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 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.
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."
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.
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.
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