Some thoughts for the week

This interesting week produced several thoughts which I’d like to share with you.

Point 1. This first point may be a little OT but I feel it may be useful to others to mention it.

A number of people have pointed out that a lot of the market’s rise takes place on just a very few days, which makes selling out in order to be cautious, indeed cautious… but severely limiting to your upside.

Well, this week, on Monday, my portfolio dropped 4.6% in one day, which dropped me from up 40.9% to up 34.4%. That could have been really scary and I could have decided to play it cautious and take my profits and get out… Well on Friday, this same week, my portfolio finished up 59.2%. It went from up 34.4% on Monday to up 59.2% on Friday.

If I had been scared out on Monday I would have missed that 18% rise, which added 25 percentage points of gain, well more than a better-than-expected full-year gain for most people who are invested in the averages, just in those four days. That is why I emphasize in the Knowledgebase that I hold money aside for expenses, but aside from that, I stay fully invested.

Point 2. Okta

Back seven or eight weeks ago, when Okta was at $92, it was becoming very clear that what they were doing was much more than single-sign on, and they were introducing product after product. I didn’t really understand what all those products do, not being a techie, but I could sense the excitement about them, and I was adding to my position… At that same time a number of people were pointing out that Okta had the highest EV/S of all our SaaS stocks (except maybe ZS), and they were proudly asserting that they had sold their Okta positions because Okta had climbed too high and was over-valued. Well Okta never experienced any relative weakness at all in those 7-8 weeks, and it closed Friday at $127.31. It’s thus up 38.4% since they noticed that it had climbed too high and was so ’’over-valued.’’

What’s the message? Pay attention to the business, and what it’s doing, not to a single number that tells you it’s ‘’over-valued’’.

Point 3. Mongo versus Elastic

At the end of February I had a 6.8% position in Elastic, and just a 3.5% in Mongo. When all this stuff came out in March about AWS threatening Elastic I reduced my position in Elastic down to 1.1% and built my Mongo up to 6.5%, in effect moving much of my Elastic funds to Mongo. Here’s what I wrote about it in my March summary:

I don’t know yet whether this will turn out to be a mistake or not. But I do know Elastic claims to have a pure open source model, which I have misgivings about. I do know that they have an enormous lock-up expiring in April, and possibly some dilution as well. I do know that they are selling at a very high valuation. I do know that Amazon is attacking them as it attacked Mongo, but in Mongo’s case they could only copy it, while in Elastic’s case, as it is a purer open source model, they could use (some of) Elastic’s own code. …I have clearer stories all around me. Even a couple of new IPO’s soon to happen. I think I took the correct course, and will wait and see. At any rate, Elastic was down 15.2% on the month (its share price dropped from $94.15 to $79.87), and it’s below where I sold it some weeks ago, while almost everything else in my portfolio has gone up. For example, Zscaler, which I added to this month and is now my second largest, was up 42% this month. If Elastic goes way up, so be it, but I probably won’t chase this one.

Now I have 0% in Elastic, and 14% in Mongo. How has it worked out? Let’s see.

Going back exactly three months to March 7th, Elastic was at $84.94. Friday it closed at $81.40, so in three months Elastic is down 4%.

Going back exactly three months to March 7th, Mongo was at $99.46. Friday it closed at $169.97, so in the same three months Mongo is up 71%.

What’s the message? Don’t hang on to the complicated stories where you have a lot of questions. Go for the clearer, cleaner stories, especially when the numbers back it up.

Point 4. Don’t stick with train wrecks hoping that they will come back. Never say ‘’ I won’t sell it down 40%’’.

Here’s an example from an excellent stock analyst who, however, hates to sell when his recommendations are down (but sells out when they have risen ‘’too much’’). Article is called ’’Cloudera’s (CLDR) train wreck. It is a painful saga and a happy ending is not yet in view.’’ The conclusion was ‘’This has, to say the least been a very disheartening experience. Seeing a recommendation lose 70% of its value in a few months is not something that sits well with me. But I have been there before, and these things will happen in the IT space. I will keep my finger on the pulse of this, and hope that the company chooses to be more transparent going forward.’’

