Vinegar101 - First Portfolio Update

Hey guys, massive fan of Saul & the board. Looking forward to contributing more! As of EOD 3/31/2020, I am up 8.6% for the year, and I am very grateful to Saul and the board for this, given that the market at that time was down 20%.

Prior to learning about this board, I had more than 60 positions, since the motley fool indicated that “more stock adviser picks increases your chances of beating the market”. That is true, but as others on this board have already pointed out, with 60+ stocks, you most likely will not beat the market by much. Meanwhile Saul and the board regularly trounce the market.

Without this board, I would have never had the confidence to buy a 10% position in Zoom, now worth 17%, and the greatest investment I’ve ever made.

My goal is to focus more so on why I hold some of the less popular/less common positions on this board. I think the hard hitters on this board have already done a great job explaining why we should own, for example Crowd Strike. Or Alteryx. I agree with their judgment and so will not be repeating what’s already been said.

My holdings as of 3/31/2020

Table 1
ZM 17%
CRWD 12%
AYX 12%
DDOG 11%
TTD 7%

Moves made in 3/31/2020
Added heavily to: LVGO, CRWD, ROKU, AYX, DDOG
Added to: COUP, SHOP, TTD,

SOLD out of:
AMZN – 3% position sold to 0 – too big to grow like our growth stocks
TWLO – 2.5% position sold to 0 – slowing growth – the board discussed this already
SFIX – 2% position sold to 0 – inconsistent performance, not a SAAS stock.
TDOC – 3% position sold to 0 – I regret selling this. Sold in early march when it was spiking due to covid, and captured some covid gains. At the time, I thought COVID would have blown over by now…I was rather wrong lol. Might buy back in. Revenue growth historically is not impressive for this company, but they are/have established a very sustainable competitive advantage.
APT – 1.5% position sold to 0. Agree with Saul that this business will get particularly hurt during a recession.
PAYC – 3% position sold to 0 – low confidence in growth prospects
MDB – 3% position sold to 0 -Explained this move in a post a few weeks ago.

Why I’m holding
ZM – Zoom was originally about 10% of my portfolio but has performed so well that it is now at 17%. Excellent long term prospects – in the short term, it’s going to come down to whether or not the massive recent price inflation is justified. Seems the common consensus is that it’s over valued, but Saul has been making a great case that it is actually under valued. I’m definitely not selling.

Concerns about security/privacy are probably way over blown. If anything, this has given us another buying opportunity. For the most part, people historically don’t know/care to know about internet security or privacy. It also, for the most part, does a fine job with security/privacy, and is taking steps to be even better.

DDOG – Has not bounced back like CRWD or LVGO, I think for two reasons. Firstly, as others have noted, DDOG is in the “observability/monitoring” space. As a software engineer, I can tell you that not all apps need this, and the ones that can forgo this will. So DDOG is definitely less necessary than CRWD which keeps companies safe, and COUP which helps companies manage expenses.

Second reason it hasn’t bounced, is that they reported earnings before peak COVID madness, so they have not expressed what the effect on their business will be. For example, CRWD, COUP, and even SQ have all addressed how covid may affect their businesses, meanwhile I am not aware of DDOG doing any such thing.

Long term (greater than 1 year out) I am still a big believer in DDOG. The software that I work on (at a fortune 500 financial firm) uses it and we software engineers love its simplicity and understandability. We’re trying to use more DDOG.

CRWD – In heavy agreement with general board sentiment that this company is a home run in waiting.

AYX – What I said about DDOG, about how it is a) not that essential and b) reported before peak covid madness applies even more so to AYX than DDOG. There will be at least some companies that delay purchasing AYX due to “belt tightening” so to speak, which is going to hurt revenue growth. That said, this company is amazing, and in the long term we will be very grateful we were able to buy in the $80price range per share. I’ve been buying call options and additional shares.

SHOP – Sorta wish I owned less of this one, and it has been on the chopping block for a while. There is something to be said though that this company is a long term winner, and we should hold winners. Furthermore, they just posted a great quarter (growth reaccelerated to 47% year over year). Due to covid, companies will be even more reliant than ever on their digital presence, which SHOP will help deliver on. As I said about AYX though, due to “belt tightening”, some companies may ultimately spend less money which would eat into SHOP’s growth rate. I think this company has great long term prospects.

