mekong22 Aug 2021 portfolio update

Waaait a miiinute…Upstart?

I thought mekong was the guy that only owned a bunch of Magnite and some other companies that haven’t been widely held here for the past 2 years?


Fear not, I still own a lot of my higher conviction companies. And yeah, you might want to cover your eyes before looking at the company that has moved up to my highest allocation this month :expressionless:

My portfolio might be different than some folks here, but it doesn’t mean I don’t recognize a great opportunity (especially when the valuation is right!) like Upstart, when it comes along, which I’m super-excited about right now.

I definitely am more and more in awe, every day, of Saul and others here that are so nimble and move into the right companies at the right time, and move on just as quickly when the story changes. I may never match your success and returns, but I learn more from you every day!

Three of my top holdings reported earnings in the past two days on Sept 1-2 so I held off on posting my month summary until now so I could digest the recent earnings and comment on them before the information gets too stale, but all data below relates to August 31st, close of market on Tuesday, unless I specifically label it as representing today (Sept 3rd) balances.

Year To Date Results by Month

Here’s my latest YTD performance:

 +5.0%  YTD Jan 
+14.6%  YTD Feb 
 -9.2%  YTD Mar
 -8.2%  YTD Apr
-19.7%  YTD May
 +7.9%  YTD Jun
 +3.8%  YTD Jul
 +5.6%  YTD Aug
+21.3%  as of today 9/3/21

Yeah, that’s right, it’s been a heck of a three days so far in September, mostly driven by MongoDB and Nutanix, which are up +26% and +17% already since Tuesday.

August was an interesting month for the day to day movements of the companies I own.

Magnite, my biggest holding in recent months, started August with a very good earnings report, the stock went up more than +10% from about $30 to $33…and then for no reason that I could find went down nearly -30% during the month from $33 to $24…and now it’s back over $30 about where it was at the beginning of the month. I’ve trimmed some Magnite while it was over $30 this month in order to free up some funds to buy Upstart, but part of me definitely still wishes I still had more allocated to MGNI.

Almost the exact same story with The Trade Desk, although not quite as severely. It was $80 at the beginning of the month, good earnings report moved it up to $87, then down to $75 on new real negative news, and now back to where it started the month around $80.

MongoDB had a good August even before earnings rising about 10% during the month, and now it’s moved up another 26%+ today after yesterday’s strong earnings release!

Nutanix was essentially flat during August, although it moved up +17% this week after a positive reaction to Wednesday’s earnings.

Smartsheet had a good August, up about +10%.

And of course, Upstart has been great. My first purchases weren’t until after earnings and I’m already up more than +50% as of today!

My last company yet to report is Smartsheet next Wednesday.

August 31, 2021 Allocation by Holding

Last warning – don’t stare directly at the top of this list!

My August 31st allocation:

15.9%	Nutanix (NTNX)
15.7%	Magnite (MGNI)
15.2%	Docusign (DOCU)
14.5%	MongoDB (MDB)
13.9%	The Trade Desk (TTD)
 8.2%	Upstart (UPST)
 7.1%	Smartsheet (SMAR) 
 6.8%	Teladoc (TDOC)  
 2.6%	[]( (MNDY)

It wasn’t any intentional decision to move Nutanix my largest holding. My top five are all relatively similar sizes. I did add a little to it during August, and its stock price has drifted higher, and I trimmed a bit of Magnite which had previously been my largest, and now here we are today. Both NTNX and MDB have both moved quite a bit higher since the end of the month on Tuesday and would be the two at the top of this allocation as of today 9/3/21.

I’ve certainly read the “Chaos Reigned” thread with great interest this week. I won’t write up anything too significant on Nutanix below given that it is admittedly a different type of investment right now compared to what this board focuses on and does. But I am very happy for it to be among my largest holdings right now. The stock is up more than +60% in the last four months. Their business performance has exceeded my expectations in all recent quarters. We still have three more quarters ahead before the subscription renewals really start to kick in in the fourth quarter of fiscal 2022, which is the summer (in the northern hemisphere) of 2022 next year. Those should be very profitable sales, which will also continue the acceleration of revenue, albeit from a small base. And keep in mind that a huge portion of the operating expenses today are non-cash stock based comp relating to the new CEO hire (a great hire in my opinion, which will make the related dilution well worthwhile) earlier this year. They still have a lot of execution ahead in order to be successful as an investment, especially considering the opportunity cost against other companies we follow that have generated such high shareholder returns, but my confidence remains high.

After last month when I had no transactions during July for the first time in recent memory, I made some more significant allocations (significant for me) in August.

The morning after Upstart reported earnings, I sold some Smartsheet and Magnite to free up funds to buy about a 6% allocation of Upstart. I had no problem at all with the 20%+ pop that morning at the open before I could buy my UPST. I had decided going in that even with a 30-40% pop, Upstart would still be well worth the price given the great earnings report and expectations. Fortunately, it only moved up to the mid $160’s/share when I bought and is already at $250 today! Shoutout to Gaucho and everyone else that has been sharing such great information on the company!

