mekong22 Nov 2021 Portfolio update

Quite the rollercoaster we’ve been on lately. I was traveling last week so finally got to listen to some of the earnings calls this weekend before posting my update.

It gives me some solace to see the beating that many of my company’s stocks have taken lately, yet still know that I own great businesses and over the long run, if they continue to execute, the stock performance will reflect that over time.

My YTD 2021 performance has turned negative in November, but after gaining 67.1% in 2019 and 140.6% in 2020, even with the decline in 2021, my portfolio is still worth 3.5x times what it was on January 1, 2019. It pales compared to the outstanding performance that others here have achieved, but if I went back in time to the beginning of 2019 and could see that growth ahead, I certainly wouldn’t be complaining. And my optimism for the future for these companies hasn’t waned.

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
 +7.2%  YTD Sep
+10.5%  YTD Oct
 -7.8%  YTD Nov

I don’t think I’ve ever had an earnings season where practically every one of my holdings swung so sharply on earnings. These were the percentage changes the day after earnings were announced in November:

11/3/21  Magnite (MGNI)     -16%
11/8/21  Trade Desk (TTD)   +29%
11/9/21  Upstart (UPST)     -18%
11/10/21 Applovin (APP)     +20%
11/10/21 []( (MNDY)  -21%
11/23/21 Nutanix (NTNX)      +8%

And that doesn’t even include Teladoc (TDOC) that reported earnings at the end of October (it rose +8% the day after earnings) and then the stock was down -32% during the month of November. Investing in Teladoc has certainly been the biggest negative on my portfolio this year.

And last week Docusign (DOCU) lost a staggering -42% on Friday alone after reporting an earnings beat, but with revenue, and particularly billings, guidance that reflected a more significant growth slowdown than was expected.

So is Christmas Cancelled?

Not for me. I still feel I own companies that are poised to have many more great years ahead. Most of them are just getting started. As others have noted, we’ve seen volatility like this in the past couple of years. It always feels different when you’re in the middle of it, but some of the moves I made when things looked their worst, have subsequently been my best winners.

The challenge right now is that everything seems to be down, so it’s hard for me to see a lot of no-brainer reallocations when I still like my overall allocations. There is a temptation to reduce The Trade Desk a little and reallocate a little bit to other companies, but after listening to their earnings call, it’s just so hard for me to want to reduce my TTD stake at all, so I will probably leave it as is. Aside from a little tax loss selling, I really don’t anticipate making any seismic shifts in my portfolio.

I admit, it’s tempting to view some of the negative stock price action lately, particularly in companies like Magnite (which was above $60 in February and has fallen all the way below $20 now) and Teladoc (down from $290+ in February, to close to $90 today), to view some of them as driven by tax loss selling before year end, and potentially more significant drops than they deserved and poised for a bounce back in coming months. I bet that Docusign could continue to trend down further over the next week or two for similar reasons. I did add a little bit of MGNI last month on the weakness, and may add slightly to TDOC once the wash sale period passes from some of my recent sales. If DOCU falls much more, I may be tempted to add a little bit there too since I have no plans to sell any Docusign anytime soon.

But overall, I’m still pretty happy with my investment allocation and I’m optimistic for the days and months and years ahead.

November 30, 2021 Allocation by Holding

The Trade Desk (TTD) 24.3%
MongoDB (MDB)        18.1%
Magnite (MGNI)       12.9%
Nutanix (NTNX)	     12.6%
Upstart (UPST)	     11.4%
Docusign (DOCU)      11.2%
[]( (MNDY)     5.7%
Teladoc (TDOC)        3.9%

Sold Applovin (APP)

After Applovin jumped 20% after earnings at the beginning of the month, my small 2% stake in APP was up nearly +40% in about 6 weeks since I purchased it and, especially given the lack of enthusiasm from my intro post, and on the premium APP board, I decided to cut ties with it and add to Subsequently, both companies have dropped by a similar percentage.

