swood1963Nov2021Portfolio

What an exciting time (gulp!) to be an investor, especially a Saul investor. With the current market volatility, each of us is being tested right now to see if we truly understand and can handle what it means to own a concentrated portfolio of hypergrowth stocks. Saul-investing is not for everyone but I’m so glad I started my journey earlier this year. I’ve made numerous mistakes so far but I’m learning, growing, and excited about the challenges and opportunities ahead.

November Portfolio (11/30/2021):


                      Port%      Return YTD%
UPST  Upstart       21.0 (43.8)        122.9
DDOG  Datadog       18.9 (13.4)         80.9
CRWD  Crowdstrike   13.6 (11.7)         29.7
NET   Cloudflare    11.8  (8.5)        122.0
ZS    Zscalar       10.4  (6.9)          3.4
MNDY  Monday         9.6  (5.3)         -5.3
ZI    Zoominfo       7.5  (5.8)         48.0
SNOW  Snowflake      6.6    (–)         34.9
AMPL  Amplitude      1.0    (–)         -4.1
LSPD  Lightspeed       –  (4.6)

Portfolio Performance vs Indexes (YTD per month):


Month Day  Portfolio  Nasdaq  S&P 500  Dow Jones  Russell 2000
1      31       6.52    5.55     1.98      -0.04          9.26
2      28      12.02    7.01     5.44       4.34         16.93
3      31      -8.21    4.32     7.36       9.12         14.11
4      30      -2.77    9.96    12.98      12.08         16.47
5      31       3.73    8.17    13.55      14.40         17.93
6      30      13.92   14.22    16.13      14.16         18.74
7      31      20.68   15.61    18.55      15.27         13.85
8      31      61.69   20.17    22.21      17.00         16.85
9      30      79.22   13.78    16.40      11.98         13.28
10     31     104.44   22.82    24.67      18.83         21.18
11     30      56.47   20.56    21.59      12.67         11.35

Last month I mentioned the guard-rails that were set up earlier this year as I started Saul investing. These were set up because 30-40% downturns can and will occur (and are occuring). For those new to Saul investing, such as myself, I recommend guard-rails to help you sleep while you improve as an investor.

Company Comments:

UPST
Many have exited because not-SAAS and revenue is lumpy and hard to estimate. I still believe the thesis is intact but I’ve lowered my conviction level and will trim accordingly.
Incredible TAM in personal lending, car lending, and potentially mortgage lending
First-mover in AI lending (make FICO meaningless, like Blockbuster)
Investor relations: https://ir.upstart.com/
Next ER 3/16/2022

CRWD
Another board favorite (like UPST) where many have exited or lowered their conviction levels, primarily due to growth deceleration and increased competition.
On 11/1, acquired SecureCircle to extend its industry leading Zero Trust endpoint security device and identity capabilities to include data
Strong performer in endpoint cyber security which remains an urgent issue for business and governments as employees increasingly work remotely and applications move to the cloud.
Partners with Zscaler to deliver end-to-end Zero Trust security protection from the endpoint to the application
Investor relations: https://ir.crowdstrike.com/
Next ER 3/16/2022

DDOG
Excellent SAAS company executing on all cylinders. This might be the one to buy during the down-turn as it drops with the tide (see wisdom focus below).
Top class SAAS company providing modern monitoring and security
Companies gain complete visibility into their cloud-scale infrastructure
Ability to analyze the performance of every service and user request
Automatically detects security threats and misconfigurations in real time
Provides over 450 turn-key integrations including AWS, Azure, and mongoDB
Incredible ER on 11/5/2021 (read https://discussion.fool.com/ddog-q3-2021-fiscal-results-my-notes…)
Investor relations: https://investors.datadoghq.com/
Next ER 2/10/2022

SNOW
After recently reading numerous SNOW articles on Muji’s excellent hhhyperrowth subscription, I opened a position in SNOW and increased it multiple times this month (to a 6% position). Their latest ER has increased my conviction that the data sharing/data exchange could and probably will grow exponentially going forward. I will slowly increase my position accordingly.
Investor relations: https://investors.snowflake.com/overview/default.aspx
Next ER 3/3/2022

