No. of Recommendations: 0
By adding popular and innovative open source projects to their platforms, public cloud provider lower the technical barriers for enterprises to adopt new technologies. But unless there is a viable way to fund innovative open source companies, public cloud companies like AWS will eventually kill off open source innovation.

Exactly. It is said that the Constitution is not a suicide pact when the Constitution is raised in times of war. Lincoln used this in spades in the Civil War. Open source has to come to grips with whether or not they want open source to remain a viable business mechanism or simply a more economical source of pooled resources for giant companies who no longer need to compete with innovative smaller open source companies.

In reality MongoDb has no choice, and if the open source community wants open source to remain so pure that it leads to its inevitable death...well so be it. MongoDB will go its own way then because it has to, and so will any future successful open source company.

https://www.computerweekly.com/blog/Cliff-Sarans-Enterprise-...

But enough, it is a pet peeve to me when I can clearly see what is really going on. It is an act of destroying future innovators and disguising it as a moral act of supporting open-source.

In any event, as an investing issue, I would prefer to see Mongo experience a true FUD event as AYX did. This seems to be a more crucial issue than what AYX faced with Tableau as well.

But off to other things to obsess over. MongoDB may very well be forced to go its own way and given that there is no true substitute for MongoDB at this time, it may very well be time they did so anyways with their new license.

Tinker
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No. of Recommendations: 5
What happensed to doing nothing?

It's harder than it sounds eh?

Humble prediction: Ntnx will pull a 'TTD of 2018' type run
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No. of Recommendations: 5
Dreamer:

For a guy looking to trade less, you seem to continue to trade.

Why did you sell NTNX again?
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No. of Recommendations: 3
What happensed to doing nothing?

I happily managed the difficult absence of something task today quite happily.

Docusign is going up on what appears to be 2x normal volume. It hit a valuation that I had to buy it at, then Morgan Stanley upgraded it, it went up, profit taking the next day, and now up two days in a row with volume now picking up.

That is par the way these things usually happen.

Thus the beauty of refraining from the act of doing something all the time.

With Docusign it appears that indeed we have benefitted from the usual T/A post IPO of the round trip from large gain, back down to near IPO price, and then back on up.

Fundamentally Docusign's CAP is far greater than its multiple would have indicated, and yes, it clearly has a larger CAP than Mongo, with much greater cash flow dynamics, but slower growth, and although maybe not as large of a market, DOCU will take a far larger chunk of the market and thus effectively having a larger total opportunity.

Now watch it crash when they only do report 30% growth; watch Mongo zoom when it indeed continues upon the upward facing hockey stick curve.

For yet another day, bliss of nothing.

Tinker
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No. of Recommendations: 2
I am doing nothing with TTD and TWLO...
To a smaller extent I am content to let ZS and ESTC run, as I see their upside more clearly and have more patience for volatility with them.

ACRGF is a LT play, as non-linear events will happen over time with laws being passed, new licenses issued, etc etc... and perhaps an eventual buyout.

May also take profits on AYX. Things don't go up in a straight line forever, and we have been in a "good news" or neutral news trend in January so far, the shutdown notwithstanding.

I see Fed being reserved (pun intended) moving forward. Don't expect shocks there.
The shutdown could affect economy. Way to go Trump...like you can't go under, around, or through a wall...sheesh.
China agreement may not happen...a resumption of tariffs will weigh on market.

So I am balancing some risks, and assuming these stocks, which are priced to perfection with this very interesting/volatile backdrop, are set up to potentially collapse after one of the next 2 ER/CCs. I would rather swoop back in at that point and make another 20% in 3 weeks. Rinse/repeat.

I kid you not, my next buy this morning was BZUN, despite the Chinese ADR adversion I have grown to have...only because I expected a bounce soon. Then it pops 9%...grrr.

With TWLO, ZS, and ESTC, I would still have some pretty expensive stocks. Will be shocked if I don't have the chance to buy back at least 1 of NVDA, NTNX, MDB, or AYX in next 2 months at same or lower price.

May just keep AYX...don't know. I keep coming back to the moat. Is it a great product that can be easily replicated with big cloud money (GCP, Azure, AWS) or what about companies like SAP or CRM. Maybe they buy AYX, but at some point wouldn't it be easier to develop that for less than the $6-7b it would probably cost to acquire AYX at current prices?

Dreamer <--- sort of doing nothing.
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No. of Recommendations: 1
Why did you sell NTNX again?

--

It ran up 20% in less than a month. I think it is 60% chance it is a market-crushing stock, but given my work background, I always have reason for pause.

I think there is chance we have one more Q before market starts to treat them like software...so sold them for cash for now, with open mind to purchase again at same price or lower in 2-3 months.

Dreamer
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No. of Recommendations: 5
There is absolutely nothing stopping ntnx from marching up another 20% over the next few months.

Predicting earnings releases let alone the market response to the earnings release is about the most fruitless endeavor I can think of. I don’t play earnings games anymore.

The last time I did that I held anet stock for like 4-6 months longer than I would have because I thought Ullal was sandbagging. She wasn’t, and growth really did slow down
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No. of Recommendations: 3
in my mind it does not pay to play around when you have bought great growth stocks at what look like near rock bottom prices in a rising economy where Cramer is yelling how "cheap" many of the new paradigm stocks have become.

Certainly not true of all. Zscaler for example is no longer "cheap" even though it was "cheap" in the mid-30s while most everyone else saw outrageously overvalued. Now you simply need a 12 month longer perspective.

Nutanix is still "cheap" in my mind it is not too late, but I put in 1/3 at the time when Nutanix hit near its lowest point in December.

Too early to tell with Docu but it appears that the near bottom occurred a few days ago.

