My Portfolio at the End of April 2022

MY PORTFOLIO AT THE END OF APR 2022

What an awful month, and awful start of the year. I just read that this was the worst first four months for the S&P since 1942. I explained in my end of March summary that on March 14 my portfolio hit a horrible bottom at 53.7% of where it started the year. It was down 46.3% ytd. However, just four days later it closed at 71.5% of where it started, down just 28.5% ytd. It had risen by a third, 33.1%, in four days! And that was about where it ended March.

Then, this month, in April, my portfolio continued up but topped out at 77.6% of where I had started (down 22.4%). It then started down again and tried very hard to pierce that previous bottom at 53.7%. There were closes at 59.2, 57.9, 57.8, 57.3, and closed this week at 56.4, but the Bear couldn’t get down to the mid March bottom.

Staying invested has been a winning plan for me. I long ago decided that it’s enough work to find and choose great companies without also having to guess when to get out and when to get back in, if you are trying to time the market. (You have to be right on both decisions!) You have to learn to live with these ups and downs. Trying to guess what the market is going to do is crazy-making, no matter what the market timers tell you.

MY RESULTS MONTH BY MONTH FOR 2022

Here’s a table of the monthly year-to-date progress of my portfolio for 2022.


**End of Jan 		-28.9%**
**End of Feb		-26.6%**
**End of Mar		-29.0%**
**End of Apr		-43.6%**

HOW DID THE INDEXES DO?

Here are the results year to date:

The S&P 500 (Large Cap)
Closed down 13.3% YTD. (It started the year at 4766 and is now at 4132).

The Russell 2000 (Small and Mid Cap)
Closed down 17.0% YTD. (It started the year at 2245 and is now at 1864).

The IJS ETF (The S&P 600 of Small Cap Value stocks)
Closed down 8.2% YTD. (It started the year at 104.5 and is now at 95.9)

The Dow (Very Large Cap)
Closed down 9.2% YTD. (It started the year at 36338 and is now at 32977).

The Nasdaq (Tech)
Closed down 21.2% (It started the year at 15645 and is now at 12335

These five indexes averaged down 13.8% ytd.

EARNINGS SEASON
Several companies that we have been interested in will be reporting in May, as far as I know. So far we have ZoomInfo on the 2nd, Amplitude on the 4th, Cloudflare, Bill, and Datadog all on the 5th, Upstart on the 9th, and Monday on the 16th. There may be others.

LAST THREE MONTHS REVIEW

February brought some MAJOR changes.. I took a new position in Bill after it announced earnings, and decided that I wanted a full position. I built it up into a 13% position, which grew by itself to a 16% position in 2nd place (behind Datadog), by the end of the month as other stock prices were falling and it wasn’t.

I also built my Cloudflare position from an 8.6% position at the end of Jan, to a 12.5% position at the end of Feb. Granted, that was my smallest position, but it’s a lot bigger than it was. I added lots to Monday in the mid $130’s when it sold off irrationally after earnings (it’s already bounced up $20 in less than a week from those purchases), and added to Zscaler, most at $213.20 when it did the same. I also added little bits to Sentinel and Snowflake when I had a chance, and trimmed some bits from DataDog when it got too much over 20% of my portfolio. (Don’t worry, it’s still at 20.9% in spite of the trims).

Where did I get the money for all those purchases? Well I sold out of my little Upstart position and never looked back. I felt a sense of relief. I know it will probably do quite well, but I just couldn’t take the total uncertainty each quarter, and simply not knowing what the f— was going on in a complicated, complicated, business. It’s just me. I had companies that I could have much more confidence in. I also sold probably half of my little Amplitude position before earnings, for money to pay for Bill, and sold the rest after earnings. It’s gone. As I said for Upstart, Amplitude may do very well, but I had companies that I could be much more confident in. And finally, I sold out of ZoomInfo after earnings to build up my Bill and add to Monday, Zscaler, Cloudflare, Sentinel, and Snowflake. No special reason to sell ZoomInfo except that in times of trouble I like to be in my highest confidence positions, and in a smaller number of them. It’s another that may do just fine, but… well you know the song.

