mekong22's 1st portfolio review! Year End 20

Happy New Year!

2019 was an absolutely fantastic investing year for me.

Although I have been tracking my investments at the end of every month since 2003 in the same spreadsheet, I haven’t previously posted a month-end update here primarily because 1) it’s a big time commitment and I definitely have a huge appreciation for Saul and everyone else that finds a way to post monthly and 2) I tend to dabble in call options a lot more than others here which can sometimes make my results look strange or confusing to someone that only holds long common shares (e.g. I could have theoretically tripled or quadrupled the value of an investment this year where the stock didn’t double at any point during the year, if I only held options for that particular company. Or I could have lost 99% of the value of another when the stock itself never declined by more than 25% during the year).

If I can, I am going to aim to do an update, if not quarterly, then at least every 6 months going forward.

I generally keep about 100% invested, so cash balances are relatively negligible and I am going to exclude from below my 401k, which is with my current employer so I won’t be able to roll it into an IRA unless I change jobs in the future. I keep my 401k entirely in a low cost S&P index fund.


Here are my monthly returns for 2019, which are adjusted for any new cash inflows and outflows, similarly to how most folks on this board show their returns:

Jan +25.3%
Feb +34.1%
Mar +43.9%
Apr +51.6%
May +45.0%
Jun +61.6%
Jul +67.8%
Aug +66.2%
Oct +41.3%
Nov +69.2%
Dec +57.1%

Like a lot of us, my portfolio grew pretty steadily until July/August and then took a big hit in September when many of the SaaS companies we follow dropped. At the end of November, I hit a new high for the year, largely driven by TTD and NTNX. December started rough the first few days, although it came back quite a bit the past few weeks. Last Friday I actually wasn’t too far off a new high, but then Monday’s drops kept me below 60% for the year. All told, I can’t complain at all!


Here is my allocation at year end December 31, 2019:

TTD    18.5%
AMZN   18.3%
MDB    15.0%
AYX    12.3%
KMI    11.7%
NTNX    6.9%      
OKTA    4.9%
DOCU    3.5%
CRWD    2.3%
DDOG    2.1%
ESTC    1.7%
ZS      1.5%
SMAR    1.0%
ZM      0.4%

And since I haven’t posted updates previously, for comparison, here were my holdings and allocations at the end of last year 12/31/18, and midyear 6/30/19, compared to 12/31/19:

       12/31/18     6/30/19    12/31/19
TTD      1.1%        10.6%       18.5%
AMZN    23.2%        18.3%       18.3%
MDB     20.4%        16.0%       15.0%
AYX      3.5%        11.0%       12.3%
KMI      8.0%         8.7%       11.7%
NTNX     9.6%         2.0%        6.9%
OKTA     4.2%         5.4%        4.9%
DOCU       -          1.0%        3.5%
CRWD       -            -         2.3%
DDOG       -            -         2.1%
ESTC       -          2.7%        1.7%
ZS       6.7%         7.8%        1.6%
SMAR       -          2.9%        1.0%
ZM         -            -         0.4%
SHOP     6.1%         1.8%          -
SQ       3.4%         4.7%          -
NEWR     3.1%         2.1%          -
AAPL     2.8%           -           -
TXRH     2.5%           -           -
FB       2.3%           -           -
TWLO     1.9%         3.6%          -
ANET     1.2%           -           -
GH         -          1.6%          -

And not shown above is SFIX which I owned briefly during the year, but not at any of the three period-ends shown

In early 2019, I sold off a number of companies that I’ve held for multiple years and had big gains in (AAPL, TXRH, FB, ANET, and a little later in the year, SHOP), but where I felt it was worth paying the taxes on the gains and reallocating the funds due to better expected future upside in other companies.

Early on in the year, I decided that TTD, MDB, and AYX were my highest confidence positions (which I still believe today) and I redeployed funds into TTD and AYX brining them up to my first tier along with MDB and AMZN. I’ll discuss more about why I still own Amazon with the individual company discussions below.

