Jason’s May Investing Decisions

I’m barely able to employ the principles taught here much less add anything original to the discussion beyond how I applied the principles, as they were written out in Saul’s Knowledge Base and the Selected Posts listed in the right side panel. My family and I are extremely grateful for those who post here thoughtfully, following the Rules of The Board.

I’m guilty of trying too hard to fit investing decisions into what I believe are the overarching secular trends. Worse, I do this without a formal research approach nor myself having any industry specific expertise. I work in Healthcare and as a rule I do not invest in healthcare related companies, due to my already being over reliant for money in this area. All of this often results in my posting reasoning that is not particularly clear. When I post, I’m hoping for my assumptions to be questioned if not kindly. destroyed. These hopes are often fulfilled and I am most grateful for that, sincerely. Thank you all for making this Board great, utilizing the bolded word in that last sentence. Going forward here, I’ve bolded the principles Saul teaches that I’m trying to use. Please email me any feedback about where I’ve fallen down in this attempt.

When reading the following keep in mind that although this portfolio has now grown to be more than 95% of what we will live on in retirement, 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.

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…
April Portfolio Summary here: https://discussion.fool.com/jason8217s-april-portolio-review-348…

The Standards I’m trying to meet in making my Investment Decisions:

  1. Buy Cloud Category Crushing companies https://discussion.fool.com/how-i-pick-a-company-to-invest-in-33…
  2. Category Crushing Companies will always be expensive. Buy on the way up, on the dips if possible.
    3.Sell only if the story and/or the numbers change for the worse.

The confidence I must have before making a company into a full or greater sized position is determined primarily 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 trends within the company- operations, number of customers, platform, and expanding market - How will all these be Scaling (growing exponentially from here). And then how well is managements’ vision executed: as measured by growth in Revenue, Gross Profit Margin and improvements in Operational Margins and Free Cash Flow.

May 28, 2021 Total Portfolio +5.35% Month of May. +6.8% Year to date

May 31,2021
Crowdstrike 24.19%
Cloudflare 18.92%
Datadog 16.63%
Snowflake 12.20%
Upstart 11.39%
ZoomInfo 10.50%
Docusign 6.46%

What I did in April to get here and Why:

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

I sold about 4% of what was my 25% position in Cloudflare @$85.10 and also sold about 1% of my position in ZoomInfo @$52.38 and then bought a 5.55% position in UpStart @107.05
Having re-read my April Portfolio Summary, me thinks Mee protested too much. This month I’m trying to take my own advice, that which I espoused last month. I believe my being so overweight in Cloudflare was based on Tech specifics. Specifically, I believe Cloudflare was too big a position in my portfolio relatively, given their top line revenue growth of ‘only’ 51%. The bottom line, operating margin improvements and cashflow generation, are showing leverage but not as much as others in my portfolio. This was highlighted when contrasting the Revenue growth and the operating margins of Upstart and ZoomInfo. I had been telling myself, that given the rapid product development, Cloudflare’s business ‘has to’ accelerate revenue growth soon.
But then I finally read Bert’s article on Upstart, thanks Saul for your post here reminding me of it. I should have read Bert’s article. If I had I would have…

  1. better aunderstood Upstarts business
  2. I’d have had another good reason to retire early😁.
    Crowdstrike 24.11%
    Cloudflare 20.59%
    Datadog 16.48%
    Snowflake 15.60%
    Docusign 7.53%
    ZoomInfo 5.69%
    Upstart 5.55%
    Pinterest 4.45%
    I sold my entire position in Pinterest and substantially increased my positions in Upstart (added some to ZoomInfo also).
    There used to be a poster here that kept at the bottom of his posts a quote that read something like…’tell me why I should believe, not why I should not. I have enough doubts of my own.’ This quote stuck with me and informs every post I write. Perhaps I overstate the Bull case too much (Cloudflare’s 50,000 first time developers getting on their platform last quarter!!!, for example); but, I don’t believe I overstated the Bull case for Pinterest. Their Guide for a pause in MAU growth is not the only reason I sold out. I often stated I was keeping Pinterest under 5% of my portfolio due to their lack of Annual Recurring Revenue and Remaining Performance Obligations. It’s the same reason I’ll be watching Upstart closely. However, I’m a bigger fan of Upstarts business proposition going into the near future. More so, anyway, than that of Pinterest. I see less post COVID drag and quite possibly tailwinds for Upstart relative to PINS, given what I believe is a more positive lending environment for Upstart and less a stay at home situation for Pinners going at this time. I may get back into Pinterest in the later part of this year expecting Ad spend to markedly increase.
    ZoomInfo did what ZoomInfo does when they reported their Q1 results. They forced me to question how profitability and free cash flow can grow at such incredible rates. I added more to Upstart than I did to Zoom info because I value Upstarts superior revenue growth more than ZoomInfo’s superior leverage in their operational expenses margins and cashflow.
    The above investing decision was effected by Pinterest’s declining MAUs and Saul’s enthusiasm for Upstart. Sometimes the best decisions are made based on instinct developed from decades of experience that I alone don’t have. I do my best to be respectful of the cumulative experience of everyone on this BoardThanks.
    Upstart reports tomorrow
    Crowdstrike 25.32%
    Cloudflare 19.53%
    Datadog 17.65%
    Snowflake 15.32%
    Upstart 8.36%
    Docusign 7.52%
    ZoomInfo 6.29%

I’m Back down to the prior trough (-)13.6% year to date and now, 5/28/21, I’m up 23.6% from this low just 18 days later.

