AYX - Hochfeld Article

Bert Hochfeld praising Alteryx on Seeking Alpha. The article should be freely available for the next ten days.



Some extremely wise words from Mr Hochfeld, which we should all heed not just with AYX:

I am often asked, not just about this name, but many other hyper-growth names, if there will be a better entry point. The shares, after all, have appreciated by 22% in the last quarter, and self-evidently they cannot continue to appreciate at that cadence indefinitely. Sure, Alteryx shares will pullback at some point, but I have no idea what level it will be when that happens. AYX shares certainly didn’t escape the correction at the start of February. I have no particular expertise to say when and to what degree the next correction may arrive. But for longer term investors, I think owning these shares at this price is a reasonable strategy for generating positive alpha.



Wow! And I thought I was over the top in talking about Alteryx! Bert is absolutely euphoric!

It’s hard to value something quite as unique and game changing as that which Alteryx offers.

Like Shopifyin its category, there really isn’t an alternative that quite encompasses the functionality that Alteryx offers. And thus, like Shopify, it is very hard to precisely value this shooting star.

As I’ve said, it’s my second largest position, and almost tied with Shopify.


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Obviously, no one can forecast the future with any certainty, and that is especially true when it comes to a solution such as the one offered by Alteryx that has never been offered before by anyone, at least with the attributes that Alteryx can offer. I have linked to a couple of user reviews that come from Gartner’s Peer Insights compendium that are on point and suggest why the company is achieving the kind of success it has enjoyed. Basically, the Alteryx products provide users with experiences that substantially enhance their productivity and lead to much better decision making without the kind of effort that other deep analytic projects most often entail.

Yes, I think Bert likes Alteryx.:grinning:



Bert Hochfeld

So is the the “Bert” that Saul constantly mentions? Hope so. I am getting smarter every second.

Yes, that’s the “famous” Bert. He’s commented on several stocks that Saul is holding, including Ubiquiti.

It should be noted that Bert Hochfeld is a convicted felon.

He does not hide it. See: https://seekingalpha.com/author/bert-hochfeld/articles#regul…

Setting that aside I have found that it is worthwhile to read his articles. He has a remarkable understanding of tech companies, how they operate and their financials.

I don’t always agree with his conclusions but I do find his articles to be illuminating.



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Typically with Analytics there are 3 major components in any platform

Data Ingestion and Transformation - This is the part where you get data from multiple sources and systems and ensure that it is clean and makes sense. It requires a lot of effort but one the automation is done its relatively smooth .

Modelling and Data Science - This where you try to find signals and patterns from the data for e.g. that a certain demographic seems to spend more on XYZ and this i uncovered very painstakingly an dkeeps changing as the business and the market changes . This is also the toughest to automate as needs and requirements change often and a lot of this is hit and trial and what -if questions asked and this is the secret sauce of any Analytic solutions because you may realize the data is crap or needs some more third party correlation etc to make business sense and get value and sometimes you need an army of Data scientists to do this if the system is notvery easy to use for the biz user

Visualisation and Reporting - Tableau is the nest example of this where you cna do all kinds of reporting (of the step to with what if scenarios.

Of course now you find new ways of using data to Analyze as splunk has shown with logs how it can be monetized for e.g. a shoping cart abandonment data log can tell you a lot of things unlike previously where you just focused on how I could reduce teh abandonment (to put in a simple term)

Now with all these new age Analytics companies the thing to understand is what sectors do they play as most of them are good at 1 or at best 2 of the above and hence it costs a lot to put together all these together. SAS was one of the oldest solutions but very clunky and time intensive because business users could not use it as easily and thats where these new age companies prosper .

From the little I understand Alteryx does not have a strong Analytics piece (part 2) and I will explore further or if there is anyone who has used Alteryx can throw some light.

Net Net - At the moment it is really not clear who will be a winner as clients are still figuring out what data they have , how can it be made usable and how can the business get signals out of these to ACT on …more later

happy to hear comments and thoughts so I can also get directions to explore



Saul I understand your enthusiasm about AYX, and I thank you for talking me down from my retreat after the data breach, but there’s no way I would put them in the same category with SHOP.

