Broadway Dan's September Round Up

Broadway Dan’s September Round Up

On September 1st I owned only four stocks: AEHR (2.8%), AXON (3.3%), IOT (4.9%), TTD (3.9%) CASH (85%)

After the horrors that befell us in Nov 2021 I have become much more cautious in my thinking and feel a portfolio with at least 20 stocks is a better fit for me. My current portfolio looks like this:

IOT 11.86%
AEHR 10.24% (Revised down, see below)
FSLY 7.7%
AXON 7.37%
ELF 7.22%
OKTA 6.31%
CRWD 4.98%
ZS 4.63%
SNOW 4.55%
TTD 4.06%
MNDY 3.79%
ENPH 3.58%
TMDX 3.26%
BILL 3.23%
DDOG 3.15%
COST 2.05%
PLTR 1.90%
NVDA 1.50%
TSLA 1.49%
TKO 0.88%
CASH 6.25%

The fine art collection above is widely known as The Monsters of Greatness Excessive Capital Appreciation Fund. In September it fell 3.7%

Remember before you read this that I’m a narrative-focused investor and my thoughts are not meant to be comprehensive. They focus on the 30,000-ft view and x-factors that are hard to quantify. Taken out of context this stuff can seem trivial. For example I beat up on the AEHR website below but fully realize the tech matters far more. With earnings coming up and many with big allocations please take this as a trigger warning.

Thoughts On The Monsters of Greatness Excessive Capital Appreciation Fund

(IOT) – Samsara

Samsara has won over the numbers crowd here. They have won over Muji who did a massive deep dive on them on his Premium site which I highly recommend. Though you may need to be reincarnated twice to finish both.

If you look through their site – – and download their report on the State of Connected Operations 2023 you see world class communications. It is clear, precise, specific, uses videos, animations, graphics, images to make their case. It radiates a convincing sense of purpose. They are led by obviously brilliant co-founders with a proven track record, who are relatively young and have a massive vision for what this could become. Of note I could not find the reason for the name Samsara on their site. Interestingly one definition could be of endless rebirth. But I found another that means something more like “flowing on” and that seems perfect. Their last company was called “Meraki” which means “doing something with soul, creativity, love and passion – an ancient Greek word that describes putting yourself fully into whatever you are doing.

There is a reason this thing is so richly valued – it’s the most impressive company in our current universe of stocks. My wife is in software sales, competed against Samsara with a different company and Samsara tanned their hide with aggressive sales force. She knows a few people there and they rave about the culture. I loaded up big time around 23 and change.

In this method when a top stock falls due to macro and a BS short report that is a must-load-up situation. Doesn’t get better. I tried to make a quick 10% on a short term trade – closed it up almost 8% in a few days in my taxable and beefed up the position in the retirement accounts. By far my highest conviction pick of our crew.

Everything about this stock feels like it’s at the beginning of a massive journey to positively and significantly impact the world. This doesn’t just feel like nerds who built something cool it feels like a fully realized vision of a company built by corporate warriror for the long haul. It feels like a story that’s just getting started. For a company to communicate as effectively as they do, that elite level of communication is the tip of an extraordinarily impressive iceberg where every last detail has been considered and the founders have the intelligence, clarity of thought, passion to transmit the vision through all necessary parties. If you don’t believe me, try this: pretend you’re a young, talented, aspiring executive looking for new gig. Navigate to their Careers page and see how well they do at inspiring you to work there.

And this brings us to the next stock…

(AEHR) - AEHR TEST SYSTEMS (Down to 3% from over 10% allocation)

When I started this write up I had let it get to over 10% which I now consider a GIGANTIC portion. And upon looking over the company, studying the story I realize I have very little conviction. I know nothing about the tech, the industry at all. All of my conviction here is borrowed from Saul and Novice so this morning I took it down to about 3%. I didn’t make an investment here I bought a lottery ticket.

When I said I see Samsara at the beginning of a great journey I feel the exact opposite here. The founder is an old man. His friend who co-founded the company retired this year from the board. The company was founded in 1977, went public in 2006 and as a public company the stock did bubkus for FIFTEEN years - it actually went down. The CEO seems like a good, kind man and he has a proven track record. He had a vision, saw the potential in AEHR’s technology, ran with it and by all accounts skated to where the puck was going, got there and put up a hat trick. The stock has gone from around two bucks in July, 2021 to 45.70. Exceptional. I applaud that like Travis Bickle applauding at a campaign rally with a brand new Mohawk.

In my last write up I noted that I had found a video online of Erickson running for the board of his Silicon Valley Golf Club and, again, he comes off as really good guy. Nothing but respect. But I’ve seen videos where Frank Slootman speaks of the torment he found in retirement and how quickly he tired of talking golf scores. Sure, Erickson may rightfully just be relaxing on the course to blow off steam. But when a fellow wants to join the board that suggests to me he has one toe in retirement. He feels to me like a man who saw something, nailed it and WON big. Mazel Tov! L’Chaim! Of note that video seems to have been taken down. Maybe they read our board.

The AEHR website is an atrocity. It looks like the founder’s grandson helped him build it on Windows 97. Whether it’s centered text on the About page, poorly right justified text in the bios, the photos, the writing – it’s just terrible. Except, maybe, the descriptions of the technology which are obviously by far the most important thing here. I do get that. But imagine you are a young aspiring executive and hear about this company’s promising technology. You go to the site and navigate to their Careers page. And you find not a dedicated page, but just a few God-awful cliché lines…

Aehr Test Systems is seeking talented, passionate, and relentless doers for our teams around the world. If that sounds like you, please check out our current job openings. We’d like to hear from you!

We are always looking for exceptional candidates and you are welcome to send us your resume using our contact form.

