My Portfolio at the end of Apr 2021

Here’s the summary of my portfolio at the end of April.

April improved quite a bit from March. My portfolio finished this month down 0.02% YTD (or at 99.8% of what I started with), after topping out on Tuesday at 104.3% of what I started with.

But I was quite happy with that down 0.02%, as I it was up 19.5% from my portfolio’s YTD low on March 8th of down 17.0% (or 83.0% of what I started with). (.992/.830 = 1.195 or up 19.5%).

It would be a good exercise to think back to March 8th when you were thinking “Should I get out of these overpriced growth stocks before they plunge even more, and switch into value stocks and airlines like like everyone else?” Try to remember how scary it was back then. Tuck that away in the back of your mind for the next time.

The good news was that there was no bad news! Every one of our companies has reported excellent earnings. In fact, if I look at these seven positions (which currently make up my entire portfolio), here’s what their rates of revenue growth looked like in their most recent quarters:

**Crowdstrike		 74%**
**Cloudflare		 50%**
**Datadog		         56%**
**Inari			144%**
**Snowflake		117%**
**Upstart		         39%**
**ZoomInfo		 53%**

Their revenue growth rates average up 76% !!! With growth averaging 76%, it’s clear that these companies are doing just fine, irrespective of transient fluctuations in their stock prices.

In 2020 our companies stood out as a safe port in a storm, and their stock prices got bid up quite high. In the first three months of this year, a lot of the people who had hopped on our SaaS companies without really understanding much about them, sold them and rushed off to invest in cyclicals as their next fad. Then, this month, reality set in again and our companies came back strong.

I am no good at timing the market and I won’t try, but will just stick with strong rapidly growing high-confidence companies. I can’t tell you what the market will do Monday, or next month, or the next three months, or six months, but I can tell you that these companies are very successful, and that I can sleep well with them in my portfolio.

This year will have more ups and downs, and we are more likely to grow at a more normal rate, more related to the rate of growth of our companies’ revenue growths, or a little less (which is my current guess, anyway), which won’t be bad :grinning:, but it certainly won’t be like last year.


My portfolio closed this month down 0.2% (at 99.8% of where it started the year)! Here’s a table of the monthly year-to-date progress of my portfolio for 2021.

**End of Jan 		+   2.5%**
**End of Feb         	+   0.3%**
**End of Mar 		-  13.0%** 
**End of Apr		-   0.2%**


Here are the results year to date:

The S&P 500 (Large Cap)
Closed up 11.3% YTD. (It started the year at 3756 and is now at 4181).

The Russell 2000 (Small and Mid Cap)
Closed up 14.7% YTD. (It started the year at 1975 and is now at 2266).

The IJS ETF (The S&P 600 of Small Cap Value stocks)
Closed up 26.0% YTD. (It started the year at 81.3 and is now at 102.4)

The Dow (Very Large Cap)
Closed up 10.7% YTD. (It started the year at 30606 and is now at 33874).

The Nasdaq (Tech)
Closed up 8.3% (It started the year at 12888 and is now at 13963).

These five indexes
Averaged up 14.2% YTD. At the end of March they were up 10.7%, so they gained 3.2% in April. (114.2/110.7 = 1.032)

In the first three months of the year it was the world turned upside down, but this month my portfolio outshined the market considerably, and gained 14.7% to the indexes’ 3.2%. (.998/.870 = 1.147). But I never try to time the market like that but just invest in great companies and they take care of themselves.


You will hear know-nothings tell you that this fall proved how dangerous the “bubble” in our “overpriced” stocks was. Let’s see… I finished last year at 333% of what I started the year with. So am I supposed to be repenting my sins because this year I am down all of 0.2%? Really??? What a joke!

In my End of February Summary I posted my Four Year Results for 2017, 2018, 2019, and 2020. I finished the four years up 1251% (at thirteen and a half times of what I started with). In those four years the S&P finished up all of 67%. That’s 67% to 1251% !!! - Wow, was I punished for investing in those silly overpriced high-growth companies! Tell me about it!

Relax! Our companies are strong and powerful and doing incredibly well. They will be fine, and so will their stocks.


January. At the end of December I mentioned that I had taken a tiny position that I wasn’t ready to discuss as it was just to put it on my radar. That was Inari, and I decided to keep it and I built it up to a 4% position, where I thought I’d stop, but I added a little more in January.

