Libby's portfolio at the end of May 2018

Investment Analysis Clubs Saul’s Investing Discussions
1

Libby’s portfolio is up 39% 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 30 stocks in Libby’s portfolio. Two of the
orginal stocks in Libby’s portfolio – Callidus Software (CALD) and MuleSoft (MULE) – were
acquired by other companies and converted to CASH.


                                      Weight    Weight
Company                   Ticker     Jan 1st   May 25th   Return YTD
------------------------  ------     -------   --------   ----------
Appfolio                  APPF         3.13%       3.0%        34.9%
Alteryx                   AYX          3.13%       2.9%        28.6%
Blackline                 BL           3.13%       2.8%        22.7%
Box                       BOX          3.13%       2.9%        29.8%
Callidus                  CALD         3.13%       2.8%        25.7% * Acquired 4/2018
Cloudera                  CLDR         3.13%       2.2%        -3.9%
Coupa Software            COUP         3.13%       3.7%        64.1%
Cornerstone OnDemand      CSOD         3.13%       3.1%        37.9%
Tableau Software          DATA         3.13%       3.2%        42.4%
Ellie Mae                 ELLI         3.13%       2.6%        17.8%
Five9                     FIVN         3.13%       3.0%        32.8%
Hortonworks               HDP          3.13%       2.0%       -10.3%
HubSpot                   HUBS         3.13%       3.0%        32.8%
Instructure               INST         3.13%       2.9%        27.5%
LogMeIn                   LOGM         3.13%       2.1%        -4.5%
Mindbody                  MB           3.13%       2.8%        24.6%
Medidata Solutions        MDSO         3.13%       2.7%        18.9%
MuleSoft                  MULE         3.13%       4.3%        93.0% * Acquired 5/2018
New Relic                 NEWR         3.13%       3.8%        67.2%
Okta                      OKTA         3.13%       4.5%       102.6%
Paylocity                 PCTY         3.13%       2.8%        26.1%
Proofpoint                PFPT         3.13%       3.1%        37.7%
Qualys                    QLYS         3.13%       2.8%        25.7%
Q2 Holdings               QTWO         3.13%       3.5%        54.8%
RingCentral               RNG          3.13%       3.4%        53.2%
RealPage                  RP           3.13%       3.0%        33.6%
Shopify                   SHOP         3.13%       3.2%        42.2%
Twilio                    TWLO         3.13%       5.1%       125.6%
2U                        TWOU         3.13%       3.2%        41.6%
Ultimate Software Group   ULTI         3.13%       2.7%        21.6%
Veeva                     VEEV         3.13%       3.1%        39.4%
Zendesk                   ZEN          3.13%       3.7%        66.5%

High                                                          125.6% TWLO
Low                                                           -10.3% HDP
Median                                                         33.2%
Average                                                        39.1%

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 79%
85% were up 30% or greater
95% were up 25% or greater
Average was up 39.2%

This is NOT a real money portfolio.

I do NOT recommend trying this strategy.

Note: I track these stocks for reasons other than investing.
I know that many of you are heavily invested in some of these stocks so thought you
might be interested in how this niche in the tech sector is doing overall.

Thanks,
Ears

32 Likes
2

Easy to make up market-beating portfolios without putting any skin in the game.

This leaves out the most important element. What reaction would an investor have had when:

Doom and gloom news headlines came out?
The market was down?
The market was over priced?
The market was up?
The portfolio was down?
The portfolio was up?
Any single position was down big?
Any single position was up big?
What if a position becomes too heavily weighted?
What is too heavily weighted?

Your fake portfolio experiment leaves out the two most important components for legitimacy.

  1. Real money (skin in the game)
  2. The human element of managing the portfolio.
10 Likes
3

Ears

Pray tell, Why?

Dan

1 Like
4

Dan,

They don’t fit my investing approach. No longer actively invest. Priority is preservation. But thought people might be interested in this data about the sector because many here invest in these kinds of businesses.

Thanks,
Ears

3 Likes