That is literally why the great William Zinsser wrote his masterpiece, On Writing Well - to rid the world of soul-less, robotic, corporate drivel.

When you look for videos on the company you never find the CEO on Cramer, or Fox Business or at a major event. You find really small videos like this one…

My word. The start of the video looks like the guy is about to introduce Robocop.

I know, I know this may not matter but at this point shouldn’t there be a high level PR person to consider the next level up?

Nicholas and Kasey Rossolito at this podcast, Chip Stock Investor have covered the stock extensively and seem to have a good feel for it and command of the sector, technology.

Nicholas was in early on the stock, has made good calls on it if you watch his videos and feels that the valuation is way too high, that he’d consider buying under $40. Here’s a recent video…

And one from five months ago…

He is very sober-minded – maybe much more of a value investor than our board and makes content for less experienced, more classic Fool style investors. But he both believes in the long term viability of SiC and gallium nitrate (I have ZERO clue what these are) and yet also feels the term “Silicon Carbide” is overhyped, that this industry is inherently lumpy in how money is made and feels violent swings both ways are likely. So he’s now an opportunistic player of the stock. Interestingly he feels growth investors long for something exciting to replace the hypergrowth of cloud stocks and suggests there is misguided optimism for AEHR, that semiconductors can’t deliver growth in the same way that stocks with recurring revenue, easy-to-release modules can.

In Saul’s August write up he states they have a “functional monopoly” – this conflicts with what Rossolito is saying as one of his videos anticipates competition likely to enter the space. I have no clue if it is a functional monopoly. And SJO’s take on quotes from a conference that Saul paraphrased included these lines…

"Silicon Photonics – biggest opportunity they’ve seen” … “has the potential to be bigger than silicon carbide”… *

“If this moves to transceiver business and optical IO (OIO), the TAM can explode”

“If you start stitching this together because the communications bandwith is becoming limited and Optical IO can increase this by 1,000 X. This could be a really big opportunity for AEHR that could become a driver for them.”

“Gallium nitrate (GAN) has the opportunity to be bigger than silicon carbide.”

Those who understand this tech, this space better than I do I wish you the best of luck. This surely can be a classic “Hidden Gem” that’s not really hidden any longer. And all this excitement may be justified. But to me, who many call the Barry White of stock analysis I am a tender, feeling man. And what I feel here is hype, starry-eyed dreaming about what could be. In fact the tone here reminds me of that Sea Algae company that sparked a frenzy years ago. If they could do x, y and z then the TAM was going to be bigger than forty times the mass of Jupiter.

I don’t understand the tech, don’t like the hyped tone, I find the website unprofessional, don’t feel competitive fury in the CEO, the board chairman seems like his best days are long behind him, and for these reasons I reduced the allocation. This feels to me like a great product not a great multibillion-dollar company in the making.

My bet is this thing gets acquired in next few years. For me I consider AEHR the anti-Bear stock of the moment. Then again there’s been many smaller companies around here that I thought would get bought out but never did. I would not bet against a top-allocated Saul pick. But Saul reminds us often not to just blindly follow him. That’s exactly what I was doing here.

(FSLY) – Fastly (7.70% allocation could see as high as 10)

I’ll say say stuff here that will feel like it’s in direct contradiction to things I said about AEHR, most notably that I believe, with Fastly, because X is happening, Y will follow. So there is “if/then” and “could”ness here. I’ll explain why below.

My narrative thesis looks like this. Let’s say it’s five years from now and the market cap is at 5, 7 or even 10 billion. And we view this number as the end of a short story. If we were to work backwards from that we’d see the company did everything they are doing now.

The reason I feel so enthusiastic and willing to accept if/then and couldness here is entirely due to the new leadership including new CEO Todd Nightingale replacing the disastrous Josh Bixby and maybe even more importantly, and far less known, David Hornik has replaced Arthur Bergman as Chairman of the Board. Interestingly I can’t find any real press on the latter switch. In an interview Muji stated that he found the idea of Bergman as Chairman of the Board a terrible thing because it meant the CEO had to answer to him and the structure was off. Bergman clearly is a pure-blooded techie and from what I can tell – awful, awful Chairman of the Board. Think of him as Chairman like Ringo leading the Beatles. Not good. Bergman is back where he belongs and superstars are in control. And when you see Bergman discuss Nightingale at their last investor presentation day he radiates comfort and real affection for the new CEO. He looks so content in his new role it feels like when a kid comes out of time out and fully realizes that true parental love comes from justified discipline. The man is ready to excel.

If you’re not familiar with Hornik, he is an extremely well connected VC who runs his own VC firm, Lobby Capital. He was an attorney for many years in Silicon with a long track record representing start ups, sits on the board of BILL, teaches at Harvard and Stanford and is credited as having both the first blog and podcast focused on venture capital. He studied music at Stanford, Criminology at Cambridge and Law at Harvard. He was the Lead Independent Director for years on Fastly’s board and just this April became the Chairman – presumably when he could not bear another second of Bixby’s bumbling.

I talked about Nightingale in my last write up. In short he’s got a great track record – he helped the Samsara founders build their last business Meraki into a beast that sold to Cisco for over a billion early in its history, then rose up high at Cisco. Prior to that he worked with ZScaler’s Jay Chaudry where the two sold AirDefense to Motorola, studied electrical engineering at MIT where he did undergrad and grad school.

These are winners with incredible track records, who both served on Fastly’s board and saw what the company could and should be. They have overhauled the entire C-Suite and from what I can tell each hire has been a significant improvement, most notably in marketing. And there’s a big emphasis on security.

I’m married to a software saleswoman and seen her over 3 decades deal with every kind of CEO - those who drive salesforce too hard, those who think their product is so good for world it will magically sell itself and those who truly understand how it works, how important it is and know how to manage a sales force. Nightingale is this kind. You can tell from how he discusses his sales team that he has spent serious time working with them and get this all-important function.