Upstart knocked it out of the park! Share price returned to my cost bases after hours, $107/share. Many here highlighted this companies Earnings release. I’d already trimmed Cloudflare 20% to add to Upstart prior to earnings. Now, given this blow out quarter and Tornado-like guidance, I’m asking myself which companies, like Cloudflare, do I have too high an allocation due to my over-fascination by their technology? I’m really trying to let the top and bottom line numbers tell the story for me now, more so than in the past.
I trimmed Docusign down to about a 5.5% position, trimmed a little Datadog and took Crowdstrike down to a 23.85% position so that I could add more to Upstart. I based this decision entirely on what I considered to be a totally irrational drop in Upstart share price after earning were clearly spectacular. I still have twice as much conviction in Crowdstrike as Upstart.
I sold more Datadog (taking it down to about a 15% position) to add more to my Upstart position (Upstart now 13% of my portfolio). I did this because of yet another huge drop in Upstarts share price, defying reason. I may or may not rebalance closer to DDOG Q2. Perhaps if I was more principled and less wanting to take advantage of the daily share price fluctuations, I’d of sold more Cloudflare rather than sell Datadog, in order to take advantage of the 9% drop in Upstart today. But I wasn’t and here we are.
Crowdstrike 23.47%
Cloudflare 19.57%
Snowflake 15.63%
Upstart 14.71%
Datadog 14.70%
ZoomInfo 6.18%
Docusign 5.74%
Trying to stay disciplined, Selling only when the numbers change for the worse, doesn’t apply when having reallocated simply to take advantage of silliness in the market. I’m looking to add back to Datadog what I had sold to add to Upstart. I haven’t known the CEO of Upstart more than a week😬. I don’t think Saul would call Silliness in the market one of his principles. I bolded Silliness in the Market above anyway due to my having read here more than a few times over the years that Saul has trimmed to add due to Silliness in the Market…

I have some time before the next catalyst that should send share price up for Datadog. In the mean-time Upstart share price just keeps going up and up…
Just after writing the above, I decided to not try to time the market twice.
I sold 15% of the Upstart, @$118 (up 44% in 5 days) to add back the same number of shares I had I sold from Datadog @$82 (up 2% in those five days).

My confidence level in Upstart is going up with the great commentary on this Board and my ability to understand how Upstart will actually Scale their Business. I understand that despite Upstart looking and smelling like a Saas, there are many ways they are different. Upstart does not have significant Annual Recurring Revenue, nor Remaining Performance Obligations, and the only expand is in the increasing number of loans originated. But, when 71% of loans are already being originated on the Upstart platform without human intervention, they’re accelerating the advantages the AI platform delivers and expanding their Total addressable market on top of that (see quotes below), it is looking like a company that can grow exponentially for years.
I do think I’ll hold what is currently a 13% position, even if rising share price raises it back up to the 18% level in my portfolio (18% is where it was when I started trimming it). I’m keeping in mind, Sell only if the story and/or the numbers change for the worse, their Revenue Growth (100+% YoY), Profit Margins (85.7%) and improvements in Operational Margins and Cashflow are very Tornado-esk.

My favorite quote from The Captain (Captainccs).
The “diminishing returns” argument or objection is moot.
As for banks “having their own machine learning teams” would’t banks be better off using their capital to promote their core business while relying on the SaaS suppliers to do their non-productive back office work at a fraction of the capital investment? Money talks…

From Niki Schranz on Seeking Alpha-
Upstart is significantly improving its conversion rate (the number of loans transacted in a period divided by the number of rate inquiries received). The jump from 17% in Q4 2020 to 22% in Q1 2021 even surprised analysts. The number of fully automated loans (no human intervention needed in the process!) is at an all-time high at 71%, and default rates remain low at 0.3%. These numbers suggest that Upstart’s AI model is really working and improving.

and perCC, Upstart will produce the 1st Spanish automated loan origination in the US , ‘soon’.

I sold another 12% of Upstart to buyback the same number of shares of Crowdstrike I’d sold to increase myUpstart position just 7 days ago, for an equivalent gain of 40+%. My wife sometimes asks me what kind of an investor I am. I say that I’m the ‘modified’ buy-n-hold hhhypergrowth kind.