MDB may be nearer its bottom as well. High $60s was my prior point and this crash on FUD? it did not even come close to $69...

Saying is that many of these great fundamental, category killing, growth businesses are far closer to a bottom than to their tops. Up and down, volatility (stocks behave in quantum space, perhaps at the string level, and not in macro space where straight line almost exist) in the end I do believe this is the true statement. The same as it became after multiple previous market crashes over the past 5 years.

Thus a great time to buy and hold some companies that are quite worthy of it at near market bottoms creating tremendous risk/reward.

But each to their own.

My only issue is I psychologically don't like to hold something that is too small for me to care if it doubles. Thus on the edge I am always thinking, but in the end reality usually causes me to do nothing, as doing something has far more often than not been a mistake. That is not to say that sometimes doing something needs to get done. Her, fiddling on the edges is fun and keeps me in the "game" per se, but I am never playing the game of earnings calls or the like. But I will eagerly analyze FUD and other traceable aberrational opportunities like the IPO cycle we have observed on multiple occasions.

Tinker
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No. of Recommendations: 1
I can't keep up with your changes in terms of "do nothing"...and people rip on me for trading.

How/why did you move out of TTD?
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No. of Recommendations: 5
Dreamer,

"May also take profits on AYX. Things don't go up in a straight line forever, and we have been in a "good news" or neutral news trend in January so far, the shutdown notwithstanding."

Given that Saul et. others look at 20-30% CAGR over the long term, largely ignoring market timing, I was wondering if you could speak to the success you've had weaving in market factors to boost your investments - largely in the same stocks - based on timing?

Removing emotion from it, this article I constantly find myself revisiting: https://www.businessinsider.com/cost-of-missing-10-best-days...

If you missed the best 10 days over the past 20 years your CAGR would be 6.1% versus 9.85%. That is a 38% reduction in CAGR for just 10 random days. OUCH!!

Food for thought as you mess with your New Year's resolution. I think you were spot on in your self assessment, meddling compounds inefficiencies, especially when meddling with companies you have strong conviction in the next 3 years and who's performance back it up.

Just a Fool
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No. of Recommendations: 3
I was a big believer in high concentration until it hurt my returns last year. I remained heavily in anet while twlo and the rest doubled.

Right now I have 13 positions that I have about the same optimism in. Considering a few more such as hubspot or coupa.

But if I buy another stock it will be because I think it offers the same appreciation potential as my existing positions. 13-15 may be a lot. Right now my largest is ntnx at 10% and my smallest is SRPT at 5%. I could cut my positions in half but I don’t know which are less likely to double. I have to exclude stuff like NKTR because it’s a biotech even though it holds a lot of potential. Maybe buy some so it’s a small portion. But then you start putting a limit on how many stocks you can follow.

I honestly don’t know if MDB or docu does better so I own both. I selected MDB in the poll though.
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No. of Recommendations: 12
Dreamer, I'm obviously not ripping you, I just saw that your goal was to trade less, and I see you're trading based on all these various reasons I think miss the goal of trading less, and actually become unproductive.

For example

-Selling a stock because it went up less than 20% a month. I have held NTNX for more than a month, I have been buying/accumulating around these levels and certainly am not worried about it going up less than 20% in a month. I want to double, triple, quadruple or more my return and I honestly didn't even know it went up 20% in a month, because I don't care/track that kind of stuff. It's not worth worrying about.

-Predicting when the market is going to change sentiment on a stock. IMPOSSIBLE!!! Even technical analysis does not predict, just goes off what happened. And for all you know the 20% in less than a month is the market's way of saying "NTNX is a software stock" which makes your observation of price changes over the last month may mean your prediction was off and it's happening now. So why jump in and out over things you can't predict?

-MDB and the AMZN threat: You say AMZN is not a threat then appear to sell because it could be a threat. We don't know if it is or not! Could go either way! This could be the best thing that happened to MDB!


I am not sure if this was you or not but I recall someone saying they take profits at 20% so they can add to other positions. And they were upset a stock went up to like 19% profit then fell back down so they couldn't take profits and buy another stock. This goes exactly against "letting your profits run" theory. And second it plays into emotions. We as humans, especially men, have the "hunter" mentality. This means we are constantly hunting for the next "kill", ie the next bonanza stock. This makes us sell a winner and buy some other stock just because we have to do something. This is why investment newsletter services have to pump out new ideas every month because recommending the same 5 stocks every month becomes boring to readers who feel the need to do something, even if it's detrimental.

Obviously you could be the best trader in the world so this is just my $.02. I just know from my personal experience it does little good to jump in and out of stocks and pay such close attention to daily price movements. Even this day and age of $7 trades I don't see the benefit of it.
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No. of Recommendations: 9
Dreamer, here is my thoughts on both TTD and MDB as they are the same in this regard. Neither company is #1, #2, nor #3 in their markets.

With TTD they are #4 (maybe, depending on how you look at it) but I consider them a solid #4 that will never be a #3. But what changed my mind was just how rapidly Amazon grew and is still growing. At much larger scale Amazon is growing faster than TTD! Nevertheless, despite the usual wealth destroying nature of this market TTD has managed to not only pull away from the other also rans but do so in an extremely profitable manner. Now is that simply low hanging fruit (as several industry articles suggest) or the evidence of true market dominance that create a great CAP that is more than just being the best also ran. I have not found the sustainable CAP hypothesis that actually is compelling to date {discussed more below} relative to other great companies.

With MDB, MDB is a clear #5, and close to #4. Elastic came from nowhere in just a few years. Thus there is a great possibility of fluctuation in the market that can come from anywhere.

As we did with the exercise if not MDB, then whom? There is no other "whom" presently. Along with the obvious hockey stick rise of MDB, and the fact that all that really matters with MDB is enterprise adoption (which is happening), Mongo is obviously still a great pick in the game. However Mongo's CAP is not as great as we once perceived it to be.