Quarterly YoY rev growth rate looks like this (most recent quarter first) 47%, 44%, 47%, 49%, 54%, 57%, 61%, 68%, 70%

Definitely trending down, although this acceleration it hit was the first acceleration it’s seen since in its history as a public company. If anything, that means it is perhaps not likely to keep accelerating, especially given the current market environment.

Last interesting SHOP foot note - Tobias Lutke, the CEO, owns 6% of the company still.

OKTA – See Saul’s write up.
COUP – See Saul’s write up.
TTD – Revenue growth has been slowing, but profits continue to rise. I think this company’s strong competitive position, growing profits, and extremely high TAM make this a potential “CAP” play that could still deliver strong returns. That said, it is on my watch list to sell. CAP plays can turn into complete duds very quickly.

LVGO – Link to my CC notes (a blowout quarter) here:…

Just on Friday the stock popped 12% on news that Kaiser Permanente made the company’s mental wellness app available to members at no cost. That’s 12.2 million new members who now can access LVGO’s product free of charge.

I think this stock could prove to possibly benefit from (or at least not get that hurt by) COVID. It’s already hovering around its price pre-covid. Their CEO was on CNBC last week talking about how LVGO’s monitoring can be used to monitor COVID patients. That said, their bread and butter is their diabetes management system, but they do have other offerings in weight management, hypertension, and prediabetes.

I thought Stock Novice did a great intro write up on their business in his portfolio update here:…

As of today, it is a $2.74 billion market cap that just grew revenues 140% in Q4 2019 and 150% for the whole year of 2019. LVGO is a SAAS stock with a p/s of 13.71 as of 3/31/2020. Similar to our other favorite SAAS stocks, it’s revenue is recurring and their retention of customers is very high.

revenues (millions) Quarterly Sequential Growth,Quarterly YOY growth
?Q42019 $50.3 7% 140%?
Q32019 $47 15% 147%
?Q22019 $41 28% 156%
?Q12019 $32 52% 167%?
Q42018 $21 11% n/a?
Q32018 $19 19% n/a
?Q22018 $16 33% n/a?
Q12018 $12 n/a n/a

Other highlights:
There are 34 million Americans with diabetes – their Livongo for Diabetes app currently only has 222,700 members. This leaves plenty of room to grow.

Moreover, with more than 147 million Americans living with a chronic condition and 40% living with more than one, there is plenty of room to grow our addressable market.

Although roku will be hurt by decreased ad spend in the short term, its customer acquisition will increase due to COVID, thus strengthening its position in the long run. Once it gets customers, they tend to use the platform more and more over time.

Quarterly Revenue growth rate (yoy) looks like this: 49%, 50%, 60%, 51%, 46%, 39%, 57%
We see that it is declining lately, but it is still strong.
Roku’s use base expanded 36% in 2019, closing out the year with 36.9 million active accounts.
The 11.7 billion hours of content streamed through Roku’s platform in its latest quarter has risen 60% over the past year. We’re talking about nearly 4 billion hours of content a month!
Average revenue per user was $23.14 over the trailing 12 months, 29% better than it was in 2018.
It is possible a short squeeze is coming – 15 milion shares sold short as of mid march. Short interest has nearly doubled over the past year.

Last Roku footnote - Roku express media players are the #3 top seller in amazon’s wide electronics field

BILL – trial position that I referenced in a post last week. For more info, see this thread:…


To add a little colour to your LVGO details and provide further insight into the size of their TAM. Across the world there are 420 million people with diabetes and this is growing by 20 million a year. When they expand into international markets they increase their TAM by a factor of 10, that’s around $500B for one of their platform offerings. It is clearly going to take LVGO time to be in a position to address a significant proportion of this TAM but in the meantime their first mover advantage provides plenty of room to grow in the US alone.
The additional offerings on their platform will grow their TAM significantly too.
LVGO reminds me of SHOP, SaaS platform play with a humongous TAM and first mover advantage. If they execute well (I am impressed with the exec team) they will be a massive winner.