The new CMO has his work cut out for him but he did an excellent rebrand running the marketing for Checkpoint and no doubt will radically overhaul the current branding which is terrible. The website is a mess. The imagery and graphics are sloppy and inconsistent. I wish they’d change the name in a total rebrand as this is not the same company. And “Fastly” is a word that just sounds weak and chirpy. The “ly” undercuts the speed and muscle of the word “fast.”

I’ve listened to, watched and read several interviews with both Hornik and Nightingale and they strike me as genuinely decent human beings. Of course we can’t know this from distance but they seem like happily married fathers who genuinely care about doing great work. This is not mere foofoo barfism but hugely important for team building, recruitment, long term success.

Nightingale is radically simplifying all processes, product offerings, pricing and messaging.

The company competes in four categories: Network Services, Security, Compute, Observability and Nightingale is passionately focused on ramping up the pace of innovation to add more. He fully realizes how important it is to land and expand and to upsell the **** out of customers once you’re in. He often talks about only competing in categories he feels Fastly has a “right” to win.

He feels that Fastly partners well with the big dogs AWS, Azure and whatever the heck the other one is called. And with smaller players too – for example, with Data Dog he claims they both can do observability because they see things differently from their vantage point at the edge. (That almost sounded like I have a clue what it means.)

We’re hearing more and more talk of consolidation in software, that companies hate having so many vendors to deal with and products to integrate and Nightingale insists this favors Fastly as they don’t get cut out. By adding functionality it seems their platform at the edge could help with this customer/prospect concern by inherently offering various services in one place. Says Nightingale…

“Anyone going through vendor consolidation, because they want to shrink the size of their team, managing content delivery or even edge security, they’re almost always keeping the performance leader as one of their go-forward vendors, and that tends to always be Fastly.”

Here’s another quote that helps articulate his vision…

“The power of the platform is phenomenal and we have ported that Signal Science intellectual property onto Fastly’s Edge. We’re in the process of moving the whole management plane into one unified dashboard, one unified management playing both on the application developer side with the unified API and on the configuration and management side. And when that is finished, and we’re not there yet, we have a real opportunity to run a very low friction land and expand sales motion. And that’s the – when the real platform advantage comes, because all of our content delivery customers who are comfortable with our platform are experts on our platform.”

The man’s tone is sober, backed by intellectual heft, radiates authenticity and has some oomph to it. Though I greatly respect what Cloudflare’s Matthew Prince has achieved and his ability to spin a yarn, I prefer lower key leaders like Nightingale more. It’s a gut feeling about trust. When Nightingale says the following I believe him …

Yes. I think in ‘24 we’re going to drive that growth in security and delivery and not necessarily with the offerings we have, but by bolstering those offerings, our bot mitigation on the security sides in beta, it’s going to launch very soon for full availability. Huge opportunity to upsell there. Content delivery with the Domainr acquisition with a lot of the regulatory compliance stuff, we’ve got a huge opportunity to grow that business through portfolio expansion as well. We’ve got our DDoS security managed service offering has done extremely well. It’s very early days. We’re looking forward to that stuff. Security proxy work is an expansion opportunity for us. So, we’ve got tons of opportunity for expansion in those existing areas. And then just like you said, as we look at ‘25 and ‘26, AI compute, advanced edge storage, there’s tons of portfolio expansion.

The stock took off after the last ER and ran up to $24. It has since fallen back down to $19. We all keep seeing our stocks move in channels between earnings and I think many of us are getting a feel for doing short term trades off these. Samsara moves between 25 and 30, add some at 25 trim at 30 til next ER. Fastly seems to belong in the 17 to 22 range. And that run to $24 feels like what investors expect in the not too distant future. Of note, remember the name Gary Alexander? The fellow who was forever mocking valuations of our most popular stocks while we were all loading up trucks of gold bricks? Even that guy, a value-oriented investor thinks it can soon reach $27.

Bottom line for me is I’m breaking the Bear rule here and investing not based on what has been but what will be. When Lionel Messi joints Inter Miami you don’t evaluate the team based on their stats. You do it based on his stats. Hornik/Nightingale may not be Messi level but here they don’t have to be to get this thing to 5B. And I’m using their past performance not the company’s to justify the pick.

Wildcard Thoughts on the Rest of the Monsters of Greatness…

I suspect no one knows if SNOW, DDOG or BILL will do best so I just own 'em all. I think all three are exceptionally well run, especially SNOW. I confess to being a Slootman “fan boy”

The Clorox hack is apparently VERY bad and must be further terrifying corporate offices around the world. Tailwinds for cybersecurity are rivaled only by - never mind. OKTA, ZS, CRWD and yes, FSLY which is now heavily into security after converting Signal Sciences to Fastly Security and hiring a few heavyweights in the space. I also read an article about the Israeli legend who built PANW and that seems like it’s worth putting in the basket. Of note I’m okay borrowing some conviction from Bear on OKTA. His feel for picks like this is uncanny.

I have connection in beauty space who is fanatic about quality of ELF leadership, says they have brilliant sourcing and distribution. And once a brand owns mindshare, shelf space and people believe in their anti-cruelty, woke attitudes toward loving up every kind of body that makes them tough to knock off shelf space at Wal-Mart, Walgreens, CVS, etc. But this one has a hired gun and get a load of this - Snowflake with their big mean, anti-woke CEO has a higher ESG score on Schwab. New metric: The Loss Irritation Factor - the degree of irritation you feel when a stock you buy drops as mine did when I caught the exact high. SNOW, FSLY, IOT drop I consider adding. ELF dropped and my first thought was “what was a I thinking!?” Fun facts - did you know ELF stands for Eyes Lips Face and that one of the founders gave up his fortune, devoted himself to Jesus and became a priest?