I compare that to Docusign...CAP, #1 dominant player in the market they created; Nutanix (valuation is part of this) but Nutanix is #1 in the market they created despite all the behemoths, and they continue to innovate (and remains part of the dominant duopoly that is not going to change); ZS...CAP, #1 in the market they created; Twilio is #1 dominant player in the market they created...there is a pattern here. One could simply throw out every single stock in all the stock markets in the world and just invest in the rare companies with these characteristics and one would kill the market.

Mongo is the #1 player in the NoSQL database market that they created (or mostly did); they are also the dominant player in regard, but their long-term dominance (CAP - as mentioned above) is less certain. This makes Mongo a buy-out business as they may never have pricing power. This is the same that the founders of Mongo did with Doubleclick. Another high growth #1 business that created their market but could never make a profit but could build buy out value (in that case to Google for $3.6 billion or so); I have been concerned as to why Mongo remained relatively less valued than some of its peers. Just nit picking.

* to put the Doubleclick analogy to Mongo further, Doubleclicks's business was growing exponentially in internet ads, as did their revenues, but they never, ever, gained pricing power as their expenses always scaled with their revenues {TTD has broken this sort of pattern amazingly! I mean, amazingly!!! MDB has not broken this pattern per se, although it is too early to really tell).

None of this would make any difference if I held 6-10 stocks, I favor the characteristics above but things are always in motion and can change. The great thing about companies that squarely fit into the Docusign/Twilio paragraph is that companies like that, once they obtain their leads never lose them through thick and thin. They might only bubble as a reason of concern (if we are so lucky).

You can clearly see why TTD is a greater act of faith as they are a company with hypothetical future based upon a charismatic founder. No doubt however TTD has pulled off miracles to date and there is a good chance that will continue.

With MDB just some doubts with the CAP. I brought up a while back that MDB has consolidated its position in the market but it has not been running away with it. That perhaps 4.0 will be the catalyst to make it happen - their starting to pull away again instead of just consolidating their lead. At the current MDB valuation it may get back into the Docusign/Twilio paragraph again for me as I do some more digging this weekend. But is on this probational review for a few days with me.

TTD may as well as I dig deeper into its real CAP if I find something that I truly believe is it beyond a charismatic and very talented visionary fo a leader in an otherwise market that eventually kills everyone but the top media companies.

I think that is analytical enough to explain my intuitive investing style. Yes, I cannot help but sense great buy in points. To sense when momentum is changing. Thus, yes, I am constantly drawn back in because this sort of stuff is something through a combination of native ability and experience that works well for me. But once I have say a Zscaler at the price that I just cannot refuse yeah, at that point it becomes a do nothing stock until it bubbles or until its business momentum changes so that expectations are such that downside surprises or not surprises will be par (e.g. ANET, SHOP, NVDA).

So, again, what I am doing is playing with the edges because I just cannot turn off my intuitive sense of great buy in points. So sue me! Not actually, but greed is good. Greed clarifies. Greed creates the common good, because only greed makes one build product that so delights customers, and at prices that customers cannot resist the value they are buying - because otherwise you can't make huge bucks. Same with the stock market.


Tinker
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No. of Recommendations: 1
Food for thought as you mess with your New Year's resolution. I think you were spot on in your self assessment, meddling compounds inefficiencies, especially when meddling with companies you have strong conviction in the next 3 years and who's performance back it up.

Just a Fool

---

I guess it seems like a contradiction, but I am not sure it is.
I was, and still am, very Tinker-esque and overweight with TTD and TWLO.
I then added a bunch of smaller 3% type positions.

I didn't capitulate or sell low. I merely sold my lowest-conviction holdings when they went up 20% in 3 weeks. It isn't so much a play on earnings for the specific stocks I sold...it is that I expect "some" stock(s) I like to get hit, and would like the cash to buy any relevant dips.

If no dips occur, then my plan B is to potentially put the money into some new blood...specifically stocks that aren't at 20+P/S and that are under $3b in market cap...so I can more easily envision them appreciating quite a bit in 2019. Most of the big winners for 2018 (TTD, AYX, MDB) all started (obviously) at much lower market caps than they are today, and at lower multiples. It seems a bit unlikely that you can expect a 24 P/S stock to go up 100% in price, and sustain that price, unless they also grow revenues 100% y/y, which none appear set to do.

The December prices were ok entry points. They went up a lot. Now I don't feel like they are as good a buy, and so I take profits. TTD still has room to go. TWLO still has room to go. ZS and ESTC may be flat for a while, but will eventually head up, so I won't try to time it.

Dreamer
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No. of Recommendations: 3
-MDB and the AMZN threat: You say AMZN is not a threat then appear to sell because it could be a threat. We don't know if it is or not! Could go either way! This could be the best thing that happened to MDB!

---

I believe I mentioned I dropped MDB due more to RHAT dropping them, future impact via open source community, positive reviews for postgreSQL competition, and fact that of my high P/S tech stocks they are the least profitable.

Couldn't TTD turn a negative profit and go from 50% y/y growth to 60+% y/y? Is that a good thing or a bad thing? So I don't believe you can compare the growth rates of MDB and TTD without taking into account TTD is and has been cashflow positive and profitable for years.

As for NTNX, I am in middle of big industry trends review and Nutanix doesn't seem to have a great fit for the smallest remote sites due to HCI minimums...more and more traditional vendors have strong cloud plays/ties in Azure now (table stakes, basically) and recently a client asked to look at hypervisor alternatives and mentioned KVM-Linux/Redhat and Msft Hyper-V, and not Nutanix. Just another example that Nutanix is only one of many. I still think they will do great, and completely open to investing again, but I really question whether the market will price them as software or not.