Looking at my big three positions, Crowdstrike, Cloudflare, and Datadog, they are still in just about the same percentages of my portfolio as a month ago. I added small amounts to Cloudflare, but not enough to really budge the needle. I also added to my fourth position, Snowflake, and to Inari which is now in fifth place.

I continued to trim Docusign and Zoom, and didn’t change Okta. I also took small (under 2% positions in Zscaler and Unity Software. This brought me to 10 positions, which was more than I am really comfortable with, but it wasn’t as spread out as it sounds as my top three made up 76% of my portfolio, and the top four make up 87%, with the rest making up a tail of the remaining 13% of the portfolio.

I cut my position in Docusign further the last week of the month for cash to buy more Snowflake in the $270 to $275 range… My Zscaler, Zoom, and Docusign postions are now really small and make up only 3.5% of my portfloio between the three of them, so I really have six positions and three little fleas. There were no earnings reports in January so nothing to report on that scene.

February I was up to eleven positions inspite of my attempts to reduce the number. I sold out of what was left of my Docusign position. Early in the month I reduced my Crowdstrike from 33% to 30%, just being uncomfortable with a full third of my assets, and growing, in one company. I decided I’d be happy with just 30%. :grinning: I used the money from the little bit of Docusign, and from the Crowdstrike, to add to my positions in Zoom, Zscaler, and a little more to my Inari position. These are away from the top three which so dominate my portfolio. I then trimmed my position in Snowflake to take a starter position in LightSpeed, and finally, as Crowdstrike was again up to 31.6%, I trimmed it back again towards 30% to take a starter position in Twilio.

I guess what the issue is, is that I had 72% of my portfolio in three positions: Crowdstrike, Cloudflare, and Datadog, and if I could have found two or three more companies in which I had similar confidence, I would have been happy to have a five or six stock portfolio. I do have 7% in Snowflake, and about 6.4% in Inari, but then I had a six stock diminishing tail in Okta, Zscaler, Lightspeed, Twilio Zoom, and Etsy.

March was a wild month for me. At one point I was up to an unmanageable 12 positions, having added positions in Etsy and Peloton. However during the month I sold back out of Etsy, Peloton, and the last of my Zoom.

Why? I again decided I’d rather invest in Data, and the Cloud, which can increase forever, than in people’s subscriptions which are inherently finite and limited. I’m back down to 9 positions. Here’s how it went this month:

As I developed more confidence in some of my smaller positions, I decided that it made no sense to carry 30% in Cloudstrike, (although it remains my highest confidence position), and to have 22% of my portfolio in Cloudflare, while I had other strong companies in my portfolio with much, MUCH, smaller positions. I cut Croudstrike to a 27% position and Cloudflare to an 18% position.

Their sizes had been 5 to 6 times as large as many of my smaller positions which were also great opportunities, and that big a gap didn’t seem to make sense.

I also cut my Snowflake position in half, down to 3.5%, as it seemed that its huge growth was at war with its huge price, and I could see other places I’d like to put my money. Then after Snow annouced earnings, I decided I had to be in a company with results like that, and I added some back at $215, and then continued to add more up to a 9.4% position.

I continued to slowly trim Okta. Then Okta made a large acquisition and at first I worried that it made the story more complicated and uncertain. After spending time studying it and reading the conference call, I decided it could turn out to be a really terrific acquisition that would energize and transform Okta. I stopped trimming and added some back, and Okta is now about 5% of my portfolio.

And finally, I gradually completely tapered out of Zoom. I was long ambivalent about Zoom. I think that noone currently using Zoom for video is going to quit it post-pandemic, but I don’t think that even Zoom phone will budge the needle. So I had better places for my money and exited.

So what did I do with the money? Well I decided that I had a great group of smaller contenders.

My favorite is Inari, which has grown to a 10.3% position, in 4th place, but well behind my big three. It announced rather spectacular results in March. Its revenue was up 144%, it had gross margins of 92%, it is quite profitable, it just paid off all its longterm debt. It is low capex, and has a form of recurring revenue.

Inari is followed by Snowflake and Okta, at 9.4% and 5.0%, which I have already mentioned.

The remaining three are tightly packed between 4.5% and 4.8% positions. They include Zscaler which just announced results and accelerated revenue growth, again, this time to 55%! Billings were up 71%, RPO was up 68% to $1.025 billion. That’s enormous for a company whose revenue last quarter was just $157 million.

And Twilio which is again reaccelerating, and has been well discussed on the board. Remember though to consider their organic revenue growth (without the acquisition), as they are also digesting a large acquisition.

