Year End Portfolio Review

Investment Analysis Clubs Saul’s Investing Discussions
1

Year End Summary

2019 Return = 58%
3-year Return= 178%

Clearly, I love many SaaS companies, but I will continue to say that they are not the ONLY game in town. Some of my growth investments are similar to the group here. Maybe the other’s will spur some thought.

Allocations
Alteryx = 21.5%
Mongo DB = 15.5%
The Trade Desk = 13.0%
Mercadolibre = 11%
Guardant Health = 8.6%
Square = 7.7%
Tricida = 6.9%
Zscaler = 5.3%
Crowdstrike = 3.9%
Data Dog = 2.9%
Coupa Software = 2.6%
Arena Pharmaceuticals = 1.1%

Thoughts on the Companies:

Alteryx:

  1. Non-GAAP earnings tripled YOY to 0.24 (I love earnings)
  2. Gross Margins are at 92%.
  3. Customer count increase is steady.
    No reason to change allocation.

MongoDB

  1. Revenue growth has dropped from 78% to 67% to 52%.
  2. Atlas (lower margin business) customers are up 92% YOY.
  3. Management claims that Atlas is scaling well and margins will be improving.
  4. Quarterly earnings have been an ongoing point of frustration.
  5. TAM ~ $84B three years from now, so they should be able a meaningful chunk of that, so revenue should gap up from $383.7M.
    Holding but need to see reversal in revenue and improvement in profit situation.

The Trade Desk

  1. Earnings are good but jumpy.
  2. The combination of elections and growth opportunity with Amazon is encouraging.
  3. Should see increasing cut of $725B pie.
  4. Headwinds facing Facebook and Google may help TTD.
    Looks like a solid year is coming with the tailwinds listed above.

Guardant Health

  1. Clinical Test Increase 111% YOY
  2. Operating expenses seem to be under control.
  3. Guardant360 and GuardantOmni are generating significant revenue now butexpecting the bulk of revenue to come from early stage cancer screening, plus recurrence monitoring for people living in remission.
  4. TAM of $6 billion for Guardant360
  5. TAM GuardantOmni =$15 billion for Lunar-1, and $18 billion for Lunar-2.
  6. Revenue up 178%, but $178M is NOTHING compared to TAM.
  7. Many potential competitors.
    I can’t sleep on this one, but results have been sterling so far.

Tricida

  1. Once day of oral medication that reduces acid in blood without raising salt levels to help treat chronic kidney disease.
  2. Medicare spends $98B on kidney disease
  3. Kidney disease kills more people than breast cancer or prostate cancer
  4. Absorbed acid in the stomache and passes out through feces - mechanism allows for treatment of hypertension, edema and heart failure.
  5. 30MM patients with Stage 3-5 CKD are candidates (35% are diagnosed).
  6. Potentially only CKD treament
  7. 550,000 Potential Patients
  8. 4% patients receiving TRC101 had kidney function loss >50%, all 124 survived.
  9. 10.8% placebo patients had kidney function loss >50%, 4 out of 93 died.
  10. Market Cap = $1.6B
    Drug companies often sell for 8X max sales, I can be this being a 10 bagger in a few years. I cannot figure out why this is so cheap. Sure the NDA is not approved, but it is filed. Scratching my head, but happy to hold.

Zscaler

  1. Management claims to be unconcerned about competition, but revenue growth projections indicate they might be.
  2. Customer surveys indicate the highest satisifaction with the Zs cloud system.
  3. Zs made my former companies computers work much, much better.
    I recently sold half of my holdings. Love the space, but may shift some of these holdings to CRWD.

Crowdstrike

  1. 112% customer growth
  2. $7.0M free cash flow (YAY!!!)
  3. 88% increase in revenue
    Lockup period expires Monday. I plan to buy more after I see what that does to the price.

Datadog

  1. Love NRR = 146%
  2. Customers include:
    a. Wayfair
    b. Twitter
    c. Zendesk
    d. Mercadolibre
    e. Skechers
    f. The Motley Fool
  3. Expected revenue growth of 66% is great.
    Lockup of 3/17/20 gives me a little pause.

Coupa Software

  1. Revenue growth solidifying at 50.8%
  2. Scaling well with huge earnings jump to 0.20.
  3. Network effect, how customers can procure materials together is powerful.
  4. Knowing who to avoid using AI is powerful.
    Love the business model and results. Plan to increase in the near future.

Square: probably trimming to invest in better growers.

Arena: nothing has changed. I expect good results and a large increase in value.

That’s all I have time for now.

Happy New Year to all!

bulwnkl

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2

bulwnkl,

OT for this board but I’m long TCDA too. If you post any additional thoughts on TCDA, ARNA, or other biotech names on the Biotechnology board, I will read them.

Otherwise, thank you for a nice,succinct portfolio review.

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CRWD lockup expiration already happened last December 9th, so your notes may be out of date.
Cheers, PB.

2 Likes
4

Thanks, and definitely my CRWD notes are out of date. Let further purchasing begin.

bulwnkl

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