Hi All,
Here is my January Portfolio Review. This is my initial go at review here on the boards. We’ll see how it goes, and maybe if folks find it useful I can do it on an ongoing basis. Prior to discovering Sauls’ board, and probably like many long time Fool members (2003 for me) many of us end up with a very large number of stocks. In October of 2017 (discovery date of Sauls board) I had nearly 90 stocks. It may sound shocking to many of you, but I had not really given deep thought to the concept of tracking portfolio returns so closely. I just kept on adding companies I thought could/would do very well.
Long story short, and about 10 read throughs of the Knowledge Base posts (a must read, if you have not yet) I got very busy. Around May of 2018, I was down to 13 stocks. It was definitely a lot to process and moving and dispersing large chunks of money took some time to enact. I did manage a 42% return in 2018. I’m sure I would have closer to many of the amazing returns here if many portfolio was concentrated at the start of the year. But if the yearly goal is at least 25%, then who am I to complain. 
Let’s move on to the review and holdings:
Jan 2019 YTD return: 20.18%
It’s been quite the spectacular January and start to the year.
Buys in January:
1 - a very small try out position in Docusign. I’ve been following this one since nearly its IPO and almost opened a position many times during the October - December market mayhem but somehow, my attention was really centered on my current holdings.
Sells: no sales YTD.
My holdings and position sizes:
Twilio 15.62%
Alteryx 14.17%
ZScaler 10.99%
Nutanix 10.40%
Trade Desk 8.61%
MongoDB 8.29%
Okta 7.92%
Abiomed 5.11%
Elastic 4.15%
Square 4.04%
Nektar 2.43%
Guardant 2.00%
Pluralsight 1.43%
Arena 1.13%
Docusign 0.93%
Presently, I am at 15 holdings (a few more than I would ultimately like). My top 10 positions represent the bulk of my
holdings at around 84%. A few that will remain small, such as Nektar, Arena, and Guardant all have the potential to grow from 1-2% currently to 4-6% or more on their own.
Twilio, Alteryx, Nutanix, ZScaler
These top 4 holdings I have the highest confidence in (even Nutanix) and will continue to let them run. I have no intention of selling these unless they grow above 20% or some unforeseen event happens along the way. No need to rehash growth rates, retention rates, customer growth, etc as they have been widely discussed.
Trade Desk A newer position in the fall of 2018, in which I built up a position fast during the market meltdown. It has much discussed here on the boards so there isn’t much I can add other than that the company is growing very rapidly and has a huge runway of growth, a great CEO, and is disrupting a massive industry and acts more as a technology company than a madison avenue ad company. I’m comfortable with the position size currently.
MongoDB
I have not sold a single share of Mongo since the Amazon and Redhat news came out. I’m not particularly concerned that an outdated version of Mongo will now be used by Amazon. After all, arent most of their enterprise customers ones who enjoy the benefits of having no vendor lock-in, as well as all the bells and whistles the newer version has, in addition to Atlas? I don’t usually sell on the rumor, so I am content to hold, and watch, and let the numbers speak for themselves. The stock, as I am writing this review up is just about back to where it was before all the panic selling began and nearing all time highs again. Everyone will be paying close attention to the next earnings report as well as any future guidance the company gives. With a sub $5 billion market cap, Mongo is still relatively small and hopefully has many years of strong growth ahead of it.
Okta
Very richly priced Okta just continues to grow like wildfire (both revenue and customer growth) as it disrupts the single access sign in market. I think we all know the numbers as it has been well discussed here. It’s hard to figure/envision just how big this company can get, but I do not think we have got there just yet. I’m happy to let Okta alone and let it continue to grow. And boy I could have used their technology at my previous job at Moody’s. I think I had somewhere around 10-12 different sign in to various applications and databases!
Abiomed
Abiomed is a medium sized position for me and while their market cap is getting bigger ($15 billion or so), any company that is very profitable, growing north of 30%, and essentially has no competition (yet) makes for a worthy addition to almost any portfolio. Thanks to HeartMD’s great write ups and his mention of great new products coming our way this year, I think ABMD has plenty of legs left. Especially in Japan where they should become the standard of care. They have not even begun to penetrate Australia, and many developed countries in Europe!
In some ways, it reminds me of Intuitive Surgical, who has given long term shareholders fantastic returns. I sold ISRG last year as its market cap was over $70 billion at the time, and I felt the mega gain days were behind it. I’d be very happy to see Abiomed reach $70 billion market capitalization.
Elastic
I’ve written on Elastic before and think this is a great company and probably should be in any growth investors portfolio at one time or another. It’s very very richly valued, but as Saul says, any company growing north of 70% will be. Duh.
https://discussion.fool.com/elastic-estc-upcoming-ipo-34001301.a…
Square
Square I’m leaving at its current % weight for now. I had trimmed a little bit in the fall of 2018 reducing from 7% or so when the price was between $85-$95 and the market cap was well over $33 billion. It just seemed a little out of hand to me with only a little over $1 billion in revenue. As we all know, the stock has bounced back in a big way since December.
Nektar
Nektar, Nektar, Nektar. It’s been a long, wild, and painful ride. I’m still confident we can see good things happen here. At this point, it is only a few months left before 181 is approved, and 214 continues to move through trials. They do have a large stockpile of cash to see them through. I’ve seen many times before, biotechs suddenly are out of favor and they drop 40-60% from their highs. They can also swing violently up on no news as well. Nektar I still believe can have a bright future and could easily triple from todays prices.
Guardant Health
Guardant is another small med tech company with their liquid biopsies could transform the way tumors are detected, and potentially detect cancers much much earlier. As we know, survival rates are much higher the earlier it can be detected. Guardants’ liquid biopsies are cost effective versus traditional surgery and non invasive. Insurers and Medicare are already on board, and we all eagerly await FDA approval in the first half of 2019. The position size seems appropriate to me as things could still go wrong, but the company could be a homerun in the making,
Pluralsight
Pluralsight was a new addition in October and the stock has already returned over 30% in 3 months, most of that coming in the last 5 weeks. There’s been no news that I can find since the company last reported earnings. Pluralsight has all the metrics we look for here - low market cap, 40%+ revenue growth, recurring revenue, high margins, huge market opportunity, and strong growth in enterprise customer growth. The company next reports on Feb 13th, and I will decide from there whether to increase PS to healthier weight (3-4%) or to move on, as a sub 2% holding wont move the needle on my overall portfolio results.
https://discussion.fool.com/new-starter-position-pluralsight-ps-…
Arena
I bought Arena based on bulwinkles great write ups. The stock has largely bounced around, and remains well below its 52 week high. It continues to move it 2 best drugs candidates through Phase II and III respectively. Interestingly, the company just received a fat $800 million dollar check from United Therapeutics, and the market had a rather muted reaction. At last check, the company should now have a little over $1.3 billion in cash on hand, and sporting a $2.25 billion market cap.
So they have plenty of cash to fund all the trials and even production. In any event, I think a 1% and change position is about right, and a buyout of Arena, or good trial news could move this into 4-6% position.
Docusign
I have a tiny try out position in Docusign. I’ve been following it since last spring, and Bert likes it, it’s a Fool Rec, and plenty of smart folks here like it. We’ll see how long it lasts, as they are not growing as fast as my other holdings, but I understand that the company is far more than just e-scribble sign technology with a very large TAM.
If you’ve made it this far, that’s all I have. I hope you have found this useful. I tried to shy away from numbers analysis, since I figure you know the numbers already from other posts.
Best,
Matt