Finally Lightspeed, which is a cross between an ecommerce company and a recovery from the pandemic company, as it serves a lot of restaurants and hospitality companies as well as regular retail. It announced another acquisition this quarter, whichgives it an entry into Australia and New Zealand.

So it was a very busy month for me. To summarize what I did: I took little positions in Etsy and Peloton, and then exited them. I also exited Zoom, all three being companies with huge revenue growth rates during Covid, but with a reasonable likelihood of enormously slower growth rates a year from now.

I reduced my Cloudflare position from 22% to 18%, and my Crowdstrike from about 30% to 27%. I increased my Inari position by almost 50%. I first reduced my Snow position but then built it back to 9.4% which was larger than it started the month. I increased my postions in Okta, Twilio, Zscaler and Lightspeed to where they are all roughly between 4.5% and 5.1% positions. I didn’t make any significant changes in Datadog.

April Back in February, to explain why I had so many positions (eleven), I wrote:

Here’s the situation: I have 72% of my portfolio in three positions: Crowdstrike, Cloudflare, and Datadog, and if I could find two or three more companies in which I had similar confidence, I would be happy to have a five or six stock portfolio. I do have 7% in Snowflake, and about 6.4% in Inari, but then I have a six stock diminishing tail in Okta, Zscaler, Lightspeed, Twilio, Zoom, and Etsy for 11 positions total

Well, all the positions in that long tail are now gone, and I have taken 9.6% and 6.9% positions in Upstart and ZoomInfo, two somewhat atypical positions for me, small SaaS companies that are first movers in modernizing old ways of doing business.

As I wrote that, I thought you might be wondering about why I sold all of those six companies in the tail. First of all because I liked my new picks better, but to be more specific: Okta because it continued to guide to 30% to 31% for the April quarter, and reiterated it with only three weeks to go so no one would be surprised. Etsy because I see it as a niche company that flourished during Covid, but whose growth rate will plummet post-Covid, Lightspeed because most of its growth comes from acquisitions, Zoom because it already conquered the world and its sequential growth is plummeting, Zscaler because it’s a slow marketing cycle and a slow install compared to Crowdstrike and Cloudflare, and Twilio because it’s just too complcated a picture, and has low gross margins. I expect that all six of those will keep growing, and some could even do better than either of the two I added, but I was looking for companies that could at least triple in price over the next few years, and I didn’t see that happening for any of those six.

Please remember that I could change my mind about any one or more of my positions tomorrow, depending on new information or other factors, and I won’t do another update until the end of the month. Make your own decisions. Don’t just follow mine. I make mistakes at times! Guaranteed!


Here’s how my current positions have done this year. I’ve arranged them in order of percentage gain. As always I’ve used the start of the year price for stocks I’ve been in all year, and my initial buy price for stocks I’ve added during the year. I tend to keep buying as the price rises, so my average price is often higher for stocks I’ve bought during the year.

Please remember that these starting prices are from the beginning of 2021, and not from when I originally bought them if I bought them in earlier years.

By the way, you’ll remember that at the end of March, my only position that was in positive territory YTD was Inari, up 18.2%. All the rest were down for the year. This month is different, although Inari is still up the most.

**Inari from 87.30 to 114.29		up      30.9%**
**Upstart from 92.20 to 109.02	        up	18.2%	  bought 2 wks ago**
**Cloudflare from 75.99 to 84.74	       	up	11.5%**
**ZoomInfo from 47.34 to 51.86           	up       9.5%	  bought in Apr**

**Crowdstrike from 211.82 to 208.51      down      1.6%**
**DataDog from 98.44 to 85.77	       down	12.9%** 
**Snowflake from 281.40 to 231.59        down	17.7%** 


I now have seven positions and that’s a number that I am quite happy with. I have no tiny try-out positions at present. I have an extremely large position in Crowdstrike, and then down to large positions in Cloudflare and Datadog, and the three of them make up 63% of my portfolio. The next level down is Inari and and Snowflake, and finally Upstart and ZoomInfo, which makes up my whole portfolio of seven positions. No long tail this time.

Here are my positions in order of position size, and bunched by size groups.


**Crowdstrike		24.9%**

**Cloudflare		19.2%**
**Datadog			16.0%**

**Snowflake		13.2%** 
**Inari			11.4%**

**Upstart			 9.6%**
**ZoomInfo 		 6.9%**

STOCK REVIEWS Please note that when I discuss company results, I almost always use the adjusted values that the companies give.

