Investment Review day 34 of 50: CrowdStrike $CRWD
CrowdStrike is a leader in cybersecurity threat detection and prevention, using the cloud to proactively protect its customers’ systems by tracking trillions of cybersecurity events every day to automatically detect and prevent threats in real time. The more data that is fed into CrowdStrike’s platform, the more intelligent the ‘security cloud’ becomes – a powerful network effect that continually increases the protection provided to all customers.
I first bought stock in Feb 2021, and then doubled my position just a few months later. Cybersecurity was clearly a critical capability for all companies, and as the widely recognised leader in endpoint security, I felt CrowdStrike was well positioned to benefit in a world increasingly beset by cybercrime. However, I perhaps bought a little blindly to valuation, and despite trimming a small piece in Nov 2021, it was a largely downhill journey for the stock for several years.
I kept my due diligence firmly up to date though, and while the valuation multiple was compressing, the company was continuing to deliver superb growth with near flawless execution. The valuation seemed reasonable at the start of 2023 so I began to accumulate again, buying in January and May. That was a clear turning point for the stock, and those buys are are 3x and a 2x respectively, delivering a total return of just under 100%.
Cybersecurity is my highest conviction investment thesis, and for my money, CrowdStrike is the clear leader in the sector, however with recent gains, the valuation has started to become a little eye-watering, and so I’ve trimmed my holding twice in the last few months, seeking to keep this to a sub-6% allocation in my investment portfolio.
As a long-term investor, it’s critically important to distinguish between the performance of the share price and the underlying performance of the business. Stock prices can go up or down for many reasons, but ultimately, the only thing that really matters is whether a company has a successful strategy, and is executing against its plan effectively. I’m happy that CrowdStrike, with Founder CEO George Kurtz at the helm, is doing a fine job of both, and so this company remains a core holding for me.
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I’m putting my holdings under the microscope. Over the next 50 days I’ll break down my whole investment portfolio. Wins, losses, and the ‘why’ behind it all. And on day 50 I’m going to share my full portfolio so you can see how my strategies played out in the real world over the last twenty years and what we can all learn together. Follow along for the journey! #StockAnalysis #50daychallenge
