I will take a deep breath and post this for the first time here. I first joined the forum in Spring 2020 and dedicated a portion of what I have to a Saul-style port in late August 2021. I did very well for three months before, yeah. I paid little attention in 2022 before diving deeply in early Jan 2023. Therefore, I am an absolute noob with no idea about software or investing. And so I am posting 99% selfishly–to remain accountable to myself and to get some feedback and not waste another promising start with the Saul method.
I am also one of those who is under cost basis. I have not made 500% or 10000% over the life of the port. I am at around -40% because of the new money I added in 2021 and early 2022. So this hopefully offers an interesting counter-start. I have limited time to dedicate to investing decisions. Bear in mind that since my 401k is limited per rules, my port is SMALL. I can afford to lose it all.
But I also decided to post so as to offer a different take on the method.
1/ Since starting in 2019, I have not seen all the detailed number analysis done by others yield anything useful to me outside the summer of 2021. I don’t do that.
2/ I have not seen extreme attention to news yield much of anything sustainable either. So while I do pay attention to news, I don’t collect every bit.
3/ I do care for what tech analysts say of the competitive advantages of specific products. For example, muji, Peter O.
3/ The heart of my approach is MY OWN assessment of CALLS, not transcripts coupled with the usual main metrics. I started this way because I read too much for work anyway but then I realized how much more I get from listening.
4/ In Jan 2023 I also introduced a “check with the algos” secondary move where I would not invest if the two algorithms I follow have a sell or strong sell on a stock even if I like the company a lot. Again, the software is not primary for me but I no longer ignore it either.
5/ I introduced strict allocation rules: minimum two distinct sectors and minimum 25% in something completely different from the remaining 75%. I treat as B2C all companies whose products directly impact their customers’ relations with consumers. Thus fintech or TTD I treat as B2C. So I am looking for a split between B2B, B2C, and health with occasional others thrown in.
I have a strong preference for “rotating” a number of companies I have followed for a while because of a perceived ability to discern positive/negative pivots. This also means that I actually like turnaround stories (for now!).
My experimental indefinite port on January 1, 2023:
DDOG 23%
ZS 18%
AYX 17%
NET 13%
S 15%
cash: the remainder, but that is new 2023 money, I stay fully invested.
My port at the end of January 2023, YTD: +10%
DDOG 22%
ZS 19%
NET 15%
AYX 18%
S 14%
DKNG 9%
cash: the remainder
End of February 2023: +22.5% YTD
February saw a lot of movement and some good luck in the process. DKNG was sold for a very solid profit and also a quick turn around in TTD where I put my NET money before the NET Q4 report.
AYX 18%
INSP 16.5%
KNSL 16.5%
FOUR 11.5%
ZS 11%
CELH 6.5%
TMDX 3.5%
TWLO 2%
DDOG 2%
CASH 11% this is actual cash, not new money. Just so it happened that I kept reshaping the port. It was not meant to remain cash.
End of March 2023: +25% YTD with a peak just under 30%
FOUR 17%
AYX 15.5%
KNSL 15%
INSP 14.5%
ENPH 8.5%
SWAV 6%
TWLO 5.5%
IOT 5.5%
FSLY 5%
TMDX 3.5%
AI 3.5%
Note that SWAV, TWLO, FSLY, AI are companies with which I had been familiar for a while. I don’t think of those moves as crapshoots or following anybody. I ended up selling AI for just under 60% gain.
End of April 2023: YTD +17.5% with a peak of just under 30%, again. This puts me behind QQQ for the first time in 2023.
My port kinda collapsed in the last week of April thanks to the market reception of ENPH and AYX which, unlike NET, makes no sense to me. But I see the next 1-2 quarters for both companies as ho-hum so I have decided to move on from both for now.
KNSL 19.5%
INSP 17.5%
FOUR 17.5%
AYX +12.5% and to be phased out
SWAV 8.5% and TBD
IOT 7.5%
FSLY 6.5%
TWLO 4.5%
MASI 3.5% to be build to half before earnings and hopefully full after earnings. Details TBD pending other reports.
Short list: NARI and, far behind for the moment, TMDX, S.
YTD results best explanation: pure luck on rebound in January drove the majority of my returns. Of all the moves I made, I was right about DKNG, AI, and TTD in the short term but those were just quick hits. The one big one was FOUR. It is really the next two weeks that will start showing if my 2023 strategy is bearing any fruit. So I am leaving myself no escape route by posting this now 
QUICK TAKE on the companies:
KNSL: “offers various insurance and reinsurance products…focuses only on the excess and surplus lines (E&S) market in the United States.” Specialty insurer that handled Ian very well.