March While March was far from quiet as far as a sharp selloff in the first half of the month, and a sharp bounce back in the next two weeks, it was another quiet month as far as my portfolio. I still had the same high confidence seven positions and hadn’t added any new ones or sold out of any, and at the end of the month they were all seven in the same price range. I did trim Datadog, which was down less than the others, for cash to bring the others into line.

April was an awful month in the market, and I made some changes in my portfolio as well. I took back a 2.3% position in Crowdstrike, feeling it had a huge tailwind with all the worries about hacking. I also took a 7.2% position in MongoDB, feeling that Atlas was finally coming into its own and revenue growth would continue to rise. I took a 1% position in Upstart, but couldn’t manage to hold on to it, feeling I had no way to predict what the numbers would be, which was so completely different from my other positions. It may do just wonderfully, and I hope it does for all the board members who are still in it, but after a couple of weeks I sold it back to add to Mongo. I trimmed more of Monday than anything else to buy the Mongo, with probably Snowflake in 2nd place, but these are still 9.4% and 10.8% positions. I probably trimmed the Monday for cash because most of my other companies are dominant in their fields but Monday, although growing very fast, has lots of would-be peers.

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 may not do another update until the end of next month. Make your own decisions. Don’t just follow mine. I make mistakes at times! Guaranteed!

HOW THE INDIVIDUAL STOCKS HAVE DONE YTD

Here’s how my current positions have done so far in 2022. 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 almost always higher than my starting price.

Please remember that these starting prices are from the beginning of 2022, and NOT from when I originally bought them if I bought them in earlier years. (For instance, I bought Cloudflare in July of 2020 at $34.97, but it’s listed below as starting at $131.50, because that was its price at the start of this year)


**Mongo from 387.16 to 354.93		down 	   8.3%   New in Apr**
**Crowd from 231.39 to 198.76		down      14.1%   New in Apr** 
**Bill from 226.25 to 170.71		down	  24.5%   New in Feb**
**DataDog from 178.11 to 120.78    	down	  32.2%** 
**Sentinel from 50.49 to 33.27		down	  34.1%**
**Cloudflare from 131.50 to 86.14	        down	  34.5%**
**Zscaler from 321.33 to 202.74		down	  36.9%**
**Snowflake from 338.75 to 171.44   	down	  49.4%**
**Monday from 308.72 to 129.40		down	  58.1%**

All in all, it’s a really ugly picture.

POSITION SIZES

With the addition of Crowd and Mongo, I now have nine positions which is a comfortable number for me. Here they are in order of position size, and bunched by size groups.

**.** 

**Datadog			17.8%**
**Bill			16.8%**

**Sentinel		14.5%**
**Zscaler			14.5%**
**Cloudflare		13.2%**

**Snowflake		10.8%**
**Monday			 9.4%**
**Mongo			 7.2%**

**Crowdstrike		 2.3%**

COMPANY REVIEWS

Please note that when I discuss company results, I almost always use the adjusted values that the companies give. I’m going to discuss them in alphabetical order.

Bill.com (BILL) is a leading provider of cloud-based software that simplifies, digitizes, and automates complex back-office financial operations for small and midsize businesses (SMBs). It also has begun collecting transaction fees on helping the customer companies pay and collect bills. It has made two small acquisitions which have jet propelled it. I was afraid of it at first because it sounded like a complicated story, and tied to the economy, but their last quarter results were so incredible that I cast doubts aside. Here’s enough to get you interested

Results of Dec quarter

EPS of breakeven beat by 18 cents
Revenue of $156 million beat by $25 million

Total Revenue of 156.5 million, up 190% yoy!!!

Core Revenue of $155.5 million up 197% yoy!!! (Consists of Subscription and Transaction Revenues)
Organic Core Revenue was $97 million, up 85% yoy

Subscription fees were $49 million, up a measly 85%. Subscription fees are becoming a smaller and smaller part of their revenue as Transaction fees are twice as large and growing more than twice as fast.

Organic subscription fees were $40 million, up 51%.

Transaction fees were $106 million, up 313%!!!
Organic transaction fees were $57 million, up 121%!!!

Divvy spend management revenue was up 188%!!!

