What I've done Fri/Mon/Tue

Friday

Sold LVGO at ~24
Trimmed DDOG at ~36
Added AYX at ~90
Bought OKTA at ~103

Monday

Added AYX at ~85
Added CRWD at ~33

Tuesday

Added ZM at ~106
Added PINS at ~11
Added ESTC at ~40
Trimmed ESTC at ~45
Trimmed CRWD at ~36

First off, I don’t have strong feelings about LVGO. It was only down about 20% from its recent high while others were getting crushed – that’s an easy sell.

Being willing to add when it’s the most scary can give you a short-term opportunity to trim at a gain as I did with CRWD (Mon-Tue) and ESTC (Tue).

But you’ll note I’ve also bought into quality – not just stocks getting crushed and looking incredibly cheap. ZM and OKTA still carry PS ratios among the highest of any stock I follow, but I still see them as buys, and so I bought.

All buys have been small, percentage-wise, because I want to stay as flexible as possible and not get to zero cash.

Hope everyone is finding some opportunities amidst the severe (and understandable) worry creating this volatility.

Bear

36 Likes

“First off, I don’t have strong feelings about LVGO. It was only down about 20% from its recent high while others were getting crushed – that’s an easy sell.”

not sure how that explains anything.
Saul had some sort of argument that it was good that RDVT ‘only dropped’ by 34% compared to his others. And that was a good thing. Again how does that explain anything?

They don’t drop or rise at the same time. Again what can you really say about all this movement?

tj

4 Likes

“First off, I don’t have strong feelings about LVGO. It was only down about 20% from its recent high while others were getting crushed – that’s an easy sell.”

not sure how that explains anything.
…Again what can you really say about all this movement?

TJ,

I wasn’t saying that I know what will happen with LVGO. I was taking advantage of the fact that it wasn’t down, and selling. It was a low conviction position, so I was happy to get rid of it at a time when I could redeploy the cash into other favorites at much lower prices (than where they had been).

Sorry if that wasn’t clear. The point of my post was just to explain what I do in times like these and why. I always try to trim the fat (low confidence positions) and add opportunistically to my favorites.

Take care,
Bear

3 Likes

ESTC drop has been tough to stomach, but sometimes best move is to do nothing, and wait for rebound.
They have $300m in cash, and would take about 7 Q’s to burn thru that.

Their next ER will be for Q4, due to screwy calendar, so will be interesting to hear their approach to getting closer to breakeven on FCF basis. For now, mgmt has done exactly what they stated they would do, which is focus on market share, and the point of their IPO was to have the funds to burn to do just that.

I have been trying to think of how virus/economy impact could hit them, and it just really isn’t clear what the negative impact would be, as they aren’t focused on smaller businesses (like retail/smb/restaurants) but rather allow consumption of their services to be dictated by needs of the client, regardless of their size.

Today was business as usual for them, announcing progress on FedRAMP status:
https://seekingalpha.com/pr/17811335-elastic-achieves-fedram…

I think this is particularly notable as AWS had “lost” the larger cloud contract to Azure, and Azure doesn’t try to offer a competing Elasticsearch service like AWS does. So some synergy there as Elastic Cloud is good to go on Azure, per below:

https://www.elastic.co/azure?ultron=[EL]-[B]-[AMER]-US+CA-Ex…

Fed should continue to grow, and as companies look to automate and be more efficient, the cloud-based SaaS segment of ESTC should continue to grow rapidly (was over 100% y/y in last ER).

In my world, companies are still very much on-prem. For example, AYX is largely an on-prem motion…not cloud-based. So you can’t knock ESTC for having a dual hybrid strategy yet still think AYX has a good business model.

I have definitely been proven wrong to-date on ESTC, but their last ER was very good, so I am following those numbers, and since valuation is so favorable, an explosion upward seems inevitable, especially from these levels. But I am just a guy on the internet.

Dreamer

6 Likes

I have definitely been proven wrong to-date on ESTC, but their last ER was very good, so I am following those numbers, and since valuation is so favorable, an explosion upward seems inevitable, especially from these levels. But I am just a guy on the internet.

Good post Dreamer. My only quibble is the word “inevitable.” I think an explosion upward is certainly possible…but for that to happen the market will have to endow it with a reasonable valuable. My guess is that’s because we’re not seeing what the market is seeing. Who’s right? Doesn’t seem inevitable to me that we are.

But until I see it, I can’t sell.

Bear

First off, I don’t have strong feelings about LVGO. It was only down about 20% from its recent high while others were getting crushed – that’s an easy sell.

I see this differently. LVGO and SE were pretty large positions for me, but their relative strength during this downturn (SE also was only down ~20% from its high when the S&P was down 29%) convinced me that these were stocks that I should absolutely hold on to. My guess was that since their valuations were reasonable before the downturn and they both have an amazing amount of upside (both have triple digit growth rates), the downside is very limited and therefore they shouldn’t be sold as aggressively as other stocks I’m not as sure about.

I figured there aren’t going to be many “big drop” opportunities for LVGO, so I’ve been adding to them. Don’t get me wrong, I’ve been selling positions I’m less confident about and adding to positions that I think are amazingly undervalued, but I’ve also been adding to stocks like LVGO that I feel good about, even if they haven’t dropped much. What other opportunity am I going to get to add to LVGO at this valuation?

CloudAtlas

5 Likes

I am puzzled by the change in confidence level wrt LVNGO. They last reported rev for the Q up 137% YoY, a record no. of new clients, 50% growth in valuation of agreements, expanded usage per client, rapid growth in number of clients, expansion from 20 to 30% penetration of the Fortune 500 companies. Increase in EBITDA and strong projections for the coming year. And a few other impressive details.

Where have they gone wrong?

4 Likes