TMDX - Transmedics - our nation is so grossly overweight that airlines are praying new weight loss drugs will help reduce fuel costs. Imagine a nation so fat it’s hard to lug them around in gigantic planes! Oy is that fat! The stock dropped because apparently the market didn’t like their purchase of a small airline. But it makes sense to me to control the whole process. Hate to be mean but that Americans will need heart transplants in large numbers seems certain. And if TMDX’s grotesque wired up glorified coolers can help with that it should be a winning bet. Not a long term hold for me as the CEO seems kind of grumpy. I like nice people. Like me!

Thanks to Gaucho Rico for introducing me to the killer podcast Acquired. Their episode on NVDA caused me to take a small position in what appears on the surface to be our biggest no-brainer stock. I just struggle to get brain around anything over a trillion. I actually listened to their other podcast on COST and was so inspired by the story - and by the madhouse I see whenever I go there I had to add some. In fact, I could honestly have my entire portfolio in Costco and sleep soundly.

If TJ Rodgers buys ENPH I’m in. The need in India, Australia alone should offset the idiocy from CA, FL, TX where regulations and politics impact sales. Tailwinds just too big here and I took a chance to add off the recent plummet. Barron’s did article claiming stock could rise 80% from low for whatever that’s worth. Our power grids are a disaster and solor panels help alleviate high-usage times, preventing rolling blackouts.

Took tryout position in PLTR because Karp impressed me when read interviews with him, founder led, been around a while and many think will explode with AI’s ascendance.

Had to add some TSLA due to all the fascinating posts here on Dojo, Optimus, coming self-driving car revolution, And the trouble with legacy auto industry surely a plus. That said, Musk is the most off putting over exposed personality in human history. I wish so much he’d execute the 16th of the 48 Laws of Power. And I’d kill to see him guest star on the testercle-themed show in the film Idiocracy.

Had to own some TKO because WWE, UFC and possibly addition of boxing would make this a dominant brand in the best global sport. Everyone in all cultures instantly gets what’s going on when two galoots whomp each other. Try explaining American football, or baseball, or cricket to cultures who don’t play them. I have seen UFC fights in China, Abu Dhabi, Liverpool, Paris, Mexico, Brazil … and the hysterical passion is the same everywhere. Especially for hometown fighters. I figure tons of room to grow in Eastern Europe, Africa, Latin America, all around the globe. Will never add to it as zero faith in management to do anything other than two-fist all the cash they can into their own pockets.

Every time an executive leaves a company you wonder if something negative happened. CTO and Co-Founder Dave PIckles at TTD set the gold standard for how to leave with class. Writes Pickles in the company’s press release…

“When Jeff and I founded The Trade Desk 14 years ago, we shared a vision of a better way to price and buy digital advertising. Our amazing progress since then is testament to the incredible work of our product, engineering and data science teams,” said Pickles. “I could not be more proud of the innovation we are pioneering for our industry, and I look forward to continuing as an advisor to Jeff, Sairaj and Gruia and everyone else at The Trade Desk in the years ahead.”

“In founding and building The Trade Desk into the world’s largest independent demand-side advertising platform, I could not have asked for a better partner than Dave,” said Green. “Dave is one of the true innovators of advertising technology, not only in service of The Trade Desk, but also more broadly, in helping the industry move forward with transparency and trust. He leaves behind an incredibly talented technical leadership team. While I will miss his day-to-day counsel and contribution, I’m thrilled that he will continue as a close and valued advisor moving forward.”

Yet more proof this company has an actual soul. Notice how he calls out Jeff, makes clear strong replacements in place and he plans to help and stay in touch. I hope his health is okay. He seems like a genuinely decent person.

Haven’t had time to consider MNDY but curious how a stock like that will be impacted by AI.

I couldn’t bring myself to buy CELH because I really believe the product is not healthy, not legit. That said, like with ELF massive mindshare, great marketing, Pepsi now in with them. But juggernauts Red Bull and Monster won’t go gently into that good night.And will surely release drinks that are allegedly backed by science. Ask Google if CELH is healthy and you’ll find tons of videos saying it’s not, especially in large daily quantities. If TMDX or CRWD vanished lives could be lost or ruined. If CELH vanished the effort to replace them would require reaching for a different colored can and maybe feeling a little sad. Must be 100 brands with equal quality. I’d call this liquid Peloton but the lock on shelf space and deal with Pepsi makes them too strong.

Saw an older story about AXON CEO sticking to his guns (almost pun not intended) on building drones with tasers in them. He had a board of advisors weighing in on ethical decisions. They concluded taser drones was bad idea as all sorts of potential for misuse. But to me placing drones in schools and buildings to be launched at mass shooters is a great idea. Good for Smith to stay tough. FWIW a cop friend of mine in Chicago thinks Tasers could become far more ubiquitous as shooting people with guns is a tremendous problem for cops - could risk their freedom, careers, mental health if get it wrong - so it’s far more preferable to take someone down by making them “ride the lightning.” Challenge is the shots don’t always make it to flesh. This one is in my LTBH classic Fool style bucket as well as Saul bucket. A flawless narrative - founder led, great marketing, noble mission, proven product, few if any real competition, a real top dogg.

Lastly it’s funny to note that in my Schwab account almost all our stocks are rated D or F. I think I might have one C. When I log on I feel I’ve gone back to Jr High.

Okay mercifully for all I’m out of gas.


Broadway Dan


Just a minute. Let me put down my cane and adjust my glasses. According to MarketScreener, Gayn Erickson, CEO of Aehr Test Systems is 57 years old. That squares with his 1988 graduation date on his LinkedIn profile. Slootman is 63.

