Copyright 2018 Ticker Target, LLC

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1 February 16th, 2018 Premium Package by Bert Hochfeld Miguel Toro 1

2 Daily Post 2

3 December 13th, 2017 In Addition to the Portfolio We have added $12,500 of Twilio shares to the high-growth portfolio. This represents approximately a 6.4% position. Our price per share was $24.80, the closing price on 12/11, and we bought 504 shares. We funded the purchase from our cash balance. Twilio is the leading vendor of software to embed communications solutions including voice, video, and text within applications. Most of its sales are to developers although it has most recently started to sell enterprise license agreements. The shares have been under substantial pressure since last spring when the company disclosed that its largest single customer, Uber had decided to build its own communications infrastructure. At that point, Uber had been a 17% customer and the company s reported growth tumbled. That said, however, the component of Twilio s business outside of Uber and its other large, non-contractual customer, Facebook (WhatsApp), has been achieving 60%+ growth and the company is adding 3000 new customers/quarter. The company will lap the high point of its revenue from Uber in the next 6 months, after which its optics should substantially improve. At the moment, the company is forecast to grow by just 24% in 2018 but will probably handily exceed that level. At this point, the shares are not valued for the strong growth the company is achieving. They are trading at just more than 4X revenue, far below what might be expected for a business that dominates the high growth space of communications applications. Expectations have compressed dramatically since this company went public. At some point in the next couple of quarters, we anticipate that investors will look beyond the transition from Uber and reflect on the very rapid growth the company is achieving in the balance of its potential market. The company has been able to achieve a very effective selling motion and the items that have weighed on gross profit include FX and particularly the lower gross margins the company has on communications sales in international markets should begin to abate. The shares have been substantially derisked by the lasts share price pullback since the start of November. At this point we think the risk/reward factors are substantially in our favor. Copyright Ticker Target, LLC 3

4 Bert's Portfolio Commentaries 4 Copyright Ticker Target, LLC

5 Bert s Portfolio Commentary - Week of January 26th, 2018 The stock market s never-ending rally rolled on last week, and our portfolios continued to rise as well. At this point, the reasons for the rally are a combination of the goldilocks economy coupled with increasing realization that the tax cut and the falling dollar are going to be driving earnings along with higher unit volumes. This holds true in the IT world, where strong capex numbers imply accelerating growth for most businesses. I certainly expect the rally to come to a pause at some point, but so far there are simply no immediate signs of that happening. Our high-growth portfolio rose by 1.9% this week, trailing the results of the IGV which was up 2.4% and the S&P index which rose by 2.2%. The portfolio had companies with significant share price appreciation such as Ubiquiti, Alteryx and Commvault. Commvault reacted to a better than feared earnings report that featured strong guidance for the impending fiscal year. Ubiquiti is essentially in a cat-up mode having been under-valued for a significant period as investors reset their expectations as to what the company s unique business model can achieve. Alteryx, up over 8%, is probably reflecting investor speculation regarding a potential merger. I simply have no way of validating if that speculation has any basis in fact. Alteryx shares are now up by 56% in 5 months; it would be hard to imagine they will continue to appreciate at that cadence going forward but as the position is only 9.5% of the portfolio, we are going to maintain our stake and hope that the speculation is borne out. Our relative performance last week was hobbled by the 8% decline in Nutanix shares. The decline was a function of a JP Morgan downgrade. We simply do not think that the downgrade was based on any substantive considerations and was poorly framed. It is our belief that Nutanix remains one of the premier emerging growth names with the pivot to software a significant positive and the stronger sales management team also likely to help results. In addition to Nutanix, the portfolio performance was retarded by the 6.5% fall in Impinj shares. Impinj is a small position for us and is so because it is basically a speculation on the success that the company will have in developing new and expanded use cases. Last week, in the wake of the official opening of the Amazon Go store, it has been speculated that Impinj technology was not part of what Amazon has chosen. We are not sure if that is accurate, we are not sure if it matters significantly and we think at this juncture, with the stock at new lows, and short interest at new highs, it is in a great position to provide strong returns. Despite the underperformance this past week, the high growth portfolio, up 33% in the past 5 months, is still substantially outperforming both the S&P and IGV indexes. Again, we caution subscribers that it is unlikely that any portfolio can maintain that cadence of return for an extended period. While the over-valuation that some commentators are fond of writing about is belied by the strong operational performance of most IT vendors, portfolio appreciation at a 75% rate, completely unleveraged, is not likely. Our income/stability portfolio without the negative results of either Impinj or Nutanix, rose by 2.4% last week, matching the performance of the IGV and slight exceeding the performance of the Dow. The portfolio, as had been indicated, added Infosys and deleted Symantec last week. Strong performance was achieved by Microsoft, Oracle, Fidelity National and Hewlett Packard enterprise. NetApp, was the weakest name last week, not too surprising in the wake of 67% appreciation over the past 5 months. As indicated the portfolio reduced the NetApp position by 33% last week to rebalance portfolio weighting. At this point, our income/stability portfolio is up by a bit more than 21% over the past 5 months, again a rate that will be difficult to sustain over the balance of the year. 5

