Jason’s September Investing Decisions

What I wrote in my profile page at the Motely Fool under My Story is that: I’m just a very unoriginal person who is grateful for living in a time when, with their generosity over the internet, I’m able to learn from the best in the world.
I’m 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. I apparently have a risk profile and a conviction in Saul’s reasoning that has led me to enormous financial gains.
When I started reading Saul’s Board, like a lot of you, I had been a member of the Motley Fool for a few years and other than that I’d read a few books on investing. I had a portfolio of 45 different stocks that I only kinda understood that they were in a growth market of some sort and their financials weren’t that bad. The results I got weren’t that bad. They weren’t that great either.
If you have read Saul’s Portfolio Summaries, his Knowledge Base and His Selected Posts in the right side panel here…and your still not convinced how his method of investing will work…keep reading to see how following only Saul’s method and reading the posts here has been working for me.

2018 > +38.9%.
2019 > +32.9%
2020 > +203%
2021 > +46.8%
2021>. MTD. YTD
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%
Aug. 12%. (-)25.3%
Sept. 13.9%. (-)50%
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 Sept30 Aug31 July31 Jun27 May31. Aprl30 Mar31 Feb28 Jan31 Dec 31 Nov 30 Oct 31. Sept 30
Upstart **0.0%** 0.0% 0.0% 0.0% 0.0% 0.0% 3.30% 3.76% 14.25% 10.47% 11.28% 11.73%. Datadog. **16.58%** 16.88% 20.22% 19.23% 18.87% 17.72% 17.39% 14.53% 17.54% 16.60% 16.28%. 11.91%
Cloudflare **20.66%** 24.90% 18.13% 18.00 15.51% 13.90% 19.24% 18.38% 15.22% 13.48% 14.06%. 13.23%
Monday.com **5.06%** 1.83% 3.50% 3.32% 0.0% 15.19% 14.52% 13.44%.15.08% 14.39% 17.92%. 10.37%
Lightspeed **0.0%** 0.0% 0.0% 0.0%. 0.0%. 0.0%. 0.0%. 0.0%. 0.0%. 0.0%. 0.0%.
Zscaler. **2.24%** 0.0% 0.0% 0.0% 12.11% 14.87% 13.85% 10.79%. 9.26% 8.99%. 8.64%. 7.06%
Snowflake **25.39%** 23.28% 21.61% 21.67% 22.73% 20.13% 21.04% 11.98% 13.25%.12.69% 11.35%. 8.84%
ZoomInfo. **0%** 0.0% 0.0% 0.0%. 0.0%. 0.0% 9.87% 12.69% 11.11%. 9.22%. 6.72%. 7.09%
Crowdstrike**11.54%** 11.01% 9.92% 9.98% 12.66% 8.75% 3.91% 6.6% 6.51% 11.45%. 10.81%. 6.84%. 8.14%
Bill.com **11.12%** 11.71% 11.41% 14.03% 5.01% 5.21% 0.0%
MongoDB **7.42%** 10.38% 16.89% 16.39% 4.08%

Watch List:Last month I wrote that Zscaler was the most likely to gain from Fedral spend in ZeroTrust and 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. Hmm…
I really try to own shares only in the clear leader in any cloud category. Owning Crowdstrike, I’ve never owned any SentinelOne shares. With GitHub larger and still leading with innovations, I’m not interested in owning any shares in Gitlab. Despite Cloudflare getting most of their revenue from their ZeroTrust solutions, I own more of it than Zscaler because of Cloudflare’s potential third act, with their Workers Platform disrupting nearly every cloud category. Cloudflare has more than One Million Developers customizing Apps on Workers as of ~6 months ago? With the Workers Platform enabling every enterprise the ability to customize every SaaS tool set, including ZeroTrust, I’m happily holding Cloudflare at 20% in my portfolio, despite Zscaler being the faster growing pure play in their cloud category.
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.
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 investing decisions.
Decisions 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)
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.
Maintaining 2/3rds of position held prior to ER
Despite the ‘optics, referred to in the QnA, of increasing spend on growing this company when Revenue growth is also taking a hit from Mid-Market Customer Usage trends (*‘worse than expected in Europe, better than expected in the US’ *= War between Russia and Ukraine), I believe **MongoDB management is signaling Bullishness here. **If I hadn’t been following Mongo for more than Three years, I’d sell out on current ‘execution’. But, I do know this company and when Management is bullish and in light of the unknowable consideration of World War with Russia, x-ing out this macro, and given ‘real time transparency of customer consumption via attaining revenues’ being afforded by their business model, I’m cognizant of the fact that if I get out with the intention of trying to time when to get back in then I’m likely better off just staying in for now. Along with Mongo management, I’m bullish here also.
Special thanks to Mekong for all the work he put into an amazing post
https://discussion.fool.com/mongodb-q2-deep-dive-35160960.aspx . I couldn’t agree more with what he wrote in this post, with only one caveat. I personally have no concern about Mongos use of SBC when choosing how they pay their employees, be it from providing SBC or cash (subtracting this amount from FCF). IMO, neither effects MongoDB’s business performance. How investors in aggregate view SBC may effect share price. But, I can’t understand why it should; therefore, I tend not to think about it.]
Peter Offringa came to a very similar conclusion, selling 30% of his 15% position. He wrote about his similar reasons for doing so, with stand out thoroughness as usual for him, here https://softwarestackinvesting.com/mongodb-mdb-q2-fy2023-earnings-report/#more-6259 .
What I did: I sold a bit of what I’d placed into Cloudflare from my decision on 8/31 AH ,after
press release and before Conference Call, to sell 30% of what was a 16% position in Mongo, and today used this to buy back some more Monday.com.
Why I did it: Saul had pointed to SlowAndFast’s recent posts, so I re-read them.

