For a while, I’ve been wanting to create a stock index of US public companies specializing in B2B cloud e-commerce. There are many cloud indices, but typically they are not focused on B2B and/or they are not focused on inter-company platforms. Until recently, I had not found the right tool that was simple, free, and would allow me and others to invest (at our own risk)!
Then came along Motif Investing which makes the entire process a snap (and free). (I highly recommend it for investing nerds). I have created two indices:
- B2B E-commerce which you can view here. This index consists of 30 stocks of US companies engaged in business to business cloud commerce. (30 stocks is the Motif Investing limit.)
- Industry Clouds which you can view here. This index is a subset of the above index and is limited to similar cloud B2B companies, but only those with an industry or vertical focus.
(Both indices are market capitalization weighted, mainly because it was easy to do the weighting that way and market cap weighting is a common, though problematic approach.)
I created the indices on Monday, September 15. Since then the returns have been incredible ;-)! (How is that for short-run results!)
Don’t let this one week of performance mislead you! As you can see, both indices include Concur (CNQR), which received a take-over offer from SAP at a 20% premium on Thursday, three days after starting the index!
Motif provides a “look-back” on performance for up to five years for any portfolio you create. Here’s that data for the Industry Cloud portfolio:
This data fits with the overall performance of cloud tech stocks. Tech stocks came roaring back after the March 9, 2009 market low and then have fallen behind the market as a whole over the past nine months. The bottom line is that these stocks have tracked the S&P 500 over the past five years with a lot more volatility. Over the past year, they have under-performed the market, as most small stocks have.
Let me be clear, I’m not recommending that you invest in these portfolios right now, after all, valuations remain quite high. (I take no responsibility for my own actions, much less yours!) But it is fun to watch these stocks (which should have decent moats in most cases) and which operate in segments that should continue to grow faster than GDP for a long time.