Sold Smartsheets (SMAR)

I had worked my Smartsheets holding down to only a couple percent already this year, and earlier in the month, I decided there were other companies that I wanted more exposure to, so I sold off the last of my SMAR, and added just a little bit to UPST (before the earnings drop unfortunately) and a bit more to So far, this move really hasn’t worked out, as SMAR just reported good earnings and was up last Friday while nearly everything else I follow was down.


Aside from those, all I did was the tax loss selling I mentioned above with TDOC, which also went into, and I added some more Magnite.

I may sell off a couple percent of Upstart next week when I pass the wash sale period, but we’ll see how prices shift in coming days before I ultimately decide what to do.

I really don’t feel much urgency to do much right now. Coming weeks could continue to be really volatile, but that’s ok.

The Companies

The Trade Desk (TTD)

I had a busy month and didn’t get to listen to many of the November earnings calls live, so I binged a few of them on Saturday, and it was really quite wild listening to Docusign’s really negative call, back to back followed by Trade Desk’s euphoric call.

The opportunity for Trade Desk is so huge, and growing, and they have positioned themselves so well, and have such a great leader in CEO Jeff Green, that I have so much confidence for this company’s future.

Very happy to hear Jeff Green say recently that he plans to be in his current role as CEO of TTD for “at least” another decade.

He predicted on the call that, in only the next three years, the “majority” of tv advertising will be executed programmatically on CTV. When asked by an analyst what will it take to best get TTD from the current $1 billion revenue rate, to $3 billion, or $5 billion, he emphasized CTV. This also tells me that Magnite has positioned themselves well if they can execute going forward too.

TTD announced that they can now sell NBC Universal ad inventory on the Peacock streaming service. This gives them access now to National Football League NFL games, English Premier League soccer, and most likely, the next several Olympics, which NBC already has the rights too. This is huge, and probably just the beginning.

TTD also just partnered with Walmart on their DSP. They don’t reveal the exact terms of how the deal works, but it just went live at the very end of Q3, and Jeff was very excited about this achievement with the biggest retailer in the world. He said the potential is “just massive” and that TTD’s entire company today is “just a tiny percentage of that TAM”. He indicated that he expects many more big partnerships like it.

Jeff says he has never been more excited going into a year than he is going into 2022. Regulatory environment “net positive for TTD”. No material negative impact from the IOS changes and no material impact from supply chain. He says they are “consistently grabbing share”. He has “never seen what is currently happening in CTV happen in any other channel before, and likely will never happen again”…“What is happening in CTV is incredibly bullish”. Midterm elections next year should also be a nice positive compared to Q4 2021.

At least right now, I have no concerns with 25% of my portfolio in TTD

MongoDB (MDB)

MDB is my only holding that hasn’t reported this quarter yet. They report next week. I still believe it’s my only holding that I consider to be fairly expensive, despite it’s fall from almost $600/share to $450 in recent weeks. It’s a long term story here, but I think they can continue to execute and continue their trajectory.

Magnite (MGNI)

Magnite has just taken an absolute beat down in stock price in recent months. Their quarter wasn’t a blowout, but it also didn’t give me any reason to believe they won’t emerge as the SSP sell side platform leader in CTV. They’ll need to execute, they’ll need to keep signing on and powering big streaming services like they already do with Disney and Discovery, and it will still be a while before we really see what their growth rate will normalize at once the big acquisitions of the past two years are fully ingested. They probably have the best CTV dev team after the workforces acquired from Telaria and SpotX, and they should have the roadmap and build tools that keep them in a leadership position.

Nutanix (NTNX)

Nutanix held up better than most other growth stock I own lately. They quarterly results were solid, they just need to keep doing what they are doing. It may not be until the first big subscription renewals hit revenue in late 2022 or early 2023 before this company starts to get the recognition for how well their shifts from hardware to software to subscription have transpired in recent years, but I plan to be there and watch it play out. Very much a steady as she goes situation here.

