November 2020 Portfolio Update and NewsMonthly Disclaimer: I put together these updates as a sort of record keeping for myself. It helps me to think things through with my investments, and documents the reasoning for most of the moves I make. I do not want to come across as a know-it-all or a braggart just because things are going well. I have always kept records of my investing because I want to see how each of the decisions I make compares with the overall market. Having these records reminds me that it is an absolute certainty that things can and will go south at some point. This is the third year that I have kept detailed information on a monthly basis. In all three years, there have been periods of time where my portfolio has dropped from 20-40% and it will happen again. I assure you that when that update comes out, it will not be a rosy picture. Now on to this month’s update…A couple major events happened in the past month that had a significant impact on the stock markets, the first being the Presidential Election. I’m not sure what impact this will have on things moving forward, but knowing there is a decision should help. The second major event was the announcement by Pfizer that they have a vaccine for the virus that is 90% successful. One week later, Moderna announced that their vaccine has also been successful and is at a 95% success rate. I hope these are extremely successful and are able to be rolled out as fast as possible. This immediately had a pretty big negative effect on tech stocks, specifically those that have benefited most from working from home (WFH). I truly see this as a short term effect as the era of digital transformation and shift to the cloud has been greatly accelerated during this pandemic. I don’t see companies moving backwards in technology now that the possibility of lockdowns and restrictions are ending. Until then, we are seeing more and more places increase their restrictions.Each month, I continue to hear people stating about how you cannot beat the market, so you shouldn’t even be trying. Some people feel like we are just getting lucky and that things will come to a crash where we will lose everything. It’s just not true. If you are someone who is unsure, I really encourage you to make a dummy portfolio on one of the available finance websites and track what we do each month. You’ll see that the numbers are real. Maybe even consider taking a small portion of your investment portfolio and start your own condensed portfolio and see how it performs compared to the various funds you may be invested in. As I reminder, I post results the last weekend of the month. Although Monday is the last day of November, those results will be rolled into December. This portfolio was started on March 13, 2020 when all of my assets were rolled over into this one Retirement Account. Therefore, instead of using a more traditional Year to Date (YTD) column, I am utilizing a Portfolio to Date (PTD) designation. Here is a snapshot of how my portfolio has performed over the past month, compared to the broader indexes. As usual, I’ll include the CNN Fear and Greed Index. W/E Date Portfolio S&P 500 % DJIA % Nasdaq % Russ 2000 Fear and % change change change change % change Greed Index-------------------------------------------------------------------------------------------11/06/2020 +14.01% +7.32% +6.87% +9.01% +7.14% 40 11/13/2020 -10.99% +2.16% +4.08% -0.55% +5.81% 5911/20/2020 +8.39% -0.77% -0.73% +0.24% +2.37% 6211/27/2020 +6.86% +2.27% +2.21% +2.93% +3.92% 92------------------------------------------------------------------------------------------- November +17.53% +11.27% +12.86% +11.86% +20.59% 92 PTD +196.36% +34.21% +28.45% +54.99% +53.33% 92We end November with another strong monthly performance and our portfolio nearly tripling from where it started. During this same period of time, the average index is up 42.74%, meaning we are performing 4.5 times better than the most widely tracked indexes. The Fear and Greed Index has it its highest point since the portfolio started. To put the 92 into perspective, on March 13th when we started, the index was a 5.As I mentioned at the end of October, I really dug into some of the stocks on my watchlist to see if I wanted to make any changes to the portfolio. I made a couple allocation tweaks before making a bigger change mid-month. On 11/2, I trimmed my Datadog (DDOG) position by 11% at $89.57 and added that to my position in Etsy at $127.34. I feel that Etsy is just so undervalued right now, and I expected Datadog to drop once they reported earnings. (They did, but have since recovered and gone even higher). I'm still a big fan of Datadog and expect them to ramp back up over the next few quarters. I can see myself adding back here in a quarter or two. This was my first time trimming Datadog after adding to them in April, May, August and September.On 11/12, I trimmed my Cloudflare (NET) position by 15% at $63.65 and added that to my position in Zoom (ZM) at $425.88. This decision was more me trying to get more into Zoom while others were selling off. Cloudflare continued to run up another 17.5% after I trimmed it, and Zoom is up about 10.5% since then.Now for the bigger change. On November 16, I exited my position in Okta (OKTA) at $223.80 and started a new position in Teladoc (TDOC) at $176.12. I still feel Okta is a great company with a bright future, but it is growing much slower than my other holdings and I feel like it would continue to lag. I’ll have more on Teladoc below.On to the individual results for each company that I invest in. They are listed by allocation from highest to lowest. Cloudflare and Datadog were the two companies in the portfolio that announced earnings this month. You can see the difference on how each was received on the chart below. Next month we have three.Company Allocation October % Change PTD % Change---------------------------------------------------------------------------CrowdStrike (CRWD) 23.20% +21.79% +294.22%Zoom (ZM) 22.69% +2.32% +317.80%Cloudflare (NET) 14.95% +43.85% +207.02%Datadog (DDOG). 12.90% +6.25% +189.03%Etsy (ETSY) 9.72% +32.04% +15.73%Teladoc (TDOC) 6.15% +11.54% +11.54%DocuSign (DOCU) 5.94% +12.17% -3.50%Shopify (SHOP) 4.46% +11.77% -2.23%On the chart above, you get a clear picture of how things are currently allocated. The portfolio remains at 8 positions this month after exiting Okta and adding Teladoc. Cloudflare (+43.85%) was our strongest performer for the second month in a row. Announcing stellar results on their earnings report certainly helped. Etsy had a very strong month as did Crowdstrike. In fact, due to the big month Crowdstrike had, they passed up Zoom for the top position.CrowdStrike (CRWD) - CrowdStrike Holdings offers cybersecurity services through its Falcon platform, which monitors client operations at their endpoint connections to the internet and works to identify and stop threats. The platform learns from attacks made on it and then warns the entire CrowdStrike cybersecurity network about likely avenues for future security issues. Crowdstrike was up nearly 22% in November, in spite of having almost no news to speak of. There will be plenty to write about next month as they announce earnings on December 2nd.Zoom (ZM) - Zoom Video Communications provides telecommunications services that allow people to connect via video, voice, and chat as well as sharing content. The dedicated cloud-based platform aims to offer a superior user experience compared to traditional teleconferencing options, and its device-agnostic features offer high-quality communications regardless of how users connect to the platform. On November 18, Zoom announced that analyst firm Gartner has named Zoom a Leader in the 2020 Magic Quadrant for Meeting Solutions, as well as a Leader in the Magic Quadrant for Unified Communications as a Service. This is the sixth time Zoom has appeared in the Gartner Magic Quadrant for Meeting Solutions and its fifth consecutive time as a Leader. It is the first year Zoom has qualified for inclusion in the Gartner Magic Quadrant for UCaaS.For the Meeting Solutions Magic Quadrant, Gartner evaluated companies based on criteria including their ability to satisfy a wide variety of well-established and newly defined virtual meeting scenarios. The report analyzed 15 companies in the Meeting Solutions space and named Zoom as a Leader.The criteria used by Gartner to evaluate companies selected for the UCaaS Magic Quadrant include ease of use, service reliability, and the pace of innovation and enhancement. The report analyzed 14 companies in the UCaaS space, naming Zoom as a Leader.Zoom will announce earnings on November 30th. It is funny how everyone is seeming to avoid announcing on the same day as Zoom.Cloudflare (NET) - Cloudflare is on a mission to help build a better Internet. They have built a global cloud platform that delivers a broad range of network services to businesses of all sizes around the world—making them more secure, enhancing the performance of their business-critical applications, and eliminating the cost and complexity of managing and integrating individual network hardware. Announced earnings on November 5th. Revenue was $114.2 million (+54.5% Y/Y) beating analysts estimates by $11.0 million. This was an acceleration from their Q2 results where they were up roughly 48%. Non-GAAP net loss per share of $0.02, representing an improvement of $0.14 year-over-year. Strong large customer growth (+63% Y/Y), adding a record of roughly 100 net large enterprise customers in the quarter, in addition to their first $10 million ARR customer“Our third quarter represented many significant milestones including surpassing $100M in revenue, crossing 100,000 paying customers, and releasing more than a dozen new products and features,” said Matthew Prince, co-founder & CEO of Cloudflare. “I’m incredibly proud that we exceeded financial, customer, and innovation milestones, all while providing our services, at no cost, to state and local governments to ensure that cyberattacks don’t disrupt the United States 2020 elections. The world has never needed the Internet more than it has over the last nine months, and we're laser focused on helping to keep it fast, reliable, and secure.”On November 10th, Google announced that Google Search will directly take web performance and page experience data into account when ranking results on their search engine results pages (SERPs), beginning in May 2021. Specifically, Google Search will prioritize results based on how pages score on Core Web Vitals, a measurement methodology Cloudflare has worked closely with Google to establish, and we have implemented support for in our analytics tools. If Cloudflare worked closely on Google with this, you would think that Cloudflare customers would have these metrics optimized to help them appear in search results.Datadog (DDOG) - Datadog operates a fast-growing platform that monitors customers' cloud activity and mines it for business insights. Announced earnings on November 10th. Revenue grew 61% Y/Y to $155M. Large Customer ($100k+ ARR) growth was 52%, increasing from 727 to 1,107 Y/Y. Gross Margin improved to 79%. Dollar Based Net Retention was over 130% for the 13th quarter in a row. Customers are plainly finding tremendous value in Datadog's platform. That's a great way to drive more gains from its customer base, but it also strongly suggests that new customers will keep coming through the door. DataDog’s competitive position continues to get stronger with its multi-pillar growth strategy continuing to be validated by customer acceptance. 71% of customers now use two or more of their solutions up from 50% a year ago. 20% of users are using four or more products compared to 7% a year ago. They announced eight new products over the summer, so we can expect these numbers to continue to grow.Growth is slowing at Datadog, but the company still came through with a textbook "beat-and-raise" quarter. This is still a fast-growing company building out its ecosystem with satisfied customers all-in on the process. Stock was down 10% pre-market, but recovered throughout the day ending a little more than 6% down.Datadog’s revenue deceleration is not nearly as severe as it looks, management has stated that they have seen a clear return to normalized usage growth. They did caution that their growth numbers may not look as strong until they pass over Q2 next year. Keep an eye on their sequential growth though. I expect this to remain strong.On November 17th, Oracle announced integration between Oracle Cloud Infrastructure (OCI) and Datadog. Joint OCI and Datadog customers can move logs from OCI to Datadog for running analytics and consolidating logs from multicloud and hybrid environments. This adds to the long line of Datadog integrations.Etsy (ETSY) - Etsy operates a global marketplace where people can make, sell, and buy unique goods online. The company also offers various services to support its sellers. According to the Verizon Business Retail Trends Report, online retailers are booming as COVID-19 restrictions led to an increase in online shopping this holiday season. As per the National Retail Federation (NRF) first week of November 2020 shows 82% Y/Y increase in data traffic. I can see this number accelerating as we get deeper into the holiday season. This was expected to happen, but I am happy to see some early numbers about it. Hopefully we get a few more glimpses in December.Teladoc (TDOC) - Teladoc provides virtual access to healthcare providers with a portfolio of services covering 450 medical subspecialties from non-urgent, episodic needs like flu and upper respiratory infections, to chronic, complicated medical conditions like cancer and congestive heart failure. When I exited Livongo in August, after they were acquired by Teladoc. I mentioned then that I would continue to keep an eye on Teladoc in case this was something I wanted to get into. Well here I am with a new position this month as I think synergies will continue to emerge now that the deal is complete. Teladoc is one of the many companies that have benefitted from the changing environment, as Telehealth has gained a lot of traction. This drove up growth significantly, as more and more people turned to alternative meetings with health professionals. This also accelerated the growth rate for Livongo Health, which was leveraging technology in the healthcare space as well. I expect the combined company will continue to reap rewards longterm. DocuSign (DOCU) - DocuSign is the market leader in providing electronic signature technology and automation of the agreement process through its cloud platform. DocuSign's solution addresses the core of every business transaction - the agreement - and makes the process much more efficient, resulting in lower processing cost and time. November was a quiet month for DocuSign as no new information came out. We will have plenty to write about next month as they announced they will release third quarter fiscal 2021 results on Thursday, December 3, after the close of the market. Shopify (SHOP) - Shopify's e-commerce platform allows merchants of all sizes to build an online presence, including storefronts and fulfillment, payment, and shipping services. On November 17th, Shopify launched a partnership with Alipay to help merchants access new global customers. Their e-wallet app will allow Shopify merchants to accept payments through Alipay from more than 1B annual active users in China. In the past, Shopify merchants were able to offer Alipay as a payment method through third-party providers. The companies say the new arrangement "will reduce friction for consumers looking to make purchases with their preferred payment method.” The new Alipay payment gateway is available now to Shopify merchants in the U.S. More markets are planned in the futureWith three companies announcing earnings this coming week, I’m sure my portfolio allocations will fluctuate quite a bit. I would be a bit surprised if Zoom does not move back into the top allocation slot after they report.I did an excellent job staying active this month. I have been taking our dog on long walks and it has been great for both of us. Unfortunately, the long walks were not enough to overcome Thanksgiving at my sister’s. I actually gained 0.8 pounds this month, putting me at 21.0 pounds lost since I started.I hope everyone had a wonderful Thanksgiving holiday.
W/E Date Portfolio S&P 500 % DJIA % Nasdaq % Russ 2000 Fear and % change change change change % change Greed Index-------------------------------------------------------------------------------------------11/06/2020 +14.01% +7.32% +6.87% +9.01% +7.14% 40 11/13/2020 -10.99% +2.16% +4.08% -0.55% +5.81% 5911/20/2020 +8.39% -0.77% -0.73% +0.24% +2.37% 6211/27/2020 +6.86% +2.27% +2.21% +2.93% +3.92% 92------------------------------------------------------------------------------------------- November +17.53% +11.27% +12.86% +11.86% +20.59% 92 PTD +196.36% +34.21% +28.45% +54.99% +53.33% 92
Company Allocation October % Change PTD % Change---------------------------------------------------------------------------CrowdStrike (CRWD) 23.20% +21.79% +294.22%Zoom (ZM) 22.69% +2.32% +317.80%Cloudflare (NET) 14.95% +43.85% +207.02%Datadog (DDOG). 12.90% +6.25% +189.03%Etsy (ETSY) 9.72% +32.04% +15.73%Teladoc (TDOC) 6.15% +11.54% +11.54%DocuSign (DOCU) 5.94% +12.17% -3.50%Shopify (SHOP) 4.46% +11.77% -2.23%
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