Libby's portfolio at the end of Apr 2018

Investment Analysis Clubs Saul’s Investing Discussions
1

Libby’s portfolio is up 25.7% YTD.

Libby created an equal weight portfolio of stocks chosen January 1, 2018 using the
following simple rules:

  • US or Canada domiciled firm.

  • Annual sales between $100 million and $1 billion.

  • Market cap between $1 billion and $10 billion.

  • 100% cloud computing based business.

There were 32 stocks chosen. There are currently 31 stocks in Libby’s portfolio. One of the
orginal stocks in Libby’s portfolio – Callidus Software (CALD) – was acquired by SAP in April
for $36 and has been converted to CASH.


                                      Weight    Weight
Company                   Ticker     Jan 1st   Mar 29th   Return YTD
------------------------  ------     -------   --------   ----------
Appfolio                  APPF         3.13%       2.9%        15.1%
Alteryx                   AYX          3.13%       3.0%        21.2%
Blackline                 BL           3.13%       3.1%        24.9%
Box                       BOX          3.13%       2.7%         7.0%
Callidus                  CALD         3.13%       3.1%        25.7%
Cloudera                  CLDR         3.13%       2.1%       -14.1%
Coupa Software            COUP         3.13%       3.8%        52.2%
Cornerstone OnDemand      CSOD         3.13%       3.1%        24.3%
Tableau Software          DATA         3.13%       3.0%        21.5%
Ellie Mae                 ELLI         3.13%       2.6%         5.7%
Five9                     FIVN         3.13%       2.8%        12.4%
Hortonworks               HDP          3.13%       2.1%       -16.1%
HubSpot                   HUBS         3.13%       3.0%        22.0%
Instructure               INST         3.13%       3.0%        21.1%
LogMeIn                   LOGM         3.13%       2.5%         0.2%
Mindbody                  MB           3.13%       3.2%        29.4%
Medidata Solutions        MDSO         3.13%       2.8%        12.4%
MuleSoft                  MULE         3.13%       4.7%        91.0%
New Relic                 NEWR         3.13%       3.0%        20.3%
Okta                      OKTA         3.13%       4.1%        63.0%
Paylocity                 PCTY         3.13%       2.9%        15.6%
Proofpoint                PFPT         3.13%       3.3%        32.0%
Qualys                    QLYS         3.13%       3.3%        31.5%
Q2 Holdings               QTWO         3.13%       3.3%        33.9%
RingCentral               RNG          3.13%       3.5%        39.3%
RealPage                  RP           3.13%       3.0%        21.6%
Shopify                   SHOP         3.13%       3.1%        25.4%
Twilio                    TWLO         3.13%       4.4%        76.5%
2U                        TWOU         3.13%       3.1%        24.5%
Ultimate Software Group   ULTI         3.13%       2.8%        10.7%
Veeva                     VEEV         3.13%       3.2%        28.3%
Zendesk                   ZEN          3.13%       3.6%        43.2%

High                                                           91.0% MULE
Low                                                           -16.1% HDP
Median                                                         23.2%
Average                                                        25.7%

Libby wondered if perhaps a more focused portfolio might give her better returns.
Perhaps that extra return might compensate for the greater exposure to permanent loss
she bears if one of the companies pulls an Enron. So she created ten thousand portfolios
made up of 10 stocks each chosen at random from the original 32 stocks. Here are the
results:

Best was up 56%
1/4 were up 30% or greater
1/2 were up 25% or greater
Average was up 25.6%

This is NOT a real money portfolio.

I do NOT recommend trying this strategy.

Thanks,
Ears

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no position in any stock above … This is NOT a real money portfolio.

Hi Ears, Why not? Just curious. Why didn’t you take a real money portfolio like this back on Jan 1st? It would have been very successful. Or is this just a portfolio you just put together now, retrospectively, knowing that cloud computing companies did well in the first four months of the year? That would make Libby seem very smart.
Best,
Saul

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Hi Saul,

Why didn’t you take a real money portfolio like this back on Jan 1st?

Not a fit with my investing approach. But these stocks are of interest to people I care about,
so that’s why I track them.

Or is this just a portfolio you just put together now, retrospectively, knowing that cloud
computing companies did well in the first four months of the year?

This type of tracking has been around for years.

See: https://www.bvp.com/strategy/cloud-computing/index

However, that index is market cap weighted. I wanted something equal weighted, and so decided
to go with my own tracking portfolio that is similar but equal weighted.

Hope this helps.

Ears

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Earslookin wrote:

Hi Saul,

Why didn’t you take a real money portfolio like this back on Jan 1st?

Not a fit with my investing approach. But these stocks are of interest to people I care about,
so that’s why I track them.

Or is this just a portfolio you just put together now, retrospectively, knowing that cloud
computing companies did well in the first four months of the year?

This type of tracking has been around for years.

See: https://www.bvp.com/strategy/cloud-computing/index

However, that index is market cap weighted. I wanted something equal weighted, and so decided
to go with my own tracking portfolio that is similar but equal weighted.

Hope this helps.

Ears

Ears, it’s clear you’re just trolling Saul and you don’t hope that your posts help anyone. You took Saul’s ending “Hope this helps.” - which he uses for truly helpful and very appreciated posts - and used it in spite. You’ll perhaps post something how you really meant to help but dude it’s clear.

If you have any investment ideas like a stock to recommend please, we’re all ears.

John

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Ears

U have great insight please keep posting

Ur thoughts r provocative

Do u put valuation into ur equations or do u ignore that?

Thx for ur inspiration

Rizz

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Ears,
For the most part, i am with Rizz. Differing viewpoints are always good, no matter whether you agree or disagree with the message.

But i also agree with Saul. It does make me wonder why, even after you have been posting that the cloud companies are in a huge bull market, that you dont own any of them. I understand why you might not want to go heavy after a lot of the easy gains have been made, but none?

You have put this out there a couple times now. I, for one, have appreciated it. But what is your thinking on the market? Where are you invested? If your diversified, cool… what is your focus.

It feels like your making a statement without doing the much tougher part, telling us what you think is a good investment now.

Respectfully,
Randy

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Hi Ears:

Could you please ask Libby what combination of the 32 stocks listed gave the best YTD return of 57%?

Thanks in advance!

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JohnBelg: That’s an interesting interpretation of “Hope this helps”. Very little surprises
me these days but that sure did. Awesome.

Rizz: I never ignore valuation. I mostly use different forms of discounted cash flow.

Randy: I keep track of these cloud stocks for purposes other than this board. The only
reason I posted here was because I know people here are heavily into these stocks and
thought people might be interested in this data. It was meant as a factual presentation
but I understand why some people would interpret it differently.

Champico: BOX, COUP, DATA, ELLI, MULE, NEWR, OKTA, RING, VEEV, ZEN

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Mulesoft was an unusual case, since the stock jumped on news of being bought by Salesforce. I suppose if the merger fails, MULE might become a buy opportunity.

10

Thanks Ears!