In August, I also bought a little bit more Teladoc, some more Nutanix, and a little more Trade Desk. However, at the end of the month, I sold some Trade Desk and some more Smartsheet to free up some funds in order to take my initial small position in Depending how next week’s Smartsheet earnings report looks, I may sell more (or all) of the rest of SMAR and potentially reallocate more to or other companies.

Cumulative Gains by Company

Note - This section uses data through today, Sept 3rd closing, including subsequent performance this week after August ended.

Similar to last month, this shows my total gains for all purchases of the companies I own today, including some recent additions to winners which nets down the average gains from some of the bigger long term winners a bit:

Nutanix (NTNX)    up   +126%
MongoDB (MDB)	  up   +450%
Magnite (MGNI)	  up   +130%
Docusign (DOCU)	  up   +168%
Trade Desk (TTD)  up   +162%
Upstart (UPST)	  up	+52%
Smartsheet (SMAR) up	+95%
Teladoc (TDOC)   down	-20%
monday (MNDY)	  up    +0.1%

These numbers get a bit muddy because some stocks, I bought most of my position all at once, while others I’ve made many small purchases over time when the stock price vs gain potential looked opportunistic. Also impacting this breakdown is that some of these positions include call options too, which I won’t discuss here.

So to try to take a more useful view of the cumulative growth at a more clear point in time without the impact of the options, I took a look at the biggest single purchase I made for each company which still represents my largest tax lot for each stock (not necessarily my first purchase, although in several cases, it was) and then I looked at the gains for the regular common stock since that purchase:

			     Purch Date	 Cost	9/3 Price
Nutanix (NTNX)	  up  +227%   3/16/2020	 13.24 	  43.24 
MongoDB (MDB)	  up  +784%   7/16/2018	 57.39 	 507.41 
Magnite (MGNI)	  up  +189%  11/10/2020	 10.90 	  31.54 
Docusign (DOCU)	  up  +593%    8/7/2019	 44.73 	 310.05 
Trade Desk (TTD)  up  +586%    1/2/2019	 11.40 	  78.20 
Upstart (UPST)	  up   +52%   8/11/2021	163.18 	 247.29 
Smartsheet (SMAR) up   +57%  11/11/2020	 53.35 	  83.77 
Teladoc (TDOC)   down  -22%   3/17/2021	186.45 	 144.56 
monday (MNDY)	  up  +0.1%   8/31/2021	379.50 	 379.81

Teladoc has clearly continued to be an anchor on my portfolio so far in 2021. I had started buying Teladoc in the $180’s in April, which was well below where the stock had traded a couple months earlier at over $290. I’ve been adding a bit while it has lagged in the $140’s recently. I continue to think the market is not going to get too excited about them until it laps the Livongo acquisition early next year and we get a better look at what true consolidated growth is likely to be going forward, and when we start to get some of the synergies on sales, and cost savings, again, much of which is not expected until next year. However, I continue to feel that we are getting a great discount to what this company is really worth due to the those uncertainties and clouds that are likely to clear in a positive way in the not to distant future. So I am happy to continue to hold and may even continue to add a little bit more TDOC here and there. At the same time,

I do have some unrealized losses in TDOC in my taxable account, so I could also potentially sell some of the higher cost Teladoc shares later this year to reduce the tax bill, which is quite high already this year due to sales of old Amazon shares in January, as well as my sales of Crowdstrike and Datadog earlier in 2021 which (yes, I sold too early!) and had significant gains too.

Company Thoughts

Nutanix (NTNX)

Nutanix is not really on-topic for this board, so feel free to message me directly if you’d like to chat about anything NTNX related

MongoDB (MDB)

I wrote up my thoughts on yesterday’s Mongo earnings announcement here:…

I’m loving the 26%+ pop today, and expect MongoDB will continue to be a long term hold for me.

Magnite (MGNI)

My thoughts on Magnite’s earnings release this month are here:…

Not much has changed. This stock has been really volatile especially when there has been no significant news. Not ideal as a shareholder with a big position, but it’s certainly provided opportunities along the way for someone to take a new position. If I didn’t already have a big stake, I definitely would have been buying when it dropped to $25 last month. It’s another one that may take a little while for all of their big recent acquisitions to be digested, but they are in a great space, with a great runway ahead, and I think management is doing the right things to make this a leader in the space for years to come.

Docusign (DOCU)

Here is a paste of what I posted after earnings last night:

Docusign grew +50% this quarter, definitely less than recent quarters, but I doubt anyone was expecting them to continue to grow at the rates they were achieving when boosted by the pandemic and stay at home environment.

Yes, I was hoping for a bigger beat. Although my own model, which is pretty conservative, only forecasted 40% growth over the next 12 months, which I’m sure they will beat handily.

The presentation that went with the earnings has some interesting slides:…

Slide 9, to me is key, which shows +77% growth in international, although it is still only 22% of total revenue.

Docusign, to me, is a long term hold. My expectation is that there is still a lot of room for international growth in the near term for the core e-signature business, and then that will hopefully be followed after by meaningful contribution from the eAgreement cloud products. So I’m fine with their only growing at 50% right now, especially if it doesn’t slow much further too soon. But things change quick, so will definitely have to keep an eye on them.

