Hi Saul,
First of all, I completely agree with the overwhelming support for the continued detailed monthly returns you graciously provide. As has been stated, the numbers may be “preposterous” but they are reality. And while you have “proved your point”, it is still a good measuring stick for others to compare to as we explore other ideas (which may vary from your concepts) in our search for the next idea. Having that short & long term measuring stick helps us gauge the validity of new ideas. Some day the SaaS type high growth stocks may run their course and we will have to debate the next sector of high growth (as you yourself also continue to look at other ideas).
Thank you for the explanation re Docusign. I too have thought about this but have chosen to hold onto my Docusign for now – though it is only ~6% of my “Saul Portfolio” (vs say CRWD which is 16%).
My reasoning is based on the following data points (some empirical):
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Growth rate – while slower, still guided to 42% Q2/Q2 and 40% YoY. BUT … they beat guidance for the past 8 quarters, usually significantly. Based on the average beat, they would have ~46% growth for both Q2 QoQ and YoY. Not in the range of some of the other stocks here, but nicely above the 40% cut line I tend to use.
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Continued increasing non-Gaap income per share (0.12, 0.17, 0.22, 0.37, 0.44) and GM (74%, 76%, 78%, 80%*) – a strong indication that the continued growth is being combined with a more efficient operation – sign of healthy business. While a primary focus is on growth rates here – being an old school investor I tend take a liking to companies with high growth rates AND increasing profits & margins.
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While still mainly a “one-trick-pony” there are still races for this pony to win. One example, the companies I work with (tech/semi industries) are on mixed levels of using digital signing – some have highly adopted, while others (mine included) are early in the process of adoption. The $6XM multi-year contract I closed last year was signed by the customer with Docusign, but we still signed and scanned the pdf.
Plus there are industries that are still quite manual – such as the mortgage industry here in CA.
And you mentioned international arena. Yes, there are a limited number of people in the world that need digital signing, but the people (and companies) that benefit from this capability are also the ones that spend money. And I believe there is more TAM available here - more pasture for this pony.
Yes, there are other great stocks here and if I narrowed down to 8 (as you have) DOCU might not make the cut. But with 11 stocks currently in my “Saul portfolio”, I am keeping DOCU for now and giving some room for this pony to run.
That said, your YTD results are better than mine - and maybe my reasoning for keeping DOCU is related to that ;).
Thanks again,
Jeff
aka borngiantsfan
Now I am heading to the ballpark to watch the Giants beat the Brewers!