What I’ve done so far in this tech mini-me

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What I’ve done so far in this tech mini-meltdown:

First of all, I call it a MINI-meltdown because when I closed the month of May on the last weekend of May (two and a half weeks ago), my portfolio was up 36.2%, and as of yesterday’s close it was up 36.4%. A lot of tumult but not a lot of damage (as of yet).

Okay, what have I done? Well it was kind of a no-brainer for me. I had an oversized position that didn’t need to be oversized, and which has been going up almost every day while all my tech stocks were dropping 5% to 10%, so I sold a little of it to buy some stocks that still had a great future but were down because everything tech was down. Here are the details.

LGIH was at $32.40 when I ended May. It was an 11.1% position, and second in size only to Shopify. It is now at $37.15, up 14.6% in a couple of weeks since then. I trimmed some for cash, but it’s percentage of the portfolio didn’t drop too much because it was going up the past few days while everything else was going down. It’s still in second place, but at 9.6%.

So, what did I do with the money? I bought some:

Hubspot – They had great results and even surprised themselves and everyone else with a 3 cent profit, their first. Now cash flow positive every quarter.
Splunk
Hortonworks – They announced an expanded alliance with IBM and, to quote from the press release: “IBM will migrate existing IBM BigInsights users to HDP”. If this wasn’t a tech meltdown, Horton would have been up 20%.
Mulesoft and Talend – I couldn’t resist when they sold off.

And I took a new 2.0% position in Nvidia

I helped finance the new Nividia position by exiting my little try-out position in The Trade Desk. It may turn out to be a mistake, but I just thought that Nividia had a dominant position (for now) in a lot of potentially very large fields, and from my experience with Criteo and Rubicon Project, the advertising field was a dog-eat-dog kind of competition where it was difficult to keep a lead. So I thought Nvidia was a better choice. But if you like The Trade Desk, you don’t need to argue with me. I’m no expert.

So that’s what I did. I’m not claiming it was the best course of action. It’s just what I did. I know that the tech stocks “could fall another 20%.” But this is just what I did. Yes I know that if they fall another 10%, all these TA shorts will suddenly appear again on our board saying all their charts say “Sell! Sell! Sell!” (just like they appeared at the very bottom in February last year to tell us to sell). But again, I’m just telling you what I did. Today I expect I’ll just sit back and watch.

Hope that you all do well.

Saul

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Saul is nimble! Denny not so much.

On Friday I sold two covered calls to finance buying more high tech ETFs but put off buying because I want to give the market time to blow off more steam. Today NASDAQ and the high tech ETFs are testing Monday’s lows so I continue to watch and wait.

Ross Stores (ROST) is my favorite retail investment which I sold for $64.695 during August last year and have been waiting to get back in. Today down below $60 for the first time since then.

I don’t think this correction is done yet.

Denny Schlesinger

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Saul, I noticed in your post that you provided a reason for each stock you put money into, except for Splunk. Was there a particular reason you put some of the money there?

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Saul, I noticed in your post that you provided a reason for each stock you put money into, except for Splunk. Was there a particular reason you put some of the money there?

Revenue keeps going up, adjusted earnings keep going up, operating cash flow keeps going up, free cash flow keeps going up, stock price still where it was a year ago, while other tech stocks have been on a tear. This seems to be at least partly due to a perception of them as just a security provider, and partly due to a perceived revenue disappointment in the reported results, the cause of which seems pretty clear: they are in the midst of shifting to a subscription model which means all the revenue isn’t recognized right away, but part is deferred.

By coincidence Bert wrote about them today.

Saul

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Thanks Saul.

Yes, I did see Bert’s article today, too.

Thanks again for your response.

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On Splunk, Saul, can you expand on your comment that it’s viewed as “just a security provider?” Splunk is about Big Data Analytics. Yes, they do have a security related offering (https://www.splunk.com/en_us/products/premium-solutions/splu…), but even that is actually about analyzing data from security applications, not the actual securing of anything.

Am I missing something either in what Splunk does or what other analysts have been saying about them?

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On Splunk, Saul, can you expand on your comment that it’s viewed as “just a security provider?” Splunk is about Big Data Analytics. Yes, they do have a security related offering but even that is actually about analyzing data from security applications, not the actual securing of anything. Am I missing something either in what Splunk does or what other analysts have been saying about them?

Hi Smorgasbord, I think a lot of them don’t understand that. Here’s an example news article:

Susquehanna sees upside in cybersecurity stocks

Jun. 7, 2017 5:59 AM ET|By: SA Eli Hoffmann, SA News Editor
Susquehanna initiates coverage on the following cybersecurity and tech stocks:

CheckPoint (NASDAQ:CHKP): Positive. $132 price target implies 16.1% upside.

Fortinet (NASDAQ:FTNT): Neutral. $45 PT implies 15.1% upside.

FireEye (NASDAQ:FEYE): Neutral. $17 PT implies 7.7% upside.

…

Splunk (NASDAQ:SPLK): Neutral. $68 PT implies 8.2% upside.

Symantec (NASDAQ:SYMC): Neutral. $32 PT implies 5.7% upside.

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Here’s a post I just wrote on the RB board for Splunk, about Bert’s piece that Saul mentioned, in case anyone is interested:

This is one you should have already read if you’re a Splunk shareholder! :slight_smile:

https://seekingalpha.com/article/4081988-can-splunk-shares-e……

It’ a long one to be sure, but well worth it. Here’s a snippet:

the transition to ratable revenue sources. … whose impact is probably reaching its apogee in terms of negatively impacting year over year comparisons this year and the next year, is pressuring both overall reported revenue growth and gross margins. At some point, the impact will reverse and lead to higher margins as subscription renewals make up a higher proportion of revenue-but when that might be and how that will translate into the company’s longer-term business model cannot be precisely forecast at this point.

I have no particular silver bullet to add, but I think these statements from Bert may even prove conservative. Revenue grew 30% YoY in the April quarter, but maintenance and services (recurring) revenue grew 48% YoY. The latter was more than half of the pie, so if we haven’t already hit the apogee he speaks of, it certainly seems imminent.

This is very good for the long term. When the Street will catch on…we’ll see.

Bear

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