Portfolio Update 8/15

Investment Analysis Clubs Saul’s Investing Discussions
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Portfolio Update 8/15/19 as of 10PM.

It’s been a month since I posted my July portfolio update found here; https://discussion.fool.com/portfolio-update-714-34250270.aspx
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 all in tax free accounts; Roth IRA, HSA, ESA. Thus I do not worry about tax consequences of my trading actions.


Current Portfolio as of 8/15/19.  
	  
Change since 7/14/19  -3.6%.  
	 
2019 YTD +39.3%.

Stock		Current	 % of Port	      	% Change 		        	Mark	
		% of Port	on 7/14	   	in port since 7/14	   	        Cap

CASH		  20.4		30.8			-10.4
TWLO		  14.0		15.7 			 -1.7				 16.5B
AYX		  17.9		15.3			 +2.6				  8.4B
ZS		  13.5		13.5			    0				  9.9B
MDB		  11.3		11.7			-0.04				  7.9B
ESTC		  13.9		11.8		 	 +2.1				  6.5B
EBIX		   3.2		 1.2			 +2.0				  1.1B
PSTG		   4.3	  	   0			 +4.3				  3.3B
NTNX		   1.6		   0			 +1.6				  3.5B
	
				
New positions since last portfolio update: PSTG, NTNX

Exited positions since last update:  

Trades between 7/14-8/15

Bought 		        ESTC		7/17,8/5	94.87, 90.45
			EBIX   		7/17,8/12	47.51, 38.82, 38.78
			MDB		8/14		140.65
			NTNX		8/12		18.47
			PSTG		8/14		13.09, 13.08

Sold			None

Thoughts on trades and companies for the month.

This was the first negative month return of the year. Obviously the market is in down turn because of recession talk and trade wars. The fear and greed index now sits at 19, https://money.cnn.com/data/fear-and-greed/?iid=EL

Is this a temporary blip or the start of a more extended downturn? Nobody ever knows.

AYX-My largest stock holding and my favorite stock. Margins plus growth make it a winner.

TWLO-2nd largest stock holding. My largest market cap stock.

ZS-Bought some more in taxable account (see below). If combined would be my 2nd largest holding. Is 2nd largest market cap holding.

MDB-Has not done much the last few months after its big runup earlier in the year. I think it is getting interesting value/growth prospects.

ESTC-Cooled off quite a bit from last month. Look forward to earnings report coming up. I believe it has the potential to make the most gains from here till end of year.

EBIX-I added to a starter position and I am still learning more about the company. I like the leadership. Raina is quirky and I can see why some people do not like him, but he strikes me a a brillant business person. Price fell off the cliff here recently. Lots of negatives out there, high risk, high reward stock IMO.

PSTG & NTNX-I was seriously considering cancelling my TickerTarget subscription. Then I thought I really do think Bert is a smart person, he seems to think both these company’s have become too undervalued. I decided to keep my subscription and go with Bert. I have owned both these names previously. They have just become so beaten down, I think the amount of upside is tremendous if they can show some improvement in operations.

I reduced my cash position this month. Prices are falling and I still have some cash to deploy. When I have some cash to invest, I feel if the market goes down, I win. If the market goes up, I win. I know its a funny psychological thing, but as an investor you have to figure out ways to control your emotions. One way I have learned to keep mine in check during periods of downturns, is to have some sideline cash in which to invest. Then instead of getting scared or getting paniced, I can just invest in the opportunity of a downturn.

I will also note that I did not sell any position this month. That is a bit unusual for me.

This month I inherited some securities not in my tax advantage accounts. I sold off the securities and reinvested the proceeds into the follow:


CRWD 	        24.5%			Market Cap 18.5B
NTNX		24.0%
PSTG		17.0%
NVTA		16.1%			Market Cap  2.5B
ZS		15.6%
CASH		 2.7%

I bought these stocks on 8/14 which was a down day for the market. I did not include these into my overall portfolio as it would have skewed my holdings and since they are not in tax advantaged accounts I may manage these stocks a bit differently. I also put some monies in bank savings that I am not counting as cash. Next month I will included these stocks in my overall portfolio.

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Nice writeup and good explanation of your thought process.

I too added to my NTNX this week (as well as shifting some funds out of SQ and adding to my already large MDB and TDD holdings). I know Nutanix is not a popular position here, but today, with the price even lower than my last writeup a few weeks ago, we’re only paying $3.4B for a company that did $1.24B of revenue (2.7 P/S) in the past 12 months, with almost $1 billion of gross margin after cost of sales, and has the potential to grow pretty significantly over the next few years. By no means a guarantee as they are spending a lot, ramping up sales and marketing, especially in the past couple of quarters, so revenue growth will have to outpace opex spending, but I like the chances, especially at these prices.

Only about another ten days until their next earnings report, so that should tell us a lot about how things are trending.

-mekong

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RE: NTNX, I am not seeing it friends. Here we’ve got a company that is going through a complex business model change, that is not growing much, whose losses are ever growing (???), where there is very much reason to question an entrenched management team, whose recent price action has been abysmal.

I admire the contrarian thinking but gosh, aren’t there better options out there right now? This one seems like the odds are not in a holder’s favor in the near term. What is your thesis for the turn around? I assume you think growth suddenly reignites and the street “buys the story again”? What has to happen for that to take place? Seems difficult to me…

I didn’t like the stock when it was first mentioned here and continue to not like it.

Rob

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Hi Rob,

Obviously I can only speak for myself and not any others invested currently in NTNX.

Just about 6 months ago NTNX was my largest stock holding. I sold most of it off about 3-4 months ago (you can verify this in my monthly portfolio updates if you like) in the mid 30’s.

Now I just came into some extra money that I want to invest. NTNX is a company that I am very familiar with as I have read up on it a bunch in the past. The stock is down 50% from where I previously sold it a few months ago. I think that it has fallen in price to a level where it presents an interesting investment again from a risk/reward standpoint.

On the business side. According to company leadership in the most recent earnings call. NTNX transition to subscription is ahead of schedule, sales within organization is improving, they are still a leader in a large evolving market.

The companies leadership came out two earnings calls ago and foretold of the impending slow down when their numbers for the quarter were still good. If they did that then, why would they lie now about improving conditions?

In their market its basically VMware and them, its like Coke and Pepsi, they both can have plenty of market share and make money. I do not want to get into all the specifics as this company has been covered a ton here over the past year.

It basically comes down to do you believe management has the correct vision of the future. Because a lot of the pain in the numbers is coming from a transitioning of the business model from selling hardware/software to a more pure software company.

I do believe they are suffering some short term pain for long term gain. Now they definitely stubbed their toe in implementing this transition, but seems they are starting to get thing back in right direction. Time will tell.

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