NTNX was a medium sized position already at the beginning of the year on January 1st 2019. It took a big hit in the first half of the year which made it a smaller position. Although I still felt pretty confident in it, in between earnings announcements when I wasn’t expecting much news that would move the stock price, I sold off the shares that I had in my taxable account to lock in the tax losses, and then bought them right back (and then some), all as call options, after the wash sale period had passed and prices got even cheaper. Some of those options are up more than 200% already since I bought them in August so they’ve done a good job to offset some of the losses I had in Nutanix earlier in the year. I hold NTNX today because of the potential for the future, regardless of what they’ve done in the past. If wasn’t optimistic about their future, I would have moved on long ago despite past loses. As recently as 11/30/19, NTNX was 9% of my portfolio. It has come down in December simply due to the stock price pullback, on no company news. I’ve gone into lots of detail in previous posts about why I still like NTNX and especially liked it when the valuation got really low at the end of the summer, so I won’t rehash here.

To me, the craziest thing about this year is when I think about my Amazon shares. At the beginning of the year, AMZN was 23.2% of my entire portfolio. I didn’t sell or buy any Amazon shares in 2019, and Amazon’s stock price increased 23.0% during the year. Yet at the end of 2019, AMZN was only 18.3% of my portfolio!..despite increasing more than twenty-three percent this year! If you told me in any year during my investing career that my biggest holding would represent nearly one-quarter of my portfolio at the start, and it would go up more than 20% that year, I would have been thrilled. Yet in 2019, Amazon was actually a weight holding down the rest of my portfolio which somehow managed to increase by almost 60% overall despite a huge portion of it only growing 23%! Absolutely crazy! And a situation that certainly never would have happened without Saul, this board, and all of the other amazing contributors here. So let this be my first Thank You to everyone that contributes here.


Although I won’t get into any details of the options since that is OT here, for some perspective, here’s a summary of how much of each company’s holdings are in call options vs shares. I include this to try to give some context to some of individual companies’ returns further down, some of which may otherwise look unusual.

No calls, just 100% common shares: AMZN, OKTA, and DDOG

Mostly shares, some calls: TTD, MDB, AYX, ESTC, ZS

About half and half: DOCU, KMI, SMAR

Mostly, or all, calls: NTNX, CRWD, ZM

In general there are two situations where I will choose to buy some options over shares 1) where, at some point, I thought the stock price got beat down unfairly and is likely to rebound soon due to the market’s misinterpretation of earnings or other (e.g. MDB dropping from the Document DB announcement) news or 2) where I want to have a bit more exposure to the stock than I would get by buying common shares, but I am not confident enough yet in the company’s prospects to put a significant sum of money into the shares (CRWD, ZM) so I’m willing to take on more risk in order to get exposure to more shares. And yes, I reaize how irrational #2 will probably sound to many people. I’ve never used any kind of margin, never shorted a stock, and I’ve never sold-to-open options, all of which I consider too risky for my appetite. Most calls I buy are long term “LEAP”s, often already in the money, with a year or two until expiration. DDOG would have fallen into category #2 as well, but since DDOG options are currently only available with short term, mid 2020 expirations, it makes them way too risky even for me, so my DDOG holdings are common shares.

Overall, at December 31, 2019, about 30% of my portfolio is in options. Keep in mind, I didn’t invest one-third of my investable funds into options. I put a smaller amount of my cost basis into them. They have just appreciated faster than most of my common shares recently, largely driven by the performance of my TTD, MDB, NTNX, KMI, and DOCU calls. It’s unlikely that I will have nearly as high a percentage of my portfolio in options a year from now.

I do NOT recommend anyone, especially if you are relatively new to investing, start buying options unless you really know what you are doing. I’ve definitely been very wrong with some of these in the past, losing -100% on some option contracts, and any extended market weakness in the underlying shares will hurt my portfolio and returns a whole lot worse than someone that just owns common shares of the same companies.


Here are my 2019 returns on my current holdings. Any lots that I purchased prior to 2019 reflects their returns since 1/1/19 and any that I purchased during 2019 shows the return since purchased. So there are weighted blended return percentages for companies that I already owned at the beginning of the year and then added to during 2019.

TTD    +55.8%
AMZN   +23.0%
MDB    +51.8%
AYX    +20.2%
KMI    +36.5%
NTNX    -0.7%
OKTA   +80.8%
DOCU   +76.2%
CRWD    +5.3%
DDOG   +10.5%
ESTC    -5.0%
ZS      +1.2%
SMAR    +9.9%
ZM      -1.7%

Looking over that list just makes me thankful for what we have here and that I’ve been able to learn about these companies from so many people that are familiar with them.