There’s plenty more of course but that should get you interested and enable you to see why I built up my position so fast

**Cloudflare (NET)**had been a star of my portfolio, almost sextupling, at one point, since I first bought it in 2020. I had been saying that I didn’t understand why it was going up like that. It’s growing revenue steadily at 50% and accelerating to a little more, which is certainly a great rate of revenue growth, but it is slower growth than my other positions.

So what was pushing the price up? I suspect that there were two issues.

First was that they were putting out new products and enhancements to older products at a rate that has rarely been seen before, and the thesis is that this will enable high growth to continue for many more years than currently expected.

The second issue was a perception that this company is on its way to both become a fourth cloud (along with AWS, Azure, and Google). :grinning:. The people pushing the stock up, with what must have been massive buys, obviously believed it.

Well in December the price rise finally ended, in conjunction with the pull back in all the high growth software companies, and the stock price collapsed. It remains a great company and I have no plans to exit it.

And now we just learned that Cloudflare will power the new Microsoft VPN – “Microsoft Edge Secure Network” feature, which provides data encryption and prevents online tracking, courtesy of Cloudflare.”

DataDog posted outstanding December quarter results.

Revenue growth was up 84% and accelerated from up 75% in the September quarter, and from up 67% in the June quarter, which in turn had accelerated from up 51% in the March quarter.

Operating cash flow was $116 million, up from $67 million sequentially, and up from $24 million a year ago.

Free cash flow was $107 million, up from $17 million a year ago.

NRR was over 130% for the 18th quarter in a row
They are doing just fine.

Announced FedRAMP Authorization at the moderate impact level.

Announced a global strategic partnership with AWS.

Announced the launch of Sensitive Data Scanner which provides their customers with an easy way to detect, classify and protect sensitive data found in their application logs.

Achieved the AWS Graviton Ready designation.

Achieved AWS Migration & Modernization Competency status for AWS Partners.

Announced integration with Confluent. Users running Confluent Cloud, can now use Datadog to monitor their Confluent Cloud resources alongside the rest of their technology stack.
Launched the general availability of Application Security Monitoring “to break down silos between security and operations teams”

Monday AGAIN had an excellent quarter. They help people work together and cooperate, and yes, I know that there are lots of other companies in that field, but none that I know of growing revenue at 91%.

The number of enterprise customers over $50,000 was 793, up 200% from 264 a year ago. That’s not a misprint! … 793 up from 264 are the real numbers. I personally have never seen any company grow enterprise customers at 200% yoy! And it’s not a fluke, they’ve been growing those cusotomers at 200% or more for at least the last eight quarters.

NRR for customers with more than 10 employees was 135%, up from 130% in Sept, which in turn was up from 125% in June and 121% in March.

Adjusted gross margins topped 90%.

They seem to be rapidly moving towards profitabilty with Adj Operating Margins coming in at minus 10%, greatly improved from minus 47% a year ago.

On this glorious report they dropped about 34%!? Can you believe it! I bought a bunch, and it bounced, but now is down again, almost to the bottom.

There’s lots more good stuff, but I’ll let you research the rest.

Mongo seems to have finally broken through. Its SaaS component is now 58% of revenue, and is growing much faster than its older hybrid version. For a long time I had avoided buying any “open source software” company for twomreasons:

First, because anyone could (and did) copy what you had done, and release their own identical, or near identical, version (ie Amazon released its own version of Mongo’s software solution, and tried to copy every improvement).

Secondly, because the managements of “open source” companies’ seemed like part of a idealistic cult, who were much more interested in keeping on good terms with other open source developers than making money for stockholders, who came in last in their list of priorities. (Please take into account that this is just my biased opinion, and don’t bother sending me outraged emails telling me how wonderful open source is for the world).

Well Mongo broke out of this two or three years ago when they realized that Amazon would just keep copying every advance they made, and decided to copyright/patent their new advances from then on, to some outrage from the open source community. Well Amazon had to stop copying them and Amazon’s copied software product is now still okay, but way outdated compared to Mongo’s latest.

And secondly, Mongo broke away from its legacy product for on-premise, and released its SaaS version for the Cloud, which has been growing by leaps and bounds and is now, as I mentioned above, well more than half of revenue and growing much faster than the company as a whole.

Thirdly, the recent move by mainline companies to move part of their businesses to the cloud is a major tailwind for Atlas.