Crowdstrike is currently my largest and highest confidence position at an enormous 25% of my portfolio. It is a security company built entirely on the cloud which started out securing endpoints, but now is expanding into many other aspects of security, and seems to be heading towards being one of the world’s dominant security companies. A key advantage it has is its AI. When it detects an attempt at an intrusion in one of its customer clients it instantly flags and stops that intrusion in that customer, but at the same time stops that intrusion from occuring in each and every one of its customers, pretty much instantly. It has a record of everything that has ever been tried on any of its customers so it keeps increasing its knowledge base. That’s a Wow! Feature, and no on-premises firewall company can come even close to what it does.

They had an outstanding earnings report in March, for their quarter ending in January. It included the number of subscription customers up 70% yoy, and subscription revenue up 77%.

New customer growth accelerated, up a record 1,480 new subs

• Record op cash flow and free cash flow

Total revenue was $265 million, up 74%.

Subscription revenue was $245 million, up 77%, and was 92.5% of total revenue.

Annual Recurring Revenue (ARR) was up 75% to $1.050 billion up $143 million sequentially.

Adj subscription gross margin was 80%, up from 77% a year ago.

Adj op income was $34 million, up from a LOSS of $7 million a year ago.

Adj net income was $32 million, up from a LOSS of $4 million

Adj EPS was 13 cents up from a LOSS of 2 cents.

Op cash flow was $114 million, up from $66 million.

Free cash flow was $97 million, up from $51 million.

Cash was $1,920 million.

It’s easy to see why Crowdstrike is a very high confidence position. I watched the Investor Day Presentation in April and they seemed almost euphoric. This company will keep doing well

DataDog, is 3rd of my big three high confidence companies, at 16.0% of my portfolio. Datadog announced their Dec quarter in February and had excellent and encouraging results, although we are still waiting for them to lap their Covid second quarter with their June results to be able to see what they are really doing year over year. For this quarter:

Revenue was $177.5 million, up 56%, and up about $23 million sequentially
Gross margin was 78%.
Adj operating margin was 10%.
Adj EPS was 6 cents
Operating cash flow was $24 million
Free cash flow was $17 million
Net retention rate was over 130% for 14th consecutive Q.
Remaining performance obligations or RPO was $434 million, up 78% yoy
Cash was $1.5 billion.

For the full year, Free Cash Flow was $83 million, or 14% of revenue.

• We had 97 million dollar customers, up 94% from 50 a year ago, and more than triple the 29 we had two years ago
• We had 1,253 hundred thousand dollar customers, up 46% from 858. They generate more than 75% of ARR.
• We have about 14,200 total customers up from about 10,500 last year. We added about 1,100 customers in the quarter making it another strong quarter after the 1,000 we added in Q3.

Acquiring Sqreen, a SaaS based security platform that enables enterprises to detect, block and respond to application level attacks. Adding Sqreen will provide development, security and operations teams a unified platform to deliver and manage and secure applications.

Acquiring Timber Technologies, the developers of Vector, a vendor-agnostic and high-performance observability data pipeline. We expect this technology to further empower our customers to control their observability data, while providing broader points of entry to our platform.
• Launched the general availability of Incident Management, which allows users to declare incidents, investigate root cause and dependencies, collaborate around a shared view of the incident, follow to resolution, and auto-generate post-mortem documentations, all within the Datadog platform.
• Enhanced our security solutions with the beta introductions of Runtime Security and Threat Intelligence.
• Introduced Log Rehydration, part of our Logging Without Limits feature set. This feature allows customers to efficiently archive all logs, and later easily pull archived logs back into the Datadog platform to analyze and investigate old events.
Delivered additional product innovations and integrations, including enhanced Live Containers functionality to provide a multidimensional look into Kubernetes workloads, expansion of Network Performance Monitoring (NPM), ability to share Datadog dashboards securely outside the organization, as well as new or enhanced integrations with AWS Network Firewall, Azure Monitor, Azure Stack HCI, etc, etc.
• Announced support for a bunch of Amazon programs.

Cloudflare (NET) has become a high confidence company for me, and is in 2nd place in my portfolio at 19.2%. I suggest you read muji’s deep dive here (

Here are some results from the December quarter, announced in February. I would have preferred even higher revenue growth, but I’ll settle for 50% growth (Boy am I spoiled!), as they have a huge number of new paying customers to digest and expand, and RPO was up 75% as well.

