FSLY/NET - It was common sense!

Investment Analysis Clubs Saul’s Investing Discussions
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It was common sense, not herd mentality.

And for proof, those of us who sold Fastly immediately at $90.50 (I was able to sell part at $95 in the aftermarket, but most sold at about $89.50), and bought Cloudflare at $56.50, are currently [$70.80] up a little over $25% on their Cloudflare. Those who hung on to their Fastly are currently [$74.00], even after a little dead-cat bounce, still down 18% from where we sold, and down 51% (more than half) from its all time high.

Thus those who held on in the face of overwhelming evidence lost not only by the continuing descent of Fastly, but suffered the opportunity cost, the ability to use the cash to invest in a stock going up. The difference is HUGE! They have 82% of what they would have had if they sold then. We have 125% of the money we reinvested in Cloudflare. That means that we have 52% more in just a couple of weeks!!!

[125 divided by 82 is 1.52, meaning that those who sold and reinvested have 52% more current value!]

Common sense, and getting out when the story massively changes, wins out over falling in love with the company, and holding on and hoping for a comeback.

Saul

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Thank you Saul for all you do. I rationalized holding Fastly by telling myself I wanted to wait for the earnings report to see what had changed. I approached it like a poker hand where you stay in the betting to see the next card on the turn. But in doing so, I missed out on the chance to add to Cloudflare. Expensive lesson but hopefully I’ve learnt it this time.

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Thank you Saul,

This reminds me of Buffett’s quote “you don’t need have to make it back the way you lost it, and in fact, it’s usually a mistake to make it back the way you lost it”.

Not being a smart cookie here since I have made many mistakes trying to make it back the way I lost it. What also helped me emotionally was to follow what the adage “a stock does not know you own it” (Peter Lynch I think).

Thank you. NET is my 12% position now, I kept adding it up to $51 just last week after selling the rest of FSLY.

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Common sense, and getting out when the story massively changes, wins out over falling in love with the company, and holding on and hoping for a comeback.

Saul

If your way is the only way it sure is herd mentality. :wink:

No, I didn’t take your comment kindly.

Denny Schlesinger

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‘My way is the only way’ is not the same as trying to adhere to a method of investing.

‘Herd mentality’ assumes blind following.

So let not get back to this way of describing our feelings, please.

I don’t think anyone takes kindly to name calling.

Jason

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All the information you need to invest is always available. Wether you seek it out on your own or it is handed to you is irrelevant. Thank you Saul for exposing me to information sooner than later. You saved me 2 procrastination days and 50% of profits that I would have lost, moved that money into net which made it a win win.
Having difficulty with your investment philosophy but have pared my stocks from 21 to 15.
Thank you again for your advise and this board.

Long shop ttd aapl MSFT Okta pypl veev net gh ddog edit pins aaxn pfe CRWD

Howie

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It’s also evidence of how fast the big money opinion changes on these particular stocks.

Darling to dumpster inside of what, 3-4 market days?

That’s really tough volatility / velocity for most casual / retail investors to manage around. These are not long term buy-and-watch-grow-to-the-moon stocks. Every stock needs watching, and the sell trigger needs to be cocked, around earnings time especially. Follow the money.

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Thank you Saul! I’m new to the board but adopting most of your strategies which I find very much to my likings and my personal investment philosophy.

Practicing your methods by actually doing something instead of sitting accelerates the learning curve.

Since I start reading the posts on this forum, I got rid of my “loosers” and stocks which were sitting flat and idling.

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“Common sense, and getting out when the story massively changes, wins out over falling in love with the company, and holding on and hoping for a comeback.”

Hi Saul,
Not sure why you need to address this past move really. I think it was the right move and I agree with you, but we don’t know exactly what the future holds in store longer term.

The story changed also at times for companies like SHOP, TTD, TWLO and many others, but these came roaring back in a huge way. No idea at the time if they would, but they did.

I don’t fault anyone for continuing to believe in a company I sold or never owned.

Like you say so many times, “don’t follow me and just buy and sell what I do”.

I’m also out of FSLY and put the funds in ROKU, NVDA, MRVL.

No idea which, if any of these have a guarantee of winning any race.

