PERFORMANCE
MTD
Me: (1.32%)
S&P 500: 2.41%
3.73 points worse
YTD
Me: 18.28%
S&P 500: 17.02
1.26 points better
MTD
Me: (1.32%)
S&P 500: 2.41%
3.73 points worse
YTD
Me: 18.28%
S&P 500: 17.02
1.26 points better
*****
Tier 1 (10-25%):
20% - Datadog (DDOG)
20% - Datadog (DDOG)
17% - Upstart (UPST)
15% - Crowdstrike (CRWD)
11% - Roku (ROKU)
Tier 2 (5-9%):
8% - Twilio (TWLO)
7% - Asana (ASAN)
Tier 3 (2-5%):
4% - Snowflake (SNOW)
4% - FuboTV (FUBO)
3.5% - Digital Turbine (APPS)
0.5% - Latch (LTC)
11 positions, including cash (11 last month)
*****
ACTIONS FROM THIS PAST MONTH
Bought:
Latch
Added:
to Upstart
Trimmed:
Crowdstrike
Crowdstrike
Sold:
*****
Well I got it to ten positions after selling out of Pinterest. I do have a 0.5% holding in Latch, but that's basically a non-position.
It's been a disappointing year thus far. This month was disappointing for sure. One because Pinterest was a big letdown. But also because if I look back about six months I see that I made an active decision to sell Docusign and buy Pinterest. And those two actions were both wrong.
But I am now leaning pretty hard into Datadog and Upstart. Two companies which should show accelerating YoY revenue for the next few quarters. Both of those companies will report in early August.
*****
COMPANY OVERVIEWS
Pinterest (PINS)
MTD performance: down 25%
YTD performance: down 11%
T6M performance: down 17%
T12M performance: up 134%
I sold out of Pinterest after the company reported earnings on 29 July. The stock sold off about 18% that day. Pretty brutal. Was it warranted? Maybe. I don't actually know. But I've managed to lose a good amount on Pinterest. It was a mistake to buy it when I did. I saw high revenue growth and an easy Covid comp and thought I had a sure thing. And that was dumb.
There are a lot of things going for Pinterest but the Monthly Active User (MAU) growth is concerning in the near term. In short, the revenue growth and guidance were strong. But the MAU growth and guidance was disappointing. Same thing as last quarter.
And they didn't miss guidance by that much, but this is what happens when a growth company misses guidance. The stock takes a big hit.
And the truth is ... the best companies simply don't miss. They just crush. There is no "but this and that ... etc ... it will get better." They just fire on all cylinders.
Also this company is cyclical so that combined with Covid comps makes comparing QOQ really difficult. Revenue grew 26% QOQ but that's about on par with 2019 at 29%. So it's not really that impressive.
Again a really capital efficient business that is showing drastic moves toward profitability, and probably a great stock to hold for 3 years and forget about. But that's not what I do.
Yes from a high level the revenue and ARPU are growing and that's great. But remember that users are the denominator in ARPU. And so if there are fewer users, while revenue laps an easy Covid comp, then it makes sense we will see a bump in ARPU. And MAU's are a leading indicator.
After reading the report it became a psychological game. I can hope and wish that Wall Street will see something different and bid the stock up in the near term. I can hope and wish. Or I can get out now and move into something where hoping and wishing isn't part of it.
And that's what I did.
Crowdstrike (CRWD)
Market cap: $57 billion
MTD performance: up 1%
YTD performance: up 20%
T6M performance: up 18%
T12M performance: up 127%
I trimmed Crowdstrike this month from 20% down to about 15%. I feel like we're at peak optimism for Crowdstrike right now, and for good reason. All the news about hacks has created a situation where everyone knows Crowdstrike is a good investment.
However, at a $57 billion market cap, how much can it grow over the next year? Will it double from here? Seems unlikely. Maybe that's simple-minded thinking, but it's something I've been thinking about.
Further, they are not accelerating revenue. It is slowing down. And while it's still high, it is slowing down. It will be interesting to watch.
Latch (LTCH)
Market cap: $1.8 billion
MTD performance: up 9%
YTD performance: N/A
T6M performance: N/A
T12M performance: N/A
Latch specializes in keyless entry security systems to open and manage every door in an apartment building from a smartphone.
It's a newly public company that came out of a SPAC earlier this year.
From a high-level it's a tiny company with terrible margins but they have guided for the next two quarters to have 50% sequential growth each followed by something like 33% to finish the year.
In other words, they reported $6.6 million in revenue in Q1. But guided to $10 million in Q2, $15 million in Q3 and $20 million in Q4 to finish the year with around $52 million. That's torrid growth and would represent about 183% YoY growth for the fiscal year.
And in an investor presentation, they have targeted almost $1billion run rate by 2025, which would represent 65% CAGR over five years.
The company also has agreements with AvalonBay, which gives a high degree of certainty on future revenue. From here:
https://www.latch.com/news/latch-avalonbay-partner-to-create-an-affordable-tech-first-resident-experience
AvalonBay Communities is one of the largest real estate investment trusts in the world, and NMHC’s third largest apartment owner in the United States. With upwards of 90,000 apartment units across the country, they own and develop multifamily buildings in both urban and suburban environments to appeal to many types of renters.
Their products seem sticky because once the system is installed in a building it seems highly unlikely that they would go in and rip it out and replace it with another one.
*****
MACRO THOUGHTS
From a macro level, the US will now start to show decelerating growth in GDP. While also showing decelerating inflation. Historically, that is good for large growth stocks. I don't base investment decisions off that, but it will be interesting to see how it plays out.
From a macro level, the US will now start to show decelerating growth in GDP. While also showing decelerating inflation. Historically, that is good for large growth stocks. I don't base investment decisions off that, but it will be interesting to see how it plays out.
*****
NEW LINEUP GOING FORWARD
Same
Watchlist:
DocuSign
Olo