All these "trades" were about 7-8% of my port, so I don't feel like I have wildly changed anything.

Dreamer
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No. of Recommendations: 5
If no dips occur, then my plan B is to potentially put the money into some new blood...specifically stocks that aren't at 20+P/S and that are under $3b in market cap...so I can more easily envision them appreciating quite a bit in 2019. Most of the big winners for 2018 (TTD, AYX, MDB) all started (obviously) at much lower market caps than they are today, and at lower multiples. It seems a bit unlikely that you can expect a 24 P/S stock to go up 100% in price, and sustain that price, unless they also grow revenues 100% y/y, which none appear set to do.

OK.....you are gaining wisdom after all ;)

The MDB concern with Redhat is likely overplayed IMO....how many of those open source folks are paying customers on Atlas?.....likely not many. And how many of those are facile at multidocument?

At some point in a new tech's evolution, the challenges to their authority always begins.....maybe MDB pulled this trigger a bit faster than they should have with 4.0 just launched and 4.2 not due until summer. Perhaps if they had a greater multidocument buy-in and lock, this would have been a less risky gauntlet to throw down.

But there should be no surprise that there is a challenge...heck multiple challenges......no suprise really......and remains bullish for MDB since these potential competitors all feel the need to attack the potential winner.......doesnt mean that MDB survives it all.....but IMO, was certainly not a reason to jump ship.

Until and if the ATlas growth appears to be negatively affected.....and if Mongo's tech is as great as they say it is......customers will still clamor for it.
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Too early to tell with Docu but it appears that the near bottom occurred a few days ago.

DOCU did a double bottom November/December. Like I said a few days ago, it looked like it was ready to break out to the upside. So I bought some and sold calls but way to low a strike price. I rolled them up today.

https://softwaretimes.com/pics/docu-01-18-2019.gif


MDB may be nearer its bottom as well. High $60s was my prior point and this crash on FUD? it did not even come close to $69...

MDB is in a rising channel and off the low. I added two days ago at 74.50. Now 80.34.

Truckers are doing great in this economy. Today ODLF is up 4.7%. OK, so it's not an NPI stock but with a history of 22.5% growth it's a good way to diversity the portfolio.

https://invest.kleinnet.com/bmw1/stats25/ODFL.html

BEAT and V were slouches today.

Denny Schlesinger
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No. of Recommendations: 0
I honestly don’t know if MDB or docu does better so I own both. I selected MDB in the poll though.

DOCU with a much more diversified customer base is the safer stock. I too own both.

Denny Schlesinger
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No. of Recommendations: 1
and remains bullish for MDB since these potential competitors all feel the need to attack the potential winner..and if Mongo's tech is as great as they say it is......customers will still clamor for it.

Again, when I post raving reviews or pessimsitic what ifs I am just thinking things through, trying to elicit input, testing hypotheses and the like.

My sense with MongoDB is that Mongo has reached the point where it actually can become a true proprietary product since there is no true substitute for it as a modern general purpose database. The new licensing requirement is a half-way step towards that, which hopefully Mongo will never need to go beyond, and its timing was necessary now before anyone attempted to API its 4.0 version.

Thus, I am just thinking things through and weighing a lot of good choices, which are sometimes more difficult than weighing only bad choices (there you go with the least horrific alternative).

What Duma is stating is wisdom. You have the mathematically certain Tornado adoption combined with the industry now trying to jump in Mongo's wake to either profit, or to try to turn opinion against Mongo so they don't fall behind.

It is all good in the end. I think the fact that not one single person, no one, nada, not even bloggers on the Internet, came up with one true substitute for MongoDB that is in existence today.

Certainly you can fork Mongo (but enterprises are not going to do that). Certainly Postgres is excellent for many use cases, but it has significant weaknesses as well that Mongo addresses and Postgres never will. Thus Postgres is really the closest thing. If you truly have massive data loads then Cassandra appears to be the go to, but Cassandra has fallen 3 places in the last year alone in the DB rankings. Many databases can partially do what Mongo does but with material short comings made worse due to worse support and product road map. Why would someone go with AWS or Azure clones because one was upset that Mongo is not as open sources as before, when Azure and AWS are not open sourced at all and largely inferior for the most part?

Good food for thought. As I said just playing with the edges where tax ramifications are small and I'm entitled to my own neurotic tendencies. Duma indeed speaketh wisdom. The best solution is probably to own both Docusign and Mongo, but if one had to choose the board's collective wisdom is BUY THE FRIGGIN MONGO! Yes, stated not with a whisper but with an echoing cry heard the next county over!

Thus, take my ramblings for what they are. I play Socrates with myself and hope others join in when I find decisions to be made that are choices between good and good. Horrible choices are easy like {get out of Pivotal and Nvidia now!!! this is not the bottom, take the tax loss - and stop playing things as 12x has stated he too has made that decision as well).

Tinker
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Certainly concur, Docusign has the materially superior CAP. It dominates its market, it in fact created and continues to create its market, it has the rare branding of a Netflix or Google like, and clearly is becoming one of the stalwarts of the modern economy. It still has to penetrate Europe and Asia and the like, but it is rare that a company with an enterprise value of $6.5 billion or so has already become a verb.

"I docusigned," is becoming as ubiquitous as "I googled." How often do we find such a company coming off its bottom at such a low market cap to opportunity? I mean really!

Back to the comparison I've been doing, MongoDB is also very well branded. It is not a verb, but in the industry Mongo is clearly a singular brand with tremendous top of mind awareness and interest with over 40 million downloads. Only Nvidia appears to have a greater following than Mongo in regard to downloads for CUDA. Nvidia's problems are not CUDA they are gaming, so don't hold that against Mongo who has no alternative business units to worry about.