TMB

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Saul, it’s interesting to me how you got frustrated with so many people talking about Fastly that at one point you (I think it was you) even “forbade” posting about Fastly until after their earnings report. Meanwhile, you seem to feel the need to rip on Fastly in every post you make. It’s ok that you don’t like it anymore. It’s also ok that others feel more comfortable holding long term to see if the story changes. There is no “right way”. To invest. There are many ways to skin a cat. It is annoying to me how you seem to have a vendetta against Fastly and others that you decide to sell (I recall similar things with Nutanix… you couldn’t stop trashing them and you would criticize others who continued to hold). And no, simply looking back at the past two weeks’ returns does not make one move right and the other move wrong. It’s easy in hindsight to say, “Look! Cloudflare went up!” Cloudflare could have just as easily gone down. Short term the market is a voting machine. It is voting for Cloudflare right now. That may not always be the case. Stop using short term market moves as “proof” you made the right move. You did this with Snowflake after you bought too. A day or two later it was back below where you bought, if I recall correctly. Did that make you wrong? I thank you for all that you do for the board, but I ask that you stop the distraction that is the behaviors cited in this post.

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Ninerfan,
Totally out of order. Sounds like you got left holding the bag and sour grapes to me. There are so many things wrong with your post but here are a few.

  1. He always says he could be wrong and could get back in later.
  2. Have you seen the price of Ntnx recently(or are you left holding that as well?
  3. Yes he skinned the cat good and proper before it skinned him and many others further by another 25% and allocated the funds elsewhere.
  4. Saul is up over 200% and rising come tomorrow. Pray tell and tell in detail like he does freely, about how you are doing?
  5. Wonderful to see how closely you appear to be monitoring his portfolio so at least you are paying attention. Shame though you don’t find to read the Knowledgebase in detail as you wouldn’t be snarking away here
    and might have learnt something. He never got back into Shop, or TTD and woohoo look what’s happened. So freaking what? He, myself and others look what they have now, not what could have been and he was right with Fstly at the time for reasons discussed and if you do see in another year the price doubling, well jolly hockey sticks for you and others and hope it gets there for you, but again, so what? He did what he did. It’s his board, his rules and you are simply along for the ride(and a damn good one at that).
  6. And finally if you don’t like what he says or does start your own board as just too tired to comment further.
    Good luck to you regardless.
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you seem to have a vendetta against Fastly and others that you decide to sell

What an absolutely ridiculous thing to say! Two of my current six positions are companies that I previously sold out of and bought back in (Crowdstrike, Docusign), and if you look back you’ll find companies I’ve sold out of and bought back into as many as three times. Some vendetta against companies I’ve sold!

I recall similar things with Nutanix… you couldn’t stop trashing them and you would criticize others who continued to hold

Man, don’t you think before you write??? Nutanix is still down over 50% from its high in mid 2018. It never came back!, while our portfolios have tripled or quadrupled in some cases with redeploying that money.

Cloudflare could have just as easily gone down. Short term the market is a voting machine. It is voting for Cloudflare right now. That may not always be the case.

Fastly went down because of at least 10 pieces of bad news, which I enumerated. Cloudflare went up because of at least 10 pieces of good news. So it went up… duh!

Stop using short term market moves as “proof” you made the right move. You did this with Snowflake after you bought too.

Wrong again! My only mention of my tiny Snowflake position that I remember was in my End of October Summary where I wrote the following Tell me if you see me trying to prove there that I made a “right move.”

I bought a tiny 0.7% Snowflake position, with tiny buys starting at $245 and ending at $268. Since then it’s been up to $297 and right back down to $250 where it is now.

Stop using short term market moves as “proof” you made the right move.

Who the heck are you to come on my board and tell me what I can write and what I can’t. If you are unhappy, go elsewhere.

There is no “right way”. To invest. There are many ways to skin a cat.

That my be true, but this board is set up to discuss one particular way of investing which has brought its users huge and previously unimaginable success. That method includes getting out of companies where the story has changed for the worst (like Fastly). If you don’t like the way I run my board you don’t have to stay. There are lots of other boards, or you can start your own (right at the right hand side of the blue line at the top of every post).