Revenue) of $126 million, up 50%
Remaining performance obligation (RPO) ) was $384 million, up 12% sequentially and up 75% yoy.
Current RPO) was 75% of total RPO.
Adj gross margin) was 78.1%.
Adj operating loss) was 4% of revenue, improved from 22% of revenue, a year ago.
Adj net loss) was 4% of revenue, improved from 18% of revenue a year ago.
Adj EPS) was minus 2 cents, improved from minus 6 cents yoy.
Op cash flow) was minus $8.8 million, compared to minus $8.6 million a year ago.
Free cash flow) was negative $23.5 million, or 19% of revenue, compared to negative $23.5 million, or 28% of revenue, a year ago
Cash) was $1,032 million.

In four weeks during October, November and December, Cloudflare announced a staggering number of exciting new products. For more on this, see Stocknovice’s post:… They haven’t slowed down this year either and continue to announce a massive number of new products and updates.

Conference Call
Our paying customer accounts grew to over 111,000 up 10% quarter-over-quarter and our strongest quarterly growth in several years. [This means they grew paying customers by 10,000 sequentially! That’s a net 10,000 additional paying customers!.. In a quarter!.. By comparison, last quarter they grew by “only” 4800. That’s amazing!]

Companies over $100,000) continues to be our strongest growth area adding 92 new customers in Q4 and bringing our total large customer account to 828. Revenue from these large customers increased sequentially to 49% of total revenue, up from 47% sequentially as our sales team continues to close larger and larger enterprise accounts.

As you look across customer segments by side, our large customer segment is growing the fastest. This is because of new logo wins and also because our land and expand motion is picking up steam. We saw initial evidence of this earlier in the year but are now seeing it reflected in lagging indicators like dollar-based net retention) which increased sequentially from 116% to 119% in Q4.
In particular we’re seeing more of our existing customers adopt Teams, our zero trust network security solution, as well as Magic Transit.

In April they announced a partnership with Nvidia to bring AI to the Edge. I don’t understand the tech significance at all, but from a business standpoint it sounds good.

Snowflake. It’s now a 13.2% position and in 4th place in my portfolio. Most of my purchases are currently underwater. I have been ambivalent about whether I should have such a large position, but after it announced Jan quarter results and fiscal year results in March, I decided that Snowflake is a powerhouse I have added instead of tapering.

Revenue up 117% and up 19% sequentially.
RPO up 213%, and up 40% sequentially. RPO was 6.8 times quarterly revenue, up from 5.8 times just a quarter ago
Free cash flow was positive 9% of revenue for the quarter.
For the TTM, free cash flow was -12% of revenue, up from -75% last year, and from -152% the year before that.
Net retention rate was 168%, up from 162% sequentially, and the highest I’ve ever seen.
For the TTM, Product Gross Margin was 69%, up from 63% a yr ago and 59% two yrs ago. This quarter it was 70%.
They have 77 customers with TTM product revenue over $1 million!!! Up from 41 customers a year ago.
Cash was more than $5 billion

I quit tapering after going through all this and started adding back at about $215. How could I not invest in a company with results like that?

Bear also pointed out in a great post that since they only charge when contracted usage is actually used, new customers don’t usually count in their revenue until six months later, so even their huge revenue growth, as shown, is an undercount in a way.

By the way, when they talk of Product Revenue, it seems roughly the equivalent of when a SaaS company gives Subscription Revenue. It excludes Service Revenue and other revenue like Interest Revenue, etc.

This is a VERY high confidence company, it’s its stock price that I’m not as confident about. But a company with huge fundamental growth like that will grow into and past its stock price.

Inari is in 5th place at 11.4% of my portfolio. I took an initial position in late December at $86.50 and built it up in early January, and added to it in February and March too. It’s now at $114. I wrote it up on the board on January 19th.… You should read the whole thread though as a number of people were very skeptical (as I usually am about any little biotech or biopharma), and you should definitely make your own decision about this company. Don’t buy it because I did! At any rate this is a company that is growing revenue over 140% per year (and up 20 times in two years), and revenue was up 28% sequentially this last quarter (reported in March). It has 92% gross margins, is profitable, turned cash flow positive, and has plenty of cash. I have a LOT of confidence in this company in the short and medium term. And it’s consistently had the most positive stock price growth in my portfolio so far this year.

Upstart was presented to the board in January by GauchoRico, but I didn’t have the courage to take a position then, seeing it as too small and too risky, but then when Bert Hochfeld also wrote it up and recommended it a couple of weeks ago I decided it was worth the risk.