The above doesn’t reflect other gains I had in 2019 in companies that I have now fully sold out of (e.g. SHOP appreciated quite a bit from 1/1/19 until I sold it later in the year)

TTD took a big hit on Monday this week, otherwise that list would look even nicer. Also, one month ago, as of 11/30/19, my overall blended NTNX return was over +32% YTD (even despite the big decline early in the year), which has come down as the stock dropped in December on no news.


Although my portfolio holdings did change quite a bit this year, I don’t think I’ll ever be as nimble, or move funds as frequently, as some of the other investors on this board, and it will likely cost me some missed opportunities in the future, but it’s more in line with my comfort level, so I’m ok with that.

A recent TMF marketing email listed out a few of David Gardner’s best picks over the years, notably Amazon up +11,000% since 2002 and Netflix up +16,000% since 2004. That made me think a bit about my holdings and which ones really have the potential to be life-changing investments. Both Amazon and Netflix had huge valuation haircuts along the way over the past 15 years, but shareholders that stayed the course have been handsomely rewarded. I think this gives me a little more patience to stick with the companies that I have the most confidence will ultimately dominate their industry, even during stretches when revenue slows or profitability seems far off. That’s how I feel about The Trade Desk and MongoDB (and to a lesser extent, maybe Docusign) in particular right now. To me, they are in the driver’s seat on their way to becoming really dominant companies and will have a hard time screwing things up. That being said, I’m always re-evaluating and ready to change course if the situation changes.


The Trade Desk – The future of advertising, and it feels like we are still in the first inning. They’ve built the platform, they keep adding inventory (e.g. a small slice of Amazon Fire this year), they get their advertising partners access, and then without any manual touches, they can just let the system scale and grow, essentially hands-off. It’s a beautiful thing. How many smart/connected TV’s and devices were sold this holiday season? How many will sell next year? And the year after that? New streaming services keep launching. New television and movie content is being created at a pace that blows away any other time in history. 2020 is an election year so there will be a ton of political ads trying to find the right audience over the next ten months in particular. Netflix lost customers for the first time ever last quarter! If TTD CEO Jeff Green is right and Netflix does create an ad-supported free or discounted tier, then all I have to say is “hold on, because this is going to be some ride!”

Amazon - Despite the fact that AMZN only rose 23% this year, I don’t regret holding onto my shares. All of my Amazon is in a taxable brokerage account and it is a multi-bagger. But I am not holding onto it just for tax reasons. If that was all I cared about, I wouldn’t have sold SHOP, AAPL, FB, ANET, etc this year. I really believe that Amazon can double over the next five years from where it is today. Yes, that would make it about a two trillion dollar market cap corporation! Maybe they will and maybe they won’t, but I believe they can, and while that will equate to compounded annual returns that pale in comparison to what most of us have earned the past few years, factor in the tax impact, and I’ll be very happy with that result. I also don’t fear Amazon being broken up. What could AWS, Alexa/Echo, and Prime+the retail businesses be worth individually? Possibly even more than today’s consolidated valuation. Bezos doesn’t want that to happen, long term they would surely be worse off, but as an investor, I wouldn’t be surprised if a broken up Amazon’s individual parts might appreciate more over the subsequent 2-3 years than the combined company would have.

MongoDB - I believe. I believe MDB will have a very significant share of the database market 5-10 years from now. It may not rival Oracle’s dominance at their peak, but it doesn’t have to. Every company in the world needs a database. The database market is going to keep growing. The amount of data being captured today is like nothing else in history. When 5G rolls out en mass, more and more devices will be talking to one another creating mountains more data than we are even storing today. The non-relational database market (where MDB plays) will keep growing a whole lot faster than the overall db market. And Mongo is likely to continue to dominate that market. What more needs to be said?

Alteryx - AYX is super popular on this board so I don’t have much to add that hasn’t already been said. That same, massively-growing, data I was just talking about in MDB above needs more and more sophisticated tools to analyze it and make it useful. That’s where Alteryx comes in. Their product is expensive but more and more companies are realizing they need it in order to compete effectively!