Here’s my thoughts, for what they’re worth. First AYX has a way much smaller TAM than SHOP. There aren’t that many data scientists in the whole world. Even if you throw in the super-users who aren’t actually trained in statistical analysis but still use the tool, the market opportunity will never approach that of SHOP.

Second, I used to do analysis of similar products (broad class of BI, business intelligence, tools). As I mentioned elsewhere, SAS used to rule this math space, but it’s a beast to use - or at least was. AYX has an elegant user interface and it they offer a comprehensive suite of applications, all neatly integrated, which makes the whole end-to-end analysis faster and easier, but there’s precious little that I can see as a moat. I don’t see any particular barrier to any other motivated pocketed company developing a similar set of tools (assuming sufficient resources). Of course, this might actually move AYX up on the scale as an acquisition target for a Microsoft, Oracle, Google, et al. OTOH, Google might displace them with freeware to draw in more cloud customers in the same way they have captured a fair number of Office seats from Microsoft.

Right now, AYX has the best mouse trap in the hunt of a fairly rare species of mouse (data scientists), but while I see a pretty solid near ro mid term growth trajectory for them they are likely to either exhaust the available market, or run into some stiff competition after a bit.

For me this is buy and watch very closely investment. With SHOP, I feel like I could go to sleep for five years and it would still be growing when I woke up and looked at it.


In regards to TAM, I am more optimistic.

I don’t have a ton of quantitative data or scientific research to back up my next couple of statements, they are more qualitative, so take them for what they are worth.

AYX’s product pushes out data, makes it more visible in ways that make it easier to understand. That is every leader, decision maker, executive I have come into contact with. Making better decisions is the crux of data science, knowledge management, and information systems. Most users I encounter ‘feel’ like computers have made their life more difficult (until I ask them to do their jobs with technology).

I haven’t used the product, but would like to. Heck, I would like to work for a company that uses it. I like to invest in companies that have a ‘cult’ following like Splunk, AYX, and Workiva. I think of it as moat. Add high growth and recurring revenues and I’m in.

Anyways, I found this blog post to be helpful:

“push the power to the people on the front lines” - TAM is larger than just data scientists, its licenses for everyone that wants easily visible data to enable decisions.

Hope this helps a bit,

I own shares of AYX


I haven’t used the product, but would like to. Heck, I would like to work for a company that uses it. I like to invest in companies that have a ‘cult’ following like Splunk, AYX, and Workiva. I think of it as moat. Add high growth and recurring revenues and I’m in.

Your post here almost makes me wish I had use of Alteryx for the purpose of more quickly doing my next EV/FCF future projection scenarios following up on my initial foray with PSTG.


I’ve worked in the kind of environment you said you’d like to work in. A place where certain s/w has a ‘cult’ like following. It’s not everything you think it might be . . .

But, setting that aside, would you know when it’s appropriate to apply a “Gamma Regression” analysis? Just one of the many analytical tools in the Alteryx toolset. Not sure what that is, let me quote form the Alteryx website:

Based on the R and Revo generalized linear model, called the Gamma Regression, (which is based on an underlying Gamma distribution) that handles strictly positive target variables that have a long right tail (so most values are relatively small, and there is a long right-hand tail to the distribution).

Does that help?

I’m not saying there aren’t a lot of folks who would not use this analytical tool. What I am saying is they would use it. They would use it without the understanding of whether or not their data fit the criteria for its application. They would use it under almost any set of circumstances. Pump the result into Excel or Tableau or whatever to produce a pretty graphical visual. Make a Powerpoint slide out of it. Dress up the presentation and put it in front of executives as if it were deeply meaningful. Do you think that’s ludicrous? I do. I’ve also seen it (similar) happen.

There you go, “power to the people on the front lines.”

But I agree with you that a user community contributes to a moat. In the case of Alteryx, it might be the moat. I don’t see anything else inhibiting a competitor from building a better mousetrap.

Yeah, I’m also long AYX, their growth is impressive, but I am hyper-vigilant on this one.