Erickson became AEHR’s CEO in 2012. The chart shows the stock taking off in 2021, in his 9th year at the helm. You seem to hold his friendship with one of Aehr’s co-founders against him. He’s friends with (gasp!) a retired person!! I have friends who are dead. I guess I can see myself out.

And he wants to be on the board of his golf club? I mean, how dare he! Maybe he values work/life balance? Maybe he’s mature enough that he’s seen friends burn out, lose important relationships, or die young from failing to do just that? A CEO with outside interests–God help us! How will the company survive? They’re only projecting 50% YoY revenue growth for this fiscal year. Obviously he’s just phoning it in.

You don’t have to like the company. It’s very small and it could all vanish. But to go all-in on his age, what the company did or didn’t do before he took the helm, how he spends his free time, and the working status of his friends seems beyond the pale.

I better quit now. I’m 64 and need to save my limited strength to listen to their earnings call on Thursday afternoon.



I’m sincerely sorry if that offended you.

I said that this is non traditional analysis meant to add color and not be definitive. I think a key point worth making before this thread is cut off is that Bear has spoken often of how hard it is for companies to grow into the multi billions.

I just don’t see an elite, vibrant company here out to conquer the world as I do with Samsara. Or Cloudflare or CrowdStrike for examples. And I see euphoria on the board about much glory to come when x, y and z happen. It’s reasonable to question the company’s culture here by discussing the tired vibe of their website and main players in the story.

If you reject my rationale for not feeling this culture is up to the task of realizing an epic multibagger that is entirely reasonable.

But a few things. If Slootman is my favorite CEO at 64 obviously this is not about ageism. He has fire in his gut for the mission, races boats outside of work and has other interests including helping animals and writing a book. But he radiates a vibe that Snowflake is by far the most important thing in his life. Like TTD’s Jeff Green he appears in endless big time media interviews to share his story. And winning by growing the market cap is paramount. He has epic charisma and feels like a war time general. I just don’t sense the same fire in Erickson - though he is a great success and seems like a really nice man. And he has shown no marketing flair. Note that he is not the founder I was referring to. I realize how silly it sounds to bring up the golf thing but it’s just a feeling I get about where his headspace is at.

While I know and respect the numbers do the majority of the talking here I think at times we get blinded to obvious flaws when the numbers are great. What gets a company to 2B may not be enough to get them to the big time market cap many feel is a near certainty. And that may be evident in things that at first glance seem trivial. To hire 1000s of people, build out office space, compete globally, fend off competition, develop killer messaging is a massive undertaking.


Keep in mind that aehr is a very unusual company for the board. It is full on hard core precision manufacturing, which very unlike anything in software. Mechanical and electrical engineers that work in that field are precise, very cautious, methodical, not risk takers. Aehr seems to be that kind of company – found what it does better than anyone else, and like a badger grabbed hold and never let go. Crucial difference is it is a physical thing that they build, which cannot be ‘faked’. Not that net or others are faking things, but software is simply different. I speak from several decades experience in both manufacturing (food & beverage) and software.


Dan, as a professional writer you have an advantage over probably all of us that follow this board. You are so adept at telling a story that you even wrote a book on it. And, as a writer, you are equally adept at doing the research required in order to tell the story you want to convey.

Employing your knowledge and innate talent, you’ve done a pretty good job of ripping a hole in the thesis for investing in Aehr . . . or have you?

I’m going to simply ignore your criticism of the Aehr website, not that you observations are wrong, no, they are valid, sort of. They are also irrelevant. Yeah, the site could be better designed, no doubt about it. But your criticism is overblown, it’s just not that big a deal. And Aehr is selling a rather unique technology. The shortcomings of their website has nothing to do with it.

If you want to attack Aehr on their customer relations, go after the sales team which they’ve beefed up considerably per 4Q23 conference call. They even made specific mention of Vernon, Aehr’s VP of sales and the success he’s had in building their funnel. Somehow he’s managed to accomplish this (or so reported unless you simply distrust management) despite the website.

OK, I’ll agree that you may have a valid criticism when you compare Erickson to Slootman or Green. True, he does appear to have a life that extends beyond his role as CEO. I’m not sure that’s all bad, or as bad as you imply, but it’s probably true. Apparently, he enjoys golf. Hell, he might even cook dinner every now and again.

So, let’s get to it. What does Aehr offer? What kind of moat do they have to fend off competition? What is the demand, or TAM for that offering?

What do they offer? Aehr supplies the semiconductor industry with a fully automated system capable of simultaneously testing up to 18 300mm wafers of semiconductor devices (prior to cutting into separate devices). In particular, wafers made from the substrate of Silicon Carbide, SiC as well as gallium nitride (not nitrate) GaN.

While Aehr is not the only company that offers test equipment for SiC and GaN devices, they are the only company that provides a fully automated process capable of testing 18 wafers at one time. While there are a variety of tests that these devices might be subjected to, the particular test that Aehr’s equipment performs is called “burn in.” Aehr also provides much simpler test equipment for one off testing appropriate for research, educational and laboratory needs. But the high volume test equipment applicable to manufacturing is what sets Aehr apart from the competition.

The burn in test simulates a full year of in service operation under high stress conditions. It typically requires 24 - 48 hours with temperatures in the vicinity of 200 degrees C while applying a voltage which may exceed 2,000V (these specs may vary depending upon the intended application for the device, but Aehr’s equipment is designed to support the upper limits of burn in testing).

