Well, that was a rubbish month wasn’t it?! Markets have continued to fall over the past month as pressure mounts on the federal reserve to increase the rate at which they increase rates with tech stocks in particular largely falling as a group - often a sure sign that the macro backdrop is cause for the decline rather than information driven by business news/performance.

If I could summarise investing in April 2022 in one tweet.

That’s left us in an interesting spot with regard to valuations. With markets as they are currently, there’s a temptation to categorise many software names as ‘cheap’. The issue with this is the point of comparison used to determine good value; looked at alongside mid-2021 valuations, many of today’s SaaS stocks could be perceived as bargains; this also seems to be the case when compared to the pre-covid state of play (scroll to the ‘Update on Multiples’ section for pre-2020 graphs). However, it’s important to remember that both periods were defined by extremely low interest rates. The number one question is what happens to rates now?

The Fed now have to attempt to thread the needle between increasing interest rates enough to keep a lid on inflation (if they aren’t already acting too late) and keeping enough momentum in the economy so that a recession is avoided. As there is some debate over the extent to which central bank policy can curb inflation (the cause of which is out of their control), whether or not you are buying stocks for the long-term right now essentially boils down to whether or not you believe capitalism can quickly and effectively solve the issue of heavy supply-chain disruption in order to alleviate the inflation problem. It’s arguable that even in a situation where we have both high inflation and high rates, software businesses are some of the best placed to weather the storm due to their stellar margins (nobody mention stock-based compensation…)

That’s certainly an argument that I’d make and given that SaaS businesses are currently at their most attractive valuations since late 2019/early 2020 despite a much clearer and rosier outlook in comparison to that period, I’m bullish on the risk/reward they currently offer.

Then again, what do I know? I’m reminded of these words of wisdom from Terry Smith, alluded to at the end of January’s update - I think I’m more likely to experience investing success by remaining invested than convincing myself that I can both predict the future and profit from those predictions. Who forecast this year’s events at this stage last year?

Business Updates

After a manic March, April was a quieter month in terms of company news though there were still a number of interesting announcements:

YTD return vs benchmarks

(Index source: Koyfin)

Portfolio Nasdaq S&P 500 FTSE 100
-33.15% -21.23% -13.31% -21.23%


Holding Ticker(s) Weighting (%)
🐶 Datadog DDOG 19.6
❄️ Snowflake SNOW 17.1
💸 Upstart UPST 14.3
🦅 Crowdstrike CRWD 9.8
🕸 Cloudflare NET 8.0
🔐 SentinelOne S 8.5
🗂 Monday.com MNDY 6.9
🪙 Coinbase COIN 5.2
🛑 Zscaler ZS 5.1
🔁 Gitlab GLTB 3.3
🏡 Airbnb ABNB 1.9
💰 Cash - 0.2


As briefly mentioned in the March update, due to the start of a new tax year here in the UK, it made sense for me to transfer shares from a general investment account to an ISA which was an ideal time to reflect on position sizing.

The net result was an increased position in SentinelOne and Upstart (both as a result of increasingly attractive valuations in contrast to their recent excellent earnings updates) and selling some Airbnb shares as I feel more comfortable holding SaaS businesses, which come with the benefit of more reliable and predictible earnings. I also opened a new position in Gitlab following their impressive Q1 report.

Closing Remarks

With big tech having now reported, May kicks off with a number of portfolio companies reporting their Q2 results:

  • Airbnb - 3rd
  • Cloudflare - 5th
  • Datadog - 5th
  • Coinbase - 10th

Given the recent beat-downs, I wouldn’t be surprised if we get some strong price reactions on even moderately good news, though that’s perhaps wishful thinking! Either way I’ll be watching with interest to see whether the uncertain macro environment has caused any change of narrative.

Until next time!