Excellent discussion people! Please continue.

Tinker
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No. of Recommendations: 1
Why can't Adobe, the pdf folks, create their version of Docusign?
They are already experts at this sort of thing and cloud-based.

I guess I just don't get the moat. But you have all talked about it enough to make me look at it next week.

I am of the mindset to get some (relatively speaking) lower P/S SaaS stocks to make up the 8-10% of cash I have. My thought being I can sell those gains opportunistically when the more volatile high P/S higher-growth stocks have an inevitable volatility downward.

ZUO popped to mind...funny that Saul just mentioned it, but guessing he got idea from Bert's Dec rec. Many NOW (service now) or something similar. So many of my clients use NOW...seem ubiquitous. I think ESTC can become next Splunk type return, so hanging on there.

Then what about something cheaper but SaaS-y...like EVBG.
I am so tempted to say "BZUN!" and I still might, but Trump could eat a bad meatball over the weekend and decide to tweet hate at China...so maybe just stick with TTD as my pseudo China play.

Core: TTD, TWLO
Highly-priced cloud/data stocks: ZS, AYX, ESTC
Pot stock to benefit from US legalization trend: ACRGF
Random biotech that fulfills my belief in the promise of genetic screening/editing, but is smaller than Illumina: GH

So maybe add to that
Mature SaaS: NOW, ?
Smaller cap SaaS: BL, EVBG
Boring SaaS w/ smaller cap: ZUO
Tinker idea of digital signature company to rule the world: DOCU
Chinese stock to rebound when Trump & Xi exchange promise rings: BZUN

Should be an interesting Tuesday for me. My guess is I go for toe-dips on ZUO, NOW, and either BL or EVBG.

Dreamer
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No. of Recommendations: 6
Dreamer,

Here is a statistic about Docusign that is hard to beat. 60% of its revenues now come through being embedded in the software of other large applications. As an example Salesforce embeds and uses Docusign as its esignature application.

Now one might think, Salesforce...are they not a huge software company with an army of developers. Why can't they just develop their own eSignature application? Well, probably because, like with Okta, it is not so easy to do.

https://www.docusign.com/products/integrations

Here are just a few "tiny" integration partners: Microsoft, Google, Oracle, SAP...and frankly practically any software company that needs eSignatures is going to integrate with Docusign.

As Denny stated it is a lower risk company with a very high CAP. Docusign is being built into the ecommerce infrastructure of America, Canada, and trying to make it so throughout the rest of the world.

The concern with Docusign is what growth rate eSignatures? Can Docusign proliferate the contract management software? The market for contract management is large enough for Forrester to run a report on it and rank the players, so it is proven to be a viable market. But can it become an industry standard practice as well for contract management? If so, pretty much none of that is embedded in the expectations for Docusign. However, if that do not succeed in this regard then we need depend on the eSignature aspect continuing 30% plus growth for years itself.

Given the 115% or so revenue retention rate that is likely to occur. But as we know other software companies, like AYX are consistently over 130 and Mongo is consistently over 120. As long as companies are rapidly growing their customer bases this retention rate is very valuable. However, as with Cloudera or Talend it is more of a cover if the company is not growing its customer base.

We know that Mongo is growing its customer base, and AYX is, and Docusign is as well:

DocuSign added another 25,000 customers during the quarter, bringing total customers to 454,000.
Year-over-year growth in billings accelerated from 32% growth in Q2 to 40% growth in Q3.


https://www.fool.com/investing/2018/12/06/docusign-earnings-...

But certainly not growing its customer base at anything near what Mongo is (albeit small numbers vs large numbers). But still it is only growing customers by 5.88%. Over the last 2 quarters sequentially customer growth has been 13% total, from 400,000 or so at the end of Q1 to 452k at the end of Q3. That may be an issue as new customers are not growing rapidly, but billable and revenues are still growing nicely.

Nevertheless, the one area of customer growth that Docusign is reporting that is growing well are number fo customers with over $300k in spend a year (there are some with 8 figure spend):

We continue to achieve strong upsell in Q3, resulting in a net dollar retention rate of 114%. Strong upselling was also reflected in the number of customers at ACV greater than $300,000 which grew 57% year-over-year to a total of 285 customers.

https://www.fool.com/investing/2018/12/12/3-must-see-quotes-...

So what Docusign has going for it is an enormous (but still not greatly penetrated) customer base that are materially increasing the density of their use of Docusign while still adding new customers (albeit at what looks like 20-25% year over year growth in the end for new customers), it is embedded in some of the world's most ubiquitous software, and Docusign is attempting to increase upsell by use of its newly purchases contract lifecycle management software suite.

The Achilles heel for Docusign is then rate of customer growth (albeit, better than Pivotal or Cloudera or Talend, but far shy from what we are use to in other stocks we invest in here), but ameliorating this is rapid growth in the largest customers, international growth has still to take off, and increasing upsell opportunities; albeit somewhat speculative until they prove the new product is in demand.

Thats pretty much the gist of it. Adobe and Docusign don't even compete in every market segment. Adobe sticks with the high end whereas Docusign is everywhere. And the product is not so simple that Salesforce, Oracle, SAP, Microsoft decided not to build it in house and instead use Docusign embedded in their software.

For what it is worth, that is Docusign.

Tinker
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How Docusign is used at Saleforce:

As a result of this automation, customer onboarding has essentially become self-service. Ninety percent of services are now provisioned within one day, and 60 percent are enabled within 15 minutes...Benefits for New Talent Onboarding: Now, offer letters are delivered almost instantaneously. In the first six months of use, the 1,000 offer letters salesforce.com extended were returned in an average of 21 hours with zero incomplete fields. Further, the company has eliminated shipping costs from the onboarding process, saving $63,000 in that first six months.

