First of all, I would like to thank everyone on this board for all the input that helped drive my
portfolio to some impressive -for me - gains for 2018. Overall, I did better than some - worse than others - which; seems about par for the course.
Secondly, one of my somewhat ironclad - but pending entirely on circumstances - primary
resolutions for 2019 is to try to give back - contribute in some meaningful way - to the rich
investing discussions that occur here. Some of the resources I use for investing are fairly
Motley Fool Rule Breakers
Saul and Saul’s Board
Kooba The Stock Dog
Others not so typical very much. For example, I use a guy on Seeking Alpha, Gary Alexander, as
a sort of contra indicator and the group think of TipRanks to generate interest on my part
for additional research on individual companies.
Anyway, I have been looking over some companies for 2019 that appear primed for, if not greatness,
then certainly elongated goodness. Which brings me to New Relic. As part of the routine here it is considered good form to outline what a company does. So for the record:
New Relic (NEWR)
NEWR provides software as a service for companies to monitor both software and infrastructure
performance by users.
That really doesn’t tell you very much and I have no clue as to what New Relic does - but, it seems to do whatever it does very well. However, Bert Hochfeld likes the company and I initiated
a small ‘Test Flight’ position at one point but sold a bit later to raise capital. Since that time NEWR sank with the rest of the tech stocks and now has the following data points:
Current Price: $80.88
52 WK Range: $56.01/114.78
Market Cap: $4.6B
The Stock is 29.5% Below its 52 WK High
Growth in general has been rock steady with the last four (4) quarterly reports featuring
revenue growth of: 35.7%; 35.1%; 34.8% and 33.5%, respectively. Just a quick glance gives
slightly accelerating revenue growth and during their last Conf Call the company Raised
Guidance. (I capitalized Raised Guidance because I really like Raised Guidance). The stock
popped about 14% after the report and since has given it all back and then some. The last
earnings announcement can be found here:
Highlights of the Conf Call Included:
- Beat on EPS by 8 Cents
- Beat on Revenue W 35.7 Y/Y growth
- Increased Accounts Paying $100K or more by 34%
- Dollar based Net Expansion Rate of 124%
- Gross Margins of 85%
- Deferred Revenue Increased 55% Y/Y
- Raised Guidance
Negatives I could see included:
- Total paid accounts were about flat at over 17,000. (RED FLAG!)
- Gary Alexander wrote and article on SA praising the company performance (Potential Kiss of Death
- On the NPI board I believe that NEWR was brought up and I think it was Tinker that noted that
he noted that NEWR went down just like every tech stock - but had not recovered as fast as some
others. Tinker please correct me if I am wrong.
Ok all that to ask this question:
I note that Saul was in NEWR for a bit but sold out: Bear has a currently 9.5% position in the
company. Since I am thinking of reinitiating a small position going forward I would like
to know if Saul has any additional thoughts on the company; and, why Bear has such strong confidence in it
Finally, it appears to me that NEWR probably won’t dominate the world but it has the potential
to provide good returns from here.
Differing opinions requested.