(Bert’s article on Seeking Alpha is now public, and again if you are investing in growth stocks, you are out of your mind if you don’t subscribe to MF Stock Advisor and MF Rule Breakers, and to Bert’s newsletter TickerTarget. One recommendation from any one of them can make you 20 years of subscription costs. If you don’t believe that, my first purchase on Monday before last was at $92.20, and a little later in the morning at $91.40 (I had had the whole weekend to read Bert’s recommendation and research the company before buying that Monday. That’s what a subscription does for you :grinning:). Later that day it was already at $105, and it closed the month at $109, up 18% from my first purchases two weeks ago, after actually hitting an intraday peak of $123, which was up 33%. Here’s the story:

What does it do? Upstart has developed a cloud-based platform that evaluates applicants for unsecured personal loans based on a multitude of factors that are not taken into account by traditional FICO scores. It is based on AI and deep learning so that the more loans it writes, and the more payments that are made on those loans, the smarter it gets. It’s a bit like the way Crowdstrike benefits and learns from every attempt at a breach that it analyzes, and its subsequent skill and enhanced knowledge gives it a moat, as a potential competitor would have to start from scratch. It’s the first mover advantage, and Upstart figures it has an eight year headstart on any competitors, as far as collecting the data.

What are the advantages of using it? It benefits everyone. The bank gets to approve more loans, with a considerably lower loss ratio, the customer has his or her loan more likely to be approved, and at a lower interest rate, and Upstart collects a fee. It’s a combination of lower interest rates, higher approval rates, and higher net yields.

How about management? The three who co-founded it (two men and a woman) in 2012 came from management positions at Google, and are all still at Upstart. Sounds good to me.

How’s business? Revenue from 2017 to 2020 went (in millions) $57, $99, $164, $233 (quadrupling in three years, inspite of revenue getting killed in the “Covid quarter,” Q2 of 2020). For the year they are adjusted profitable (23 cents per share, up from 5 cents the year before), and adjusted EBITDA profitable (13.5% of revenue, up from 3.4% the year before.

Quarterly revenue really took off in 2019, and the last eight quarters look like this. (You can spot that Covid quarter a mile away):

**20   33   49   63**
**64   17   65   87** 

And they are guiding to $115 million this quarter, up 80% yoy and up 32% sequentially!!! And they certainly expect to beat guidance. Guidance for the full year 2021 is $500 million. That guidance is up 115% from 2020’s $233 million, and they certainly expect to raise that several times as well. Look, if they beat their first quarter guidance of $115 by $10 million, they will come in at $125 million and they will have a run rate of $500 million already! They imply that they are not counting growth in Prodigy in guidance (see below).

What’s new? They just acquired Prodigy Software, a facilitator of auto loans, which will multiply their TAM about five times, as auto loans are a market about five times as big as unsecured personal loans. They also just signed a new bank, First Financial Bank in Cincinnati, and then, just this Wednesday they announced they signed another new bank, Drummond Community Bank in Florida. They also noted that Drummond will be financing personal ”and auto” loans through the Upstart system, so it sounds like Upstart has already been integrating Prodigy.

How could I not invest in a company that is a first mover, making its own market with a highly automated cloud-based new technology which uses AI and deep learning? A company that is already profitable, and is guiding to 115% revenue growth for the 2021 year, which it is obvious that it will handily beat? And is moving into a new market that is five times as large!

ZoomInfo I got this one from Bert also. (Also now a public article on Seeking Alpha). There have been several threads on the board with posts pro and con. This company is using AI to try to automate Sales and Marketing, which is every B2B company’s largest, or close to largest, expense, by leasing ZoomInfo’s SaaS platform to ZoomInfo’s customers so that they can find the right customer companies for their own products, and the right person at each of those customer companies to contact. This will cut costs for ZoomInfo’s customer company, or give it more revenue for the same cost, which ought to be a compelling reason, and ROI, to use this software. The following is from one of my posts:

Last quarter it had revenue of $140 million, which was up 53% yoy. But here comes the interesting stuff: It had adj operating income of $63 million, which was 45% of revenue!!! Yes, 45% of revenue!!! Have you heard of any other companies with adjusted operating income at 45% of revenue??? And growing at 53%?