This is the sort of enterprise integration that enables greater productivity by use of Docusign, and Docusign gets embedded in the CRM software itself to maximize automation.

As one poster on Saul's board mentioned, who worked in the entertainment industry, it was a huge, huge, huge, pain to get all the employment contracts done each week. Really a 4 day labor intensive process, and even then employees would often make mistakes in executing the documents.

His company adopted Docusign, they never finish the weekly contracting chores before Monday is out, and with zero errors by employees. This poster talked about having to process more than 100 such contracts a week (or something like that). One can see the benefits a Docusign can bring.

I have no doubt that Adobe has its share of enterprise customers that it similarly helps, but at present Adobe is a distant second. Again, I need to confirm but the number mentioned is Docusign has 4x the marketshare of #2 Adobe.

But good places to start looking if you are interested, and if there is some reason not to like what we are seeing here.

Tinker
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This is the first reference from Mongo re: redhat. Suggests the hi # of downloads should still continue.

https://sdtimes.com/os/server-side-public-license-struggles-...

Given the nature of Red Hat, Wheeler is not surprised about this decision and noted that developers typically get MongoDB software directly from MongoDB, so MongoDB isn’t worried and hopes it can get OSI-approval soon.

Just some bad PR if they don't get OSI to approve their open source license so they are trying hard.
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I never understood why the Red Hat thing was considered a big deal.

Prior to SSPL, when a Red Hat customer purchases Red Hat they receive a number of free open source software (including several open source databases) that is “bundled” into the distribution. To use the full feature paid version of Mongo you would need to download it from Mongo. The one in Red Hat is just a basic free Mongo. A Red Hat customer who wants to use Free or Paid Mongo can just go to Mongo website and download. Or you know use Atlas. RH didn’t want to get caught up in the distribution language and be liable.

I feel this will burble another week or so and then move on and Mongo continues being Mongo. Remember Alteryx and The Tableau thing? More than likely Mongo updates the language and everything is hunky dorey.

Darth
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Nice writeup.
I have used it as well but never paid...but it may have been subsidized by realtor companies in the background.
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What a bunch of hypocritical crap!

Matt Asay, head of developer ecosystem for Adobe, recently tweeted: “Someone asked me today if MongoDB is still open source. I thought he was joking but since October 16, 2018, MongoDB is no longer open source. It’s SSPL-licensed, which is not an OSI-approved license. It’s open-ish, but not open source. This genuinely makes me sad.”

From Adobe, which makes its billions on proprietary software and only uses open source software to supplement its proprietary products or to make its internal software cheaper. Yes, Adobe is a substantial contributor to open source, but only because it helps sell their proprietary software and make their operating budget cheaper. But no no no no, how dare someone get paid for their creations. Best to let the big boys steal it, sell it, and thumb their noses at the idiots who put their blood, sweat, and tears into it to begin with.

Jeepers!

But this is the controversy and problem for Mongo. It is not just Red Hat but the open source ethic usurped by the commercial giants like Adobe, Microsoft (the largest open source contributor in the world while also the world's leading seller of proprietary software), et al. As long as it benefits them screw anyone else.

I don't know how much Mongo depends on these third party commercial relationships. I know Mongo and Adobe have a close integration partnership. On the other hand Microsoft competes with Mongo so nothing to speak of there. How much business does this impact, or is it, just like in politics, say mean words, act as if your disappointed, and 3 months later it is all forgotten and business as usual. I don't know. Will Adobe, as a matter of corporate policy now choose to write Mongo out of its software integrations? Does it even matter if they do?

Maybe someone else can enlighten us in regard.

It is also clear, and this just goes into the greater heart of the hypocrisy, is that AWS (as the present devil, but no one is complaining from the open source community other than Mongo) is taking this Mongo "compatibility" and turning it into a proprietary locked in database for AWS.

Thus, AWS can now emulate Mongo, thus taking sales from still open-source Mongo - new license or not, that works anywhere and has only moderate lock-in, and instead Mongo should SUBSIDIZE AMAZON'S SOFTWARE DEVELOPMENT SO THAT OTHER COMPANIES CAN EASIER LOCK THEMSELVES INTO A PROPRIETARY DATABASE!

Only a dogmatic idiot does not understand the implications here of what Amazon is doing to destroy open-source development of software and the repercussions. Of course destroy innovation and you make the big dogs jobs easier as they don't have to fend off the disruptors and the little dogs.

Philosophically you see where I come down, but how cares. It is more about how does this impact Mongo. Clearly Mongo is #1 and onto something good, thus the little Mongo is being taken down. Just as anyone in say law school who aces the bar is taken down by those who don't (oh the bar, who cares) so anyone who is less than Mongo is trying to tear them down to gain advantage. Mongo vs. the Industry.

Does MongoDB have the power to face this battle? I have no clue, depends if this philosophical argument becomes an organized movement against MongoDB to punish them, or if it stays as just fighting words.

Tinker
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Btw/Docusign has no such battle to fight; Nutanix has no such battle to fight; TTD has no such battle to fight...and so on. To me this calls for some FUD stock action for MDB, but it never really happened. The market telling us that this too will pass as just fighting words. TBD. But is the most likely outcome.

From the few reviews of DocumentDB I have read no sane person would put their companies mission critical databases on DocumentDB instead of Atlas.

From the few reviews of DocumentDB I have read no sane person would put their new start-up mission critical applications on DocumentDB instead of Atlas.

What will got to DocumentDb is garbage work, cheap work, sandbox work, and the work of dogmatic idiots. A lot of dogmatic idiots in the world, but they don't buy Mongo anyways.

The bigger issue is will buyers give Mongo alternatives, despite their relative drawbacks, a longer look such as Dreamer indicated.