And finally, as Peter Offringa pointed out, the hyperscalers like AWS, azure, and Google, have decided within the last year to quit fighting the software companies like Mongo, and partner with them instead.

Mongo’s revenue growth has thus really accelerated in the past year and should continue to do so for the immediate future at least. Here is some summary data from Mekong’s post with some commentary from me:

Year over year growth

Q3 21 +38%
Q4 21 +38%
Q1 22 +39%
Q2 22 +44%
Q3 22 +50%
Q4 22 +56% (Q and fiscal year 2022 ended Jan 31, 2022).

You can also see that the growth rate, after being stable at 38% or 39% for several quarters, went to 56% in three quarters!

You can also see that Q1 growth yoy remained stable although sequentially (see below) it was up only 6%. The yoy stability came because Q1 the year before, and the year before that, were seaonally low sequentially too.

Sequential growth

Q3 21 +9%
Q4 21 +13%
Q1 22 +6% (April Q is seasonally light)
Q2 22 +9%
Q3 22 +14%
Q4 22 +17%

Sequential dollar increases:

Q3 21 +12m
Q4 21 +20m
Q1 22 +10m
Q2 22 +17m
Q3 22 +28m
Q4 22 +39m

This tells us clearly that we should expect Q1 23 (which will be the next quarter announced), to be lower sequentially too, and if it sells off because of that it will be a buying opportunity (but they won’t be announcing results probably until early June (it’s the April quarter).

At any rate, I have taken a good sized position, limited by not having more cash and having to sell something to buy it.

SentinelOne Well there have been so many posts on Sentinel that I won’t go into great detail, but merely say that they had an excellent quarter, even if they didn’t duplicate the absolute blowout of the October quarter. Here are some of the numbers from the most recent quarter:

Revenue was $66 million, up 119% from $30 million yoy

Revenue growth progress for the last seven quarters has been yoy growth of 96%, 103%, 97%, 108%, 121%, 127%, and now 119%. The most recent 119% was accelerating from 97% a year ago. The Jan quarter seems to be lower growth than the October or April quarter. We shall see.

Annualized recurring revenue (ARR) was up 123% to $292 million from $131 million a year ago.

Total customer count grew more than 70% yoy from 3,900 to over 6,700 customers, adding 700 this quarter.

Customers with ARR over $100K grew 137% yoy to 520 from 219 a year ago. They added 104 sequentially while a year ago they only added 46.

Dollar-based net revenue retention rate was 129%, up from 117% a year ago.

Adj gross margin was 66%, up from 54% a year ago

Adj operating margin was minus 66% of revenue, improved from minus 104% a year ago. Not only that but the last four quarters the Adj op margin has been -127%, -98%, -69%, and -66. Clearly improving.

• Free Cash Flow Margins went from minus 86% to minus 11% yoy, and from minus 38% to minus 11% sequentially

Cash was $1.7 billion so they are clearly not going to run out of money

They had multiple significant announcements since January:

First, they increased their integration and partnership with AWS (Amazon Web Services).

Second, they announced that KPMG utilizes SentinelOne for cyber incident response services. “KPMG’s Cyber Response Services team, which has been involved in many of the most high-profile breaches worldwide, will use Sentinel’s Singularity XDR platform to accelerate investigations and response to cyberattacks”.

Thirdly, Barracuda Networks, who protects over 200,000 global customers, “selected Sentinel’s Singularity XDR platform to help MSPs prevent, detect, and autonomously respond to threats at machine speed with AI-powered XDR”.

Fourthly, they integrated with Mimecast to improve security for emails (as far as I can tell)

Fifthly, they integrated with Zscaler, simplifying XDR and Zero Trust adoption

Sixth, they launched DataSet, a “revolutionary” live enterprise data platform, which leverages cybersecurity data expertise to help enterprises ingest, store, and understand real time data at scale – beyond cybersecurity use cases.

Seventh, their new modules are growing “phenomenally” (over 10x yoy, although granted, they are still small).

Eighth, Mandiant selected Sentinel as a global go-to-market partner. Mandiant is one of the world’s leading Incident Response (IR) firms “and this strategic alliance brings the best of both worlds to our joint customers – top incident response consultants leveraging the best-in-class XDR platform.

Ninth, they acquired Attiva in March.

