Mekong22 Mar 2023 portfolio update

March continued a nice start to 2023 for my portfolio.

My holdings continue to be dominated by large allocations in The Trade Desk and MongoDB, both of which were up about 10% this month, so that is still driving my results.

I had no trades or transactions at all in March, so this may be a bit of a boring summary writeup.

Year to Date performance:

+11.3% YTD Jan
+16.2% YTD Feb
+23.5% YTD Mar

The movement in March was due to the increases in TTD and MDB, a smaller increase in NET, essentially flat SNOW, and decreases in DDOG and Magnite

and allocation at March 31st:

TTD     44.6%
MDB     37.9%
DDOG     6.4%
SNOW     5.9%
NET      3.1%
MGNI     2.0%

Without buying anything this month, both TTD and MDB’s already large positions grew by a one or two percentage points simply due ot their performance this month compared to the smaller holdings.

I still don’t love having such a large amount in two stocks, but other than NET, there isn’t anything else I own currently where I want to put any more funds right now. Several members, particularly Saul, JabbokRiver42, and Bear and others have given some compelling reasons to consider getting back into Global-e. I need to do some more research to get up to date on them, but that is a company might make a smart place to reallocate a bit at some point in the near future.

The Companies:

The Trade Desk (TTD)

Looking at the YoY growth rates by quarter over the last few years:

       Q1    Q2   Q3   Q4
2020   33%  -13%  32%  48%
2021   37%  101%  39%  24%
2022   43%   35%  31%  24%
2023   15%(q1 guide)

And sequential growth (note that Q1 is typically going to be negative sequential growth given the seasonally strong holiday quarter in Q4)

       Q1    Q2   Q3   Q4
2020  -26%  -13%  55%  48%
2021  -31%   27%   8%  31%
2022  -20%   20%   5%  24%
2023  -26%(q1 guide)

Not much to add to what I wrote up last month. TTD will be highly impacted by softness in ad spending for as long as the economy is soft, but that also presents an opportunity as marketers are looking to maximize the return on all of their advertising dollars, which is exactly what The Trade Desk does compared to traditional advertising, which should enable them to keep taking more and more market share, even if the topline growth number looks less impressive for a little while.

MongoDB (MDB)

MDB YoY growth

       Q1    Q2   Q3   Q4
2020   46%   39%  38%  38%
2021   39%   44%  50%  56%
2022   57%   53%  47%  36%
2023   22%(q1 guide)

And MDB sequential growth

      Q1   Q2  Q3   Q4
2020  6%   6%   9%  13%
2021  6%   9%  14%  17%
2022  7%   6%  10%   8%
2023 -4%(q1 guide)

Mongo had guided for only +26% yoy growth in Q4 (and +1% sequential), and early in March when they released earnings, they soundly beat that at +36% yoy and more than +8% sequential.

The new guidance for Q1 is probably a bit conservative as well, but eventually workloads are going to start rising again, and I still feel that Mongo will be in a great position to benefit for years to come.

Normally I don’t give too much thought to TMF articles that try to get your attention, but this one actually does a nice job of summarizing in a few sentences exactly why I’ve held MDB as such a high confidence holding for the past few years:

"MongoDB CEO Dev Ittycheria also noted in the Q4 call…that the company has been able to win new business even with the challenging macro environment.

IDC projects that the data management software market will increase from $85 billion in 2022 to $138 billion in 2026. The market will almost certainly continue its strong growth trajectory for a long time after that period. There’s no question that increasingly more data will be generated and need to be stored somewhere.

MongoDB’s cloud-based platform should grow even faster than the overall market for two main reasons. First, it enables customers to reduce the complexity involved with building and managing database apps. Second, it reduces their costs. That’s a combination that should make this stock a huge winner over the long run."

Datadog (DDOG)

DDOG YoY growth

      Q1   Q2   Q3   Q4
2020  87%  68%  61%  56%
2021  51%  67%  75%  84%
2022  83%  74%  61%  44%
2023  29%(q1 guide)

And DDOG sequential growth

       Q1   Q2   Q3   Q4
2020   15%   7%  10%  15%
2021   12%  18%  16%  21%
2022   11%  12%   7%   8%
2023    0%(q1 guide)

I may ultimately be wrong to hold onto most of my Datadog shares, but they’ve performed so well for so long, that I’m not in a rush to bail out right now, even despite a somewhat worrisome guide to start 2023. I’d like to see at least one more quarter and how management’s tone sounds when they report Q1 before doing anything just yet.

Snowflake (SNOW)

SNOW YoY growth

       Q1    Q2    Q3    Q4
2020  149%  121%  119%  117%
2021  110%  104%  110%  101%
2022   85%   83%   67%   53%
2023   45%(q1 product rev guide)

Snowflake only provides guidance for product revenue, but product revenue accounts for most of their total revenue, so I think it’s safe to pencil their +45% product revenue guide for Q1 into the above chart as an estimate of total revenue growth.

And SNOW sequential growth

      Q1   Q2   Q3   Q4
2020  24%  22%  20%  19%
2021  20%  19%  23%  15%
2022  10%  18%  12%   6%
2023   4%(q1 est. guide)

I’ve never been that comfortable with SNOW’s valuation, which is why I didn’t own any Snowflake until last summer. I still can’t call it high confidence by any means, but their valuation actually looks a lot more reasonable to me today, even only as a 40-50% grower than it did a year ago as an 80% grower. Despite that, I could see myself trimming some of my Snowflake holdings depending what other alternatives look appealing in coming months.

Cloudflare (NET)

NET YoY growth

       Q1   Q2   Q3   Q4
2020   48%  48%  54%  50%
2021   51%  53%  51%  54%
2022   54%  54%  47%  42%
2023   37%(q1 guide)

And NET sequential growth

        Q1   Q2   Q3   Q4
2020    9%   9%  14%   10%
2021   10%  10%  13%   12%
2022   10%  11%   8%    8%
2023    6%(q1 guide)

Consdering the current macro environment, Cloudflare performed well in Q4 and management’s tone came across pretty positively on the call. This might be my highest confidence holding after my top two, so I’m not sure why it sits so far down my allocation list. Probably something I should remedy.

And that’s it for another month. Thanks for all the continued great discussion, and especially some of the recent new ideas that I need to start looking into some more. good luck to all