There haven’t been any portfolio company earnings releases since the last portfolio update so this update will be short.
PRIOR PORTFOLIO UPDATES
PORTFOLIO PERFORMANCE
In September, the portfolio gained some ground against the S&P 500. The portfolio dropped 8% from the end of August while the S&P 500 dropped 9.3%. For the past 20 weeks, the portfolio has ended each week YTD down between 60.0% and 68.8%. Yet, the portfolio is still 17.2% above its 24May low while the S&P 500 is currently at its YTD low.
On the positive side, we’ve had another quarter of earnings results since that 24May low so we might expect the portfolio to have risen 12% just on improved operating results (assuming valuation multiples remain constant).
| DATE | GauchoRico Portfolio (YTD) | S&P500 Total Return (YTD) |
|---|---|---|
| Jan22 | -31.7% | -5.2% |
| Feb22 | -32.6% | -8.0% |
| Mar22 | -35.1% | -4.6% |
| Apr22 | -49.6% | -12.9% |
| May22 | -66.5% | -12.8% |
| Jun22 | -65.8% | -20.0% |
| Jul22 | -63.6% | -12.6% |
| Aug22 | -62.3% | -16.1% |
| Sep22 | -65.3% | -23.9% |
Weekly Performance
| DATE | GauchoRico YTD | S&P500 TOTAL RETURN YTD | DELTA |
|---|---|---|---|
| 01/07/22 | -24.1% | -1.8% | -22.2% |
| 01/14/22 | -30.5% | -2.1% | -28.4% |
| 01/21/22 | -39.5% | -7.7% | -31.8% |
| 01/28/22 | -39.3% | -6.9% | -32.3% |
| 02/04/22 | -33.6% | -5.5% | -28.2% |
| 02/11/22 | -25.2% | -7.2% | -18.0% |
| 02/18/22 | -33.0% | -8.6% | -24.4% |
| 02/25/22 | -35.8% | -7.8% | -28.0% |
| 03/04/22 | -42.4% | -8.9% | -33.5% |
| 03/11/22 | -48.4% | -11.5% | -36.9% |
| 03/18/22 | -37.9% | -6.1% | -31.8% |
| 03/25/22 | -37.6% | -4.3% | -33.3% |
| 04/01/22 | -33.7% | -4.3% | -29.4% |
| 04/08/22 | -41.6% | -5.5% | -36.1% |
| 04/15/22 | -40.8% | -7.5% | -33.3% |
| 04/22/22 | -49.0% | -10.0% | -39.0% |
| 04/29/22 | -49.6% | -12.9% | -36.7% |
| 05/06/22 | -58.6% | -13.1% | -45.5% |
| 05/13/22 | -62.4% | -15.1% | -47.3% |
| 05/20/22 | -67.0% | -17.7% | -49.3% |
| 05/27/22 | -64.9% | -12.2% | -52.6% |
| 06/03/22 | -64.7% | -13.2% | -51.4% |
| 06/10/22 | -66.4% | -17.6% | -48.8% |
| 06/17/22 | -68.8% | -22.3% | -46.5% |
| 06/24/22 | -61.8% | -17.3% | -44.5% |
| 07/01/22 | -63.9% | -19.1% | -44.8% |
| 07/08/22 | -61.0% | -17.5% | -43.5% |
| 07/15/22 | -64.9% | -18.3% | -46.6% |
| 07/22/22 | -64.7% | -16.2% | -48.6% |
| 07/29/22 | -63.6% | -12.6% | -51.0% |
| 08/05/22 | -61.0% | -12.2% | -48.8% |
| 08/12/22 | -60.0% | -9.3% | -50.7% |
| 08/19/22 | -62.5% | -10.4% | -52.1% |
| 08/26/22 | -60.8% | -14.0% | -46.8% |
| 09/02/22 | -64.3% | -16.8% | -47.5% |
| 09/09/22 | -62.2% | -13.7% | -48.4% |
| 09/16/22 | -64.1% | -17.8% | -46.3% |
| 09/23/22 | -65.7% | -21.6% | -44.1% |
| 09/30/22 | -65.3% | -23.9% | -41.3% |
ALLOCATIONS
| 9/30 | 9/2 | 8/31 | 7/31 | 6/30 | 5/31 | 4/30 | 3/31 | 2/28 | 1/31 | 12/31/21 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| CRWD | 18.7%** | 19.2%** | 19.4%** | 17.0%** | 23.9%** | 23.8%** | 21.9%** | 15.4% | 8.3%* | 6.4%* | 5.9%* |
| DDOG | 17.6% | 18.6% | 19.1% | 28.8%** | 40.4%** | 41.4%** | 39.4% | 33.4% | 35.7% | 36.8% | 31.7%* |
| SNOW | 16.1%** | 15.7%** | 14.0%** | 16.9%** | 23.3%** | 21.8%** | 12.8%** | 9.8%** | 18.1%** | 18.4%** | 15.5%** |
| TTD | 5.3% | 2.9% | 2.8% | — | — | — | — | — | — | — | — |
| MELI | 5.2% | 3.5% | 3.3% | — | — | — | — | — | — | — | — |
| NET | 3.3% | 3.4% | 3.4% | 2.8% | 3.7% | 4.9% | 4.4% | 4.2% | 3.9% | 3.2% | — |
| LNG | 2.8% | 1.8% | 1.7% | 0.5% | — | — | — | — | — | — | — |
| MDB | — | — | 3.7% | — | — | — | — | — | — | — | — |
| UPST | — | — | — | — | 0.1%* | 0.2%* | 2.7%* | 3.0%* | 4.6%* | 3.5%* | 14.7%* |
| ZS | — | — | — | — | 4.5% | 4.7% | 22.5%* | 16.9%* | 16.2%* | 12.6%* | 4.3%* |
| S | — | — | — | — | — | 6.8% | 6.3% | 4.9% | 5.1% | — | — |
| MNDY | — | — | — | — | — | — | 3.5%^ | 9.4%^ | 9.1%^ | 26.0%^ | 27.5%^ |
| AFRM | — | — | — | — | — | — | — | — | — | 3.8% | 7.4% |
| Cash | 31.6% | 35.1% | 33.2% | 34.1% | 4.0% | -3.7% | -7.3% | 6.2% | 2.3% | -5.6% | -4.0% |
The allocation details described below are as of the end of September. Two of the seven positions in the portfolio are leveraged with long-term call options. CRWD: of the 18.7% allocation, 17.4% are shares and 1.3% are Jan2024 $200 calls. SNOW: of the 16.1% allocation, 15.2% are shares and 0.8% are Jan2024 $300 calls. Note: there are some rounding errors in the preceding shares/call options splits. The portfolio is comprised of 2.1% in long call options, 66.7% in shares, 31.6% cash, and -0.4% in short put options.