Its operating cash flow of $67 million was 48% of revenue! Yes, you heard me right! Its adj free cash flow of $77 million was 55% of revenue!!! That gave it a Rule of Forty of 53+55=108!!! Did you ever hear of a score on the Rule of Forty of 108? Or free cash flow at 55% of revenue?

For the full-year they had revenue of $477 million, up 62%. Its adj operating income of $226 million was 47% of revenue. That’s a lot of operating income.

Op cash flow of $170 million was 36% of revenue, and adj free cash flow of $244 million was 51% of revenue. (That’s a Rule of 40 of 113, and is positively indecent).

They closed the year with over 20,000 customers, including more than 850 customers over $100k.

Forrester Wave rated them highest in what they do. There are two axes with Current Offering going up and Stronger Strategy going right, so the idea is to be in the top right corner of the graph. Well on Current Offering they were a little higher than anyone else, which is good, but on Stronger Strategy they were way better than anyone else, with its dot right on the line which was the right hand edge of the graph. (I assume that designates a perfect score and I’m not sure I’ve ever seen that before).

They were named in 42 of G2’s GRID placements and were ranked Best in Class in 26 of them.

Their CEO was one of the founders, and was recognized in Fortune Magazines 40 Best CEO’s Under 40.

They also received a number of awards from Comparably, including Awards from Comparably: Best Sales Team, Best Engineering Team, Best Places to Work in Boston, Best Company Outlook, Best Company for Women, etc

Among their new or expansion logo customers they list Okta, SAP, Honeywell, Marathon Oil, etc, which are sophisticated, knowledgeable companies, and not little corner groceries. I was especially impressed to see Okta there.

The only softer point is that they only had an annual net retention rate of 108, presumably because they only had one platform which they sold up front. Now they have released more bells and whistles to their platform just released an entirely new companion platform for Recruiting.

Just this month they attained 2021 TrustArc General Data Protection Regulation, and California Consumer Privacy Act validations, showing that they treat data responsibly.

So to conclude: This is another company that is a first mover, making its own market with a cloud-based new technology that is changing an old way of doing things, attacking S&M expense, the largest expense item for many B2B companies, a company that is already very profitable, is using its data to move into a second market (recruiting), and last quarter had 53% revenue growth and 55% free cash flow margins.

Let me remind you first, that I have NO IDEA what our stocks will do next month. I’m terrible on predictions. But I know that the businesses of our companies will do just fine for the most part.

I feel that my portfolio is made up of a bunch of great companies. But that’s just my opinion, and I can’t say often enough that I’m not a techie and I don’t really understand what most of them actually do at all ! I just know what great results look like. I figure that if their customers clearly like them and keep buying their products in hugely increasing amounts, they must have something going for them and, as I’ve often said, I follow the money, the results. And I listen to smart people about the prospects of these companies.

When I take a regular position in a stock, it’s always with the idea of holding it indefinitely, or as long as circumstances
seem appropriate, and never with a price goal or with the idea of trying to make a few points and selling. I do, of course, eventually exit. Sometimes it’s after months, and sometimes after years, but I’m talking about what my intention is when I buy.

I do sometimes take a tiny position in a company to put it on my radar and get me to learn more about it. I’m not trying to trade it and make money on it, I’m just trying to decide if I want to keep it long term. If I do try out a stock in a small position and later decide that it’s not what I want, I sell it without hesitation, and I really don’t care whether I gain a dollar or lose one. I just sell out to put the money somewhere better. If I decide to keep it, I add to my position and build it into a regular position.

You should never try to just follow what I’m doing without making up your own mind about a stock. In these monthly summaries I’m giving you a static picture of where I am currently, but I may change my mind about a position during the month. In fact, I not infrequently do, and I make changes in the position. I usually don’t announce these changes until the end of the month, and if I’m busy or have some personal emergency I might not announce them even then. And besides, I sometimes make mistakes, even big ones! Don’t just follow me blindly! I’m an old guy and won’t be around forever. The key is to learn how to do this for yourself.

Since I began in 1989, my entire portfolio has grown enormously. If you are new to the board and want to find out how I did it, and how you can try to do it yourself, I’d suggest you read the Knowledgebase, which is a compilation of words of wisdom, and definitely worth reading (a couple of times) if you haven’t yet.

A link to the Knowledgebase is at the top of the Announcements panel that is on the right side of every page on this board.

For some additions to the Knowledgebase, bringing it up to date, I’d advise reading several other posts linked to on the panel, especially:

How I Pick a Company to Invest In,
Why My Investing Criteria Have Changed,
Why It Really is Different.
Illogical Investing Fallacies

I hope this has been helpful.



