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Sold all of my $WORK shares
Why?
I like Salesforce a lot.
I like the leadership, vision and execution.
However:
- I get the sense that as the business has scaled they have run into trouble when attempting to build new products in house that expand the TAM and provide additional optionality. This belief is reinforced by the Mulesoft, Tableau and Slack acquisitions.
- The road ahead is in direct competition with $MSFT. Granted, this was also the case when $WORK was independent. However, now this new organization will be competing against Satya Nadella's behemoth across many different dimensions but without the vertical integration (hardware & software) that powers $MSFT's business.
- Salesforce will also likely need to eventually compete in the public cloud infrastructure game against AWS, Azure & GCP. I could see another acquisition down the road of a company like Digital Ocean. Each new acquisition and corresponding new business vector introduces a new risk to the companies culture and execution.
In general, I cringe at the idea of selling shares but I think I'm at peace with the possibility of $CRM becoming a multi-trillion dollar company from here and me not owning a piece of it.
In my view, $CRM can definitely 10x from here but it will likely be a bloody battle over a potentially very long period of time where they had to move heaven and earth. As an investor, I prefer to minimize my exposure to investments where I expect the company to move heaven and earth in order to deliver good returns. $AMZN & $NVDA are currently those workhorses for me and account for ~20% of my portfolio. While he's been phenomenally successful, I'm not sure that I'd put Benioff in the same category as Bezos and Jensen.
Part of the problem for me with this acquisition was that:
- The terms of the deal were half cash/half stock. The cash portion becomes a taxable event in 2021 and then I'd have to actively choose to purchase more $CRM over other positions. Hard for me to justify that.
- I have other ideas that I feel I am under invested in. This list includes: $SQ $TWLO $OKTA $PD $SFIX $NVTA and $NVDA. (fwiw I like $NVDA much more than $CRM although they are very different companies).
I'll be holding the proceeds from $WORK in my savings account for now but I'm weighing a few options as far as what to eventually do with the proceeds:
- Dollar cost average all proceeds into $SQ.
Ultimately, I think a logical decision here would be to allocate these proceeds to a similar risk/reward profile as $WORK prior to the $CRM acquisition. At the moment, this feels like $TWLO $OKTA and maybe $NVDA .
Any feedback or questions on this thought process would be appreciated!
MarketWatch
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