Boring Software, Thoughts, Small Cap Growth Fund '21

NEWS: The discussion forum is now up and running, hopefully everyone contributes to it!


There are 2 parts of this post, a brief update on BlackLine. There is hardly any real news on the name usually, it is not covered like an Apple or Microsoft where there is constant news flow on the underlying names. So I just like to keep people updated on what I am thinking on the name. Second, I want to go over a few thoughts heading into the week and new year along with the watchlist I watch day to day, maybe you will like some of the names or buy them! I just do not have room in my whole portfolio.


Between Lemonades rapid share price appreciation the past few weeks, BlackLine and Lemonade are dueling it out for 2nd largest weight in my portfolio. It amazes me how quickly that can happen. As of Friday BL is still ahead, but Lemonade dethroned them earlier in the week hitting over $110/share briefly. Current Total Returns on both stocks are 33.16% on BlackLine and a whopping 53.60% return on Lemonade. I am staying long both these names, and as I contribute my $6k to my Roth IRA at the beginning of the year, I will have to make a decision on allocating that capital to my names (between BL, LMND, ZBRA, PLAN).


I see a lot of confusion on the difference between nominal share price, and valuation. I have seen people say they will not buy a stock because it is trading at $150 per share, that they would rather buy a stock trading at $10 per share. Here is the thing, the $150 per share stock could be trading at a lower valuation (factoring in your analysis and growth rates), then the $10 per share stock is trading at. Never be afraid of the nominal share price, in my opinion. Focus on valuation and your overall analysis.

Above I have the estimates for revenue growth for BlackLine, from 11 analysts that cover the stock. I think even the high forecast is relatively conservative for a few reasons. One, the stock was actually affected by COVID and burned some cash to give customers some leniency on using their products. I think this all makes a nice comeback into 2021+ as customers come out of COVID stronger, I hope, and sales pick up again. That is where my money is.


Make sure, as owner of a business, you subscriber to their website to get all news, filings, and emails related to your companies. Keeping on top of your companies is critical to understanding them, and creating your bull and bear thesis for them!

 

It looks like we may be getting another stimulus bill, I look to seeing the broader indexes chug away on positive vaccine notes and stimulus talks. I am not really convinced we are in a bubble, maybe certain pockets of the market sure, always have that one area that is overvalued, but at the same time things seem to be doing well.


I do not focus too much on the broader macro stuff as much anymore, I pay attention to some geopolitical news. To me, at the end of the day I am buying the businesses, we must maintain our focus and not get distracted or emotional because we see market moving headlines. My $.02.


Stocks on my watchlist include:

  • Zebra

  • BlackLine

  • Cintas

  • Amazon

  • IGV

  • Google

  • Lam Research

  • Rocket Mortgage

  • Home Depot

  • SPX / QQQ

  • SQ

  • VEEV

  • AAPL

  • PINS

  • FB

  • PLAN

  • NET

  • LMND

I watch the share prices of these stocks go up every day, all day. After years of doing this, you start to develop pattern your see, how news flow affects certain names, and it has given me the ability to feel like I have an edge.


I plan on building out a new fund next year, called the Small Cap Growth Fund. I may even keep track of the dollar amount in here too, it is going to be a small % of my overall assets, as it will be riskier. It is going to be a research/PM experiment, and I would love for participation. I am studying the S&P 600 and the constituents and building my 5 small cap portfolio that I think have the most potential in the future. Not only will this give us exposure to small cap companies, it will be fun as I plan on setting the Growth Fund on cruise control. I will keep track of the returns of the small cap growth fund, and much more. data. It will be a buy & hold strategy. The reason I am using the S&P 600 is because of the specific criteria it takes to be IN the S&P 600. Link below for details.


Happy Investing,

Fiducia



Details on S&P 600


https://www.spglobal.com/spdji/en/indices/equity/sp-600/#overview





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