Ben wrote about Monday.com here, * …raw sequential revenue increased 17.5%, was a sharp acceleration from 3.4% last Q, 1% the Q before and 6.5% the Q before that.* And…
Operating Income and Net Income improved sharply from last quarter, which was front loaded with yearly expenses. Operating income improved to -12% of revenue, up from -40% last Q and up from -14% in the same quarter a year ago. Based on their non-GAAP operating margin guidance of -29%, I had expected -25%, so this was a very positive surprise to me. Similarly, Net Margin improved to -12%, up from -40% last Q and up from -16% in the same quarter a year ago. Well Done Monday! Operating margin guidance for next quarter looks even better with -19%, which is 10% better than last Q’s guidance, so we should expect their significant improvement of leverage to continue next quarter. FCF margin held steady at -16% and “we expect margins in H2 to improve” and “free cash flow (…) is going to be low double digits (…) as a percentage of revenue by the end of the year. And I would assume that somewhere next year in H2, we’re going to see a shift toward breakeven or some free cash flow positive.” This is exactly the trend I am looking for as an investor. Net retention rates held also steady in all categories with >125% for all customers, >135% for customers with 10+ users and >150% for customers contributing >$50k ARR and from the call: “we believe we are now at the stage
where it’s stabilized”.

Thanks Ben. And thanks Saul, for getting me to revisit this.
Monday.com is now at 5% of my portfolio. I’m looking to add as I believe there will be some
market consolidation adding to what Gartner said here regarding expected adoption rates for the technologies Monday.com is selling 2023 Gartner Top Strategic Technology Trends: Detailed Guide (eBook). And if Monday becomes a fuller **Integration Platform as a Service (iPaaS) **, to interconnect data between SaaS platforms, I want to be in Monday.com before their valued as such.
I guess, I’m still questioning my decision to hold an 8.5% position in MongoDB. Perhaps I’m trying to balance my continuing to hold a significant amount in Mongo. I expected MDB to become a permanent part of most modern software. Their share price may underperform for a couple quarters, while the consumption of their product follows the overall economy a bit (Will the end users re-engage with the Apps utilizing MongoDB and will Mongo’s decision to further invest in company growth pay off?). Asana is smaller, measured by revenue, and growing much slower than Monday now, Making Monday the clear leader in this all be it crowded field.
What I did: I sold a little Cloudflare and bought back a 2% position in Zscaler.
Why I did it:
I was happy to see Zscaler do better than I expected, specifically regarding Billings, the metric Zscaler called out as their best way of measuring their companies success. In my last two months portfolio summaries, despite my selling out of Zscaler, I did say, “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. “.
From yesterdays Confernce Call comments confirmed this thesis. “In Q4, we added over 25 new