Kinder Morgan KMI - It’s a high dividend yield natural gas pipeline operator, so completely off topic for this board, 2019 was a very good year for them.

Nutanix - It’s been an up and down year for NTNX. For me at least, one of the main reasons I had such a good second half of 2019 was due to adding to my Nutanix stake at the end of the summer when the stock was trading in the teens (although it pulled back quite a bit in December with no real news). The reasons for my continued optimism in NTNX are well documented on this board so I am not going to get into them again here. I won’t be surprised if Nutanix is my best performing holding in 2020. It could also be my worst one, but I think they odds are a lot better for it to be at the top of that list than on the bottom. I was tempted to suggest NTNX on the “Top Pick for 2020” thread, but decided not to, given some of the strong negative Nutanix opinions, as I doubt it would convince anyone that isn’t already an owner.

Okta - It’s been a great investment for me since I purchased my shares in January and February 2018 for less than $30 each. Wish I had bought a lot more at the time. But I still just can’t get my arms around why it is valued quite as high as it is today. They dominate their field and probably will continue to, but, to me, there is a lot more risk, buying, or holding, with so much growth already built into the stock price. Although not one of my biggest stakes, I probably would have trimmed it already if it wasn’t in a taxable account and I hadn’t locked into several big taxable gains when selling off my SHOP, FB, AAPL, etc earlier in the year. Most likely I will trim a portion of it early in 2020 and reallocate those funds into other companies, but will most likely keep at least half, maybe two-thirds, of my Okta stake regardless. In this particular case, I feel like I’d rather be wrong and miss out on some upside, than be correct (about it being relatively overvalued compared to some of our other companies) and realize I kept too many investment dollars in the shares for too long. A lot of really smart people on this board have a lot of confidence in Okta, so don’t be surprised if I ultimately regret not owning more. Fortunately, we have a lot of really amazing high-potential companies to invest in right now, so even the wrong decision could turn out pretty good.

Docusign - All they have to do is keep most of their market share in the e-signature market (which is expected to grow pretty significantly over the next few years) and have a minor success in the Agreement Cloud space and I feel a DOCU investment will continue to be a long term winner. If they somehow make the Agreement Cloud into a huge success, or develop another nice little product or two that succeeds, then that’s just gravy, and this one will really reward us beyond my expectations, which are already pretty high.

Zscaler - I’ve reduced my stake a fair bit during 2019. Still holding some, but not a high confidence one for me. I won’t be surprised if I trim it further in 2020. But I also won’t be surprised if the stock does really well in the next year.

Crowdstrike, Datadog, and Zoom Video - They don’t really belong together but I’m lumping them together because they all IPO’d recently at high initial valuations and I don’t have a lot to add here, as others on this board are much better versed in their businesses than I am. I’m the least confident in Zoom probably largely due to their already high valuation. To some extent, I only have positions in these companies because a lot of investors I admire on this board, as well as Bert, have been consistently positive on them. Not enough personal conviction for me to allocate large sums to them, but I would love to see one or more of them go gangbusters this year and gain enough to grow one of these small holdings into a medium size position.

Elastic and Smartsheets - Again, they don’t belong together, but these are two of the companies that seem to be given lower valuations than they deserve, in my opinion, relative to other SaaS companies, while consistently performing, at least in terms of growing revenue. These are probably the two that I most wonder if I will someday really regret not having more invested in them. Both represent situations where I am kind of hoping one of them announces a great quarter at some point next year, but drops the next day when the market decides the results aren’t good enough. That kind of opportunity in either of these companies would probably tempt me to reallocate some funds and make it a bigger position. As of right now, I just can’t bring myself to sell off a portion of anything else to put more into these, but they are both near the top of the list of where I would put new money, rather than add to what are already large positions in my highest confidence ones.


What a year! It’s hard not to be spoiled with our recent success. Next year can’t come close to this again, can it? If I have even a +25% year in 2020, I will be absolutely thrilled with that result.

Thanks again, especially to Saul, but also to the assistant board managers that keep this forum focused, and to everyone that contributes here. How lucky are we to live in a time when this type of collaboration and sharing of ideas and analysis is even possible!

Happy New Year to all of you, and let’s make 2020 another prosperous and successful year!