I started this text blog last year at the request of a few friends to create an open dialog and platform for communicating the 10 companies I am invested in at any given time. Re-reading the pages and pages of posts again, it has been rewarding in many different ways, not the least of which is to force me to think about the “why” I am invested in any particular company and defend it to myself. I am pleasantly surprised when friends ask me to add them to the post, but am excited and happy to lend whatever perspective I can after about 30 years investing in public companies. As I have not posted my holdings and portfolio percentages in over a month now, I will follow this post with the 10 companies I now hold, along with the percentage that each company makes up in my portfolio. Note that the highest percentage holdings are the companies in which I have the highest conviction and confidence.
As stated, I try not to allow any one company holding to exceed about 15% of my total stock portfolio, so that no unforeseen stumble by a company will have a massively detrimental impact to the overall portfolio. I can’t control the overall market (beta risk), but I can control the excessive impact of any one company. I want to reiterate again that I do not try to time the market or hit the exact high or low of a stock or market condition. 7 of my 10 stock positions I have now owned for more than one full year. I will typically make at least 5 or more purchases of a company’s stock to get to a full position in any one stock.
I fully expect each company I own has the ability to 5-10x themselves (grow 10 times larger) when I buy them. If you bought the companies in the same percentages last October 2018, (and sold the companies like NTNX and NKTR which stumbled and I posted that I dumped quickly), then you are up over 100% in less than a year. This is particularly incredible since the portfolio lost more than 20% in late December when it corrected around December 24 with the rest of the market. I did not sell on the low of December 26th amidst the Armageddon. If I had, I would have missed out on the recent tear. Again, I can’t time the market, so I don’t try.
If I had listened to the countless pundits who proclaimed we were entering a recession, that the companies and the market as a whole were massively overvalued, and that this year would be flat (which has happened for the past 3-4 years repeatedly), I would have missed out on an incredible run in 2019 that is on pace to beat 2009 for me, which was 110% returns (albeit this was after the real estate and banking crisis of 2008 that cut markets in half).
After fantastic overall returns in 2018 that exceeded 40%, I would have been very happy with 20% gains this year in 2019. So to NOW be up more than 85% YTD (since Jan 1, 2019) is beyond any expectations, but still in line with my long term goals and expectation that these companies rapid growth rates would allow them to 5-10x themselves in size; they have now hit their second doubling for me. If I now were to lose 20%, 30%, 40% or 50% before the end of this year, I will still be up for the year and significantly up the past 3 years…by several hundred percent. The point is: No one can time the market consistently and well. Instead, I prefer to continue to try to invest and hold the best performing and fastest growing companies; those with more than 50% q/q revenue growth, outstanding Net Customer Retention rates, annual recurring revenues, increasing deferred revenues and customers, great management, TAM’s that will allow them to continue to grow, and the best technology with a moat around it and that is enabling the digital revolution we are in right now, which I believe will dwarf past revolutions including the internet and email.
I hope these texts have been informative, helpful and perhaps even profitable for each of you who have chosen to invest in some or all of these companies. I hope you have each been able to listen to at least one earnings call or read one earnings report. I hope these posts have encouraged you to venture into the world of owning great companies whose stock price can be very lucrative and rewarding. At the least, I hope the posts have helped to introduce you to a different perspective on investing in high growth companies that I have learned, developed and benefited from in my own investing, and since personally taking one of the first “cloud” companies public in an IPO in Silicon Valley (before the term “cloud” existed) way back in the internet bubble of 2000 (Corio).
Thanks for following and for all the great questions and feedback. CHEERS!!
