MDB thougths and recent moves

Although down initially this morning, the market reaction has taken a sharp upward turn and MDB shares were, at one point, up almost +10%, but back to about 6% at the moment.

MDB is one of my biggest holdings and, while I would have loved to see an even stronger quarter, and higher guidance, I don’t see anything in yesterday’s earnings release, or during the conference call, that makes me want to reduce my stake in MDB significantly.

First, let me point out that MDB (and other companies that did the same) looks really smart right now for raising cheap cash in January with the convertible notes. I believe the exercise price on those is about $211/share, which, while I still think MDB’s stock price could be well above that price by the time they mature, it is still whole lot better than where it would be if they had to raise cash today.

Is MDB growing at as high a rate as some other SaaS companies…definitely not

Are they priced for growth as high as those other companies…definitely not

Are they likely sandbagging a bit in their guidance…Yes

Are they likely to beat their guidance by as much as they have in the past…maybe not

Will today’s pandemic hurt MDB’s long term story and prevent them from being the non-relational database of choice…I don’t think so

Will MDB be several times larger and likely worth several times as much as they are today, five to ten years from now…I think so

Could MDB only grow in the 30%'s this year…Yes

Do I think that their growth rate is likely to stay at least in the 30%'s for 3+ years…Yes

So those are just some stream of conscious thoughts that I initially have. Especially with the current pandemic craziness, I am making a concerted effort to focus more on long term than trying to guess what will happen to a stock over the next 12 months.

While MDB may only grow thirty something percent this year, I do think their chances of stabilizing there for an extended period, or even re-accelerating growth a year or two from now are high. They have the cash to do a couple nice little tuck in acquisitions in the near future, especially in light of valuations compression in the market overall. I know this board tends to focus on organic growth and sometimes dismisses acquisitive growth, and I agree that I would prefer strong purely organic growth, but many a fortune has been made investing in companies that grew via prudent acquisitions of companies fit nicely into what the acquirer was trying to achieve, often costing less than what it would have costed to build those capabilities (and employee skillsets) internally. MD&A activity in the tech space is likely to be a lot higher in the next year than it was in the past 12 months, in my opinion.

That being said, I did sell a very slim sliver of my MDB shares, shares that were bought in fall of '19 and had capital losses, to add to my AYX and DDOG positions this morning. It was a very small portion of my Mongo holdings and I expect to hold the rest of what I have.

Quick update on my portfolio and what I have done:

My portfolio has probably been beaten down harder than others on this board because a) I have a decent amount of my portfolio in call options and 2) I had a decent size position in a natural gas pipeline operator which has gotten slaughtered due to the oil price war.

These same things juiced my returns in recent years, and this is how it goes when you have more risk in your portfolio, like me, and the overall market takes a nasty turn. Over the long term, I do think I will be better off with the strategy I have. I am still relatively young and make a good salary so, even with the recent losses, I don’t plan to make any big changes to my strategy. I have just been making minor re-allocations as I feel are warranted.

I remember when it was 2008 and my portfolio was literally cut in half by more than 50% in a short period of time. Although it was painful, I kept fully invested and, in less than 12 months, my portfolio was reaching new highs, well before the overall markets had recovered. While I am not banking on finishing in the green for 2020, given that I am down pretty significantly right now, I also wouldn’t completely rule it out, and I do feel pretty strongly that the companies that I am invested in today will survive the pandemic and continue to thrive for years into the future.

Although I don’t hold any ZM in my portfolio which I know has been an area of strength for many of you, I do still have a large percentage of my portfolio in AMZN, which has weathered the downturn better than most of the tech companies I own, and may end up being one of the companies that benefits the most from the craziness in the current climate.

The biggest change I made in the past few days was to reduce my stake in TTD quite a bit. I came into 2020 really optimistic that this would be a huge year for them given the election, the olympics and the move to connected tv’s. Well the olympics may or may not happen. People upgrading their tv’s may now slow considerably (my 10 year old plasma still works great) and I think a lot of political advertising was already baked into the stock price. Bloomberg bailing out fairly early won’t help boost the advertising too much either. I’ve read some argue that political advertising will now be higher because people can’t go door to door as much, but I don’t think I am buying that. The candidates can only spend as much as they can raise, and they were already planning to spend as much as they could on ads. If anything, they may have a harder time raising money in this climate, which could lead to less ad buying.

Don’t get me wrong, I still love the long term TTD story. They have been consistently profitable and that will help them weather most any storm. I think I sold about half of what I had, but it is still a significant holding for me. I would love to be able to buy back a big chunk of their stock at the end of the year if economic conditions improve and their valuation doesn’t increase too much between now and then.

I also sold a lot of my small ESTC position (still like the company but prefer to add to other favorites that have taken a valuation hit) and I sold out of the small RDVT 0.5% position. I still think they could do well, but I am happy to lock in that capital loss to offset some gains from earlier in the year and move the funds into a company I am more passionate about.

Mostly I redeployed those funds into AYX, DDOG, and an unpopular stock on this board which will remain nameless (although it rhymes with Butanix).

As horrible as the current pandemic is, and it will certainly impact many lives, and unfortunately probably drive many small businesses to bankruptcy, but before long, it will be in the rearview mirror. We may go through a couple flu seasons where it reappears, it may mutate and change. But there will be a vaccine, and that vaccine will eventually adjust alongside any mutation. People will naturally get immunized to the virus as they become infected and then recover. And the stock market will recover too. Maybe this summer, maybe later this year, maybe next year, I don’t know the timing, but the economy will get back on track and the strongest companies, like the ones we own, will get stronger.

Anyway, I was only planning to type a few comments on MDB and I’ve gone on long enough so will leave it at that.

Everyone be safe, take care of yourselves, and thanks for all of the great contributions to this board.



Yes, the MDB price action has been extremely bizarre. I sold at about 106 yesterday and felt good about this when it dropped to 99. Now I feel foolish. I sold due to the co-founder stepping down and the decline in growth although I liked the longer term story. I have no idea why MDB would reverse after the big drop with the market still dropping.

This market no longer makes any sense at all. Maybe the less done the better.

I redeployed these funds to SE and MELI.


This market no longer makes any sense at all.

Programmatic. Trading.



I sold due to the co-founder stepping down and the decline in growth although I liked the longer term story.

I do think the co founder leaving spooked the market and was at least partially responsible for the after hours drop yesterday.

However, one of the things I liked on the conference call is that they said that most of his responsibilities had already been transferred to two of his main deputies, both of which had been with the company for (I think they said) 7 years, and they had been preparing for the change for quite some time, and that there was no search planned to bring anyone from the outside in to fill the role. They also said the co-founder would continue to be involved on a more limited basis.

I don’t think it is too unusual for tech guys to always want to move onto something new and shiny, so while I would prefer for him to have stayed with the company, I didn’t view it as too big a red flag, especially after hearing what they said on the conference call.



Large fund sales,or is that exclusively programmatic?

Mekong, I’m a fan of your posts, and I generally agree with you, but in this case I think MDB is a perfect illustration of stocks that are quite good, but not the best. And because we generally try to concentrate our portfolios between 7 and 15 or so of the best stocks, it is hard for me to justify holding it (I sold a day or two ago).

It’s a great example of what I would call a Tom/David Gardner play, in the sense that this stock will be a long term winner 3-5 years from now. But it is no longer what I would call a Saul stock, due to decelerating revenues and mounting net losses.

I predict that MDB will outperform the S&P 500 both short and long term, but it will not outperform the Saul 7 (or however many stocks Saul currently has).