As I review the results and reports coming in for the month of Sept, I am impressed with the apparent continued growth of DOCU, which I was just reminded of when I had several transactions to complete. It was as smooth as silk. I also took note of Paul Bryants observations this evening on Saul's discussion board.
I hold DOCU . It is about 7% of my current portfolio. I have a bit of cash but I can't decide whether to sink more into DOCU or try to augment my FSLY now at 12%. Decisions decisions.
I haven't seen or heard any reasons to lighten up on either LVGO or SE but I am ready to cut bait at a moments notice if necessary. There was a recent report on a survey of online shoppers in Indonesia who prefer Shopee to other options by a wide margin. It was also reported that the number of ecommerce platforms in SE Asia is much depleted by competitive pressures. Meanwhile Shopee thrives.
Paul referred to your early Sept post which I reread. That motivated me to communicate here. Do you have further thoughts on any of the aforementioned issues. I would be most interested in how positive you are now regarding DOCU.
For my part I have a growing conviction in DOCU because they are expanding their product offerings and because its one of those services that everyone will need to use.
My thoughts on DOCU are very much the same, and my update in a couple days will be almost identical to the post you referenced. DOCU have given us plenty of clues they could end up with 50% growth or maybe even better next quarter. I can’t argue with your points on FSLY either as I believe this TikTok drama is way overblown. Both experienced recent pullbacks, and I added to both equally with some of the cash I redeployed this month.
In all honesty, I don’t think you can go wrong with either one. DOCU is probably safest to reaccelerate over the next quarter or two but FSLY’s edge offering could end up being a game changer. I’m glad to have both as strong positions.
And thank you for your blog! It is very good example how anyone that takes investing seriously, has to proceed. I also must start taking such notes, but yours look like a fairy tale - so well written and easy to read!!!
Let me ask you a question with an example.
Let's take two companies - CRWD and PTON. Both of them reported earnings this month. CRWD's stock went down, but PTON went up after-market, although both had amazing results. I do not discuss the reasons why this happened.
My question is - when you suspect good results and have some amount willing to add to the position, do yoу spend half of it before the earnings and the other half after?
I know that there isn't one-fits-all answer, but I'm curious what's your oppinion.
Good question. Personally, I have come to view situations like that as market timing and determined I'm not very good at it. My preference is to stay fully invested and simply buy my best idea whenever I have new money to invest. The one exception is I usually wait if earnings are coming up for a name I am considering. However, it has nothing to do with price. It's simply knowing I have info coming that could affect whether the company remains a best idea. I am more focused on the company and its thesis than the price.
To put it another way, I only care about one thing: "Is this the best place for my money right now?" Earnings only matters for the info it provides toward answering that question. The stock price is totally secondary. Does that fully answer your question?
Hello stocknovice. Thank you for your August writeup. Iparticularly appreciate your ability to synthesize material from the earnings calls and develop convincing conclusions.
In your writeup you mention two issues, Sea Ltd and TDOC/LVGO and discuss your reasons for avoiding both. I read the same reports and decided to hold both,. I'd like to solicit your further comment.
Consider SE. SE has 4 business components which they report on. These are Entertainment,E- Commerce, Digital Financial and Merchandise ( a smaller component). At present Entertainment is the largest component.
In the Q&A the CEO was emphatic about the positive prospects for e-commerc and Digital Financial. e.g E-commerce was exhibiting high growth in all metrics and gaining market share thruout S.E. Asia. The Digital Financial piece was gaining efficiency and approaching profitability
SE was investing heavily in long term growth and building on line use cases for the Dig Fin services.
Some Q@ metrics...all YOY
Total rev +102%
Gross profit +106%
OpEx +59
Net loss +42% This is explained as due in large measure to some accounting factors
Rev by category
Entertainment +61%
E-Commerce 187.7 %
Digital Financial +327.7% (Adj EBITDA +506.8%)
Cash +50%
Deferred rev $1.28B +20
Cash flow 74M vs. 8M
So its complicated but interesting. It looks like a huge TAM in SE Asia in each of 3 fast growing sectors. Maybe worth another look.
LVGO is entirely different story and the subject of much discussion. Initially I shared you conclusion and early on sold out of a large holding. But since then may medical professionals have poste on Saul's Discussion board arguing in favor of the merged entity. There is a lot of stuff there. Enough to convice me to reinstate a position albeit a smaller one. I wonder how you see all that.
Good thoughts on both and I agree with all of it. My difficulty with SE was mostly the amount of info that needed to be tracked. The sheet I use got incredibly long with SE before I realized it was because I was basically recording 3 business in one (which would become 4 if Merchandise grows). I find it challenging enough to follow one company. Add in the fact this is a foreign company, and that challenge increases exponentially. I decided it was just too hard to become comfortable with. You're absolutely right. It's "complicated but interesting". I am trying to prioritize "simple and understandable" first. That's just me, though. I totally see the case for owing SE.