The need for burn in testing is driven by the typical failure rate of semiconductors. When graphed against time, the curve resembles the shape of a bathtub, with the vast majority of failures being in the first year. The escape rate post burn in is under 1 part in 1,000,000. The shape of the graph rises around the end of the device’s planned service life, usually around 20 years. SiC (and GaN) is very hard to produce at the purity level required in order to make MosFETs devices. In simple terms, the yield of MosFETs per wafer is relatively low when compared to regular silicon or germanium devices. But the requirement to weed out the faulty devices before they’re packaged and shipped is extremely high due to the criticality of their applications.

Aehr was founded in 1977. The company has been in the business of providing test equipment to the semiconductor business for its entire existence. Gayn Erickson came to Aehr in 2012. He had a 23 year background in semi testing when Aehr brought him in. He was somewhat prescient in seeing the future demand for SiC devices and the attendant need for testing. From what I’ve read, this has been his primary focus since the day he was hired. I don’t know when the vision was expanded to include GaN devices, but it’s a pretty obvious call in conjunction with SiC.

The FOX family of test equipment has been several years in development. The capabilities of these machines is rather astonishing. First, the ability to process 18 wafers simultaneously is unmatched by any other test equipment manufacturer. It is even more remarkable that multiple wafers are tested at a working voltage in excess of 2 kilovolts without arching. I could go on, but suffice it to say that these machines are quite extraordinary.

And it should go without saying, but I’ll say it anyway, this technology is protected by a gaggle of patents and trade secrets. Creating a competitive product clear of patent violations is no simple task. But that’s not the only moat that Aehr has. In addition to proprietary knowledge, Aehr employs a pricing strategy such that it would be very difficult for a would-be competitor to recapture R&D expenses in a reasonable amount of time. It’s just not worthwhile for some other company to try and compete, so despite the comment in one of the videos you shared regarding the inevitability of competition, I’m of a mind that this particular market niche is simply ceded to Aehr.

But finally, how about the demand and TAM for SiC/GaN semi’s? You may have noticed the growing market for BEVs. Can you build a BEV without using SiC semi’s? Yes, absolutely. Can you build a competitive BEV without using SiC? No way, can’t be done. A little while ago Elon said he thinks that Tesla may be able to reduce the amount SiC that goes into a vehicle. Notice the words “thinks,” “may” and “reduce.” The application in BEVs is in the inverter (BTW, there are inverters in solar and wind systems, in fact inverters pop up in an increasing number of critical applications). The SiC MosFETs used in these devices are not only able to survive the operating environment but they do so while providing significantly improved efficiency of operation.

One of the folks in one of the videos you linked suggested that SiC demand won’t last or words to that effect. I am not an expert on any of this stuff. I’m just relating what I’ve read or viewed in a video. But the notion that BEVs won’t displace ICE vehicles in the relatively near future is laughable. Every car maker in the world is racing to provide an expanding fleet of BEVs. Tesla just happens to be way out in front, but they are no longer pretty much alone. After a while they will just be another car maker. Their growth will come from other sources (now that I’ve mentioned Tesla, I will admit I have somewhat reluctantly taken a position. Elon is far from my favorite person - very far. But, IMO the opportunity is undeniable).

Why is SiC mandatory for BEVs? It’s not just a matter of efficiency (which means more miles per charge), but it goes beyond the drive train. Virtually everything in a BEV is dependent on the reliability of the electrical system, including the steering and braking systems. The suspension, the sensors, the everything. An inverter failure could be fatal.

But let’s look beyond BEVs. I already mentioned renewable energy sources. How about cloud computing and AI? Here’s a link to an Nvidia device: NVIDIA is Preparing Co-Packaged Photonics for NVLink | [H]ard|Forum. It employs photonics. Photonics is pretty much synonymous with SiC/GaN. But would this application require burn in like that required for a BEV application? Yes, it would. That device costs about $50K. Typically, several of those things operate in tandem. Would you risk a device failure because a comm port went bad? No, I didn’t think so. Neither would Nvidia.

Why photonics in any case? Transmission speed, bandwidth and efficiency. Electrical signal transmission is not as fast as optical, the communications pipe is not as big and it consumes more energy. These are limiting factors especially with respect to AI. And these same factors play a role in cloud computing. Improve the throughput and you’ve improved the overall compute capability. Reduce the energy consumptions and you’ve lowered the electric bill for the computing devices and the HVAC system.

I’m sure I’m missing a number of other compelling arguments for an investment in Aehr. But, in a nutshell, I disagree with you.


I love me a good investing podcast, but good-golly - 3 hours of Costco? 4 hours of Nike? Even at 1.5 speed that’s… well… a long time! I added it to my playlist, and maybe I’ll use it for falling asleep material.

This is a very minor point, but the TMDX device is not a “cooler”. It is a “warmer”. Coolers are what transplant surgeons used in the past. The TMDX device is for “warm perfusion”. It keeps organs at a “natural” temperature to prevent damage that can occur during cold storage - while simultaneously supplying the organs with nutrient enhanced, oxygenated blood.

And the CEO is not normally grumpy. He got a little grumpy on the recent call, but he does not usually come across that way - and I have listened to every TMDX ER and 90% of their industry conference presentations in the last 4 years. He is direct, serious, and sometimes blunt - but remember that he is not communicating in his native language, and that can make it more difficult.


Hey Brittlerock,

You make a compelling case as have others - I get it. And I’m in for 3%. And appreciate your time, detailed thoughts and kind words.

Since my posts tend to do well with recs I think it’s worth the time to clarify what I’m adding here.

I clearly did a poor job of expressing some key things. I think Erickson is a great guy and great CEO and has done a fantastic job. I trust that the numbers are elite and the tech legit. I am rooting for the stock to crush it - in fact I will be scouring Stock Novice’s exceptional write up from his latest premium email where he details exactly what he’s looking for in the numbers. I use these religiously. If I see the company exceed Novice’s numbers I pile in. If they fail I race out of the stock screaming and shouting invectives.