Tenth, they announced how three specialized cybersecurity companies Artic Wolf, LogRhythm and Noetic Cyber, were using the Singularity marketplace to offer new products using Sentinel’s software (as I understand it, anyway).

Eleventh, they announced that Arete’s team of elite cybersecurity and digital forensics experts have investigated some of the most complex breaches worldwide. Arete deploys Sentinel’s Singularity XDR platform and Sentinel’s Storyline Active Response technology in incident response cases, and has resolved more than 2000 cases using Sentinel. As a result, breached organizations are back to business 4X faster than industry standards.

Snowflake Had excellent results but there were things you had to understand. Here are some of the results:

Total revenue of $384 million, up 101.5%, but up only 15% sequentially. (How can you really be dissatisfied with a company growing revenue over 100%)
Product revenue of $360 million, up 102%
Adj Prod Revenue Gross Margin was 75%
RPO of $2.6 billion, up 99% yoy. This is 7.2 TIMES the current quarterly product revenue!!!
Total customers were 5944
Customers over $1 million were 184, up 139% yoy from 77, and up 24% sequentially from 148.
Net revenue retention rate of 178% !!! (actually accelerating both yoy and sequentially).
Op Margin was 5%. They hit positive 2.5% last quarter for the first time.
Op Cash Flow was $80 million
Op Cash Flow Margin was 21% of revenue
Adj Free Cash Flow was $102 million or 27% of Revenue !!! Just look at those numbers.

They did say that they improved their computing so that their customers can do more analysis in the same time and they are passing that gain on to their customers (to encourage them to move more and more data to Snowflake). This will somewhat hold back gains for the coming year, but hopefully increase them for future years

In Jan they announced support for ITAR (Gov’t) Compliance on Microsoft Azure Government and on AWS GovCloud. I’m not sure what it means but it has to be good news.

In March they also launched their Health Care and Life Sciences Data Cloud as well as their Retail Data Cloud.

They also partnered with Blue Yonder, and extended their relationship with AWS.

They also announced that they maintained a perfect recommend score for the fifth consecutive year. 100% of Snowflake customer survey participants said they would recommend Snowflake to other organizations.

It is best in class for virtually all product measures including scalability, usability, ease of installation, ease of administration, customization, and extensibility, and ease of upgrade/migration to new version. It maintains a perfect Recommend score,” said Howard Dresner, founder and CRO at Dresner Advisory Services.

And finally, Informatica an enterprise cloud data management leader, announced an expanded partnership with Snowflake. The companies plan to deepen integration between the Data Cloud and Informatica’s Intelligent Data Management Cloud (IDMC) to help accelerate customers’ move to the cloud with extended data management and data governance capabilities.

The partnership will provide integrations to Snowflake’s native governance features via Informatica’s Cloud Data Governance and Catalog service. Key benefits for customers include providing a single “pane of glass” view into data governance, streamlined access controls, and end-to-end lineage across the enterprise.

I can best summarize all this with an excerpt from a great post by Poleeko :

“I parsed through the actual KPIs for the company, listened to the call, reviewed the financials, and tried to decipher and deduce the actual future performance of the company by looking at their other key “future” growth predictors and indicators to see how they might actually do going forward. Is the company falling apart? Are there red flags? Fraud? Losing market share? Sitting on their laurels? Proven slow down (not just sandbagged guidance)? Customers running away. Lower NRR?

No. No. No. No. No. No & No. Folks, you are free to disagree, but I feel SNOW is still a phenomenal company, growing faster than almost any other company out there at this size, with an amazing management team, expansive greenfield pastures to keep growing, a relatively strong moat, incredible growth and impressive FCF (and reaching their FCF goals much earlier than they guided).

Are they expensive…dang right and should be! But this is definitely not a company that I feel deserves a 30% stock price haircut (after hours today). Yes, of course, it is eventually a certainty that a company this size will start to slow down from a blistering 106% growth shown this year, but its also possible and even probable that they can and will continue to surprise us over the next few quarters and years when I consider the exponential explosion of information, data analysis, and data sharing, along with today’s extremely conservative guidance that deserves little credence.”

