Portfolio Update 11/16/19 as of 8AM.
It’s been a month since I posted my October portfolio update found here; https://discussion.fool.com/october-portfolio-updatethoughts-343…
I have found doing these updates is helping me keep better records of my investing thought processes over time. Much like keeping a journal in life when you re-read in the future it helps you remember what your thoughts were at the time of writing. Hopefully others find this helpful as well.
My portfolio monies are NOT all in tax free accounts any longer. Thus I do have to worry about tax consequences of my trading actions for a percentage of my portfolio. So far this as not been an influence on my investing style.
Current Portfolio as of 11/16/19.
Change since 10/13/19 -9.7%.
2019 YTD +16.9%. S&P 500 +25.2% Nasdaq +30.6% Dow +11.3%
Stock Current % of Port % Change Market
% of Port on 10/13 in port since 9/15 Cap
AYX 29.2 27.6 +1.6 +6.3B
ZS 20.0 19.1 +0.9 +5.7B
ESTC 18.2 13.5 +4.7 +5.8B
MDB 14.8 13.9 +0.9 +7.4B
ZM 12.4 2.9 +9.5 +18.3B
CRWD 5.4 4.5 +0.9 +13.0B
TWLO 0 12.6 -12.6
CASH 0 5.8 -5.8
New positions since last portfolio update: NONE
Exited positions since last update: TWLO
Trades between 10/13-11/16
Bought ESTC 10/22 $69.42
ESTC 11/1 $71.73
ZM 11/4 $70.26
AYX 11/4 $99.24
Sold TWLO 11/1 $96.50
Thoughts on trades and companies for the month.
Last time I held a zero cash position in my portfolio was on 12/22/18, which turned out to be the very bottom of the market at the time. I had gone cash between 10/11/18 to 11/22/18 which can be verified here: https://discussion.fool.com/november-portfolio-update-and-though…. It turned out to be a few weeks early on deploying all my cash reserves but as many know and preach timing the market is near impossible.
So of course I am going to stick my neck out on a limb and say I believe we are near bottom for our growth stocks. Now I could be a few weeks early, but better than being a few weeks late (or of course I could be completely wrong). My portfolio definitely not doing as well as many on these boards. When I compare to the Dow, S&P and Nasdaq I am lagging. Last year about this time I was at 21.8%, now currently this year I am at 16.9%. I have not lost faith in my companies, I believe I am positioned to out gain the indices going forward.
Part of my under performance can be attributed to some inherited monies I received earlier in summer. It increased my cash holdings to level where I wanted to deploy my capital. I like holding cash when I think markets are frothy but I also do not like holding too much cash as one never knows what markets may do. I bought some significant positions in some of these companies during the start of their price fall.
I also need to obviously look at some of my decisions. I was starting to worry about TWLO in June, but then I read a post by Bert that changed my outlook, instead of just holding or reducing like I had been thinking, I bought more in July. That turned out to be a mistake, but instead of holding after the downturn I decided to move on. I am not concerned by my portfolios current under performance because I have many years of experience and understand that these ebbs and flows are part of investing.
Number one holding AYX 29.2%. What’s to say, everyone on the board believes it a great company with great numbers. If someone disagrees with that statement please chime in as I have a LOT of money invested in the company and would love to hear different opinions. I have seriously considered increasing my position however at ~30% of my portfolio its already the dominant company. I obviously believe this company has a great opportunity to appreciate in value from here. I would like to see them develop a cloud presence.
Number two holding ZS 20%. This is a company that everyone does not agree on. Saul reduced his position in the company as did many others due to a predicted slow down in sales. Zscaler hired Dali Rajic for CRO what looks to me to be a great addition to their company. I believe the search was over a year (that in itself is amazingly patient!). Gotta believe they got that correct based on what I have read. Is this stock going to take off soon? Most likely not. However my personal belief is this stock/company is the most special of any in my portfolio. I believe the technology and talent is above their peers. I think this will be a much, much larger company in the future. I see holding this stock for a very long time as long as its market opportunity plays out as I currently believe it will.
Number three holding ESTC. Lots of debate on the boards on this one lately. I have to say it has forced me to re-review my conviction in the stock/company. The open source software does give me some concern. However after reviewing; customer count keeps improving and revenue growth the same. They are burning thru more cash, however they have been doing a lot of hiring. Number one expense in a growing company is acquiring talent.
Why I am personally going to stick with ESTC until this next earnings call in a few weeks (also is why I believe it has the most opportunity of any of the stocks this board follows to increase in price the next few weeks). I think next they lose the y/y headwind. From the Q1 earnings call transcript;
Tyler Radke – Citi – Analyst
Great. And then maybe a follow-up, as we think about the guidance for next year, maybe just help us understand your expectations for the SaaS revenue business. I know you made some changes with the warm-hot architecture, which I think offered more favorable pricing to customers based on their memory usage. But just help us understand the context of that as we think about the growth in that line for next year.
Janesh Moorjani – Chief Financial Officer
Hey, so this is Janesh. Happy to do that. Overall, we remain very bullish about the SaaS opportunity that we see ahead of us. You’ll see that for the past few quarters, our SaaS business has continued to grow faster than the self-managed business.
Broadly, I’d say we’d expect that trend to continue in the future. We don’t do anything that tries to influence customer behavior one way or another. We are relatively agnostic when it comes to customer preference in that regard. And so we’ll continue to serve the customer in the best way that makes sense for them, but we do expect that that business will grow a little bit faster than what we’ve seen before.
The other piece I’ll just take the opportunity here to point out is that we made the architecture changes that you talked about around three quarters ago. And in conjunction with that, we had launched our revised pricing model. And so we’ve still got one quarter of that pricing headwind to go before we lap that at the start of Q2 of this fiscal.
Number four holding MDB 14.8%. This really is all about what others hear are saying about the move to NonSQL and this being the most popular database to go with. The Atlas numbers show its popularity and strengh. It is not nearly as high of a conviction stock as the first three. If I thought I had better places for the money, I would reduce the size of my position.
Number five holding ZM 12.4%. Profitablity combined with growth. What not to like? Valuation possibly. I am not sure it has the greatest chance of appreciation in my portfolio currently. However I see ZM as company of the future. I had mentioned before the IPO I was interested in it because it has customer evanglism. I have had multiple people tell me to set up ZM for a busiess meeting. That kind of thing makes me take note of potenital investment opportunity.
Number six holding CRWD 5.4%. Obviously not my highest conviction. Mostly going on what others on this board are saying about the company. I could easily see me selling out of this position in near future if I felt I had better opportunities elsewhere.
Hope everyone has a great Thanksgiving. I personally am thankful to all that contribute to this board!
As always any suggestions or questions feel free to email me.