Fastly Inc. (FSLY) shares surged nearly 45% from July 24 through Aug 5. — going from $78 to a high of $117.79. But since then, FSLY has pulled all the way back to $79.25. Tons of volatility, but Fastly’s #1 holder — Abdiel Capital — hasn’t sold a share of its 9.5M share position. Abdiel’s Fastly Inc. stake is unchanged. At least through last Thursday.
Abdeil Capital’s managing partners Colin Moran and Geoffrey Gentile like to put all their eggs in one basket, then watch the basket like hawks. At Q2’s end, Abdiel was staring at an oversized egg — Fastly Inc (FSLY), comprising 23.89% of the fund’s 13 stock portfolio.
On April 6 we reported that Abdiel had increased its stakes in two of its core holdings — Appian (APPN) and Fastly Inc. At the time, Abdiel had recently purchased 305K shares of Fastly at $19.08. A 13G/A holding filed several days later listed the fund’s overall ownership as 10.7%
Then on May 26, Abdiel filed a Form 4 disclosing the purchase of 600,000 shares of FSLY @ $41.50 via a secondary offering. That purchase raised the fund’s stake to 9.5M shares — 23.89% of FSLY’s outstanding shares.
As a 10%+ holder of Fastly Inc, Abdiel must report any change of holdings within 2 business days. Through Monday night, no such Form 4 filing had been made.
The spike in FSLY share price came after Shopify (SHOP), one of the Fastly’s main customers (and Abdiel’s #4 holding) reported strong results, leading to speculation that FSLY would report a strong June quarter on August 7. However, investors used the results as a reason to sell, despite FSLY posting revenue of $75M, up 62% from a year ago, better than Wall Street’s consensus estimate of $71.4 million. The company also raised 2020 guidance. In a Barrons interview, CEO Joshua Bixby also disclosed that TikTok is the company’s single largest customer, accounting for 12% of revenue in the year’s first half.
Abdiel Capital is a long term investor that focuses on companies with durable earnings streams, competitive advantages and the ability to increase market share over time. Managers Moran and Gentile also favor management with large percentages of net worth invested in the business.
Nonetheless, one might expect Abdiel to lighten its holdings a bit into a quick 33% move. But it hasn’t happened. As a 10% holder, the fund is required to report any trades that result in ownership change. A Form 4 must be filed within 2 business days of a position change. So, through Thursdays close, we know that Abdiel has not sold any Fastly Inc. shares. In fact, Abdiel has not sold any FSLY stock since crossing the 10% threshold in April. It is certainly possible that the fund hedged its long position into the price spike via options, but there’s no disclosure requirement of such a position.
A WhaleWisdom backtest of Abdiel’s 13F portfolio since 2016 shows an annualized return of 61.68%, including a 86.21% return year-to-date.
Abdiel Capital 13F portfolio as of Q2 2020 end
|Stock||Symbol||Shares Held||Market Value||% of Portfolio||Previous % of Portfolio||Ranking||Change in shares||% Change||Qtr first owned||Avg Price|
|Fastly inc||FSLY||9,501,679||808,878,000||23.8944%||7.8992%||1||600,000||6.7403%||Q2 2019||24.3379|
|Appian corp||APPN||8,059,473||413,048,000||12.2015%||14.275%||2||470,000||6.1928%||Q2 2017||26.3452|
|Alteryx inc||AYX||2,391,776||392,921,000||11.6069%||16.41%||3||-1,296,247||(35.1475%)||Q2 2017||27.8063|
|Shopify inc||SHOP||381,934||362,532,000||10.7092%||11.9284%||4||-230,000||(37.5858%)||Q1 2016||58.6094|
|Floor & decor holdings inc||FND||4,984,222||287,340,000||8.4881%||5.4717%||5||1,337,240||36.667%||Q1 2020||38.9476|
|Zoom video communications inc||ZM||1,068,469||270,900,000||8.0024%||7.2994%||6||0||0.00%||Q2 2019||73.1442|
|Bill.com holdings inc.||BILL||2,881,619||259,951,000||7.679%||4.0702%||7||336,119||13.2044%||Q4 2019||40.9336|
|Axon enterprise inc. (taser international inc.)||AAXN||2,184,920||214,406,000||6.3336%||8.0565%||8||-250,000||(10.2673%)||Q2 2017||39.3181|
|Carvana co||CVNA||1,734,615||208,501,000||6.1591%||4.4678%||9||0||0.00%||Q1 2020||55.09|
|Smartsheet inc||SMAR||3,053,818||155,500,000||4.5935%||5.9267%||10||0||0.00%||Q2 2019||45.508|
|Slack technologies inc||WORK||197,610||6,144,000||0.1815%||7.5878%||11||-5,849,107||(96.7319%)||Q1 2020||26.84|
|Zoominfo technologies inc.||ZI||100,000||5,103,000||0.1507%||12||100,000||Q2 2020||51.03|
|Mimecast ltd||MIME||0||0||3.902%||-2,364,273||(100.00%)||Q1 2016||18.2167|
|Twilio inc||TWLO||0||0||2.7053%||-646,583||(100.00%)||Q1 2020||89.49|
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