Never, never, NEVER, do that!!! Think of the opportunity cost in a market like ours. “Keep my finger on the pulse” of a stock that has gone down 70%, and you are still in it??? No! Redeploy the money!!! (Nutanix is another example which just keeps getting worse). Note that I’m not talking about a down market where everything has gone down. I’m talking about a business execution train wreck of an individual company. Take your lumps and redeploy the money.

Point 5. On mistakes.

Remember, I don’t always get them right either and in my March summary I had an entire section analyzing my mistakes of the first quarter. In fact Point 4 above was about admitting your mistakes and correcting them, as opposed to hoping that somehow in the future they will turn out to not be mistakes.

I hope that this was of help.



Now I have 0% in Elastic, and 14% in Mongo. How has it worked out? Let’s see.

Let’s look at revenue growth rates from most recent to oldest quarters:

ESTC   62.59% 69.95% 71.65% 79.00% 

Mongo  85.37% 70.33% 56.64% 61.49% 

They are almost reciprocal growth trends.

I have shared my thoughts on ESTC vs MDB numerous times…seems we agreed. But let’s fast forward to next week when lockup release date has come.

Based on the above revenue growth trend, this made you exit SHOP early before because of concern about revenue growth deceleration. Have you moved on because of that issue no matter?


Have you moved on from Elastic because of that revenue growth deceleration?

As I said, I sold out a month or two ago, before that last earnings report with the big drop.

Your instincts are uncanny…but i dont think you need to take 3-month chunks of time to make a point.

"Going back exactly three months to March 7th, Elastic was at $84.94. Friday it closed at $81.40, so in three months Elastic is down 4%.

Going back exactly three months to March 7th, Mongo was at $99.46. Friday it closed at $169.97, so in the same three months Mongo is up 71%."

If you started 1 week later, on about March 14th, and went thru just late morning Thursday (2 days ago) MDB was down initially after their ER, and was essentially flat since March 14th.

From June 8th 2018 to Jan 4th 2019, ZS was essentially flat. Was ZS too complicated for those 6 months?

I could be completely wrong on ESTC stock, of course, but their stock IPOd at about same rich level as ZS (but about 6 months after ZS IPO) then make a move up just like ZS and then has now plateaued for 5 months similar to what ZS did, and stock lock up expiration is finally done next week. Similar revenue base size and growth rates (elite) as ZS and MDB too…so not an issue of comparing very different-sized companies.

I have owned MDB and enjoyed their ride this year too. Just not sure what that has to do with ESTC.

I know i feel better about the ability of a $6b company to have stock appreciation over next 12 months more than, say, $24b ZM.

My 2 cents.



My 2 Cents.
We all make mistakes but Sauls timing and instincts whether you agree with them or not is more than enough for me. Fwiw.

Mistakes… teum, docu(sold and then rebought) and a few others… now no longer wait… take my losses and place elsewhere mostly adding to conviction and winning stocks…

Learnt finally and it’s paid off. Plus no longer look backwards only forwards.


If you started 1 week later, on about March 14th, and went thru just late morning Thursday MDB was down initially after their earnings report, and was essentially flat since March 14th.

Wow Dreamer, talk about cherry-picking your dates, going through just the morning after earnings, when Mongo was briefly down!!! And ignoring the present reality!

As was clear from what I wrote, I started my comparison on Mar 7th because that was approximately when I got out of Elastic and moved to Mongo. That sounds perfectly appropriate to me. And using Friday’s close made sense as well as both companies had announced earnings and reacted to them. What could be more equal? I started from when I switched from Elastic to Mongo, and finished currently, when both have reported earnings and had time to react to the news. Couldn’t be a more fair comparison.

But pick any date you choose, Elastic has gone nowhere and Mongo has done well. Let’s go all the way back to Elastics IPO on Oct 1st. Since then Elastic has risen from $70.00 all the way to $81.39 for a gain of 16% in eight months (or 2% per month), while Mongo has gone from $72.75 (roughly the same start) to $169.97 for a gain of 134% in the same eight months. That’s 16% to 134%. How is the message from that different than my comparison of the last three months where Elastic was down 4% and Mongo was up 71%. Which would you rather have held since Elastic’s IPO? Clearly, the market is seeing some of the same things I was seeing.




cherry-picking your dates

Your board, so I am not going to argue with you about ESTC any more.
But pretty sure I am not alone in cherry-picking dates.

