The DumbSaas Portfolio

Investment Analysis Clubs Saul’s Investing Discussions
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My cousin, nosepickin, is an Intelligent Stock Picker (ISP). For example,
yesterday he was up 1.3579% from 10:52 AM to 3:23 PM. He runs a concentrated
portfolio of 10 stocks – all cloud, crazy growth, all recurring revenue, all
investing for the future.

But last night he said to me, “You know , Ears, I’m worn out being an ISP.
You actually have to study companies and stuff. Plus, what if Left is right?
There’s got to be a better way.”

So I said to him, “Cousin, you’re in luck!!! There IS a better way!”

The DumbSaas Portfolio!

So I proceeded to give him the following details.

The DumbSaas Portfolio is currently made up of 52 publicly traded cloud
companies based on the BVP Index. As of 1/1/2011, the BVP Index is up
483.9% versus 115.8% for the S&P 500. That translates into an annualized
return of 27.9% for the BVP Index versus 11.3% for the S&P 500. If you
had invested $10K in the BVP Index on January 1, 2011 it would have been
worth $58.8K on February 28, 2018. A 5.9 bagger!!!

“But Ears”, he said, “you can’t buy an index!”

So I told him all he needed to do was buy equal amounts of the 52 stocks
in the BVP Index. Each position would be about 1.9% in size. Every month he
simply checks the BVP Index to see if any new stocks were added or any
existing stocks were dropped, and make the corresponding changes to his
portfolio.

That’s it. Once a month check the Index. Once the initial purchases are
made there are very few changes month to month. Of course you’d want to have
a portfolio say > $10K to minimize the initial trading costs…but what
do you care, I told him, this is GOLD, Jerry, GOLD!

“Well that sounds easy enough”, he said. “All I need to do is check the Index
once a month. That will free up all the time I was spending trying to do due
diligence, plus if one of the companies goes kaput I only take a 1.9% hit!”

So I told him that’s true, but be prepared for some volatility. If the market
drops, the BVP Index will drop A LOT faster and further.

Dear reader,

Even if the DUMBSass Portfolio doesn’t sing to you, you may want to explore
the BVP Index and associated data. You can find it here:

https://www.bvp.com/strategy/cloud-computing/index

If you do decide to be a DUMbSass, we would appreciate a donation. It’s not for
me, it’s for the orphans Mrs. Ears and I spend our many hours working our
knuckles to the bone caring for. Send it to: Earslookin, c/o The Bellagio Hotel,
Las Vegas, NV 89109.

Thanks,
Ears

28 Likes
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It’s nice to see so many of them listed in one place. What are their criteria for selection/deletion?

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What are their criteria for selection/deletion?

The criteria aren’t published anywhere as far as I know, but here’s my guess based
on what they’ve disclosed in interviews, blogs, and papers.

  • Public, US exchange.

  • 100% cloud focused. (e.g., excludes acquirers like Microsoft or Oracle)

  • Subscription-based.

  • Multiple clients share an instance. (They’ve made some exceptions)

  • Revenue > $100 million for initial inclusion but not for exclusion once added.

The index is market-cap weighted. It is updated weekly, but published monthly.
Additions are made the 2nd trading week of the month. Deletions are made the
2nd to last trading week of the month.

Ears

7 Likes
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Nice find! will save me some work googling. But the sorting mechanism is funky, seems to sort numbers from left to right which puts all the 1’s with the 10’s and 2’s with the 20’s, instead of 1,2,3,4… I think there is a term for this, but not sure what it is. I copied into my own sheet for sorting.

Still doesn’t replace conducting due diligence for your risk tolerance. EVBG looks great, has a small market cap, but earnings is don’t look great on Seeking Alpha. Maybe high growth isn’t worried about earnings as much, but something to be aware of. How does it have FCF if earnings/EBITDA are negative? Maybe SA is a quarter behind on their data.

But makes for easy comparisons; I just worry about being concerned with a percentage in one column outweighing the benefits of another. Missing the forest for the tree.

For example: LOGM vs OKTA. Do they do the same thing or are they competition? OKTA market cap is half LOGM, but their customer retention rate is better. And this doesn’t give you DRR, is the efficiency similar?

Or I can’t cherry pick and buy em all!

Robert

1 Like
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But the sorting mechanism is funky…

Robert,

There’s a “Download XLS” button at the top of the page. Click on that and open in Excel. There
are four tabs that you can copy to your own worksheets. One of the tabs in the xls worksheet has
all the companies in the html version. Another tab has weekly results for the index going back to
1/1/2011.

You are right to treat something like this with caution, especially if you are a somewhat newcomer
to investing. My original post was mostly tongue-in-cheek.

Ears

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I think there is a term for this, but not sure what it is.

Alphabetic sort.

Denny Schlesinger

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I saw the ‘Download’ button after I posted, thanks!

It might have been tongue-in-cheek but its still a good filter/screen, less work for me!

Robert