mekong22 Aug 2022 portfolio update

Lots of earnings for my companies this month…and some new positions (which won’t be new to most folks on this board).

So let’s get right to it!

Year to Date Performance

-29.3% YTD Jan
-21.2% YTD Feb
-29.8% YTD Mar 
-43.3% YTD Apr
-60.4% YTD May
-65.6% YTD Jun
-62.2% YTD Jul
-54.4% YTD Aug

The good results from my small-ish Snowflake position, and more significantly from my big Trade Desk position, improved my YTD performance a bit in August. Alas, that has been given back during the first week of September already, particularly given the market reaction to MongoDB’s results last week.

August 31 and July 31, 2022 Allocation

                       8/31   7/31        
The Trade Desk (TTD)  38.7%  27.9%    
MongoDB (MDB)         36.8%  42.7%    
Datadog (DDOG)        10.3%  10.9%   
Snowflake (SNOW)       6.8%   5.2%      
Cloudflare (NET)       2.8%    - (NEW)
Crowstrike (CRWD)      2.5%    - (NEW)
Magnite (MGNI)         1.7%  13.3%   
Pubmatic (PUBM)        0.4%    - (NEW)      

TTD had a very positive reaction to their earnings report in early August so that pushed Trade Desk back up to the top spot. That same week, Magnite had a really disappointing report and outlook, which led me to sell about 80% of my MGNI shares.

With the proceeds from my MGNI sales, I initiated a new (my first) position in Cloudflare, and bought back into Crowdstrike, which I have been out of for the better part of the past two years, and re-established a very small try-out position in Pubmatic to better keep an eye on them for now.

The Trade Desk (TTD), Magnite (MGNI), Pubmatic (PUBM)

Trade Desk had a solid quarter, continues to be profitable and gives an optimistic outlook, as we get into the beginning of the midterm election cycle here in the U.S. which is likely to bring a big supply of political advertising over the next couple of quarters. Their stock price has bounced around like it’s been in a pinball machine lately, moving from around $40 in mid July, up to the mid $50’s just before their earnings release, all the way up to $75/share just after earnings, and now a few weeks later with no new news, it’s already back to $60, nearly back where it was just before earnings.

Magnite, on the other hand, came out with another pretty disappointing result. Revenue was up +20%, but only +7% on a pro forma (essentially organic, excluding acquisitions) basis. And guidance wasn’t all that impressive either. I really thought MGNI was doing all of the right things, making acquisitions to position themselves as a leader in the burgeoning CTV market, yet somehow TTD, and sell side competitor Pubmatic, are having more success than MGNI without the big acquisitions. As far as I can tell, they just aren’t executing as well as the other companies are. I can’t explain it, but the numbers aren’t giving me much optimism.

Now it’s entirely possible that Magnite has been putting their efforts and energies into combining the companies and the technology to best take advantage of all of the assets and products that they’ve brought together, and maybe they are right on the cusp of turning things around and I could be shifting away at the worst possible time. And maybe the upcoming launch of Disney+’s new ad supported tier is going to turn on the spigot and really accelerate the growth in coming quarters, given Magnite’s partnership with Disney. But at this point, I’m not as comfortable having too much invested in them, so I sold off a lot of my Magnite soon after earnings, and resdistributed those funds, primarily into CRWD and NET, and just a little bit into Pubmatic.

PUBM also put out their earnings this month, and while their 27% revenue growth is below what most on this board would consider in an investment, they had no acquisitions, so that was about 4x MGNI’s 7% pro forma revenue growth. And Pubmatic’s CTV revenue grew by 150% this quarter! How exactly they did that, while Magnite with all of their fancy new CTV acquired assets can’t crack double digit growth right now, I just don’t understand, but I want to keep my eye on PUBM, and potentially will add to this positions.


I posted my analysis of MDB’s second quarter yesterday here:

I’m not as pessimistic as some others were. The next couple of quarters will be unpredictable, given how much of Mongo’s Atlas revenue is consumption based and dependent on usage of their customer’s applications which can swing based on the macro economic environment. The management team sounds very optimistic or the future and I still like the long term story here, and plan to continue to keep Mongo as a core holding in my portfolio.

Datadog and Snowflake

I don’t have much to add on these two names. Very happy with SNOW’s earnings this month. My first ever purchase of Snowflake at $131 is already up close to 30%, even after giving back a bit in recent days. Datadog has essentially traded sideways since I got back in around $95/share

Cloudflare and Crowdstrike

When some funds freed up from my Magnite sales, I felt it was a good time to get back into CRWD and finally buy my initial NET shares. My new Cloudflare position at $76/share is already down nearly 25% just a few weeks later, so I didn’t time that one great, but I feel good about both of these companies over the next few years.

Now we wait again, another couple of months until Q3 results start coming in. Overall, I think a lot of pessimistic expectations for the overall economy are built into many of our companies’ valuations today. I think it’s hard to go wrong investing in the leaders in security, data, and ad-tech over the next 5+ years. The next year could be bumpy, but we have really great companies, with great leaders, positioned in spaces that will have more and more importance over coming years, so as rough as the ride has been this past year, it still feels like we’re on the right track.

Thanks as always to Saul and all of the regular contributors that make this board so great