On LVGO, I still love it. I guess my view is once the merger occurred it became about whether or not I wanted to own TDOC. That's a much different company. It is a different business model with management that has generally been more acquisition driven. It is also taking on a much bigger and more competitive market. Being honest, I must also admit some prior bias because past looks at TDOC showed some things that made me take pause. One was a controversy surrounding claims about their initial behavioral health offering. The other was an C-suite employee affair. My decision wasn't about disliking LVGO. It was deciding TDOC didn't fit my current portfolio.
Part of this I believe is due to the fact my portfolio has gotten so concentrated. If I decided on more holdings, both these companies would likely be in it along with names like SHOP and ROKU. As it is I might miss out on some gains, but I'm OK with that. I still have about 4% of cash to spend, so ending up in one of these isn't out the question. I'm still waiting to see how COUP and ZS report this week. 4% seems about right to jump back in if either trips my trigger.
Hi StockNovice, thanks for the great write up. Quick qn, how do you track monthly and ytd returns if new money is being added to the portfolio or taken away since money added in shouldnt be considered as gains.
At this stage I am only adding, but I do adjust for new money to make sure it isn't counted as gains. I contribute the 1st of every month, so I need to reset my return rate as well. The method I use was learned on a message board called "Saul's Investment Discussions" at the Motley Fool website. The math is described below:
"Here's how to calculate your overall returns ignoring cash flow in or out. Say you start the year with $14,000. You want to equate that with 100% and calculate gains and losses from there. So you ask yourself "What number (factor) would I multiply $14,000 by to get 100?"
By simple arithmetic we have 14000 x F = 100
And thus F = 100/14000 = .0071428
Sure enough 14,000 x .0071428 = 100
Now say three weeks later you have $14,740 and you want to see how you are doing, you multiply that number by .0071428 and you get 105.3 (so you are up 5.3%). If you don't add or subtract money, that factor will work for the whole year.
Now say you add $2300 of fresh money, but you don't want that to screw up your estimate of how well you are doing.
You add the $2300 to the $14,740 and get $17,040 which is your new balance that you are investing with. That's your new starting point. It doesn't affect how you've done up to here. You haven't suddenly done better because you added money. You can't still multiply by .0071428 because you'd get 121.7 and it would look as if you were up 21.7%, when you are really only up 5.3%.
So you need to change your factor to make it smaller so it will still reflect just the 5.3% gain you've made so far. You figure: "What would I multiply my new balance ($17,040) by to get 105.3, to reflect my 5.3% gain so far this year?"
F x 17,040 = 105.3
F = 105.3/17,040 = .0061795
And that's your new factor. If you multiply it by 17,040, sure enough you get 105.3. Now you continue to see how you will do for the rest of the year.
If a little later you are at $18,000, you multiply 18,000 by .0061795 and you get 111.2, so you know that your investing is now up 11.2% for the year.
Same, if you take money out. You don't want it to look as if you lost money. You calculate a new factor so you start from the same percentage where you were.
On January 1st of the next year, you write down how you did for the year to keep a record, and start over at 100 for the next year."
I just enter the new factor in Excel and go from there. I hope that answers your question.
Great write-up! I like how you pointed out Zoom's international growth, its definitely a big part of the story. Can't wait for DOCU and CRWD earnings, hopefully more of the same!
I'm curious about your opinion on Nvidia. Why don't you own it? I'm not big on cyclicals but the 50% growth overall and the gaming/data center performance is outstanding. I'm currently in at a 4% stake for the last 9 months with a 175% return and happy with the outlook. Also, what are your SHOP concerns specifically? TAM not big enough at the market cap? I can't argue too much with 97% growth and lockdown environment so I have 4% as well on SHOP.
I owned NVDA for a time in 2018 but eventually sold. One, as you mention it's cyclical which I decided I would prefer to avoid. Two, the initial glitch was an inventory issue, which software companies don't have. I simply decided it was easier for me to understand and follow other names.
SHOP is a top watch list stock I simply haven't gotten around to reentering since selling last year. I'm not a big valuation hound, but it's always been pricey (and rightfully so). I think the TAM is plenty big enough. I just don't see it as one of my top 8 ideas right now. There's a chance it could be back in my portfolio VERY soon though as I am determined to redeploy my sidelined cash this month.
Hi Stocknovice,
As I review the results and reports coming in for the month of Sept, I am impressed with the apparent continued growth of DOCU, which I was just reminded of when I had several transactions to complete. It was as smooth as silk. I also took note of Paul Bryants observations this evening on Saul's discussion board.
I hold DOCU . It is about 7% of my current portfolio. I have a bit of cash but I can't decide whether to sink more into DOCU or try to augment my FSLY now at 12%. Decisions decisions.
I haven't seen or heard any reasons to lighten up on either LVGO or SE but I am ready to cut bait at a moments notice if necessary. There was a recent report on a survey of online shoppers in Indonesia who prefer Shopee to other options by a wide margin. It was also reported that the number of ecommerce platforms in SE Asia is much depleted by competitive pressures. Meanwhile Shopee thrives.
Paul referred to your early Sept post which I reread. That motivated me to communicate here. Do you have further thoughts on any of the aforementioned issues. I would be most interested in how positive you are now regarding DOCU.
For my part I have a growing conviction in DOCU because they are expanding their product offerings and because its one of those services that everyone will need to use.
cheers
arnie
Arnie -
My thoughts on DOCU are very much the same, and my update in a couple days will be almost identical to the post you referenced. DOCU have given us plenty of clues they could end up with 50% growth or maybe even better next quarter. I can’t argue with your points on FSLY either as I believe this TikTok drama is way overblown. Both experienced recent pullbacks, and I added to both equally with some of the cash I redeployed this month.
In all honesty, I don’t think you can go wrong with either one. DOCU is probably safest to reaccelerate over the next quarter or two but FSLY’s edge offering could end up being a game changer. I’m glad to have both as strong positions.
Hello,
And thank you for your blog! It is very good example how anyone that takes investing seriously, has to proceed. I also must start taking such notes, but yours look like a fairy tale - so well written and easy to read!!!
Let me ask you a question with an example.
Let's take two companies - CRWD and PTON. Both of them reported earnings this month. CRWD's stock went down, but PTON went up after-market, although both had amazing results. I do not discuss the reasons why this happened.
My question is - when you suspect good results and have some amount willing to add to the position, do yoу spend half of it before the earnings and the other half after?
I know that there isn't one-fits-all answer, but I'm curious what's your oppinion.
Cheers and thank you.
Good question. Personally, I have come to view situations like that as market timing and determined I'm not very good at it. My preference is to stay fully invested and simply buy my best idea whenever I have new money to invest. The one exception is I usually wait if earnings are coming up for a name I am considering. However, it has nothing to do with price. It's simply knowing I have info coming that could affect whether the company remains a best idea. I am more focused on the company and its thesis than the price.
To put it another way, I only care about one thing: "Is this the best place for my money right now?" Earnings only matters for the info it provides toward answering that question. The stock price is totally secondary. Does that fully answer your question?
StockNovice,
Thank you very much for the detailed answer... I salute you for all deep dives that you do and that you put arguments for all your actions!
You are a good example that we can all learn from.
Hello stocknovice. Thank you for your August writeup. Iparticularly appreciate your ability to synthesize material from the earnings calls and develop convincing conclusions.
In your writeup you mention two issues, Sea Ltd and TDOC/LVGO and discuss your reasons for avoiding both. I read the same reports and decided to hold both,. I'd like to solicit your further comment.
Consider SE. SE has 4 business components which they report on. These are Entertainment,E- Commerce, Digital Financial and Merchandise ( a smaller component). At present Entertainment is the largest component.
In the Q&A the CEO was emphatic about the positive prospects for e-commerc and Digital Financial. e.g E-commerce was exhibiting high growth in all metrics and gaining market share thruout S.E. Asia. The Digital Financial piece was gaining efficiency and approaching profitability
SE was investing heavily in long term growth and building on line use cases for the Dig Fin services.
Some Q@ metrics...all YOY
Total rev +102%
Gross profit +106%
OpEx +59
Net loss +42% This is explained as due in large measure to some accounting factors
Rev by category
Entertainment +61%
E-Commerce 187.7 %
Digital Financial +327.7% (Adj EBITDA +506.8%)
Cash +50%
Deferred rev $1.28B +20
Cash flow 74M vs. 8M
So its complicated but interesting. It looks like a huge TAM in SE Asia in each of 3 fast growing sectors. Maybe worth another look.
LVGO is entirely different story and the subject of much discussion. Initially I shared you conclusion and early on sold out of a large holding. But since then may medical professionals have poste on Saul's Discussion board arguing in favor of the merged entity. There is a lot of stuff there. Enough to convice me to reinstate a position albeit a smaller one. I wonder how you see all that.
cheers
arnie
.
Arnie -
Good thoughts on both and I agree with all of it. My difficulty with SE was mostly the amount of info that needed to be tracked. The sheet I use got incredibly long with SE before I realized it was because I was basically recording 3 business in one (which would become 4 if Merchandise grows). I find it challenging enough to follow one company. Add in the fact this is a foreign company, and that challenge increases exponentially. I decided it was just too hard to become comfortable with. You're absolutely right. It's "complicated but interesting". I am trying to prioritize "simple and understandable" first. That's just me, though. I totally see the case for owing SE.
On LVGO, I still love it. I guess my view is once the merger occurred it became about whether or not I wanted to own TDOC. That's a much different company. It is a different business model with management that has generally been more acquisition driven. It is also taking on a much bigger and more competitive market. Being honest, I must also admit some prior bias because past looks at TDOC showed some things that made me take pause. One was a controversy surrounding claims about their initial behavioral health offering. The other was an C-suite employee affair. My decision wasn't about disliking LVGO. It was deciding TDOC didn't fit my current portfolio.
Part of this I believe is due to the fact my portfolio has gotten so concentrated. If I decided on more holdings, both these companies would likely be in it along with names like SHOP and ROKU. As it is I might miss out on some gains, but I'm OK with that. I still have about 4% of cash to spend, so ending up in one of these isn't out the question. I'm still waiting to see how COUP and ZS report this week. 4% seems about right to jump back in if either trips my trigger.
Thanks for the deep break down.
Joe
Hi StockNovice, thanks for the great write up. Quick qn, how do you track monthly and ytd returns if new money is being added to the portfolio or taken away since money added in shouldnt be considered as gains.
At this stage I am only adding, but I do adjust for new money to make sure it isn't counted as gains. I contribute the 1st of every month, so I need to reset my return rate as well. The method I use was learned on a message board called "Saul's Investment Discussions" at the Motley Fool website. The math is described below:
"Here's how to calculate your overall returns ignoring cash flow in or out. Say you start the year with $14,000. You want to equate that with 100% and calculate gains and losses from there. So you ask yourself "What number (factor) would I multiply $14,000 by to get 100?"
By simple arithmetic we have 14000 x F = 100
And thus F = 100/14000 = .0071428
Sure enough 14,000 x .0071428 = 100
Now say three weeks later you have $14,740 and you want to see how you are doing, you multiply that number by .0071428 and you get 105.3 (so you are up 5.3%). If you don't add or subtract money, that factor will work for the whole year.
Now say you add $2300 of fresh money, but you don't want that to screw up your estimate of how well you are doing.
You add the $2300 to the $14,740 and get $17,040 which is your new balance that you are investing with. That's your new starting point. It doesn't affect how you've done up to here. You haven't suddenly done better because you added money. You can't still multiply by .0071428 because you'd get 121.7 and it would look as if you were up 21.7%, when you are really only up 5.3%.
So you need to change your factor to make it smaller so it will still reflect just the 5.3% gain you've made so far. You figure: "What would I multiply my new balance ($17,040) by to get 105.3, to reflect my 5.3% gain so far this year?"
F x 17,040 = 105.3
F = 105.3/17,040 = .0061795
And that's your new factor. If you multiply it by 17,040, sure enough you get 105.3. Now you continue to see how you will do for the rest of the year.
If a little later you are at $18,000, you multiply 18,000 by .0061795 and you get 111.2, so you know that your investing is now up 11.2% for the year.
Same, if you take money out. You don't want it to look as if you lost money. You calculate a new factor so you start from the same percentage where you were.
On January 1st of the next year, you write down how you did for the year to keep a record, and start over at 100 for the next year."
I just enter the new factor in Excel and go from there. I hope that answers your question.
Thanks! This helps a lot. Appreciate your response !
Great write-up! I like how you pointed out Zoom's international growth, its definitely a big part of the story. Can't wait for DOCU and CRWD earnings, hopefully more of the same!
I'm curious about your opinion on Nvidia. Why don't you own it? I'm not big on cyclicals but the 50% growth overall and the gaming/data center performance is outstanding. I'm currently in at a 4% stake for the last 9 months with a 175% return and happy with the outlook. Also, what are your SHOP concerns specifically? TAM not big enough at the market cap? I can't argue too much with 97% growth and lockdown environment so I have 4% as well on SHOP.
I owned NVDA for a time in 2018 but eventually sold. One, as you mention it's cyclical which I decided I would prefer to avoid. Two, the initial glitch was an inventory issue, which software companies don't have. I simply decided it was easier for me to understand and follow other names.
SHOP is a top watch list stock I simply haven't gotten around to reentering since selling last year. I'm not a big valuation hound, but it's always been pricey (and rightfully so). I think the TAM is plenty big enough. I just don't see it as one of my top 8 ideas right now. There's a chance it could be back in my portfolio VERY soon though as I am determined to redeploy my sidelined cash this month.
Thanks for the questions.