Saul

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All,

This board provides an invaluable resource to its members. It would be difficult if not impossible to value the increases in performance achieved, and it is, mainly done in good humor with respect and courtesy. It is part of the secret sauce here that posters are generally not argumentative (disputatious). There are a few “elders,” and Saul has EARNED (for too many reasons to express here) the position of top man. Most of us respect him for his intellect, instincts, directness, and generosity. Some feel compelled to challenge him, in ways that are not respectful. I guess it’s inevitable. But we don’t have to let it go on.

This Fastly thing has gotten out of hand. Most of us benefited when Saul raised the flag and shared his analysis. I thank him for it and i know most of the rest of us do. There isn’t anything else to say about Fastly, unless there is some NEWS.

Perhaps it can’t be codified, and there are things in the rules already, but we may want to think about something for the rules…

“Posts to this board which detract from the board’s mission of following this particular way of investing, or which are not respectful or civil may be deleted. There are other boards available if you do not agree with the approach followed here.”

It’s a great board. Let’s treat it with the respect it deserves. Thanks.

Cheers,

Bill

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ninerfan,

I think there may be some bias here towards making sure people get the message about companies. We need to say it, say it again, say it a third time, check for pulse, then say it again.

This seems pedantic and monotonous, but there is a reason for the repetition and the incessant comparison. It’s how we learn.

The numbers trotted out at every ER are the foundation. The intuition comes from the narrative and the news. The exits and entries are not precise, but they are a constant work in progress.

If Saul or anyone else reaches another person to help them connect the dots through this process, it’s VERY successful.

After all, we have two purposes here: enrich and enlighten. The star student at the front of the class is not aim of those who wish to teach. Look for the new kid in the corner who is just starting to find the puzzle pieces.

Respectful discourse is a huge part of the culture here. Agree, add upon, or pick apart.

For what it’s worth, I started my position in SNOW about the same time Saul did. I wasn’t comfortable with there valuation at IPO, but, being range bound, I started a position in the hopes of learning more about the company as news and numbers come out in the next several months.

If you think FSLY discussion is gloating, bragging or insulting to those who hold, you have missed the point. (Saul doesn’t care if you hold companies he doesn’t. Why would he?)

He does care a great deal about some one NOT UNDERSTANDING all of the information about a company they hold. (limited to companies closely followed on this board, of course).

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GDavenport I think that you are missing the point. Ninerfan is simply saying that there are different opinions here and it certainly isn’t obvious at this point or “common sense” that Fastly is busted

Fastly has customer concentration and one customer had to go. Forced out by politicians That’s it.

This changes nothing about the company.
Now you could argue that you got Fastly wrong based on the evidence that was available prior to the tiktok exit. But the exit of tiktok does not change this business.

Momentum being what it is It’s easy to look smart for a few months after a big stock drop. The time to review this decision would be a year or two from now. My personal opinion. Fastly will be a monster and patience is highly underrated
D

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And finally, that is a lie about snowflake. Maybe you honestly don’t remember, but you posted a day or two after you bought bragging about how it went from 220 to 280 or whatever. It’s not worth going back and looking at. But I have seen you do this many times… you say “it went up, so I was right”. That’s resulting.

As you know, AFTER A TOTAL OF ALL OF THREE POSTS ON OUR BOARD, ninerfan decided he had enough creds to tell me what I could post on the board and what I couldn’t. Now he’s calling me a liar. Since personal attacks are not allowed that post will be deleted. However, he felt comfortable about calling me a liar without bothering to look up what I had written to even see if his accusation was true! Can you believe it! “I’m going to call you a liar, but I’m not going to bother looking it up to see if you really were.”

I looked it up. Here’s what I wrote, word for word. I recounted taking a tiny position (0.5%) to put Snowflake on my radar, and then having it go up for no reason that I could see, and rather than saying I was right and smart, I’m saying “I don’t understand what the f— is going on!” and asking if anyone has seen any news of any kind that would account for it. Here’s what I wrote:

I’ve been graphing Snowflake ever since the IPO just to keep it on my radar. I was interested in the company but the price just seemed silly high. It had opened after the IPO at about $245, ran up that day to something like $319, but came back down. The last four weeks I have it closing at $229, $227, $238, $240 (tightly range bound!). I decided this week to take a tiny position to make me pay more attention and made purchases on three different days. The first day I made some truly tiny purchases at $245.50, and one more at $247.50, and ended up with about a 0.12% position (an eighth of a percent). Yesterday I added more at $263 (I tend to buy when the price is going up, but what the heck is going on?), and at $268 this morning (down a little from yesterday’s close), and when I looked at today’s close it was at $297!!! That’s $297!!! And this move was without any news that I could find, and while all the rest of our companies were having a tough week. I ended up with a 0.65% position and wished I had bought five or ten times as much.