After 2 more days of Upstart going up more than ZoomInfo, I sold 10% more of Upstart to add to ZoomInfo. I’ve only had the Upstart position for 3 weeks total and what is now 13% of my portfolio is what I’m comfortable with having and I like ZoomInfo now at 7%. I can’t stop thinking about what Bert Hotchfield wrote about ZI on TickerTarget.com , two weeks ago: this company has extended the reach of its sales contract database to offer users a series of solutions that can significantly automate the sales process-far beyond what might be achieved using something like the solutions offered by Salesforce and other supposed sales automation products..

Ok, so apparently I feel better with 12% in Upstart. I bought back the Docusign shares I’d sold to add to Upstart. Docu price hasn’t changed and this morning Upstart is up 60% from time of purchase from sell of Docusign shares; but, that’s not why I sold the Upstart to buy Docusign. Despite Peter Offringa and Saul selling their positions in Docusign, I love everything about Docusign the company. With what was left over from the the sell, I added another 10-15% more to ZoomInfo. I believe, given both of their Cloud Category Crushing positions and excellent Management, their current share price will be viewed as a bargain in the later half of this year. I’m trying to keep the % of each company in my portfolio accurately reflecting my confidence level. But Upstart share price keeps going up beyond my comfort level. I remember a post here describing Saul as a Zen Master Mountain climber. He’s more comfortable at higher peaks was the gist of it. I’m hoping that comes for me as my experience grows.

Crowdstrike 23.76%
Cloudflare 18.41%
Datadog 16.50%
Snowflake 15.33%
Upstart 12.12%
ZoomInfo 7.48%
Docusign 6.42%

I sold 20% of my Snowflake position, just prior to earnings. I added it to my ZoomInfo position.
I’m quickly gaining confidence in the future business prospects of ZoomInfo (re-read that quote I wrote taken from Bert Hochfeld about ZoomInfo above, on 5/21/21). When compared to ZoomInfo, I believe the difference in % held in my portfolio was entirely because of Snowflakes’, yes, scale upon scale upon scale of its technology. This references what Muji has been writing about on his most amazing service, HHHypergrowth.com. (#HurricaneInvestmentThesis). He explains,IMO, better than anyone that this applies to Snowflakes business model as much or more so than their ground breaking architecture. I believe this is being displayed in their top and bottom lines. But, that didn’t stop me. ZoomInfos margins are significantly better (89% compared to 70%) and most of Zoominfo’s bottomline numbers are vastly better and continuing to improve. More to the point, on its’ own merits ZoomInfo deserved a higher allocation in my portfolio. But, perhaps I’ve been too hasty here?

Snowflake reported after hours.

I just posted my take always from the Snowflake Confernce Calls onto this Board earlier today.

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! I think it’s clear, when a group of individuals come together with a common goal success is inevitable!

Special thanks to Saul for insisting on these rules and his tireless efforts in making this, without a doubt, the Best place to discuss Hyper-growth Companies.




3.Sell only if the story and/or the numbers change for the worse.

There is no loyalty in investing. Ditch your dancing partner when you find a better one. Keep your capital deployed in what you believe to find the best.



There is no loyalty in investing. Ditch your dancing partner when you find a better one. Keep your capital deployed in what you believe to find the best.

Do you think that always be true for you?


Do you think that always be true for you?

If I’m going to spend my time and effort actively managing my portfolio then I’ll want to strive for the best possible returns. If I decide that I want to spend my time on other things, I may decide to put my investments on more of an autopilot setting.



Thanks for the great question

Do I always follow my standard of ‘only selling when the Story or numbers change for the worse’.

I use standards to describe an ideal, something to strive toward. My expectations are that I’m not always employing principled reasoning in making decisions. I often let a gut reaction choose for me.

I think it’s important to back up a step and recognize that gut reactions are not bad. Gut reactions mostly come from our mid-brain area. I believe that Mid-brain thinking is a problem only when not combined with use of our fore brains. Use of the mid-brain to make decisions takes less energy and often works great.

I’m trying to incorporate the benefits of this mid-brain thinking with keeping in mind that I don’t always take the time and energy needed to utilize my forebrain for calculating probabilities. I just don’t have the energy it takes to use the fore-brain (see Daniel Kahneman’s book summary, Thinking: Fast and Slow.

Built into the standard, the standard in question, is the idea of story. When I’m lazy, if the story I have told myself about this company has changed, my midbrain which takes very little energy to use, easily notices when the story is interrupted.

So, first I try to meticulously develop a coherent story. I utilize many criteria, increasingly with numbers. Then I develop a chunked down version (A simplified version of a story takes even less energy to follow so that my midBrain thinking will be used). When that story gets interrupted and noticed by the midbrain then, hopefully before I make an emotionally based decision, I employ my more probability based thinking, which is more energy intensive but vastly more statistically likely to be successful(this probability based thinking is done in the fore-brain).

I’m not saying that doing the above eliminates emotions from the calculus. I’m saying that emotions inform the calculus for making my investing decisions. I believe my investing decisions are more successful and repeatable when the benefits of the mid-brain and the benefits of the fore brain are combined thusly.

Using a standard is not the same as using a principle. However, using Saul’s principles, as I understand them, is my standard.:grin: