Willo2028 November Portfolio Decisions

WillO2028 · November 30, 2021, 7:39pm

Performance to date


2021 > %
2020 > +203% 
2019 > +32.9%
2018 > +38.9%

2021>.           Month.            YTD
January >.       +3.6%.           +3.6%
February >.     (-)0.87%.         +2.7%
March >.        (-)13%.          (-)11%
April >.         +13.56%          +1.37%
May >.           +5.35%.          +6.8%
June >.          +15.2%.          +23%
July >.          +5%.             +29%
August >.        +24.3%.          +60.5%
Sept>            +2.9%            +65.22%
Oct>.            +16%.            +91.7%
Nov>.           (-)14%.           +54.38%


      November 30  October 31. Sept 30.  Aug 31.  July 31.   June 30.  May 31  April30. March 31
Upstart    11.73%.   25.27%    27.52%.   22.47%.  14.76%.      0%.       0%.       0%.      0%
Datadog.   16.28%.   11.91%    16.39%.   16.43%.  16.42%.  16.21%.   16.63%.   16.83%.  17.85%
Cloudflare 14.06%.   13.23%.    9.33%.   14.45%   17.60%.  16.48%.   18.92%.   25.12%.  23.82%
Monday.    17.92%.   10.37%.    8.72%.       0%.      0%.      0%.       0%.       0%.      0%
Lightspeed.    0%.    9.75%.    8.78%.    4.40%.      0%.      0%.       0%.       0%.      0%
Zscaler.    8.64%.    7.06%.    6.51%.       0%.   2.75%.      0%.       0%.       0%.      0%
Snowflake. 11.35%.    8.84%.    7.51%.   10.32%.  12.67%.  12.10%.   12.20%.   15.68%.  18.01%
ZoomInfo.   9.22%.    6.72%.    7.09%.    7.75%.   7.98%.   8.12%.   10.50%.    6.32%.      0%
Crowdstrike10.81%.    6.84%.    8.14%.   19.12%   21.50%.  22.36%.   24.19%.   24.05%.  24.51%
Docusign.      0%.       0%.       0%.       0%.   6.32%.  10.88%     6.46%.    7.75%.   7.74%
Pinterest.     0%.       0%.       0%.       0%.      0%.      0%.       0%.    4.46%.   3.18%
OKTA.          0%.       0%.       0%.       0%.      0%.      0%.       0%.       0%.   4.89%

Most likely to add to this portfolio:
Amplitude(AMPL)

I’m well off my ATH, up 105% YTD, about four weeks ago . I lost 25% of a 10% position in Lightspeed. I lost 17% of a 28% position in Upstart. The day after Upstart earnings, Monday.com’s 22% pre-earnings drop hurt; but, being able to put a large chunk of what was left in Upstart into Monday when Mondays share price dropped due to FUD makes me feel like there’s a lot of upside in my portfolio right now. And My total portfolio remains up 54% YTD, So keeping that in mind does help take some sting out.

I recently re-read Newbies place to start, put together and posted by Muji now on the side panel to the right. In Distilled Knowledge is this post that of course I read many times over the years. I believe this post more than most explains my approach to investing this month https://discussion.fool.com/over-the-last-year-and-this-happens-…
TLDWR:
You do not beat the market by thinking you are “smarter” than the market. You beat it by understanding what the market never understands as it always either overreacts to FUD or underreacts to those few extreme world changing businesses.
-Tinker

Trading concerned with the FUD swirling around World Changing Businesses and not trading concerning their valuation is psychologically difficult for me. The rub I feel is due to my resistance to two of Saul’s principles.

‘Don’t sell due to valuation’ when there is no historical way to measure this … https://discussion.fool.com/oh-this-time-it8217s-different-33123….
True FUD events don’t happen often. When valuation does scream ‘too high’ Ala Cloudflare, I tend to want to do something more than… ‘trim only if the allocation keeps me from sleeping or there’s something I want to buy more’.
‘Don’t trade based only on technology alone. A great Go To Market strategy may be as important or more important in determining who’ll take share.’
My tendency is to go to the tech to determine TAM and Moat and use this as a reason to trim a stock that has run into a huge valuation. That’s part of why last month I sold and then this month bought back a bunch of Crowdstrike. I don’t recommend it.

In order to practice these two principles and short circuit these two tendencies/biases:
It helps me to remember that other than trimming or adding a little in order to take advantage of a real FUD event or just to sleep better at night before earnings, I principally trade only when new information leads me to believe a company’s abilities have changed, regarding how they are efficiently riding the combining adoption curves of their tech up the hockey-stick toward becoming behemoths(see my July’s Portfolio Summary below for what exactly this means).

When reading the following keep in mind that although this portfolio has now grown to be more than 99% of what we will live on in retirement, this portfolio is what is in our non-taxable Roth and Rollover IRAs only. We have not added any money to these accounts for many years. To buy something I’ve sold something else. I don’t trade options or use any leverage. I stay fully invested at all times and keep less than 1% in cash.
—————-
What I did (5 trades this month)and why during the month of November 2021.

11/2/21
Sold 5% of 13% position in NET and added to DDOG and CRWD. I sold this Small amount of Cloudflare just to sleep better before an earnings release. I believe Datadog’s phenomenal GoToMarket (as measured by their expand - NRR >130% for the past 17 quarters. And Datadog’s R&D spend surpassed S&M spend earlier this year and now exceeds it by 30% on an absolute basis.) is going to continue to take market share in their forever growing TAM. I think Dynatrace might have better products; but, I expect Datadog to keep winning for a long, long time due to this GoToMarket prowess. I’m buying Crowdstrike here because I realized I sold too much, based on my making assumptions about Cloudflare taking share in end point protection.

11/4/21
Lightspeed reported at 5am my time. The report was very disappointing on nearly every level. But all I needed to see was the following:
Revenue growth in dollars, compared to the prior quarter:
Q3 Q4. Q1. Q2. Q3
+$9.3m → +$12.1m → +$24.8m → +$33.5m → +$17.1m
Gross margin, what had kept me out until recently, **-> just 50%**down further from the 51% of last quarter.
Worse, IMO, was the decrease in growth of customer adds from: Q3FY21 to Q4FY21 +35,000 Q4FY21 to Q1FY22 +10,000; Q1FY22 to Q2FY22 ->+6,000. If you look at organic only it’s much worse.
This decreasing growth is not in my investment thesis during what is supposed to be the early phase of Lightspeeds adoption..
So then there was 8.

Upstart 30%
Datadog 12.90%
Cloudflare 12.62%
Snowflake 10.13%
Monday.com 10.05%
ZoomInfo 9.01%
Crowdstrike 7.84%
Zscaler 7.24%

I invested all of the money from selling out of Lightspeed to buy more of almost all my other positions. Because I hold a concentrated portfolio, disappointment can be very costly. Because I hold a concentrated portfolio, I was able to know when to get out and where to deploy the remaining capital quickly, taking advantage of the benefit in managing a relatively small amount of dollars. Because I was confident in both when to sell Lightspeed and where to put the remaining money to work, I ended up by the end of the day with more in my overall portfolio, despite begining the day with a 20-25% loss in what was a 10% position in Lightspeed.
Just because the total amount in my portfolio grew to end the day with more in it doesn’t mean my portfolio wouldn’t have been up even more had I woken up in time for the release of the Lightspeed report. The amount of money I lost from sleeping till 6 doesn’t sting as much as it should.

11/9/21
Sold some Monday to bring Upstart back up to 28% on Upstart’s drop of 7% before Earnings and Mondays 2 days of 8% gains before theirs. Monday got up to 12% of my portfolio and like Saul I didn’t want to need to sell a bunch of a high priced stock that is thinly traded, if the report doesn’t go the way I believe it will.

Upstart reported- my first reaction was shock that Revenue didn’t grow by $250Million…and shock! that I was disappointed with 250% YoY revenue growth.
—————-
11/10/21
Lock up expiration is never unexpected and therefore usually doesnt suppress share price for any length of time. Monday.com had a near perfect quarter; but, in the Call management was honest about not knowing how many shares would be sold this Friday. I beleive we have been afforded an opportunity to increase our allocation here at a much lower price than Monday should command if not during Lockup expiration, based on how much more I’m valuing this company after earnings.

Over all, Monday.com Earnings Release delivered much smaller YoY growth numbers than those provided by Upstart ; however, Monday did show predictable if slight QoQ acceleration so I’m happy I chose to make Monday overweight here. On a lucky uptick when Upstart had ‘only’ dropped ~15% from pre-earnings I sold 1/2 of what had become a 23% position. And then hours later when Mondays share price dropped ~20% on the FUD, I added a little to every other position and I added the bulk of it, in nearly equal amounts, to Crowdstrike and Monday.com. Again ‘I’m buying Crowdstrike here because I realized I sold too much, based on my making assumptions about Cloudflare taking share in end point protection.’.

Monday 17.43%
Datadog 15.88%
Cloudflare 13.44%
Crowdstrike 12.92%
Upstart 11.77%
Snowflake 11.10%
ZoomInfo 9.73%
Zscaler. 7.73%

11/18/21
Trimmed Monday.com, after some of that FUD cleared , to buy back some Upstart.

My favorite from all the posts about UPST after earnings:
Jweist-
“SaaS is great for revenue consistency, but it says nothing about growth.”

I’m looking to trim more from Monday, it being over weighted presently, as the FUD from Monday’s Lock up expiration dissipates and their share price goes up at least as much as they demonstrated increased value in their business after their spectacular ER. I’m thinking at least back up to $450 where it was prior to the report. I’ll be looking to add to any one or more in my portfolio that might be down due to FUD of their own:pray: ( I’m feeling pretty equal conviction for each of those in my portfolio, so of course I’d like to build up the ones with smaller allocation. I’m just not in a hurry to do it, . If being so specific in my prognostication sounds cocky after being so wrong about Lightspeed and Upstart, all I have to say is that pre-earnings for any company is a much riskier time than after earnings. With less risk comes more confidence, .
————

Heartfelt thanks to those following the rules of this great Board! I’m proud to be one in a group of individuals who’ve come together with these rules as an agreed upon standard.

Special thanks to Saul and all the Board Managers for insisting on these rules and the work they do to keeping this Forum going.

Cheers,

Jason

WillO2028 · November 30, 2021, 8:33pm

I thought that YTD of 54.38% seemed awfully low. Sorry. Maybe no one noticed and this ipsofacto post wont actually set the record straight; but, so that there isn’t any confusion, my actual YTD is 64.8% and not 54.38%. I inadvertently was calculating from the end of May’s portfolio when I arrived at 54.38%, .

rmtzp · December 1, 2021, 9:25am

I try to refrain from short posts, but I think it’s worth underlining a crucial lesson from Jason’s summary:

Because I was confident in both when to sell Lightspeed and where to put the remaining money to work, I ended up by the end of the day with more in my overall portfolio, despite begining the day with a 20-25% loss in what was a 10% position in Lightspeed.

Think about that – a tenth of Jason’s portfolio was down ~25%. Upstart was also down that day. Yet by acting quickly, he was able to finish the day in green. That is incredible!

This is one of the key tenants of successful investors that hold a concentrated portfolio. If Jason had not set his expectations on Lightspeed’s earnings, or if he had not acted quickly once the information was released, or if he had not known where to invest extra cash – there is no way his portfolio would have finished that day net positive. These are multi-percentage point differences in a portfolio in a single day - which obviously compound overtime. It is not be coincidence that the leaders of the board often highlight these sort of lessons!

-RMTZP
Please read this before posting https://discussion.fool.com/we-are-having-a-board-emergency-3492… and visit https://discussion.fool.com/rules-of-the-board-revised-edition-3… to maximize your learning of the board