My results aren't stellar in comparison to some of the leaders here but they have been significant (not transformational
yet but I realize it is only a matter of time if I can keep at it) at a personal level and I wanted to acknowledge
all the great contributions that are made on this board, especially Saul and the other leaders of this board.
This is my second post here after my recent post about GoodRx -
[https://discussion.fool.com/goodrxgdrx-a-recent-ipo-34637202.asp...](https://discussion.fool.com/goodrxgdrx-a-recent-ipo-34637202.aspx?sort=whole#34637202).
I also included my background towards the end of this post just to give some context on how I arrived here, if anyone is interested.
Note - After my GoodRx post, Muji was kind enough to DM me on how to go about formatting posts, hopefully it comes out better this time.
Also, I copied the format from monthly reviews of StockNovice, HorsePlayAndrew and a few others.
I'm still working on getting to a more concentrated portfolio but don't want to rush it before I'm ready so please be tolerant
of any incoherencies in my writing. Also, if I get any facts wrong, please let me know and am happy to correct myself.
2020 Results
End of October YTD - Up 102.77%
Month YTD vs S&P
Jan 8.02% 8.02% 7.98%
Feb 1.76% 9.92% 18.19%
Mar -14.19% -5.67% 13.93%
Apr 19.27% 12.51% 21.80%
May 18.60% 33.43% 38.39%
Jun 19.90% 59.97% 63.05%
Jul 15.55% 84.85% 82.47%
Aug 6.50% 96.86% 85.12%
Sep 5.96% 108.59% 103.86%
Oct -2.79% 102.77% 101.32%
Stock 10-31 Port% 9-30 Port% 1st Buy
ZM 10.29% 10.20% 6/2/2020
SE 9.13% 8.67% 2/19/2020
LVGO 8.80% 6.75% 1/22/2019
DOCU 8.53% 5.54% 11/4/2019
SHOP 8.26% 8.22% 11/26/2019
CRWD 8.19% 7.72% 2/25/2020
SQ 7.04% 7.18% 9/20/2019
TWLO 6.92% 5.76% 11/26/2019
DDOG 6% 6.57% 5/27/2020
ROKU 5.86% 5.31% 10/15/2019
PTON 5.67% 4.96% 6/18/2020
MELI 5.62% 4.87% 2/28/2020
ETSY 5.05% 4.89% 5/28/2020
API 1.61% 1.73% 8/5/2020
SNOW 1.16% - 10/14/2020
U 0.66% - 10/23/2020
FTCH 0.53% - 10/21/2020
FROG 0.42% - 10/22/2020
NET - 2.32% 8/10/2020
FSLY - 8.33% 11/26/2019
October Review
Portfolio hit a peak of 145% YTD on October 13th and then followed by a swift drawdown from FSLY's preannouncement reaction
at a point where it grew to my largest position(~10.5%) and then the broader market pullback for the remainder of the month
resulted in a second negative month this year. I wanted to try out a few starter positions, primarily in recent IPOs
as I want to build a watchlist to choose from as we get into next phase of COVID effected world and the story on some
of my current companies' changes. I retained SNOW, U, FTCH, FROG for now and exited GDRX, FEAC, VRM, DKNG.
That's a lot of in-out transactions within a month for me and I would like to make it more methodical in the future.
However, given my lack or relative experience in active investing and then the turn of events during the year,
I have no complaints about the returns so far except for the monthly recurring regret that I wish I had discovered
the potential in active investing and the power of compounding much earlier in my life.
SOLD
FSLY - Reasons to exit have been well discussed in this board so I won't touch on those. On the day of the news,
it fell from a ~10.5% to a ~7.5% position and I then I tapered out my exit beginning at ~90 and kept a ~3% position
until the earnings but when nothing significantly positive came out of the ER, my mental thesis had fundamentally
changed in this company and staying in it meant a long wait until a potential acceleration from its compute@edge product.
In addition, I already have one core position in a "future potential acceleration" company in LVGO and its stock price
has gone through a full circle with no net increase since the TDOC merger news 3 months ago. I still wanted to keep a ~2% position
in FSLY primarily because of my recency bias from AYX but when the whole market sold off in the past week,
I took the opportunity to switch FSLY remnants into SHOP, TWLO, LVGO. AYX, LVGO, FSLY in the past three months
have all been a top 3 position for me when they each had their fall and I don't feel good about the way I handled any of those.
I now realize the skill required to exit with conviction is one of the key missing pieces for me in getting to a more
concentrated portfolio. Hopefully with experience I can handle these better and won't end up with as many fleeting unrealized paper profits.
NET - I had no significant reason to exit besides consolidating my portfolio based on conviction levels.
At the time of exit, FSLY was flying in all colors and NET seemed to stall around 40. A few days after I exited on 10/2,
it shot up ~50% coupled with FSLY's fall from glory which as a combination was even more painful to watch but I recently experienced
this with PINS, TTD, OKTA which shot up right after I sold them as part of portfolio consolidation.
