To preface I have a 5.78% position in UBNT, one that I likely built up too quickly. I’m down about 24% overall, it didn’t help that my first purchase was near all time highs.
Also while I am a typical SA/RB investor, since this board has started I’ve been tweaking my strategy a bit, to be more willing to sell positions that aren’t preforming well to move into faster growing companies like your portfolio.
I realize that you took a tiny position, which of course indicates that you think there is some potential, but not nearly enough to dedicate an average position, or even small position. Also if I remember correctly you held UBNT in the past, at a much bigger position then tiny.
So I was just wondering why buy back in now? It seems to be pretty much against your overall strategy, which to me are solid companies with very good growth (20-30%) trading at low valuations.
UBNT is definitely trading at a low valuation, a PE of 15 right now. Just last year UBNT’s PE was much higher at nearly 38, so it’s definitely come down in value, partially due to growing earnings, but mostly due to the stock getting cut in half.
On the growth front, the last 2 quarters have been very mediocre, and the next quarter mid point guidance is flat revenue, and decreased earnings by 5%. This will be the third mediocre quarter in a row.
There are of course some positives, and I wouldn’t be invested in them if I didn’t think the long term thesis was very good.
But after Q115 I started thinking about reducing my position (but never pulled the trigger), and after Q215 even after the pop, I came to the same conclusion.
So I seem to be coming to the opposite conclusion of every one else including you, and I just can’t figure out why. Of course part of my decision is just to reduce my fairly large position down to a more reasonable allocation, but I wasn’t going to keep more then 2.4%, and more likely 1.3%, so I’d be reducing my position by quite a bit (at 5.78% right now).
I would love to get your’s and others thoughts on this!
Dave aka ColdDay