It appears there’s a lot of confidence in AYX and based on their financials, leadership and the industry they’re in, why shouldn’t there be?
I’m curious if there’s anything that would cause us to doubt AYX or anything that could ‘shock us?’
Specifically, as recently as July TWLO was this board’s favorite stock and it was one of Saul’s highest conviction stocks but then just a few months later, all that goodwill left very quickly and most people sold their positions or reduced dramatically. Fortunately for most people (myself included), we got in early and still left TWLO with a nice triple/quadruple, but not everyone was so fortunate probably.
ZS was also a favorite of many’s and after TWLO’s fall from grace, it was Saul’s next favorite stock and then ZS fell from grace in their September earnings release and some kept their shares, most halved their shares and then come December and again some additional trimming, some left, etc.
Now with AYX, at this point, their last few earnings were really solid and it appears they can do no wrong and many people have had AYX since it was in the $20s, but many have not. What if, and this is a big if, AYX falls from grace somehow like TWLO or ZS?
I don’t believe there were any major early signals that TWLO would implode like they did nor were there any early signals that ZS would implode as they did. In ZS’ case, perhaps it was part implosion, part Wall Street irrationality, but either way, the stock is down ~40-50% from its 52-week high. For many, if AYX were to implode this coming February, even a 20% haircut would still result in a 4-bagger, but then for some, that would be a 20% loss (if not a 40% loss if they got in when AYX was in the 130s/140s).
So, are we too confident in AYX? Is there anything that could cause us to question our portfolio size?
I was reviewing AYX’s glassdoor and it did cause me a bit of concern. Anecdotally, I was actually pretty bullish on ESTC since I work in tech and all of my engineering friends had a lot of good things to say about the tech. However, after some discussion on this board, I did a bit more due diligence and found that ESTC had some pretty nasty reviews from employees or former employees in Sales. While it doesn’t appear to have impacted their overall earnings, it was enough for me to reduce my holding before the earnings call. Who knows if it will have material impacts in the future, but a chaotic sales org didn’t sound like something I wanted to have a big holding in.