I see yet another great quarter and no detrimental landmines at this time to their business model. Strong FCF (and earlier than they predicted), the largest bookings in Q4 of any quarter EVER (so much so that Slootman had to warn us on the call that FCF in Q1 would be huge), seven new $30m deals signed in the quarter, NRR of 178%, the purchase of Streamlit this quarter (1.5m new apps already build on SNOW’s platform), 99% growth in RPOs, the announcement of a KPMG partnership, additional $1.2b in bookings primarily from AWS partnership and Azure co-sellers. Then there is international expansion into India, Brazil, Asia & Europe as they go after the Global 2000 largest companies, the supreme confidence expressed by Frank Slootman…and…and…and… I saw no reason to panic sell my investment in the company after hours today. I strive to invest long term with an eye towards holding for 1-5 years or more in great companies that are leading the digital transformation.”

Thank you Poleeko!

Zscaler is the big daddy of the Zero Trust cloud-native security companies. It had excellent Jan quarter results, at the end of February. It grew revenue at 63%, its highest rate of growth in years, so it sold off of course. I added to my position. Let me point out that they have enormous tailwinds with this war in the Ukraine and our government warning of the the possibility of Russian cyber attacks. Remaining Performance Obligations (RPO) were $1.95 billion, which for them also means that they already have 7.6 TIMES this quarter’s revenue already on the books for the future. A worry seemed to be that their sequential growth was light, but Muji pointed out that it’s always light this quarter:

“But this is the 3rd year in a row that Q2 has been the lightest on QoQ growth. Mgmt has always pointed out how Q1 is seasonally lightest of bookings, having had 25% sequential drops every year. This then leads Q2 to be the seasonally weakest QoQ for revenue growth. “

SOME THOUGHTS ABOUT THE GROWTH OF OUR BOARD

We started our current investing spurt in the beginning of 2017, about five years ago.

When you sign on to the board you’ll see in the middle of the screen a little icon that says “<< 7 days >>” click on it down to where it says “365 days”, and go back 5 years (5 clicks). Back then our board was a twentieth of the size it is now, at most. The first page I came to had a total of 45 recs on an entire page of 20 posts, or an average of a little over two recs per post. A post with 25 recs was unusual, 50 was uncommon, and 100 was really rare. We also had many fewer posts each day.

As an example, until just a few months ago we had NEVER, EVER, had a post with more recs than the high 300’s. Yet earlier this year I had a ordinary post, just a post about what I had done about a stock, that had over 660 recs. That is crazy!

Our success has flooded us with new posters and readers (that’s you, most likely), so you can see we have to limit our posts to meaningful ones to avoid flooding the board and destroying it. I may at times seem arbitrary in deleting posts but that’s why it’s necessary.

Thanks for your cooperation

FINISHING UP
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. First of all, you may have a completely different financial picture than I have. Different age, different income, different assets, different debts, different expenses, different financial and family responsibilities, etc.

Besides, 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.

THE KNOWLEDGEBASE
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 my “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.

Saul

264 Likes

Saul end of oct 21 u had 182.8
you ended 2021 with 139.6

now you are 56.4 of 139.6 so 78.73 → 56.9% drawdown from end of oct 21.

did I get this right? I am sure this is tough time for everyone especially someone like me who started with this group last year with less cushion to give back.

the reason I did calculation is to see how I did relative to you. my performance from nov 9 high is about -55%.

ARKK performance in same period -62.6%
CLOU performance in same period -40.2%
MPEGX performance in same period -67.8% (this is institutional grade fund for growth going back to 90s)

Hope this makes someone feel better around here.

6 Likes

Hi Saul,
To piggyback onto what Stryker just wrote…
I meant to include this in the Begining of my Portfolio Summary this month. It doesn’t seem right to post again; but, I really feel lucky to have met you and well…

I’m just a working husband and father that was lucky enough to find Saul’s Board and be that guy able to take full advantage of his generosity in sharing his method. I apparently have a risk profile and a conviction in Saul’s reasoning, as it applies to investing in Hypergrowth Companies, that many do not. I believe myself to have been convinced more by the clarity and transparency of his method than his unsurpassed results. So, when share prices decline I’m not much phased by it. Since November 2, 2021, I’m down 56%. With all the companies in my portfolio performing as well as they are and this share price pullback, I feel great. If Global Pandemic and Putin going to War with the world hasn’t derailed Revenue growth more than it has, I don’t think I need to worry at all. I’ve never been more confident going into an Earnings Season :grin:.

