Matt's Portfolio End of March 2020

Hi All,

I’ve been feeling the pain like all of you, and times like these are never enjoyable and seem to never have an end in sight. Perhaps this crisis “feels” much different, after all at the beginning of February the economy was rolling along beautifully, we had mostly recovered from the “Risk Off” SaaS mentality that was a continuous groin punch from August through December! Obviously we’ve never seen such a thing happen before. But eventually, this too shall pass. I lived through the Internet Bubble, The financial crisis, and everything in between. I think during any sort of crisis, difficult as it may seem - it’s important to try and “see through” and look ahead. I don’t trade, so I do not make any purchases with the goal of making a quick 10-20% and exiting. It’s just not my thing, and I would probably be terrible at it anyway. I’ve mostly been looking at companies that have been wacked the worst, have/had great growth, good/great balance sheets, and good business models. I feel that these are the companies that will rebound the strongest. The demand that was there before this started will be there again when everyone returns to work (which they will eventually) whether its another 3 weeks or 6.

March 2020 YTD return: -1.65%

2020 Transactions:

Buys

Jan:

Livongo Health (LVGO) - new position
Roku - added to existing position

Feb:

PINS - opened a new position at $21.26, which seemed very reasonable to me at the time. Lol
ROKU - added small amount
LVGO - added

March:

Added multiple times to PINS, LVGO
Added small amount to ROKU
Added twice more to AYX, CRWD, and DDOG

Sells

Jan:
Elastic (ESTC) - I began trimming in Nov/Dec, and sold the remaining shares throughout January.
Feb:
ZS - Sold the remaining shares after a very disappointing report

March:

Trimmed MDB and TTD - I still like both companies, but felt that the weightings (which were around 12-15%) were too high, and I am not as confident in them as I am in AYX and CRWD.

Trimmed GH and ZM as well to fund the other purchases.

Current Holdings and Sizes:


ayx  20.61%
crwd 15.79%
okta 10.65%
mdb  10.20%
lvgo  9.41%
ttd   7.69%
ddog  7.14%
pins  6.86%
roku  5.61%
zm    1.82%
gh    1.73%

AYX - In my end of Jan write up, I had mentioned that I had not added to AYX since May of 2018! Well, since the price has dropped 40% or more, I was able to add twice during March in the $90’s, and as I type this it’s back down to $91 with a sub $6 billion market cap. I may very well again before the day is up, as this price is just too compelling for me to pass up. The company recently announced that they will offer free additional licenses to all users who are working from home.

CRWD - I’d be willing to continue adding to Crowdstrike up to about a 20% weight (Like Chris) if the market becomes irrational yet again and sends the stock into the $40’s. We’ve discussed the financials at naeseum here already, so not much more I can add other than I very love the company nearly as much as AYX!

OKTA - Currently sits at #3 in the Maidhoff Fund. I missed the drop below $100, so I have not added to my position. It has moved to number three spot by virtue of my trimming of TTD and MDB (#4) and the price not falling anywhere near as sharply as the others. I’m still considering adding to my position, and debating internally - do I add a little, or do I deploy the funds into something that is down 40-60% from its highs? I’ve been leaning towards the latter.

MDB - I trimmed a little bit of Mongo during March to a level I feel more comfortable with (10% and change). I realize many have reduced greatly or sold out completely. The stock has not been punished as badly as many others (about 28% off its high), perhaps because a large portion of the business is self serve? Contrary to most, I didn’t feel the most recent quarter was horrible (not like NTNX or Zscalers most recent quarter). I’m willing to sit tight for now and will only trim small amounts if I need to raise cash to increase other positions.

LVGO - I’ve added quite a bit of Livongo during March - Their most recently reported quarter was very good and I just felt that for the growth rate, recurring revenue, high margins, etc, all at a market cap of $2.5 billion (less than 10x this years revenues) or so was too much to pass up.

TTD - I trimmed Trade Desk during February to around 9-10% weighting and stock has continued to drop precipitously throughout March. TTD wont be immune to the effects of Covid-19 like most companies, but ads wont disappear altogether. I would expect hours streamed, time spent on social media, on laptops on tablets to be higher than ever over the last 2 months. I’ve experienced no reduction whatsoever in the amount of annoying commercials on Hulu, YouTube, et all. I still believe the companies CEO, Jeff Green is the most knowledgeable and experienced person in the whole digital ad/media world. I have no idea obviously how bad the current crisis will affect revenues over the next quarter or two, but the long term shift/trend in programmatic ads and connected TV will only continue to go up no matter the impact of the virus.

DDOG - There isn’t much not to like about DataDog - except for maybe the valuation for some. I’ve been adding little bits in March, between $31 and $34. I guess the big sell-off after the IPO lockup never came eh? In combination with the market plunge, I dont believe the shares even came near their all time low’s in the high $20’s back in October of 2019. That should tell you something about this company and perhaps a sign of strength. The shares are about 28% off their all time highs, which is nowhere near as bad as many others have fared. I’d like to get my position weight up to around 10-12% and will look to add opportunistically.

PINS - A new position for me in Feb, and I added quite a bit throughout March as the price imploded almost down to $10. I believe the long term prospects of Pinterest are bright, and until this virus runs its course, the company has a mega war chest of cash to ride it out to the tune of $1.7 billion, considering the market cap is below $8 billion, the growth is 50%, revenues are well over a billion and the are in the process of ramping up international ad revs. The site appears to be very sticky for users who are “pinning” even advertisements at an increasing rate. PINS seems to have a very effective logarithm that sends very relevant ads to its users. Like TTD, I have no idea how badly revenues will be affected by the virus, but this company is not going away, and I would think millions and millions of users who are bored at home, are pinning many boards for home improvement type projects.

ROKU - Poor Roku has been taken to the cleaners the past two months. It’s a continuous gut punch watching the price continue to drop over ad spend falling. I’ve added a few times in small amounts. I cant say much else - the same that applies to PINS and TTD is echoed here. The company will continue to add more users, who will collectively stream an exponentially higher amount of connected TV viewing. The company is not in any dire shape financially speaking and can ride out this crisis which will eventually pass.

ZM - what more can be said about Zoom? There seem to be no end to the Zoom related threads the past 2 months! I had trimmed some ZM in early March (mistake obviously) but will let the rest ride. We will have to sit tight and wait to see just how many paying users the company is able to add this quarter. Obviously it would nice to have had a 10% position in Zoom 2 months ago (I’d be up nicely YTD for sure) but at least I have some. :slight_smile:

GH - Not much to add with GH as there has been no newsworthy items. Not sure if the expected FDA approval in May will be delayed due to the virus but we shall see.

Thats all I’ve got for now. Sure, I’d like to be up 13% like Saul so far, but being down 1% and change is not so bad - it sure feels like I’m down 30%! I feel that many, if not all of my smaller positions are primed to benefit greatly when the tide turns. When that will be, is of course anybodys guess. I’d rather be in these companies now, when things look their worst, because if you wait around for the eventual recovery, its usually already too late! The thing that bothers me the most during market plunges, is not having new monies coming in to deploy!!

Hang in there everyone, stay home, and stay calm during turmoil, and try to see beyond the current crisis. It too shall pass.

Best,
Matt

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