SMAR was up about 10% on Thursday and MDB was down at least 9% on Thursday at one point. (I know bc I bought a bunch in a swing trade, because that was just a silly short-lived move after such a great ER). So I guess, at that moment in time, the market thought SMAR was an unbelievable investment compared to MDB, after seeing both their ERs.

Then on Friday SMAR was only up another 2% or so, and MDB was up 15%.
You posted on Friday that the market agreed with you that MDB was a better investment than SMAR, based just on the Friday delta, kind of ignoring the huge move SMAR had on Thurs. That is cherry-picking, too.

As for ESTC going from IPO of $70 to $81 since Oct…again, ZS did the exact same thing, going from IPO of $33 to a whopping $40 by Jan 2019. Again, you can always pick dates to suit a narrative.

But going by your logic on ESTC, then one should never have invested in ZS, based on their poor stock performance from March 2018 to Jan 2019. I forget when you jumped on ZS, but obviously their lack of stock performance didn’t dissuade your thesis in the stock.

I won’t bother commenting again on ESTC here.



I just wanted to briefly weigh in here. There is no doubt that so far mongo has been a better investment. But i think we should look at which business is going to give us the best returns going forward. Using Duma’s numbers here with my addition in (), most recent quarter first. On the surface it looks like mongo is killing estc and estc is falling off.

ESTC 62.59% (68%), 69.95% 71.65% 79.00%

Mongo 85.37% 70.33% 56.64% 61.49%

I’d like to provide a bit of context though. Mongo acquired mlabs in october 2018 which is what valuted them from 56% growth up to the 70-80% range. Lets be clear though, the organic growth of MDB is still amazing and probably in the low 60% range.

Moving on to ESTC it looks like their growth has really slowed down. A little over 40% of their business is international. I couldn’t find corresponding figures for MDB. The dollar was quite strong last quarter so on a constant currency basis ESTC’s revenue growth was a pretty astounding organic 68%.

Listen, I like mongo a lot. It is my largest position. The business is kicking behind. THey are starting to show some operating leverage. It has been a fantastic investment. My new investment dollars are going into ESTC. THeir growth is downright amazing and their valuation has compressed dramatically. I’d argue that ESTC business is doing really well, they are taking over their space and sit in the middle of so many different industries. Their EV/s is 21 compared to MDB’s 31. Lots of other companies out there are “cheap” because of some execution hiccup (zuo, ntnx, pvtl) Those companies have continued to disappoint. ESTC is not in that situation. THey are growing like wildfire, taking over industries, moving strongly into security (i’ll post more on that later). How many more quarters of 60%+ growth will it take until the market realizes amazon isn’t going to be a major threat? I’d guess 1. The lock up expiration won’t be a question any more in a couple of days. All the FUD is falling away. We do need to keep an eye on expenses though.



I was one of the people who pointed out OKTA’s high p/s ratio but I definitely did not proudly assert I had sold it based on valuations as if I was smarter than everyone.

I see/saw the declining revenue growth rates and the increasing p/s ratio made it seem like a danger to me they would get hit on a further drop in revenue. Furthermore they are facing more and more competition as Zero Trust security is attracting more competition among legacy security vendors who according to Gartner offer a superior product. So I see continued slowing from them.

But what happened instead is Okta shot up after continued slowing growth (though hardly slowing).

So what I saw out of this is slowing growth is not necessarily the end of the line for stock price appreciation.


"ESTC 62.59% 69.95% 71.65% 79.00%

Mongo 85.37% 70.33% 56.64% 61.49% "

when saying learning from your error, one needs to follow the same set of rules and look at the outcome. Ideally the environmental conditions would be the same but of course that is never the case. Nonetheless you have to follow at least to first order the same principle to be able to learn ‘from you errors’.