So at least the feelings were not new. If I was suspecting FSLY's growth story, the right approach would have
been to maintain positions in both FSLY and NET but in retrospect I didn't have any suspicions about FSLY when
it shot up to 135. So I accept these things happen and are part of the game. I may re-enter NET if opportunity arises.
Other Companies in Portfolio
Most of the companies in my portfolio are widely discussed here and given my rather large number of companies in
my portfolio, I will only the include ones that I think are not covered as much in this board.
SE - A Singaporean company that operates primarily in Southeast Asia and has been entering into LATAM, Indian markets.
They are a well established with profitable game publishing and development business(Garena), growing
eCommerce(Shopee) business and a nascent Fintech business(SeaMoney). It was founded in 2009, IPOed in 2017 with a MarketCap of $4.5B,
their current MarketCap is $76B. Led by co-founder Forrest Li who comes across as intelligent and articulate in his public appearances.
Their last six quarters adjusted revenue growth (2019 Q1 to 2020 Q2) was 194%, 203%, 214%, 134%, 58%, 93%.
They turned Adj.EBITDA positive for the first time in Q2, 2020. So not a SaaS company with recurring revenue
but a growth company riding the secular trends in one of the under penetrated markets of the world with huge TAM in each of its business segments.
As long as they keep gaining market share in eCommerce while not losing their domination in the gaming segments,
I plan to stay invested and keeping it as one of the core positions.
SHOP - Am constantly impressed by the positivity and goodwill this company generates about itself in social media and public in general.
But I guess unless the proof of it shows up in its financial numbers, it has little value. And the numbers do show up
as they keep ratcheting up impressive numbers quarter after quarter justifying their price accelerations.
And they keep expanding deeper and deeper vertically in the non-Amazon eCommerce world which I think will pave the
way for them to keep on increasing their revenues for the foreseeable future. Already profitable,
FCF positive with good cash reserves and no debt helps their cause as well. As the eCommerce industry traverses
through COVID and post-COVID world, their revenue growth rates will probably re-calibrate to a different range
but I think this company is actually executing on its promise currently as compared to a FSLY whose potential is
in the future and still needs to execute at least better than most for the results to follow.
SQ - Although within the same broad Financial Services industry, I like how Square tries to go after multiple opportunities
in parallel and given the secular tailwinds in cashless, payments, crypto enabled(maybe) financial transactions,
the odds of them making it big in at least one of their revenue segments and becoming a longer term leading financial services
company are pretty high imo. And they have been posting consistent 40%+ revenue growth(63% last in Q2) in the last 6 quarters
while either being profitable or not being too far away from profitability consistently is a positive for me.
If their GPV or Revenue Growth begins to shrink or if I come across a better growth prospect in this industry,
I will consider either switching or splitting between the two companies.
ETSY - I understand its place amongst the giants of eCommerce and they posted really strong numbers these past two quarters.
Being in the middle a chance occurrence is one thing and being able to execute and show results in the middle of the chaos is another thing.
Their execution so far should add to the credibility of their CEO. But I believe a lot of their future growth will depend
on their ability to capitalize on their newfound fame and see what other previously untapped opportunities will
they be able to tap. May require some creativity on their end to foresee new shopping habits and customer behaviors coming out of this pandemic.
Last six quarters growth rates from 2019 Q1 to 2020 Q2 - 40%, 36%, 31%, 35%, 34%, 137%, 128%. So it is clear they were an
average 30%+ grower before the pandemic hit. I am optimistic but keeping a close watch on where they go from here.
MELI - A leading LATAM eCommerce company that like Amazon goes deeper and deeper with their vertical integrations
adding logistics, payments, lending solutions. Their last Qs revenue growth from 2019 Q1 to 2020 Q2 - 48%, 63%, 70%, 58%, 37%, 61%.
They are part Square and part Amazon in their business functions and their revenues from restaurants/small businesses
got effected during the March lockdowns which explains the dip to 37% revenue growth in 2020 Q1.
So unlike Amazon, they are at risk of loss of revenue if lockdowns return. Given my lack of familiarity with that part of the world,
I'm reliant on their quarterly results to gauge my conviction levels and will revisit accordingly.
API - I'm convinced there will be more video is eCommerce going forward and this is already reflected in shopping
behaviors in China and Southeast Asia. So I like the space they operate in and posted 100%+ revenue growth these
past two quarters ( Q2 as a public company as they only IPOed in July 2020 ). I wanted to keep my exposure to a primarily Chinese
company to 2% at the time of taking the position and it is currently a 1.6% position for me and I haven't read any new negative
news about them since taking the position. Like MELI, given the lack of relative familiarity of their market I will wait for their Q3 ER and act accordingly.
SNOW - Like most folks I'm still concerned about its steep price appreciation right out of the gate from IPO and wonder
if future growth is already priced in big time. But given my background in ERP software, I'm reasonably aware of the
promise of SNOW and the pain points that they can solve for enterprises. I came across analyst estimates of 113%, 90% for 2021 and 2022,
so if they can deliver at those growth rates with 150%+ DBNERs, they may grow into their valuation over time.
Market clearly has sky high expectations given their past growth rates, future estimates and execution team.