6 Bert s Portfolio Commentary - Week of February 16th, 2018 Last week s action in the stock market was almost a mirror image of the prior week. Most of the losses that had been sustained in the first week of February were erased, although the averages have not quite returned to previous high ground. Sometimes, trying to find reasons for volatility is a case of trying to get an explanation to fit a fact on the ground. There wasn t much in the way of macro data this past week that was different than macro data received the first week in February. As it happens, inflation at the consumer level came in at expected levels-but that meant that year on year inflation ticked up to 2.1%, the highest in a couple of years. Offsetting that metric was an unanticipated decline in retail sales actually going back to December. Further, the production index unexpectedly fell as well. And offsetting those signs of weakness were signs of strength in the Philly Fed index as well as a jump in housing starts. All in all, the economy is still showing signs of moderate growth with some labor market tightness, but no substantial signs of a material rise in inflationary expectations. The recent dampening of energy prices will probably work through the inflation chain. Overall, business is good, and inflation is still not an overwhelming problem. Many tech companies reported last week, and the almost universal theme was that business was a bit better than anticipated and the outlook for the current quarter was stronger still. If readers are looking for reasons for stocks to be at record highs, simply put, the earnings and growth prospects for most companies are also at record highs and growth has been so fast that in many cases valuation has not increased. Overall, our high growth portfolio increased by almost 9% in value last week, noticeably beating the returns of the IGV index and doubling the returns of the S&P for the period. Over the past 6 months, our high-growth portfolio has increased by 27% compared to a gain of 16% for the IGV and 11% for the S&P. We are pleased with that kind of performance, although as we have said in the past it is not possible to consistently maintain that kind of differentiated performance, or indeed to maintain performance at that level over any extended period. Last week our portfolio saw a 35% gain in Twilio. Twilio is the leading provider of messaging technology for developers who incorporate its products within apps that are used in a wide variety of communications applications. The company reported results that substantially exceeded the consensus and gave guidance far above consensus expectations. That said, the shares remain significantly undervalued compared to growth that is likely to exceed 30% this year and into the future. Shares of Alteryx advanced 15% last week, making back some of the losses of the previous week. Alteryx will report its quarterly results this coming Wednesday and we hope to see substantial over-attainment. Our newest purchase, Pega jumped 10% last week, again reversing declines of the prior week. Pega will likely report at the end of February and has the opportunity to achieve healthy growth well beyond the consensus. Our income/stability portfolio rose a more modest 4.3% last week, below the return of the IGV and just slightly above the return of the Dow. While all of the names in the portfolio increased, both Infosys and NetApp showed very modest appreciation constraining overall portfolio results. Cisco reported earnings last week that beat consensus expectations and spoke to the improving climate for overall IT spending. With higher guidance, the shares jumped by 12%. Dassault Systemie, the leading provider of PLM software jumped over 10% last week, both because of its prior earnings release but reflecting strong positive trends in the economy. Our income stability, up about 14% over the past 6 months is within hailing distance of the returns of both IGV and the Dow. Given the constraints of portfolio construction, we are reasonably satisfied with the returns of that portfolio as there are simply a lack of names that have a dividend and can be included within the sector. 6

7 Bert s Portfolio Commentary - Week of February 16,

8 High Growth Portfolio Relative Performance 8 Copyright Ticker Target, LLC

9 High Growth Portfolio February 16th, 2018 Company Symbol Year # of Shares Per Share (2/9) Per Share (2/16) Total $ Invested Weekly Weekly Value % Wk Current Market Value Portfolio Weight Index % G/ L Cognizant CTSH 8/25/ $ % $ % On At Numbers of Share $ G / L on Transaction Horton Works HDP 8/19/ $ / $ $ NetApp NTAP 8/25/ $ % $ % Nimble NMBL 9/30/ /13 $ $14, $ Gigamon GIMO 8/25/ /27/17 $ $ 16,447 $ Nuance NUAN 8/19/ /30 $ $ $59.86 Opentext OTEX 8/25/ $ % $ % Rackspace RAX 8/19/16 8/26 $ $11,340 $ Shopify SHOP 8/19/16 5/10 $ $ $ Square SQ 8/25/17 10/31 $ $ $ SilverSpring SSNI 8/25/17 9/25/17 $ $ $ Teradata TDC 8/25/ $ % $ % / $ PEGA PEGA 2/10/ $ % $ % Red Hat RHT 8/25/ $ % $ % Veeva VEEV 8/25/ $ % $ % Nutanix NTNX 8/25/ $ % $ % /24 $ $ Commvault CVLT 8/25/ $ % $ % Alteryx AYX 9/27/ $ % $ % Ubiquiti UBNT 11/18/ $ % $ % Twilio TWLO 12/8/ $ % $ % Impinj PI 2/1 $ $ $ Subtotal $ $ % $ % Cash $ Total $ $ Ishares IGV 8/ $ % $ SPDR S&P SPY 8/ $ % $

10 Income/Stability Relative Performance 10 Copyright Ticker Target, LLC

11 February 16th, 2017 Income/Stability Portfolio Company Symbo l Year # of Shares Per Share (2/9) Per Share (2/16) Total $ Invested Weekly Weekly Value % Wk Current Market Value Portfolio Weight Cisco CSCO 8/ $ % $ % Fidelity Nat'l. FIS 8/ $ % $ % Index % G/L Posti on On At Numbers of Share $ Amount Symantec SYMC 0.00% Jan Hewlett Ent. HPE 8/ $ % $ % Jack Henry JKHY 12/ ,371 OpenText OTEX 8/ $ % $ % Pega PEGA 8/ % 11/ SAP SAP 8/ $ % $ % Dassault Syst. DASTY 8/ $ % $ % Microsoft MSFT 8/ $ % $ % Oracle ORCL 12/ $ % $ % Infosys INFY 1/ $ % $ % NetApp NTAP 8/ $ % $ % / Subtotal $ % $ % 114.4% Cash $ G L Total $ Ishares IGV 8/ $ % $ Dow Jones DIA 8/ $ % $