The Trade Desk (TTD)

My summary of this months’ earnings call:…

still pretty well covers my thoughts on the company. As noted above, I added a little more TTD last month when the price dipped into the mid $70’s, although I also sold some Trade Desk when opening my new position in, so net I think I sold a little more TTD than I bought. Don’t be surprised if I add to this position in the future, especially if the stock price dips.

Overall, love the company, love the CEO, love the returns I’ve gotten from the investment so far, and love the potential for the next five years and beyond!

Upstart (UPST)

Thanks again for all of the wonderful coverage of Upstart here. This is pretty much the definition of a company that I never would have followed or gotten into if not for this amazing community!

I was hesitant to buy in before earnings given the nature of their business I was a little skeptical of the potential for new competition. Also the lack of the kind of recurring revenue that many of our stocks have also kept me at bay.

But after that earnings release, and how low the valuation was even after the post-earnings pop, not to mention the potential to not only grow where they are today, but also to expand into auto and other industries, this was an absolute no-brainer and I’ve never been more happy to shift a good chunk of my portfolio into a company despite a 20%+ pop at the open.

Smartsheet (SMAR)

Smartsheet is an interesting one. Sold company, but not one that will probably ever us away with a shockingly huge outperformance.

It’s done well for me as an investment, up about +25% YTD in 2021. And nearly doubled over the past 12 months. I had predicted at the beginning of the year that if the company kept chugging along and the stock price didn’t move much, it could be a potential acquisition candidate later this year. I still think that is entirely possible. It’s just hard to stay excited about them compared to some of the other companies we follow.

Next Wednesday they release earnings and don’t be surprised if I decide it’s time to shift most of my SMAR allocation into more or Upstart, or Teladoc (or Magnite or Trade Desk….). But knowing me I may also love what I hear and add to my Smartsheet holding. My best guess is that it will a “steady as she goes” similar growth to recent quarters, and I gradually trim it bit by bit over time. We’ll see

Teladoc (TDOC)

Not much more to add about TDOC beyond what I noted above, at the end of the Cumulative Gains section. I feel like it’s just a bit of a waiting game until the stock moves up more significantly in 2022. Yes, I could hold other stocks for the next six months and hope to be able to get back into TDOC in early ’22. But I’m patient and would rather not miss the initial move, especially for a company like this that I can see potentially owning for multiple years. (MNDY)

A small position, somewhat of a try out position. I ran some numbers for MNDY, Asana, and Smartsheets and it’s honestly really hard to call the winner (in terms of future expected shareholder returns) between the three of them given that the first ones are growing faster, but Smartsheet is already quite a bit bigger (and cheaper), so three years from now I could see all three of these companies being about the same size, with likely still growing faster than the others. But you’re paying a lot more today for Monday or Asana (in terms of market cap) compared to Smartsheet, for companies that will probably only catch up to SMAR in about three years given their higher growth rates and might not be growing that much faster than Smartsheet three years from now.

I probably view as more of a short term bet, than an investment, betting that the next few quarters will show strong revenue growth and the stock price will move up, not necessarily in line with the actual future potential value of the company. And then I’ve got to try to exit at the right time.

It’s not how I usually invest (e.g. chasing super high growth despite huge valuations kept me out of Snowflake, etc), but I could see it playing out that way, for in the short term so I’m ok with having a small position here for now. Who knows, maybe they will absolutely crush even my biggest growth estimates for them and prove to be the clear winner and more than worth their valuation…we shall see.

Riskified (RSKD)

I don’t own it. Probably never will, but I saw there was a recent thread on here it and I had recently also looked into them so thought I’d comment.

Great intro post here by Pavlos…

They use AI to predict what customers are likely to pay their bills and not default. It’s not particularly expensive, valuation wise, so I wouldn’t blame anyone for taking a small bet on them and seeing how the next couple of quarters play out. Their growth is good and has the potential to accelerate significantly. I just don’t feel enough confidence in the space they are in, to believe they will definitely grow against competition for a long time.

One of the things that worries me is that Riskified apparently covers losses if they recommend a customer and then the customer doesn’t pay. That sounds like a lot of potential liability if anything goes badly. They may have some kind of insurance for that, I haven’t looked too closely.

For some reason, the more I looked into RSKD, the more the voice inside me kept saying “why would you own any of this when you could own more Magnite?”. Magnite of course is in a very different industry so it’s hardly an apples to apples comparison. And Magnite is not necessarily the first place I would likely add more money to today (that’s probably still Upstart), so I’m not sure why the MGNI comparison comes to mind, but that was all it took for me to essentially write off Riskified. I’ll track them for a few quarters and see how things go, and how the valuation moves, but this one is probably a no-go for me.

So that’s it. Another earnings season almost in the books. And none of my companies have disappointed me this quarter. I really fell like, if I couldn’t make a single trade for the next 12 months, I will be pretty happy with the results from holding these companies for the next year or more.

Thanks as always for all of the great discussion. To those of you in the U.S. have a great labor day weekend!