All I did was adjust my allocation - and boy was my timing lucky after today’s bloodbath. For most people a 3% allocation is pretty decent especially for us old-ish guys who have some savings. I’m 55, could be a frat brother of the CEO! I just can’t give a top allocation to one that has “narrative violations.”

I’m very grateful to Saul for allowing me to go into places that I realize stray from the classic method here and I work real hard on my posts to make sure the comedy, intensity, entertainment, human interest factors don’t exceed the intellectual heft that I so admire here. God knows how badly that has damaged our media, legal and political systems.

The “functional monopoly” and patent protections are especially compelling. I regret that this is not my full-time job and like most of us don’t have the many hours it takes to have a really informed opinion. Therefore I openly steal from smarter people and try to give back in the only way I can.

The way I see it stocks have three things:

  • Financials (70%)
  • Product/Services (20-25%%)
  • Narrative - Leadership, branding, x-factors that can’t be quantified (5-10%)

The percentages represent value of the research. And for some companies more can be revealed by looking at the products, narrative than other companies.

The reason financials is so much more important is if they are strong the other two are, of course, likely to follow. Obviously a stock growing 40, 50, 60 - 100+% per year must have exceptional products and strong leaders. There is a purity and a truth to numbers that is almost like music. They make the most powerful statement at the deepest and most fundamental level.

My posts are 100% focused on 5-10% of the overall picture. I come at it hard but even if I’m going off like a loon - it’s only on one thing. At times I am like the guy who is questioning the color of Arnold Schwarzenegger’s man-bikini and what I fear may be a bunion during the final pose downs of the Mr. Universe contest. To make it to the NHL requires unimaginable talent and any person good enough to play one game is the best athlete any of us are ever ikely to meet. But here we demand only All-Stars. So to critique an NHL defenseman for being “slow” in the grand scheme of things is clinically insane. And rude and hurtful. Still, he doesn’t make the All-Star team.

The reason Narrative Analysis sometimes adds real value here is because sometimes there are clues in the narrative as to where the numbers will go - like with New Relic. When I saw the founder Lew Cyrne on Cramer he wasn’t my kind of leader. Seemed twitchy. I thought the company name was ridiculous - it’s an acronym for his own. That’s atrocious and narcissistic. The man’s a titan of business whose company just sold for $6.5 BILLION dollars. So as a human he’s among the greatest. But the narrative said he woudn’t build a hyper-growth titan worthy of meaningful allocation in a concentrated portfolio.

The narrative accurately tipped us off. And, again, the narrative for Cloudflare early on was better than Fastly, though Fastly was more popular years ago. CrowdStrike and Zoom also had flawless narratives to go with the numbers, tech analysis. I was too embarrassed to bring it up but the UPST CEO once posted a photo of himself on Twitter wearing, without irony or comic flair, a big headband, sunglasses and talked of evening vibes. I would have been howled off the board for bringing that up. But it bugged me. Was it a clue that company might be a bit off? Probably not … but maybe. I just know Frank Slootman wouldn’t be caught dead in one.

Bottom line is that I see some narrative concerns with AEHR - and generally my gut tells me they are minor compared to the positives that so many great investors like you see. Maybe I’m misled by the Chip Stock Investor podcast that I thought suggested less patent protection… As for the mean things I say sometimes, it’s like Sonny Corleone repeats so humorously in The Godfather, “It’s personal Mikey not business.” If I have to risk hurting feelings over the founder/chairman’s age or by questioning Erickson’s use of leisure time or make myself look trivial/ridiculous in the process so be it. Our family fortunes are more important. The risk is a stupid idea is easily dismissed. The reward is a concern no one else saw comes to light. Again, to me, a company that can’t make a decent website nowadays may have a marketing issue. And it may not mean a dang thing. But it’s my job to note it.

Lastly let me make a confession - I have been an ATROCIOUS entrepreneur. I’m the type who first thinks up the supercool name, then grossly overspends on the logo/branding then writes a gorgeously designed business plan with beautiful, colorful graphics and real passion. Then realizes the idea won’t make money. I think I’ve fixed this with my latest endeavor. Anyway thank you for kind words on the writing and again, I’m on team AEHR. And I hope for anyone who reads my posts they always take my posts in context.


Broadway Dan

Who will be there on the 5h for the ER refreshing his screen hunting for the numbers with his Stock Novice research and Schwab account open ready to add, flee or exhale. If all y’all’s enthusiasm is correct there will be plenty of time to ride the lightning - I mean rush of aehr. Lastly, I just figured out a great way to stroke your own ego in public - own some stock AND question the stock. This way no matter what it does you look good!


I’m sorry Broadway Dan but if you look at Brittlerock’s post above and compare it with your posts the contrast is incredible.

Brittlerock discusses facts, and what is actually going on at the company, in a brilliant way, and you talk about your feelings and impressions about the company with little if any discussion of what they actually do, and about your emotional response to the CEO playing golf.

That’s enough, Dan. Drop it. And to post further on the board, please discuss facts about the company, not your feelings.



It’s your board, you call the shots, but I think you’re being a too hard on Dan. Yes, he wrote mostly about the way intangibles impressed him, mostly they impressed him negatively.

But, to be fair, he attached two separate videos which do discuss Aehr’s business. And the folks who appeared in the videos were not just some CNBC hack who looks good on TV but really doesn’t know much. These folks were well aware and very familiar with Aehr. They would probably be deemed “experts.” In fact, the man woman team (husband/wife?) specialize in chip stocks. They know the territory much better than I. And their argument was mostly about valuation. They had been promoters of Aehr up until fairly recently. They pretty much argued that the stock is worth no more than $40.