Tinker
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By adding popular and innovative open source projects to their platforms, public cloud provider lower the technical barriers for enterprises to adopt new technologies. But unless there is a viable way to fund innovative open source companies, public cloud companies like AWS will eventually kill off open source innovation.

Exactly. It is said that the Constitution is not a suicide pact when the Constitution is raised in times of war. Lincoln used this in spades in the Civil War. Open source has to come to grips with whether or not they want open source to remain a viable business mechanism or simply a more economical source of pooled resources for giant companies who no longer need to compete with innovative smaller open source companies.

In reality MongoDb has no choice, and if the open source community wants open source to remain so pure that it leads to its inevitable death...well so be it. MongoDB will go its own way then because it has to, and so will any future successful open source company.

https://www.computerweekly.com/blog/Cliff-Sarans-Enterprise-...

But enough, it is a pet peeve to me when I can clearly see what is really going on. It is an act of destroying future innovators and disguising it as a moral act of supporting open-source.

In any event, as an investing issue, I would prefer to see Mongo experience a true FUD event as AYX did. This seems to be a more crucial issue than what AYX faced with Tableau as well.

But off to other things to obsess over. MongoDB may very well be forced to go its own way and given that there is no true substitute for MongoDB at this time, it may very well be time they did so anyways with their new license.

Tinker
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I don't know how much Mongo depends on these third party commercial relationships. I know Mongo and Adobe have a close integration partnership. On the other hand Microsoft competes with Mongo so nothing to speak of there. How much business does this impact, or is it, just like in politics, say mean words, act as if your disappointed, and 3 months later it is all forgotten and business as usual. I don't know. Will Adobe, as a matter of corporate policy now choose to write Mongo out of its software integrations? Does it even matter if they do?

Maybe someone else can enlighten us in regard.


Elsewhere I addressed this issue. The Open Source ethic goes back a long way to at least WW2*, information should be free. It took a long time to become a reality as a backlash against excessive protection, copyright, patents, trademarks, and business secrets. The ability to freely exchange code on the internet was an important enabler. HTML and Javascript is there for all to see. Of course business adapted, if you can't beat them, join them.

What we are seeing with Mongo are the first skirmishes in a new war in an old conflict. How it will turn out is anybody's guess. I'm betting on Mongo because until things change both The Gorilla Game and the Science of Complexity -- path dependence -- say that that is the way to bet.

At this point it's a David vs. not just one but a bunch of Goliaths who want to use Mongo's code for free. And not just Mongo's but all the code they can get their hands on for free.

Mongo is not going to implode overnight, I don't think, because it is best of breed -- path dependence. A look at Mongo's chart shows that it is a great stock to trade, all that volatility can be put to good use.

https://softwaretimes.com/pics/mdb-01-19-2019.gif

I bought MDB at $74.50 on Wednesday thanks to RetHad and sold May 90 calls at $5.70 bringing my cost down to $68.80. If the calls are assigned in May I get paid $90 a share, a 30% return in four months! If not, I get to keep the cheap shares which I can turn into fresh dry powder.

'Tis the Season of Volatility, Make Hay!

Denny Schlesinger
 


* There are wonderful stories going way back. Richard Feynman was a master lock-picker. Hewlett or Packard ordered that the parts warehouse be left open so as not to impede the engineers from doing their work.
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Let's consider again what we know about MDB as it pertains to the AWS and Redhat issue:

1) When I first presented MDB, it was stressed that they had a different "version" of open source in that they alone had the rights of all development. They have the right to move features to freemium or paid versions.

So when they announce this SSPL license, this is what they actually said:

We created this new license for Community Server, our free to download offering to make explicit the conditions for providing MongoDB as a service. We are strong believers in open source and believe it leads to more valuable, robust, and secure software. By introducing SSPL, we have given the community a new licensing model built on the spirit of AGPL. We will continue to provide the same freedom to the open source community to use, review, modify, or redistribute the software. The only substantive change is an explicit condition that any organization attempting to offer MongoDB as a third party service must open source the software that uses to offer such a service.

There have been some 40 MILLION downloads but......and this is an important BUT.....they ONLY have 8300 paid customers. Most of these downloads must therefore have been freemium open source folks perhaps or perhaps they count the Redhat type downloads that may be less meaningful in the long run.

MDB needs MORE financially "meaningful" downloads at this juncture and there is no reason to let AWS abscond with the value that MDB brings.

2) It has already been mentioned that AWS is not the only cloud that has provided a competing database on their cloud. But we can easily see that DocumentDB is not up to par with Mongo. Who is going to use the documentDB product really???.....open source community....No...….big corporations.....not the most intelligent decision to be locked in to an inferior product with uncertain updates...….more likely the less critical mission sensitive user without crucial need for updated database. I doubt that many (if any) of the present 8300 customers are casual users.

3) I mentioned before that MDB spent 3 YEARS and $ millions to develop multidocument 4.0. This development did NOT come from open source and I doubt that open source can replicate its feat because it would not have the strategic focus of development. I also doubt that a conglomerate like AWS can singularly focus on this development that would require numerous engineers and a great deal of focused time to develop.....all to a skeptical customer afraid of lock-in.

4) Recall that just a year ago, AWS CEO Andy Jassy said that MongoDB was kicking AWS's butt on its database. AWS produces an inferior product with uncertain updates......MDB produces a compare and contrast and requests ANYONE to confirm those huge discrepancies between the two products as they now exist. Seems to me that MDB is being quite transparent. Open source is NOT going to clamor to AWS.

Bottom line.....this is an expected event and one that we knew about from the original presentation of MDB to this board and Saul's.
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I think one also has to make a distinction among open source companies as to what is actually happening with the open source. With Linux, for example, its open source character was very important from it developing from one guy's project into a major commercial operating system. But, at the same time, Red Hat has built on its existing maturity to have a semi-proprietary licensed product to sell and support.

