Saul’s Portfolio at the end of Apr.
I’m making changes in my portfolio and I’m not prepared to discuss them yet as I’m still working out what the changes will be, so this will be a very short summary.
I’ll start with my positions. Here’s what my positions looked like A MONTH AGO , at the end of March**:**
Monday 16.7% Cloudflare 16.6% Enphase 16.4% Snowflake 16.0% Sentinel 10.8% Global-e 8.6% Samsara 7.8% TransMedics 3.2% Procore 3.1% Datadog 0.9%
And here’s what my positions are NOW:
Enphase 16.6% Monday 14.0% Cloudflare 12.3% Global-e 11.9% Sentinel 11.2% Samsara 10.9% Trade Desk 8.8% Snowflake 8.3% Try-outs 5.5%
So let’s look at what happened to each one:
Snowflake’s position size was trimmed in March from 24% to 16%, still a respectable position, and this month I trimmed it further down to 8%. Still quite a reasonable position, but not one of the largest. Great long term outlook, but right now it being consumption-based means an amount of uncertainty that’s hard to quantify, even for the CFO. I’m more comfortable with its current size.
Cloudflare. I thought they had a more predictable present than Snowflake but they proved me wrong, and I’ve trimmed them some
Monday is still approximately where it was. No major adding or trimming.
Enphase sells microinverters, and now batteries, for solar energy systems. They announced first quarter results on Tuesday. They have the tailwind of the whole shift to renewable energy and climate change, but they sold off mightily after decent results because of the usual bugaboo, guidance.
As far as this quarter’s actual results, let’s see:
Revenue was up 64.5%, and slightly above expectations,
Adj gross margin of 45.7% which was a record, and up hugely from 41.0% a year ago and from 43.8% sequentially.
And this isn’t some money-losing company trying to reach profitability. It had:
Adj EPS of $1.37 in this QUARTER alone, beating expectations by 15 cents and up 73% from 79 cents a year ago, and let’s not forget:
Adj op income of $234 million!
Adj net income of $192 million!
Free cash flow of $224 million! This company is making money.
Now, does that sound like it’s worth a $57 and 26% sell-off to you. Well that’s what happened because they reported that increased interest rates are hurting sales in the US (people often have to take out a loan to buy the whole system), and because people in California have to get used to a new system for receiving payments for electricity that they feed into the grid. Thus they predicted roughly flat sequential results next quarter.
Sentinel . Yes, I know, I’m one of the very small group who still likes them, but I do.
Global-e helps merchants sell merchandise to customers in other countries, and also makes it easier for the customers to shop from the merchants. It’s mostly luxury goods that are worth buying from another country (more info below).
Then, Samsara, with the interesting ticker IOT. They help companies manage objects like 18-wheelers, farm machines, manufacturing machines, etc. They can offer companies an immediate, large, and “hard” ROI which is very attractive in the current environment.
(What’s a “hard” ROI? Well they can explain to a fleet owner that each truck he includes in the plan will cost him $400/yr, but he will save about $2,500/yr, per truck, just in reduced idling time. How can you say no to that?). It’s in 6th place.
And I also took a position in Trade Desk again, and two more tiny positions I’m not ready to talk about yet as I’m not sure I’m keeping them.
I have kept a permanent safety fund out of the market that I could live off for several years if necessary, and I feel everyone who does not have a secure regular source of income should do the same.
I have learned long ago that sticking with great companies wins out in the end, and beats market timing, but living through this decline has been awful.
MY RESULTS MONTH BY MONTH FOR 2022
Here’s a table of the monthly year-to-date progress of my portfolio for 2023.
End of Jan up 9.7% End of Feb up 7.0% End of Mar up 5.8% End of Apr down 8.1%
To be clear, two of my largest positions, Enphase and Cloudflare, each dropped 25% each after earnings, which explains what happened in April.
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.
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.
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. It’s on the panel to your right.
I hope this has been helpful.