Federal customers and over half of them purchased ZIA and ZPA together. Now, we have landed 10 of the 15 Cabinet-level agencies as customers, with plenty of opportunities for upsell at these large organizations."
“Our platform is securing over 34 million users for over 6,700 customers, and we’re making great progress towards our goal of protecting 200 million users.”
“62% year-over-year growth in customers with greater than $1 million in ARR, ending with over 320 of these customers, including over 20 customers exceeding $5 million in ARR. “ “Approximately 60% of our new business comes from existing customers, and our net retention rate has again exceeded 125%, now for seven consecutive quarters. “
In answer to my questioning their relatively slow innovation… “We continue to innovate rapidly and expand our platform…”
“Let me highlight three deals that were driven by our emerging products:…”
I also was looking for…
“50% year-over-year growth in channel sourced-deal registrations. Working closely with our cloud-centric VAR partners, we are building momentum down-market in the Enterprise and Commercial segments, which is providing higher contribution to our new business.” “In Q4, our new business through cloud marketplaces grew nearly 5x year-over-year.”
Zscaler answered every question I had prior to earnings, this was the best CC Zs has given since IPO, IMO.
Congrats to everyone long Zs before ER. Luckily I don’t have to be right about every company, just the ones in which I’m invested, right��. I did buy back a little 2% position after market open, this the day after their quarterly report was released. Although my questions were answered, I’m
liking my other positions at the weight they are at present. I’m guessing it may take another quarter of this or better performance for me to bring Zscaler back to a full position. I’m looking to add here.

When I make investing decisions I’m increasingly thinking out 3-5 years out compared to my usual 1-3 year time frame, likely cause I plan to retire in three 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.
I don’t have back ticks on my iPAD key board and attempting to move everything over to my home computer I lost this months summary to the ether. Other than being forced to rewrite the whole of it, I really like the new blog capabilities offered by the Motley Fool. Just the cut and paste feature is super. And I swear I learned more reading Saul’s Portfolio Summary this month than I would have simply because it was formatted better. Thanks MF.

————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-p...4/30/22 Monthly Portfolio Summary here: https://discussion.fool.com/jason8217s-april-monthly-summary-351...5/31/22 Monthly Portfolio Summary here: https://discussion.fool.com/jason8217s-investing-decisions-for-m...6/27/22 Monthly Portfolio Summary Here: https://discussion.fool.com/jason8217s-june-investing-decisions-...7/31/23 Montly Portfolio Summary here: https://discussion.fool.com/jason8217s-july-investing-decisions-
8/31/22 monthly Portfolio Summary here: https://discussion.fool.com/jason8217s-august-investing-decisions-35159565.aspx


Hi Will, is that really the case? I don‘t think there are exact numbers, but my understanding is that the main part of their revenue is still generated from the application services (CDN, DDos, WAN…). I know their zero trust offering is one of their fastest/the fastest growing offering, but this is surprising to me.

Could you share where you found that information? Would be really helpful, thanks!


Yes, thanks for writing me about the majority of Cloudflare revenues are from ‘Security’ not Zero Trust alone. I didn’t even need to check my notes. I should have went back and re-read again before posting. Thanks for pointing to this. If you didn’t get to listen to Muji and Peters Podcaste here’s a bit of a treat, when they’re talking about Cloudflare regarding moves into ZeroTrust.

PeterO in Muji Podcast: “Yeah, going back to your point relative to, where is a lot of this growth coming from, I guess we did get one other data point in that Protocol article, where they mentioned that, what was it, 15% of their customers now, as of, I think it was June 30th are using a Zero Trust product. And that was above the 10% that they talked about at investor day, which was as of December 31st, 2021. So effectively in six months, they increased the number of customers using Zero Trust products by 50% thought. That was also a pretty strong signal that they’re getting some traction in Zero Trust. Because if you obviously take 150,000 customers and take 15% of that on Zero Trust, that’s, over what, 20,000 so that, that starts to become a pretty meaningful number.”

muji: “Yeah, you start landing a couple of Fortune 500 companies here and there and it all starts adding up pretty quickly. So this is again evidence of that go to market shift has been successful, they’re selling at the CIO level, CISO level. And, really that optionality they have in their existing platform with all the application services they provide, DDoS protection, WAF, load balancing, rate limiting, private backbone, performance, reliability, all of those can be sold in addition to the Zero Trust. So there’s a lot of ways to take those Zero Trust wins that were mentioned in the earnings call. Clearly, competitive wise, they’re showing that they can compete in the Zero Trust. But they’ve really got, I’m gonna talk about this further when I talk about the SASE landscape, but they’ve got some unique elements to their architecture, including the edge network, as well as those application services, that they can really provide interesting bundles as a way to sell this stuff. So not only do you get zero trust, but you get DDoS and WAF protection over your app stacks. So…”

Thanks again,