The only softer point is that they only had an annual net retention rate of 108, presumably because they only had one platform which they sold up front.

ZoomInfo’s NRR is also pushed down by its smaller customers, where there is more churn. It’s NRR among large customers is much better. From ZI’s S-1:

Our net annual retention rate for the years ended December 31, 2018 and 2019 was 102% and 109%, respectively. We realized improved net annual retention across all customer types, with a net annual retention rate for enterprise customers, defined as having 1,000 or more employees, of 127% in 2019, an increase from 125% in 2018. The net annual retention rate for mid-market customers, defined as having 100 to 999 employees, was 112% in 2019, as compared to 105% in 2018, and the net annual retention rate for small business customers, defined as having fewer than 100 employees, was 87% in 2019, as compared to 78% in 2018.





You say “Okta is now about 5% of my portfolio,” after that trimming summer-salt you performed. However, OKTA is not reflected in your total monthly portfolio allocation.

You missed the start of the summary for April. Okta was in the great ‘long tail’ selling event to reduce to just 7 companies.


The only softer point is that they only had an annual net retention rate of 108, presumably because they only had one platform which they sold up front.

ZoomInfo’s NRR is also pushed down by its smaller customers, where there is more churn. It’s NRR among large customers is much better.

Thanks Mike for pointing that out.


thanks for these updates & detailed explanation on the process of investing. It has been very helpful.

We always talk about percentage allocation in company, but what about the dollar amount.

Would you have conviction to invest 100 K in crowd, even if if 100 K amounts to 30 % of the portfolio.


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My understanding is one should not consider the dollar amount nor the price of a stock, only the percent it represents of the portfolio and the quality of the stock. Simple.


Hi Saul,

Thanks so much as usual for your detailed portfolio review.

You mention that you feel your returns this year should be on par or slightly below the growth rates of your companies.

I have been wondering, in your long experience, has there ever been a year where your stocks outperformed as much as 2020 ? And subsequently if not, do you feel it’s possible that even with their huge growth rate, they might have gotten ahead of themselves in terms of price ? For example, DDOG is an amazing company but has been trading sideways for a while.

I am genuinely curious to understand. I know you have focus on growth stock and gotten amazing results even in period (2000-2010) where they were out of favor; I wonder if the current situation isn’t one of a kind.

Many thanks from a 6 month old investor for all the knowledge you share !



Most of these stocks are priced to perfection. Which is normally ok with how strong the tailwinds in the cloud sector are and future market size/growth prospects, but if there is one little speedbump like DDOG had in Q2 of last year then you can see what happens. The stock entered a huge period of underperformance for almost a year now. Its been flat/down since last summer when the Nasdaq and Cloud ETFs are up 30-40% over that time.

The good news is the business seems to have recovered so the stock should do better during the rest of this year. Although that isn’t a guarantee as it still can’t seem to find buyers and has dropped 16% the past few days. Seems like a lot of people thought we saw the bottom in this sector, but looks like the wheels are starting to come off again. Pretty much all the COVID “winners” and high growth stocks(not businesses) have been in a bear market for ~5-6+ months now. The cybersecurity related stocks have been the outliers in terms of holding up ok.



Hi Bnh,

Thanks for your insightful answer. You mention our stocks are in bear marker since 5-6 months. My question was, Saul has managed to get excellent returns every year, even during bear markets for growth stocks, by picking excellent stocks. With the unprecedented 2020 run up, it is likely that even being in the best stocks might mean sideways movements for the year? And hence potentially a negative outlier after a hugely positive one last year :slight_smile:

ydrasil, I don’t attempt to be a market timer. I invest in the best and highest confidence companies that I can find and know that over any two to five year period I will outdo the market averages by a large amount.



PS - Market timing discussions are Off Topic for this board, where we discuss companies, not guesses about the market.


To those here trying to learn.
The post above this by Saul while short is one to bookmark to refer back to. 2-5 YEAR TIMEFRAME!
I’ve been reading Sauls posts since before there was a Saul board.
Following his portfolio since 2015.
There has always been big swings up and down but overall every year so far has been positive. If your in this type of investing you have to stick it out through the rough times. This is exactly what David Gardner tells investors.
The last 6 months have not been great but we just TRIPLED out portfolios in the last year and a half in the middle of a once in a century pandemic! Lets recap in 2-5 years and see how we are doing with these stocks