The same guy is in the other video, appears with two other guys. One of the three (I don’t remember if it was the same guy that’s in the first video) made an argument that the SiC market is drying up. I thought that guy had a serious case of willful blindness. It seems utterly ludicrous to speculate that the TAM for SiC devices is subject to near term shrinkage. But, oh well. These guys are experts. Experts can say whatever they want.

And then another one of the experts (or maybe the same one, I don’t recall which) asserted that competition for Aehr was inevitable. This, coming from an expert. Who am I, for sure a non-expert, to argue.

But then if you read what I wrote in response to Dan’s post, I think the facts speak for themselves. It doesn’t require expert knowledge to acknowledge the facts. IMHO competition for Aehr’s product offerings will be a long time coming, if ever. I think their moat is pretty much unassailable. It’s always dangerous to make a statement like that. Especially if you take into consideration my non-expert status. Yeah, I might have missed some really important information that would serve to prove me wrong. But, I’m out there on a limb. I’ll take my chances.

Does all that mean Aehr’s stock has nowhere to go other than up? Of course not. Yesterday (Tuesday, Oct 3) demonstrated that Aehr can take a big hit. I do agree with the criticism that the stock is expensive. I can’t argue with that. And there’s always the possibility of a black swan. By definition, I can’t imagine what it might be, but it could be hiding in the weeds, or even in plain sight. I just don’t recognize it. And if you look back a few days on this board you will find one of my posts in which I expressed out loud (in writing) my concerns about Aehr being such a small company. Size makes a difference. It’s hard to tell how much punishment they could withstand, but it doesn’t have to be all that much to do serious damage.

Aehr is not without risk. Apparently, too much for Dan to hold a large position. Aehr is my largest position despite the risks. I think it will pay off. It’s not blind faith. Rather, it’s informed faith. Aehr reports 1Q24 tomorrow (Thursday). That will be telling, but I’m not sure how much it will really tell. They don’t provide quarterly forecasts. As for revenue all we have to go on is an admitted very conservative $100K for FY24. It’s a small company with lumpy revenue. It’s not reasonable to expect that 25% of the annual revenue will occur in the 1st quarter. If they adjust their guidance, that will tell a lot.

Anyway, I started out by requesting that you (Saul) give Dan a reprieve. I actually appreciate that he weighs in about intangibles. I think these things should be taken into consideration when making an investment. The numbers are important, probably most important, but it’s not only about numbers. When I think back, I bailed on the Bank of the Internet (or whatever it was called) primarily because of the nutcase they had for a CEO - and I’m very equivocal about my Tesla position for the same reason. IMHO Dan should continue to post his observations and concerns. I think he provides valuable insights.


At the risk of annoying @SaulR80683 further, I just want to go at this a little more. Dan raises some questions about what type of CEO we have at AEHR, and whether he’s the right person for the job. @brittlerock did a good first pass of addressing this but there’s a little more to be said.

Is he flashy? No.
Is his website post-Y2K? No.
Does it matter? No.

If this were a consumer-facing business, or even a B2B player like, it would all matter a great deal.

I guarantee you that every single chip company executive who leads production of SiC or GaN components (or is investing in R&D on them) is well aware of who Erickson is, and has probably played poker or golf or gone drinking with him or another of the AEHR top managers several times in the past 10 years. Without a doubt, their design engineers and their production engineers stop by the AEHR booth at a trade show at least once a year to get the latest.

If it were otherwise, he wouldn’t have 6 major customer wins notched on his gun.

So his customers seem to be ok with him as CEO of AEHR. How about his employees?

This is going to sound harsh, but when it comes to a cutting edge product like the AEHR has built (thank you, @brittlerock, for your commentary!), there are probably less than 50 people on the engineering team who really matter when it comes to developing and releasing a product like that. There are undoubtedly many more people involved, across the company, but the whole effort most likely revolved around the work of some few dozens of people.

It probably took them a number of years to build up to it – and you can bet that the vision of what they were trying to accomplish together was a big factor in their sticking together as a team and delivering a great product.

The best evidence that Erickson is a good CEO for them is that they accomplished their goal, and built their unique, cutting edge system that went well beyond what competitors offer.

I say this as someone who has invested in an innovative semiconductor test equipment company in the past, and was close enough to the company to attend every board meeting. It’s an industry unto itself, and I know only enough to be dangerous – but this much, I can tell you.

If you want to invest a large amount of your portfolio in it (not me! It’s still only 0.5% for me), you should understand what kind of business it is so you can make sense of it. A company like AEHR is quite different from a company like Cloudflare, as I believe someone else on this thread already mentioned. It needs to be judged according to the standards that are appropriate for its business, not by the standards that make sense for a different kind of business.



Dear Me,
Haven’t been on your board for some time Saul as even though it’s your board and your rules, you can come down on people in a heartbeat when not totally justified. If this is pulled, so be it, but agree with Brittlerock. Dan gives us everything, including his emotions and feelings. After all, it’s feelings based on what we have done over the years and based on the facts presented to us that(rightly or wrongly) initiates decisions made. Dan clearly states that he has been an atrocious entrepreneur(doubt that, but we all make mistakes) and you clearly state that nobody should follow you(recent stats prove that) but no reason to tell him to drop it?

Anyway, on a personal level, hope your injury(just learnt this) better by the day.

best. bran,
fwiw long time holder of aapl, msft, amzn, nvda, enph(agreed Dan, hang in there) Argx from last year since Vyvgart which I’m taking for Myasthenia Gravis has been so affective. All the rest of the usual suspects since 2017, long gone. 5% plus CD’s long and short. Boring, but I sleep well. Sold Meta and Tsla(so was so surprised to see your about-turn) far too early at their lowest level…boo hoo.
Peace…and happy hunting to all.