I am not aware of any data on the subject, but I would guess that open source contributions to the further development of MongoDB are limited at this point and that, for most enhancements, either Mongo does it or no one does. This allows them to do something much like Red Hat, i.e., a basic version for free to allow people to explore and learn and a commercial version which is more full-featured and supported for people who have real work to do.

The reality is unlikely to change whether or not a particular company bundles the free version, especially since the first thing one is likely to do is to go to Mongo to get the latest release, or whether or not a particular organization blesses it, except for a minority of religious adherents ... and they are not the people making decisions about commercial projects.
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Denny,
I couple of quick questions about your call strategy, if I may. The only real “risks” of your strategy are 1. Shares get called away above $90 and you miss that upside 2. Should you want to exit the stock prior to strike, you must buy back the calls or you are “naked.” Are these statements correct?

Thank you
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Are these statements correct?

Yes.

One rule of thumb is to sell the call when the stock looks like it's making a top. One exception is a new position where I try to reduce the cost basis. Of course the best time to start a new position is when the stock is making a bottom. I have found that one of the most expensive trades one can do is driven by the fear of missing out. Pick your stocks by fundamentals but buy them by looking at charts. Patience Grasshopper!

The call should not be the primary target but an added benefit, a sort of fat dividend.

Denny Schlesinger
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I am looking at calls on Zscaler. Even if I take the most in the money calls, $20 and sell them, I only get a return, assuming they expire worthless of .55%. I assume that is a very small return for selling calls. Or am I looking at it wrong? the bid/ask for the $20 calls is around $25 per contract. So $25 per 100 shares. Or is it $2500 per 100 shares for the contract?

Frankly it has been so long I forget.

If $2500 for $100 shares, then the return is outrageously high. ~55%, but then again that is a way in the money call one would be selling.

Which is correct?

Thank you.

Tinker
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Tinker, if you don't specify expiration date and strike price it is very difficult to follow your question. You seem to be looking at contracts that expired Friday.


the bid/ask for the $20 calls is around $25 per contract. So $25 per 100 shares. Or is it $2500 per 100 shares for the contract?

25 * 100 = 2,500 for the contract.

Denny Schlesinger
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Yes, its been 5 years or more since the last time I looked at options so my memory in regard is only coming back slowly.

Thanks Denny.

Tinker
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Tinker,

I don’t think you want to sell an deep ITM call. You would be selling all intrinsic value and very little time value. This is a VERY short position betting on a stock to go down. It is the same thing as buying a put. You’ll make money if the stock goes down, but if it goes up, you will lose money and if you don’t close the position, you will have to sell you shares at $20 ($2,000 per contract). If the stock goes up and you close early, you will lose money. If it goes down and you close early, you will keep your shares and make money.

Generally, you want to sell time value and typically OTM strikes that are all time value. If the stock stays below the strike, you collect the time value/premium you were paid.

A.J.
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Correction:

$2,000 should have been $2,500.
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Thanks. No real interest in selling calls, but just playing with the idea as I don’t want to sell any Zs, but at the same time it is a darn expensive stock at the moment so I’d like to continually reduce my cost basis. The cost basis is so low that if it ever sunk so low again on another marketcrash I’d just, heck, move to 100% almost instead of 30 or 50%. I don’t recall what I did at the time. Probably 35% or so at the time - I’m in a humble mood at present ;) and getting too old for this sort of crap.

But I cannot even justify enormous stock appreciation from here, at least not for another 12 months. The stock is probably much closer to a top than a bottom at present, thus looking for a way to make money without incurring a tax issue since I’d rather just keep holding it long-term anyways.

May simply just be getting too sophisticated for my own good. Best with me to just keep it simple and leave the options to yourself Phoolio or Denny (who lives off the income he makes from selling calls). I’m looking for early retirement in the next 3 years and then figure out what I really want to do with my life thereafter. My current inclination is simply to enjoy the luxuries of the king sized 4 pillar bed and see if I can beat John Lennon’s record for consecutive time not leaving bed. Should be much easier given modern conveniences, and I won’t have that very annoying Yoko appendage to deal with.

Really, Lennon/Yoko —-> think Lennon had some self-hatred going on there? yeah!

Tinker
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Denny (who lives off the income he makes from selling calls).

It's not for everyone. I stopped having an income some five years ago and covered calls do create a decent, low risk, income stream.

ZS is close to a top which makes it a good time to sell calls but if it does break out of the seven month trading range the growth could be violent and you risk losing the shares.

Denny Schlesinger
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Thanks for your help Denny. My end up being too cute for me too. But, I think I can at least get comfortable w the associated risk.
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Thanks for your help Denny.

My pleasure. I did not come up with the strategy overnight. I've been trading options seriously for over ten years. Early on I sold puts but that didn't turn out well because you don't control the outflow of cash, you need the law of large numbers on your side to sell insurance safely. Once you master which calls to sell (right stock, right strike price, and right expiration date) selling calls is a low risk investment. One really does need the help of spreadsheets to get it right but it's still not mechanical. One needs an eye for TA to time the trade right and an eye for the stock's growth rate to lessen the risk of getting the call assigned.

In the long run one should expect an annual "dividend" from 2 to 5% of the portfolio depending on how volatile your stocks are. High growth small caps are great candidates. Considering the rule of thumb that you should not take out more than 4% of the portfolio annually, a 2 to 5% dividend is just great. In my case it covers my regular out of pocket living expenses. After all, that's what the portfolio is for.

Another benefit is that having to sell stocks to pay for expenses is cumbersome. It's much better to have an independent source of cash flow.

Denny Schlesinger
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