood of advancing toward this, while their revenue growth continues at or near present levels and while they continue show the ability to be extremely profitable, at their discretion.

7/25/22
What I did: Sold 20% of 12% Bill position to add 10% more to my 17% Datadog position at ~$90/share (adding just a tiny bit to Monday.com)

Why I did it: I am at least as Confident in Datadog as I am in Snowflake and Cloudflare. After Snowflake and Cloudflare share price advancing more than Datadog, I added shares to Datadog to reflect this same level of confidence, as a percentage of my portfolio. The discussions on Saul’s Board, over the last three years, from the time when I initiated this position in Datadog, have been great. Thanks!
I haven’t known Bill.com as long. My confidence is limited by my humility, wondering if I’m missing some thing. I personally like how well the competition for Divvy, Ramp, is doing. I believe that Bill has only begun to exploit the possibilities for Divvy at this time. I don’t know the reasons for Bill not getting more traction with Divvy, compared to what Ramp is doing. Perhaps Bill completely stopped selling Divvy as a point solution, that’s what the number look like🥴. I’m choosing to trust management in that they did buy a competitive solution and will eventually take better advantage of it. I simply believe Bill.com is a winner and I’m willing to bet that they’ll keep on winning, only now with a 9% position😉.

When I make investing decisions for all but Bill and Monday.com, I’m increasingly thinking out 3-5 years out compared to my usual 1-3 year time frame. I’ve increased my expected window or holding period due to my increasing confidence, having now been researching all but Bill and Monday.com for more than a year (I owned MongoDB on and off for more than a year, from about 8/2018 to definitely 1/2020). 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…