Why I like it: offers high growth in an area completely distinct from SaaS or medical or B2C and benefits from rising or higher interest rates. Its pushing in a kinda greenfield area and as competition appears, it will see growth go down into the teens. Has already established itself, so not a crapshoot. Has very positive ROE and ROA. Extremely well liked by TMF. Could not be any further from the radar of social media retail investors (and wraps up calls in like 30 min!).
Challenges: Practically impossible for me to truly grasp which normally would preclude investment. This one is really a placeholder till macro headwinds subside. This is a VERY thinly traded stock.
INSP. The alternative to Cpap machine. Did extremely well in 2022 despite supply chain issues and switching a technology on the fly. Notoriously conservative guidance. Yet guided for high 30%s growth for 2023. It has now proven that it can scale. The closest thing to clicking on all cylinders I can find in 2023, along with KNSL. Comparatively thinly traded.
Great Q3 and Q4 2022 calls. Has 450 million of cash to 7 mln of debt and is FCF positive. Reached first profitable quarter in Q4 2022 and is expected to be profitable in 2023 though the company would not commit to that. ITL still to be developed.
FOUR. An old company but a new IPO. Payment processor with multiple solutions for many verticals (though hospitality is the largest for now) resulting in an all-in-one platform that can replace devices and software from multiple vendors. Has a SaaS component, if small.
Why I like it: Bert kept talking it up in 2022 and I finally took a good look. What I liked: Q3 2022 call and tone + consumer spending in early 2023 + exceptionally cheap price + small cap. Then the Feb 28 EC was extremely positive including with respect to the company’s ability to grow profitably. This is a 24-year old company, been through all sorts of things, great discipline, low expenses, gaap-profitable yet growing fast at scale.
Challenges: crowded space in all sorts of ways. NOTE that revenue is a bit like SQ, you need to look under the surface and so actual P/S ratio is 2-3 times higher than nominal.
SWAV: Well-known to TMF members. Guided 2022 as 405-425 for 71-79% but delivered 490 million for 107% in 2022 and project 660-680 million or 35-39% growth in 2023, which means I would expect more. Exceptional ROE/ROA at the moment. PRICE movement has been explosive of late due to rumors that SWAV may be acquired. This puts me in a pickle as I am not sure that the price increase of over 60% since I lucked to get them near a low is near-term sustainable without the acquisition. They have paperwork coming in 2024 that if delayed by regulators to 2025 will mean 6 months without one of their revenue streams. This seems the biggest thing to remember going forward. They also acquired Neovasc for 100 million.
IOT: Well-known to the board now, IOT does 3 things for fleet operators:
1/ gives you a platform to manage paperwork, fuel usage, and safety
2/ cuts down your fuel consumption offering ROI in less than 1 year
3/ exonerates drivers and cuts on driver turnover, which is a scourge for fleets
As it is exposed to a more traditional sector for its customers than say DDOG, IOT has thrived as others have stalled. In addition, the fast ROI and fuel consumption cuts should help IOT even during a recession. However, IOT is expensive and has had a big run in 2023 already.
IMO, IOT needs to maintain north of 40% growth every quarter to justify its valuation and to exceed expectations.
FSLY: old friend FSLY, the BMW of CDNs, has new leadership, its newer edge offering is finally operational, the security acquisition is integrated, and they blew past expectations in Q4 2022. Launched a new product and a new service over the last half a year. Analysts have speculated that FSLY might be taking market share from NET. Its focus on deeper pocketed customers might make them a tad better able to face a bad macro. For me, this is a turnaround story, of course, as with AYX and TWLO.
Now it is all about demonstrating that Q4 2022 was not a fluke like Q2 2020 was. In Q4 2022 it grew 22%. The March 2023 analyst forecast I see is for 23% growth in 2023 that accelerates in 2025 and again in 2026. Point is, beatable 2023 forecasts if FSLY can follow through on its Q3-Q4 2022 turnaround. But as seen with AYX, a turnaround can take a long time and it may be even longer for the stock price to reflect operational positivity.
TWLO: well-known and debated ad nauseum:
-Has legions of devoted developers, which is vital for big success stories in software
-Leader in its communications segment yet claims it can deliver 15% annual growth in bad years (which would be great given the rock bottom valuation);
-Extremely promising, per some analysts, product in customer engagement able to supposedly grow 30%+ in bad years.
-Sits on piles of cash and offered 1 B of it for buybacks which should also help the stock.
-Leadership conquered the world once, can they do it again?
-New company structure and massive layoffs make it easier to follow and leaner.
-Totally unloved and forgotten.
It will certainly be very interesting to see if they can achieve that 15/30 promise in Q1 given how SVB impacted IT spending.
LEAVING: AYX. A turnaround story that is playing out. But it requires more patience and I seem to see greener pastures outside of SaaS right now.
New: MASI.
Hello again? NARI or TMDX, which I sold for a small profit. These two are TBD.