I couldn’t find either a press release or news, except for some analysts setting $300 targets (but I don’t consider that news). Does anybody on our wonderful board know anything, or suspect something, or have any ideas they’d like to put forward about what hit this stock this week? (Remember that this was a tough week for our stocks in general).

There is nothing in there that was “bragging” that “it went up, so I was right”. What I was saying is the opposite. That I was very puzzled as to why it went up as I had thought it was range bound, and didn’t expect it to suddenly go up, and there didn’t seem to be any reason for the rise.

Again, that post will be deleted and if he continues personal attacks he may be barred from the board completely.

Saul

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Fastly has customer concentration and one customer had to go. Forced out by politicians That’s it.

This changes nothing about the company.
Now you could argue that you got Fastly wrong based on the evidence that was available prior to the tiktok exit. But the exit of tiktok does not change this business.

I’m sorry, but FSLY’s story did indeed change. In fact, it changed so much that management had to restate its earnings guide. The headline bullet point in that announcement about TikTok being removed is forgivable. However, TikTok was not the sole issue. The miscalculation of usage by other customers and subsequent info in the earnings report matter as well. I previously wrote the quote below as part of a longer post before earnings (https://discussion.fool.com/fastly39s-portfolio-fit-34644090.asp…:slight_smile:

Prior Thesis – FSLY has an intriguing new product in beta. As I am waiting for that to hopefully kick in, the company is supporting itself with a core business at mid-to-high 50’s growth (using the prior guide with a reasonable beat and not last Q’s 62%). I know about the low enterprise growth and concentration, but FSLY seems to be managing it so far. Besides, the Signal Sciences acquisition should help here. The prior CEO moved to CTO, which seems to better fit his skill set. The new guy is green but seems OK otherwise. FSLY has a pretty attractive thesis.

Updated Thesis – FSLY has an intriguing new product in beta. As I am waiting for that to hopefully kick in, the company is now supporting itself with a core business at low-to-mid 40’s growth (using the new guide with a lesser beat). That’s a big drop off. The low enterprise growth and concentration might be more of a concern than I thought. If nothing else, it puts more pressure on Signal Sciences contributing immediately. Fixing this misstep will be handled by a new CEO and a former CEO who prefers the technical weeds instead. This isn’t a terrible thesis, but it is one with considerably more risk.

More thoughts after earnings can be found here: https://discussion.fool.com/stocknovice39s-october-portfolio-rev….

Yes, Fastly’s tech is still strong and Compute@Edge remains on track. The potential of these two things are basically unchanged (NET’s recent edge progress might change that, but I’ll leave that be for now). However, the current business supporting FSLY while we wait for all this technical goodness to kick in has definitely changed. That’s what happens when 12% of your revenue evaporates and you miscalculate other business as well. That was one of the main takeaways when I updated my thesis, but don’t take my word for it. Take the market’s instead.

Please understand, this post has nothing to do with whether anyone owns Fastly or not. That’s a personal decision for personal reasons, and whatever anyone has chosen is the right decision for them. This is simply pointing out that saying FSLY’s story hasn’t changed because the tech is still cool and TikTok doesn’t matter only looks at half the story. And that story will change again - except for the better this time - if TikTok gets out of the government crosshairs and comes running back. Whenever we purchase a company, we are investing in both its present and future businesses. I’ve yet to see a convincing argument why FSLY’s present business is unchanged.

People clearly have a difference of opinion on FSLY’s future as an investment, and that’s what makes this board so great. However, I wish we’d stop talking in circles around the tech and the effects of TikTok. There’s really nothing to add at this point and everyone should have bought/sold/held their shares by now. We should probably move on to other business.

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