Upstart (UPST)

I think I had much lower expectations for Upstart’s quarter than others here. I thought the quarter they reported was great. If I didn’t already have a stake in UPST, I would probably be opening one today, even if the stock price was close to $300/share. I’ve always kept my UPST holdings relatively mid-sized, and I probably wouldn’t be comfortable letting it grow too large, given some of the drawbacks in their business not being SaaS or subscription/recurring revenue based. But they sure seem to be in a great space with lots of potential to move into the new industries. If they can grow about +100% over the next 12 months vs the past 12, and then grow another 50% or so the next year, I expect shareholders will be rewarded. It won’t be smooth again given the lack of recurring revenue, and maybe they lose momentum and don’t get there, but especially at today’s prices, I’m perfectly happy keeping a decent small to medium size stake here.

Docusign (DOCU)

My Docusign position is a lot smaller now than it was a week ago at November 30th, simply due to the drop on Friday. I listened to the earnings call yesterday and management seemed to almost intentionally be using lots of terminology that painted a negative picture. I mean the beginning of the call with the prepared remarks was really dark. It almost made me wonder if their lawyers made them sound really conservative and pessimistic or something.

But then when management was answering analyst questions, and got to speak off the cuff, it was a totally different vibe. The CEO has subsequently said that he plans to buy $5 million of stock if the price stays close to where it is now next week.

Revenue came in at +42%, which is definitely a slowdown from the 50%+ they’ve had during the pandemic recently, but I don’t think any of us expected that to persist forever. Their guidance for next quarter implies a +31% at the top end, which I’m sure they will beat and probably end up in the high 30%’s.

But I think what really spooked the analysts is that billings are projected to only grow +23% next quarter. Again, I’m sure they will beat that by at least a bit and I’m hardly surprised that there was a negative reaction, but I do think the -42% stock price drop yesterday was overdone. That being said, given the timing right before year end, it could easily fall further from tax loss selling. If you asked me a month ago, which of my stocks was least likely to fall -40%+ in one day, I probably would have said Docusign.

For some good news, their international business grew +68% last quarter and now represents 23% of total revenue. Net retention rate is still +121% (so this really shows they need to work on growing customers faster). They did add 59,000 new customers last quarter (now 1.1 million+ total customers) but they do have lots of small customers so those numbers have to be taken for what they’re worth.

They emphasized that existing customers are not leaving Docusign as the pandemic situation gets better. They said “nothing close to that” is happening, but they did emphasize they aren’t seeing quite as much cross selling or upselling recently.

The CEO says they think the signature business alone has a TAM of $25 billion, and DOCU’s total revenue is still only $2 billion, so he emphasized that they still think even the core e-sig business is “largely untapped” even before we start to think about how much contribution and growth might be generated in the future from other products such as agreement cloud.

Their new notary business has been enhanced and they now signed on Fidelity using it. M&T bank too, and they say M&T has expanded from 50 use cases where their staff used DOCU previously, to more than 200 today.

Margins increased to 82% this quarter, from 79% in the prior year, and subscription margins are now 84%, up from 82%.

Even after last week’s drop, DOCU shares are still about triple where I initially bought most of my holdings in 2019. While the next few quarters may not be blowouts, it’s a great company that is only going to be needed more and more in the future, and I do believe their complementary products will prove to be good investments over the coming years. I have no plans to sell any DOCU right now and may even add to it if it falls further over the next week or two. That being said, it’s not going to be a 50-75% grower like other companies discussed here, so I certainly get why it won’t be for everyone.

Teladoc (TDOC)

So yes, TDOC has been my worst allocation of investing dollars in 2021 for sure. The whole combined company is now worth less than what TDOC paid for Livongo a year ago, alone. I think it’s overdone and they can do well in the future. I may add some back once my wash sale period has passed, but I don’t see growing it into a medium or larger sized position unless they show some real business strength. We’ll see, but I am glad for now that it’s a small position.

That’s it for another month. It’s been rough, but that’s why we invest for the long term. Everyone have a happy and safe holiday season and new year!