PORTFOLIO CHANGES
Changes since 2Sept 2022
- TTD: added about 2.2% allocation.
- MELI: added about 1.7% allocation.
- LNG: added about 0.8% allocation.
- cash: bought about 8.5% allocation in U.S. Treasuries with maturities between 3 months and 13 months. I will report these bonds as part of the cash position. I’m not intending to use or invest this cash prior to maturity of the bonds and yields have risen recently so I’m happy to grab about 4% return on this “cash”.
UPCOMING EARNINGS
Earnings season will soon be upon us starting with the big banks in mid-October followed by many of the big tech companies (including the cloud hyperscalers which can give clues to how some of the portfolio companies might have performed). The portfolio companies won’t begin reporting results until the first week of November. I’ve previously posted on how I estimate the dates of the earnings releases. Below is a table for when I expect the portfolio companies to report their Sept/Oct results. On the right side of the table, I’ve also included some companies of interest for holders of the portfolio companies on the left side of the table.
| Date* | Date* | ||
|---|---|---|---|
| DDOG | 11/3/22 | IBM | 10/19/22 |
| MELI | 11/3/22 | MSFT | 10/25/22 |
| NET | 11/3/22 | GOOGL | 10/25/22 |
| LNG | 11/3/22 | AMZN | 10/27/22 |
| TTD | 11/7/22 | ORCL | 12/8/22 |
| SNOW | 11/30/22 | ||
| CRWD | 11/30/22 | TEAM | 10/27/22 |
| WDAY | 11/17/22 | ||
| 3/3/21 | CRM | 11/29/22 | |
| FTNT | 11/3/22 | ||
| CYBR | 11/3/22 | ||
| PANW | 11/17/22 | ||
| ZS | 11/29/22 | ||
| S | 12/6/22 |
On the right side of the table are companies that may foretell how the portfolio companies may perform. The hyperscalers’ (AMZN, MSFT, GOOGL) cloud businesses will provide insight for DDOG, NET, SNOW, and CRWD. IBM and ORCL have much smaller cloud hosting so they’re less relevant; also, ORCL will not report until after all the other results are in so their report won’t be so useful. TEAM is a larger SaaS company that reports in late October so their result will give the first glimpse of SaaS companies performance in the September quarter. WDAY and CRM, large and mature SaaS companies, report too late to give much insight. In the cybersecurity space, FTNT, CYBR, PANW, and ZS all report before CRWD and can therefore provide information on the overall health of the cybersecurity space.
FINAL THOUGHTS
We recently had some bad news for long duration growth investments: the Fed reiterated its commitment to stamping out inflation even if it causes a recession; translation: we can expect interest rates to rise more than was expected prior to this past FOMC meeting. This tightening of monetary policy should continue to put pressure on the hypergrowth stocks in the portfolio.
And the geopolitical environment seems to becoming more tense. Ukraine continues to make more and more progress in the war, and it’s becoming increasingly clear that Russia’s war is doomed to fail. At this point, it’s probably needed to get rid of the guy who started the war in order for it to end. With exploded pipelines that feed Europe with natural gas and nuclear threats, who knows what could happen next. There are certainly a wide range of possibilities, and these possibilities could have profound impacts on the portfolio, up or down.
I continue to remain near-term aggressive and cautious with about 70% of the portfolio invested in stocks (aggressive) and 30% in cash and short-term bonds (cautious). The vast majority of the 70% portion invested in stocks is in market-dominating businesses that are also rapidly increasing cash flows while still in hypergrowth.
The opinions, thoughts, analyses, stock selections, portfolio allocations, and other content is freely shared by GauchoRico. This information should not be taken as recommendations or advice. GauchoRico does not make recommendations and does not offer financial advice. Each person/investor is responsible for making and owning their own decisions, financial and otherwise.