I find this situation very peculiar as compared to all the high valuation chatter that has happened over the past year with ZM, SHOP etc.
Instead of waiting on the sidelines and watch, I wanted to take a starter position and keep adding if there are good opportunities.
I think market in general is convinced of SNOW's value proposition and the relative untapped space in the
cloud data warehouse/analytics/processing industry, so if SNOW in its own industry segment can attain the equivalent stature of ServiceNow
achieved in its Cloud ITSM industry, I think the price appreciation will be very rewarding.
U - A recent IPO and a new area for me to understand as I have never been into any sort of mobile/PC games.
So far my reading points to Unity and Epic as the top two leading platform providers for game developers
and it appears the gaming industry is going through a fascinating phase. It appears mobile, 5G, AR/VR, gaming, eSports
is converging into something bigger and unforeseen. Of course, Saul's method is not about a narrative play but a play on facts and numbers.
So both Unity and Epic as the leader have plethora of options to press for revenue growth and Unity in particular as a
public company I'm hoping will start posting good numbers for everyone to see. I plan to add as they go through lockout period and 1-2 ERs as a public company.
FROG - My wife's company uses Artifcatory, a key product from JFROG, again a new IPO. Managing software release cycles
can get very complicated and especially in a globally dispersed team setup, the need for best of breed DevOps tools is paramount
otherwise it directly impacts the productivity of dozens of developers and by extension major project deliverables
and may result in significant cost overruns. So I understand the sub-industry that JFROG is trying to get to and
given their roaster of customers, it seems to have found a good niche. However I'm not yet sure if any of the other
JFROG's product offerings have found any mass adaptation. Just a start position for now and will decide as I read more about them and review their Q3 ER.
FTCH - Online marketplace for luxury clothing and accessories. Their revenue growth rates these past 6 quarters beginning
from 2019 Q1 to 2020 Q2 is 38%, 42%, 90%, 95%, 90%, 74%. Not profitable but FCF positive this in 2020 Q2.
Clearly from their revenue growth rates in 2020 Q1, Q2 pandemic didn't slow down eCommerce for luxury goods.
They own only one physical store but otherwise don't own inventory. Starter position for now and will add as I build my conviction around it.
Background
I'm a 40-year-old guy living on the west coast with a background in ERP Software. Although I have always been a contributor
to 401k/ Rollover IRA etc, I have never been an active investor in the stock market primarily because of
a) lack of knowledge on how to go about investing b) lack of realization/understanding of the power of compounding
c) lack of knowledge that it is in fact possible for individual investors to consistently do better than indexes.
I started following some accounts on Twitter mid last year and got influenced by the vibrant growth/ cloud tech related activity.
Consequently, beginning around October 2019, I switched into ~35 stocks by the end of the year. Perhaps because of the timing
coming out of SaaS sell off in Fall 2019, I immediately started seeing results better than indexes which was very encouraging
as I wasn't just used to seeing that level of appreciation in comparison to indexes. And then COVID happened but fortunately I held through that period because
a) Almost all my invested money is in a rollover IRA b) I understood by then from my various online readings that it is better
to stay invested all the time as market timing is next to impossible
c) drawdown and then the subsequent recovery was so swift that my nascent investing brain just stalled looking at all the action.
As the recovery in the subsequent period was more than exciting, I wanted to get much better at this.
So I started reading even more online and stumbled into this Saul's board which immediately cast light on so many topics that were still hazy in my head.
Yes, a few smart Twitter accounts share their wisdom selflessly, but nothing came close to the knowledge base that Saul and
other leaders on this board curated which effectively baby sits the reader through Saul's investing mind and his successful journey.
It literally is a treasure chest for newbies and I 100% agree with someone here recently quoting on the lines "Saul teaches you to fish as well as shares his catch".
I looked at a few paid services in this past year, but nothing seemed to go as granular and as transparent as the conversations on this board.
So many contributors on this board to get inspired from, thank you all once again.
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Hi Upsidedown and other SEA (SE) holders…
SE - A Singaporean company that operates primarily in Southeast Asia and has been entering into LATAM, Indian markets. They are a well established with profitable game publishing and development business(Garena), growing eCommerce(Shopee) business and a nascent Fintech business(SeaMoney). It was founded in 2009, IPOed in 2017 with a MarketCap of $4.5B, their current MarketCap is $76B. …I plan to stay invested and keeping it as one of the core positions.
A couple of points:-
- Lazada - SEA’s number 1 competitor owner by Ali Baba disclosed a data leakage within its Red Mart customer database in Singapore last week. Not sure whether this will negatively affect Lazada and positively affect Shopee or potentially negatively affect the lot but just FYI.
https://www.channelnewsasia.com/news/singapore/lazada-redmar…
- Ali Baba this year is going to be pursuing an extended 11.11 sales event with a pre-sale period. Lazada seems to be adopting this too. This could affect like for like comparisons for Shopee this year.
https://www.alizila.com/what-to-expect-from-alibabas-2020-11…
https://pages.lazada.sg/wow/gcp/lazada/channel/sg/pre-sale/h…
Regards
Ant
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