March Portfolio Update-- MillennialFalcon

Not a lot to report for March— I was pretty flat for the month, until the last couple days—actually was up about 5% until UiPATH’s earnings dump-- I did make a couple changes to the portfolio, as I’ve done throughout the year. My goal wasn’t to trade in and out of positions, but rather to find my “sleep number.” I was pretty heavily invested in MNDY and UPST last year based on their growth metrics, but my conviction has waxed and waned and ultimately, I decided I was more at ease with my portfolio when I gave my conviction more weight than the metrics alone.

Here are the bigger changes I made in 2022 to date.

Major Portfolio Changes in 2022:

Sold out of MNDY @ $263 which was my largest position at 20%
Opened full position in SentinelOne (S)

Sold out of full UPST position after earnings at $154
Repurchased full UPST position at $134
Sold out of DOCN
Opened position (10%) in KNBE

Sold out of UPST at $145 and redistributed to existing positions.
Sold out of PATH after earnings

What can I say, I’m still an impatient Millennial who can’t sit on his hands for long.

My Portfolio Performance 2022:

**Month       Monthly           YTD**
January     -25.16%       -25.16% YTD
February:   +3.11%        -22.12% YTD
March:      -3.76%        -24.77% YTD

PHEW! Nothing to brag about here, and I’m still down a fair bit from my transition to high-growth last year–

Here’s how my portfolio changed from February to March:

**February EOM Positions**

**BILL 17.5%**
**VERI 16.5%**
**S 16.3%**
**PATH 14.6%**
**PLTR 14.6%**
**UPST 11.6%**
**KNBE 8.9%**

**March EOM Positions**

**PLTR 19.8%**
**VERI 19.1%** 
**BILL 18.8%**
**S 17.4%**
__PATH 13.8% Sold out after earnings*__
**KNBE 11%**

**Individual Performance:**
**Ticker                Month                 ROI**
**PLTR                  +19.83%            -12.02%**
**VERI                  +17.40%            -18.64%** 
**BILL                   +1.34%            -24.36%**
**S                      -1.73%             -8.24%**
**PATH                  -35.52%            -53.61%**
**KNBE                  +16.39%            +19.84%**

I don’t have a lot to add but have included a few brief comments with links for my in-depth thoughts on the appropriate companies below.

PLTR: 19.8%
Founder-led, market cap $29B, debt free, $2.3B in cash

Palantir is a story I like and a mission I still believe in. I am interested to see how their government and commercial sectors grow, and to see if they benefit from any global contracts tracking supply chain issues and food shortages similar to their COVID contracts over the past two years. I’ve posted on them in the past—I don’t think they pass the sniff test for Saul’s Board so I won’t really spend much time on them. There is a post linked below.…

VERI: 19.1%
Founder led. Market cap under $1B YoY Organic Rev Growth 41% Gross Margins 89%

“Veritone is a leading provider of artificial intelligence technology and solutions. The company’s proprietary operating system, AIware, orchestrates an expanding ecosystem of machine learning models to transform audio, video and other data sources into actionable intelligence."
Veritone is my 5-tool prospect. I’m pretty excited about the potential ceiling and high floor based on a current valuation. There is probably some risk with choppy usage based revenue from some of their products, as well as the risk of dilution and debt generation as they continue to pursue growth, but I like the speed / power combo for now.

Veritone is an artificial intelligence company with new momentum in government and regulated markets. I’ve made a few posts linked below. Ultimately, I think Veritone has several massive market opportunities and will be continuing to watch the company closely for developments. I believe they are the best investment in AI right now trading at 3x sales with 41% organic growth, material gross margin improvement (89% Q421) and accretive inorganic growth. Veritone is newly profitable on a non-GAAP basis—I like this combination of 3x Sales valuation and non-GAAP profitability at 41% organic growth.……

BILL: 18.8%
Covered well by CloudL here:…

I like some of the payment space for the built in inflation protection in transaction based fees. BILL has managed to increase organic and inorganic growth at a remarkable pace as well as simultaneously improving gross margins.

PATH: was 13.8% sold out of position*
Founder-led, debt free, $1.9B in cash. Revenue Growth 40% YoY Gross margins 86% DBNRR 145%

Reported 3/30
Revenue: $289.7 (39.7% YoY) (31% QoQ)
ARR: $925M (+59%YoY)
GM: 86%
DBNRR: 145% (up from 144%)
Guidance: $224M

I sold out of PATH after earnings. I’m probably going to chew on this decision for a while. There is more competition in the RPA space, but UiPath remains the leader—The beat was not as strong as I was looking for, and the guidance is much weaker. ARR is the primary metric I track for PATH and in Q4 it increased by $107M—which was an improvement of 72% YoY—also total ARR showed improvement of 59% YoY—Guidance for Q1 indicates 48% ARR growth YoY—Guidance is always soft for PATH and I think especially so with the current macro-economic environment. I expect ARR to maintain 50%+ growth even in their weakest quarter. Like I said—I’ll chew on this one and I could buy back in, but I jumped ship when I saw guidance. With a little deeper look this could be more interesting as an opportunity… but I thought the same thing 50% ago also….

UiPath is the leading RPA provider in the world—What is RPA? I’m glad you asked—
“Robotic process automation (RPA) is a software technology that makes it easy to build, deploy, and manage software robots that emulate humans’ actions interacting with digital systems and software. Just like people, software robots can do things like understand what’s on a screen, complete the right keystrokes, navigate systems, identify, and extract data, and perform a wide range of defined actions. But software robots can do it faster and more consistently than people, without the need to get up and stretch or take a coffee break.”

S: 17%
market cap: $10.5B Rev Growth 120% YoY Gross Margin 60%

I don’t have much to add here except they are my highest valued company at 40x sales and also growing the fastest. I’m particularly interested in the release of dataset and expansion of their AI / tech stack into data management–

KNBE: 11%
SaaS, Market Cap:$4B, ARR $285M (+44%YoY), Revenue Q4 $69M (+41%YoY), Gross Margin 86%, Profitable, $275M cash on hand, essentially debt free.

KnowBe4 is a cybersecurity company focused on the human element. They are my “sneaky pick” in a space I really like. Cybersecurity stocks have rightfully earned themselves lofty valuations based on current and forecast growth—however KNBE has less competition, a larger un-tapped market (3% of cybersecurity spend) and trades at roughly 1/3 the valuation of traditional cybersecurity software companies. KNBE runs a SaaS model with a goal of $1Billion in ARR (currently $285M), has high gross margins at 86%, and is essentially debt free with $274M in cash on hand. Organic growth is 41% YoY but accounts with multiple products have increased by over 100% YoY—total customers only increased by 28% YoY, but I believe we will see material growth in customers through 2022 and beyond. Here’s a brief document I created to track KNBE:…

Health Today. Prosperity Tomorrow. Peace Always.