MNDY
Wow, the price has been all over the map but the board conviction level for MNDY continues to increase due its incredible growth. I imagine its Work OS is quite sticky but I am worried that it does not have a moat.
Productivity/project/collaboration management SAAS player powering over 125k companies worldwide
Provides a customizable automation tool for every industry (huge TAM)
Monday uses Monday (this is important). When you use your own product, you see its strengths and weakness and are more likely to improve the product quickly
Investor relations: https://ir.monday.com/
Next ER on 2/17/2021

NET
Global network designed to make everything you connect to the Internet secure, private, fast, and reliable (what else could you want)
Secures websites, APIs, and Internet applications
Investor relations: https://www.cloudflare.net/home/default.aspx
Next ER on 2/10/2022

ZI
Great company but concerned that VCs are consistently unloading large volumes of shares as they exit their position. This could cause stock performance to drop or lag until this ends. I might trim this position until this resolves. (https://discussion.fool.com/zoominfo-and-cloudflare-34990650.asp…)
SAAS marketing information platform trusted by over 20,000 businesses to improve B2B communications by using high-quality, actionable data
Acquired RingLead in September to help customers combine, cleanse, and route disparate data sources
Acquired Chorus.ai in July to use “intelligent conversation” software to help customers analyze sales communications of clients and help them formulate effective sales growth strategies. This seems to be accelerating growth, therefore a great acquisition so far.
Investor relations: https://ir.zoominfo.com/
Next ER 2/20/2022

ZS
Latest ER shows growth has re-accelerated. Plan to add to my position.
SAAS Cloud Security platform built using a Secure Access Service Edge (SASE) architecture
Announced CRWD partnership in September that will integrate the ZS cloud security platform with CRWD’s AI-powered Threat Graph to provide customers increased threat-protection and improved security across their enterprise
Zscaler Private Access achieved DoD Impact Level 5
Investor relations: https://ir.zscaler.com/
Next ER on 2/24/2022

Watch-list Themes/Companies:
Cloud based SMB accounting automation/Bill.com - becoming a new board favorite with some great write-ups in the monthly summaries
Data in Motion/CFLT - love the technology and problem to be solved but is it a good investment? Probably not ready for prime time in a concentrated portfolio.
Cross-border e-commerce/GLBE - Interesting but complicated story. Does it belong in my top 8? Not at this time.

November 2021 Summary of Summaries:
The end of month summaries (written by Saul and others) have been an invaluable resource for me. I catalog the summaries each month and find the data to be helpful in analyzing my portfolio and forming my own convictions. This month’s summary of summaries can be found here:
https://docs.google.com/spreadsheets/d/1eRhEaVrIbEynoOoaHY8Y…

Wisdom Focus:
This month’s focus from Saul is dealing with the inevitable down market (https://discussion.fool.com/knowledgebase-2019-part-2-34381931.a…)

From Saul:
**Selling out at the bottom, when everyone is panicking, is not a good outcome.**The time to have sold the wildly over-extended stocks, was when everything was booming. On the other hand, when the market is down, selling low-beta stocks that haven’t fallen much, and thus have less to rebound, can be a good source of cash to buy stuff that has fallen a lot.

Back to me:
To be a Saul investment disciple means many things, but one of the most important traits is to not panic in the downturns and control euphoria when our stocks do really well. During this downturn, I will not panic sell. However, as I invest more in my higher conviction companies, I will attempt to limit my allocation levels to the maximum 15-20% that Saul recommends and perhaps even less (10%) for non-SAAS stocks. I stubbornly refused to trim my out-sized UPST position until it basically trimmed itself.

Quote of the Month:
“The stock market is a device for transferring money from the impatient to the patient” Warren Buffett (important to remember, especially in volatile markets)

Search Tools: There are numerous great posts about each of the companies above. To find posts, select “Board Search Sites” on the Knowledge Base.

Helpful sources:

  1. Saul’s discussion board
  2. Recently subscribed to Muji’s Hypergrowth (https://hhhypergrowth.com/author/muji/)
  3. Motley Fool Stock Advisor and Rule Breaker paid subscriptions
  4. Bert Hochfeld’s TickerTarget paid subscription (https://tickertarget.com)
  5. Seeking Alpha paid subscription (Many great articles and current stock information)
  6. SEC Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system for company filings

Previous Portfolio Summaries:
October 2021: https://discussion.fool.com/swood1963oct2021portfolio-34973522.a…
September 2021: https://discussion.fool.com/swood1963sept2021portfolio-34951005…

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