Thanks Saul😊

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Indeed, it has been quite the journey holding these SaaS picks over the last sixteen months. I put together a chart based on the picks Saul posts monthly, but holding an equal weight of them. What the chart shows is the running return (ROI) from 1/1/2021 to present, as well as the maximum drop from the highest high over the previous twelve months.

  • The absolute largest maximum drop was -58.33% on 3/14/2022.
  • The drop from the highest value reached in the past twelve months is -52.32% to last Friday.
  • The maximum ROI from 1/1/2021 was reached on 11/9/2021 with a gain of 68.35%.
  • The ROI from 1/1/2021 to last Friday is -19.72%.

Key point: We love to anchor to the highest high and see our present drawdowns in terms of that high. But is that fair? A portfolio of these SaaS companies hit a high of 68.35% on 11/9 last year. Compared to all indexes this was massively higher. The Nasdaq Composite has a return over this period of -4.30%, while the Nasdaq 100 has a return of -0.26%. The S&P 500 is 10.01%, while the Dow is 7.75%. So yes, a loss of nearly twenty percent is not great compared to a gain of ten percent. But when these SaaS companies had a gain of 68.35% the S&P 500 had a gain of 24.74%!

https://zeelotes.org/SaaS_Journey.PNG

A study of the peaks and troughs in this portfolio is interesting. This is based on finding all moves of twenty percent or more.

**Trough     ROI      Peak        ROI      Trough**
*1/1/2020    32.78%  2/19/2020* -37.11%  3/16/2020
3/16/2020  187.95%  8/3/2020    -20.59%  8/11/2020
8/11/2020   61.08%  10/13/2020  -23.12%  11/2/2020
11/2/2020   36.85%  2/12/2021   -28.09%  3/8/2021
3/8/2021    25.20%  4/26/2021   -21.84%  5/13/2021
5/13/2021  104.15%  11/9/2021   -49.83%  1/27/2022
1/27/2022   30.85%  2/16/2022   -36.52%  3/14/2022
3/14/2022   43.09%  *4/4/2022    -20.03%* 4/29/2022

This portfolio has been moving up 73.50% of the time, and moving down 26.5% of the time since 2020 began. So although it “feels” horrible holding on to these stocks, in actual fact, it is in bull mode a whole lot more than it is in bear mode. The average increase during its bull moves is 65.24%, while its average drop during its bear moves is -29.64% - a bit less than half. If you are going to get on a roller coaster you cannot expect to avoid sudden drops and sudden pops. It is just part of the journey!

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“This portfolio has been moving up 73.50% of the time, and moving down 26.5% of the time since 2020 began. So although it “feels” horrible holding on to these stocks, in actual fact, it is in bull mode a whole lot more than it is in bear mode. The average increase during its bull moves is 65.24%, while its average drop during its bear moves is -29.64% - a bit less than half. If you are going to get on a roller coaster you cannot expect to avoid sudden drops and sudden pops. It is just part of the journey!”

As a person that’s been adding on any big down day since December, realizing that with the cash I had in November and the cash I added in January, I could have been sitting on plus 50% cash now, but I felt that would be a mistake. So I hedged slowly in and am now about 19% cash. In hindsight, or course I wish I had waited, but timing the market is impossible.

Your post misses one very important point. We are on a different roller coaster now. That other one, it’s theme ride was easy money policy and a very friendly fed. That was Snow White. This one we are on now, it’s theme is fed tightening, inflation, with a war in Eastern Europe as an added side plot.

We haven’t had the bounce back that most all of us expected, as if we were still on that more market friendly roller coaster. I’ve realized in reality where we are at, and I have no idea how long it will take for the market to get clear of this cycle. I’m fully aware that we aren’t in Kansas any longer, just look at today’s pathetic bounce after a massive Friday selloff and the worst month since 2008.

I’ll keep slowly and stubbornly adding on down days, but to think that we are on the same rollercoaster, or playing field, or market conditions that we were from 2017 to 2021, and use that as comparison to now, I think we may have to be a lot more patient and ready for lower lows before we get out of this mess.

TMB

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