In the case of SHOP, we sell ‘saying decelerating growth’. But in this instance it does not apply (for MDB). While ESTC growth is growing, we sell.
I understand the ‘open source is bad’ argument. Certainly Mongo is not ‘pure open source’ but why would ESTC be? It can really never be a ‘pure open source’ business because there would be no business in the end.


Okta, MDB, and Estc. 5-6 weeks ago I bailed out of okta because of the valuation and okta because the market wasn’t appreciating it because of Amazon and the lockup. Movec all the money to MDB!!

I also work in IT and have used all the products. Based on prices / evaluations I may not touch MDB but I will be moving money back into Estc before its next earnings as it has a great basket of products that Amazon can’t replicate and it’s under valued.

Lastly, I see no reason as to why estc won’t outperform okta from now until the end of the year. Saul will get back in but I agree that it was confusing and not doing ahything, so smart money was wise to bail for about 6 months.

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What I think gets lost when there is “more and more growing competition” such as in zero trust, you have to ask is it “real” competition. As an example (extreme and historical mind you) Apple simply has a better operating system on its computers. This can be subjective, but in the end don’t argue with me because you won’t convince me and objectively I will blow you away.

Apple was not “real” competition to them anyways, and neither was IBM with OS/2 or any other operating system that tried to become something on a PC because no one could match the entire ecosystem around what Microsoft had. It ran everything.

Amazon see more and more competition all the time from online retailers. Does not mean it is “real” competition.

OKTA has built up an enormous network of users and at this point has become so large and embedded in the world it sells into that I doubt OKTA has any “real” competition either anymore. They may as they move into adjacencies but not in their core businesses. They are hooked in to the infrastructure of their clients and no one is going to unhook and dig them out.

That is why Okta can continue to thrive even with some slowing in revenue growth. That is CAP.



I’m going off the Forrester report. Symantec and PANW are “leaders” in the magic quadrant and OKTA is one of 8 contenders with Cisco. Looking at the report again most of the other contenders are not significant companies. I do know that OKTA’s single sign on gives them an advantage with their lead there. So maybe the competitive threat is not as big as I thought earlier.

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How about “cherry picking” from ESTC’s IPO to the present?

Denny Schlesinger

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I believe that you are reading Duma’s table backwards.


Let’s look at revenue growth rates from most recent to oldest quarters:

ESTC 62.59% 69.95% 71.65% 79.00%

Mongo 85.37% 70.33% 56.64% 61.49%


At least Symantec is not a disaster with end point security. They have a good business there. However, all of this links back to their appliances in the enterprise. Okta sells no appliances and is all cloud. Different selling proposition, and this is all OKTA does.

As such, no, I don’t see the competitive pressure that “real” in the scheme of things. Who steps in if Okta were not to exist? There is no one with an all cloud operation with the reach of OKTA. Someone else would need to invest the business and grow it. Growing a new OKTA would be much more difficult now that the appliance players have stepped up.

That is why being a first mover in a new disruptive market can be so important. Being ahead of everyone is one thing that makes it possible. Whereas today a new OKTA, if OKTA just vanished, may not grow into any material existence.



Using Dave Gardner’s snap test. If you snapped your fingers and Okta suddenly vanished from existence, a lot of companies (many of whom are intertwined in our daily lives) would be left wondering what in the world to do and where in the world to go. Without that single sign on connectivity and security build in it would cause a lot of problems.

Can you imagine all the password resets or people wandering aimlessly trying to find their old password notebook. “I can’t get any work done!”




So what I saw out of this is slowing growth is not necessarily the end of the line for stock price appreciation.

Indeed, as “slowing growth” SHOP continues to make new all time highs.

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PAYC same deal slowing growth but still climbing lower left to upper right!



Why Saul needs to pick a date? His performance is more than enough to prove his skills which I do not have.

Most importantly, Saul is willingly to share with us. You can pick any dates you like and show us your performance! I own both MDB and ESTC. I totally agree with what Saul said.

I am very fortunate to find this board and learn from Saul and other posters. So far Saul’s posts are most inspiring to me. Thank you again!