Note: I am an amateur investor currently stuck in the barn office on a rainy, rainy day. I’m a little chilled - think I have something of a head cold, haven’t had lunch and am bored and need something to fill up the seemingly vast amount of minutes before the lunch bell rings. All of which leads me to Peter Lynch and David Gardner (sp?).
Peter Lynch - one of the all time great investors, sort of like the late great Joe DiMaggio, once said that investors should invest in things they know. I like to think that when he said that he was standing in line at a little local place to get a donut and some coffee: Dunkin
Donuts. And thus a legend was born.
David Gardner. whose departure from the active side of the The Fool brought a tear to my very.eye (and I suspect a dent in the potential of my brokerage account) - was fond of saying that when analysts called a stock overvalued it made his heart go pitty pat. Now thats not an exact quote mind you - but its close enough for the few minutes I have before I get to a nice rib stew. A nice steaming bowl chock full of of ribs - with the meat falling off the bone, potatoes, carrots, onions and whatever else the cook finds to dump in there. Perfect for a somewhat chilly rainy, rainy day.
Anyway - back to Gardner and Lynch. Sometimes I wonder what we mere mortal amateur investors might have gotten had Gardner and Lynch ever partnered up to create what could have been an unbeatable team: Lynch - the rock steady and methodical head coach and Garner the “Let’s chunk it to the end zone” QB. Please note that the imaginary Gardner - Lynch team does not in any way belittle the Tom side of The Fool. After all, I read his book ‘Rule Makers’ and probably still have it somewhere on some dusty bookshelf. Was a fine book!
All of which leads me to a company called ONON. ONON is actually ON Holdings, which to be fair, you probably already new. But I didn’t. Why didn’t I? Well because its a European company and lately I have stuck to the American side of things. Well…that and because ONON doesn’t seem to fit the hyper growth, future of the world, shiny new SaaS thing thats just popped up model.
Note: I read once that the way to catch a monkey (Actually I think I may have seen it during a scene from the series called ZULU some time back that focused on the ZULUs (sp?) - was to find a long neck gourd, hollow it out and then put something shiny in the bottom. The theory was that the monkey would see the shiny thing - stick his hand into the gourd to get it and then hold on to it through thick and thin while you caught it. Note: I never tried this primarily due to the lack of a decent sized monkey population in my area and a lack of long neck gourds. However the whole scenario of it does remind me of the potential investing fallacies of lurching merrily along putting money into every ‘New Shiny’ thing that hits the market. So theres that. To illustrate please refer to the link below:
Now imagine that in place of Blucher-Blucher you substituted Upstart-Upstart or perhaps even Lucken-Lucken. See what I mean?
Anyway back to ONON:
On Holdings is not SaaS. It does not remotely resemble anything related to the future of IT, does not make companies run faster or better or profit more, and has nothing to do with EV cars or planetary exploration: it just sells athletic stuff and shoes. How boring and drab is that?
However, before we turn up our collective smarty pants high growth investing noses it might be worth a look-see at their financials. Lets check it out:
Most Recent Qtr Revenue Growth: +93.9%. Here is the Press Release and Transcript:
And the Rev Beat…almost perfection: 33%. Goodness Gracious Great Ball of Fiwa:
Note: I generally like to see Rev Beats at 4% or better as what I consider a really nice performing growth company.
And what therefore about Guidance? Projected 61% in NSG for the first QTR. Now isn’t that dandy?
So we have nothing more common than athletic shoes and athletic wear which seems to be taking a firm hold on European folks - ala Lynch. But what about the David Gardner (sp?) side of things? Well…here is where his philosophy shines through:
Overvalued!!! Possibly the Gardner (sp) secret sauce.
Now… someone, probably the family long time landscape supervisor, now retired, is ringing the lunch bell so one has to hurry to these things. So…I’ll leave it at this:
Is ONON a budding NIKE? ONON carried a valuation of 9B or so while NIKE sits at 185B. Lots more work to do here could be lots of happenstance propping up that 91% in this past quarters performance. But I really like what I think I might possibly see here despite it being in the wheelhouse of those snooty Europeans.
Now if my imaginary team of David and Peter were actually a thing - can you imagine the debate those two would have about this company?
Bottom Line: Subsequent to their latest report the company took off like a jack rabbit - has peaked - then fell back some. Typical pattern after a healthy ER.
Time for some nice Rib Stew.
All the Best,