YTD return: 19.20%
Note – Returns through end of day, 10/1
Current drawdown from ATH: 7.43%
Portfolio hit all time low drawdown of 36.14% mid-may.
YTD returns by month:
2020 return: 159%
September seasonality, sector rotations, macro all played their part this month but happy to see my portfolio hit ATH mid-month briefly although back to ~7% drawdown now which puts me back to early Feb levels so in essence my portfolio value is unchanged from 8 months ago. During this period, my positions in Pinterest, Roku, Twillio, Fiverr, SoFi, Matterport, Skillz, Farfetch all of which have had medium-high allocations and smaller positions in LifeMed Inc, Katapult etc have hurt the most causing the underperformance as compared to the leaders of this board. In hindsight, positions in SoFi, Skillz, Farfetch were clear mistakes as I had questionable conviction which made me fold when they went out of favor and experienced signficant drawdowns. I could have been more incisive by at least right sizing Pinterest, Roku, Twillio as their stock performance pretty much echoed their ERs and/or leadership commentary. It appears that even if a company reports on numerous metrics, it’s only that 1-2 key metrics that drive market pulse for a high growth quality company. If those key metrics fail to maintain high expectations, it then becomes a near term mini-turnaround story. In highly competitive, lucrataive segments that these companies operate in, there is not much wiggle room to show signs of slowing down without macro reasons to support.
Although Saul and other leaders here demonstrated that quality high growth companies do infact have smaller drawdowns as compared to speculative or hope driven companies, I’m only learning this by experience that it is infact true. It doesn’t really matter if you are in 10 positions or 40 but if your composition is not that of high quality, high growth then drawdowns will be way worse which really challenges your gut during tough times and because of the way math works, recovery won’t be as linear as well. The only other way to limit drawdowns is probably to own FANGs or proven cash cows like Adobe, ServiceNow but then returns won’t be as spectacular.
UPST – 16%
CRWD – 11%
SE – 10%
ZI – 9%
TWLO – 8%
DOCN – 8%
MELI – 7%
LSPD – 7%
ROKU – 3%
MNDY – 3%
AFFRM – 2%
GLBE – 2%
NET – 1%
CASH - 6%
A cloud based Team Management Software company with low code/no code solutions that can be customized to customer needs. I think for them, posting hypergrowth revenue growth 80%+, continued improvement in operating leverage are minimum expectations from the market. Their key metric is probably the Enterprise customers > 50k ARR and the last four quarters sequential QoQ growth% is 34.59% which if maintained for next quarter, the count would be ~635 and sequential QoQ adds would be 165 which again would be a record adds in any given quarter. Also, I’m not sure if they have the potential to be a 100B+ market company as in my experience productivity apps aren’t typically among the top line items in Enterprise IT Spend, not from a single vendor anyway. I plan to keep it a small or medium sized position at best. Thanks to Saul and the board for the introduction and discussions about this company.
Fintech is going through an upheaval and the incumbent models are beign attacked from multiple angles. Although I personally don’t have appetite for BNPL purchases, I understand their value prop in their ability to circumvent the traditional, seemingly non-disruptable toll booths of visa/mastercard which then might give way to models that aren’t entirely clear now. I think at this point, Affirm is leading the BNPL pack after Afterpay was bought out by Square. Interested in watching how Amazon, Walmart, Shopify embed and showcase their partnership with Affirm as we roll into the holiday season. Is it really so easy for one company to onboard these giants in such a quick sucession and underwrite all their BNPL purchases ? Even if they are not holding the debt on their balance sheet but instead offloading it to investors, it still is quite a feat.
A platform that facilititates crossborder e-commerce, a must have functionality for any merchant with international customer base. I believe there is tons of greenfield opportunity for their platform even outside Shopify merchant ecosystem that I’m expecting them to be a consistent grower for the near term. Even Shopify gross margins are only in the 50% range, so perhaps Global-E’s gross margins will never be SaaS like despite their topline growth.
Just a starter position as they got sold off more than their peers and I have been looking to take a position from sometime. Well covered on this board and they appear to be knocking on a lot of doors to enter bigleague with all their product upgrades and releases. Unlike Fastly’s short lived six month honeymoon last year, Cloudflare has been a consistent ~50% grower past 9 quarters which I think is remarkable consistency and market rewarded them accordingly in the past 12 months or so. May be market needs another catalyst from them to take them higher from here, until then it may be a base building time for the stock price.
Just a starter position as they got sold off more than their peers and I have been looking to take a position from sometime. Well covered on this board and they appear to be knocking on a lot of doors to enter bigleague with all their product upgrades and releases. Unlike Fastly short lived six month honeymoon last year, Cloudflare has been a consistent ~50% grower past 9 quarters which I think is remarkable consistency and market rewarded them accordingly in the past 12 months or so. May be market needs another catalyst from them to take them higher from here, until then it may be a base building time for the stock price.
A Fintech super-app wannabe with myriad solutions ranging from Student Loans, Mortgages, Insurance, Investing etc product lines. Over 70% of their revenue is from lending products currently and a lot of things have to work in their favor for them to be able to tip that revenue balance away from lending and into other high margin areas. I never had very high conviction on them, held on to them far too long as I wasn’t nimble to take action and paid price. However I like their technology platform Galileo that helps in creating payment card programs and will take a relook at them if Galileo and other non-lending products start to take off.
A platform provider for streaming services that is perfectly poised to benefit from shift to streaming. One of the top two in its space in US along with Amazon Fire TV.
Chord cutting and ad dollars shift from linear to digital TV are the two trends that Roku is sailing on. Performance in both plays is reflected in Streaming hours growth which took a hit last quarter at least from an absolute basis and market is very hesitant to bet on their recovery. Leadership says that there is a segment of customers that like ad supported free content and they are the preferred platform for such streaming content. That may be true for the advertisers but am starting to wonder if customer behavior remained the same from the linear TV days where there is no real choice but to sit through ads. If they show improvement in Streaming hours in Q3, I will increase my position otherwise will look to exit completely.
Very well covered on this board. First time I let a position grow past 12% although I got uncomfortable past 20% and trimmed 1/6th. In an Invest Like The Best podcast, CEO mentioned that he wasn’t good at VC fund raising so that probably resulted in a lot of value being left on the table for the public markets to tap into which is probably a rarity these days where a company goes public at lofy valuations after bulk of the juice has been gobbled up by VC exits.
Not exactly sure what it is but despite their SaaS credentials, they don’t get rewarded in stock price in proportion to their financials. May be they aren’t seen as a must have for enterprises as compared to ZScaler, Crowdstrike, Cloudflare etc or may be the general perception on personally identifiable information holds their stock price back forever.
I belive in their ability to eventually be a 200B+ company with key product lines that should stay relevant into the distant future but I should have been swifter in trimming them after their last Quarter as it was clear they needed to show more proof of execution for near term stock price growth. Since I waited on them anyway, will wait until their Q3 and then decide.
No other major changes to other positions and will wait for the next ER to take any action on them.
August Summary - https://discussion.fool.com/upsidedown39s-august-portfolio-summa…