GauchoChris's stock holdings 9/14/17

Just a list. Keep in mind that the list changes.

SHOP
NVDA
SQ
TLND
LGIH
ANET
NTNX
TWLO
HUBS
JUNO
WIX
NKTR

I like them all. I believe all have a chance to triple in 5 years (maybe not LGIH).

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It is always nice to see the list of stocks owned by a respected poster and compare them to my own stocks… Usually there is substantial crossover but the lists are never identical to mine.

For instance I own 6 of your stocks. I own stocks like TSLA, BABA, and ALGN that you do not own. So I don’t think there is too much groupthink except maybe with stocks like SHOP that probably almost all posters here own.

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Hey - I like the list!
SHOP - check
NVDA - check
SQ - check
TLND - considered, haven’t pulled the trigger
LGIH - exited earlier this year
ANET - check
NTNX - have to check this out
TWLO - considered, haven’t pulled the trigger
HUBS - consiered, haven’t pulled the trigger (I’m considering it for our company inbound marketing initiative)
JUNO - check
WIX - considered, haven’t pulled the trigger
NKTR - have to check this out

Thanks, Chris for sharing!
TracyK

Chris - Interesting to see NKTR (Nektar Therapeutics) included in your list of stock holdings along with SHOP, NVDA, etc. A small NKTR position has been sitting in my port since 2005 when I bought it with new investor exuberance. It is now is what I consider one of my “legacy” stocks - I can barely remember why I bought it in the first place and a 10% gain in 12 years is pretty pathetic.

I am learning much from this board and have pared back from about 80+ stocks to about 50 (with more to go), and am now deploying funds in a more thoughtful manner. NKTR is on my sell-watch list, so your list caught my attention.

My question: why do you like NKTR?

Random
(grateful to Saul and all for the knowledge and insights you have shared)

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My question: why do you like NKTR?

Random,

It’s my smallest position. I do want some exposure to the I-O space. I think it will transform cancer treatment. My bet on I-O was KITE which I sold the day of the GILD buyout announcement. I put a portion of my KITE funds into JUNO (3.3% position). I then bought some NKTR which I think is low risk, high reward stock. By low risk I mean that I see that the company value even if none of their I-O things hit will still be worth close to the current price. NKTR has its own I-O therapy (NKTR-214) in clinical trials. Last year NKTR entered into a partnership with BMS for a joint therapy (see below). This year they entered into a partnership with Takeda (see below).

Bristol-Myers Squibb: NKTR-214
On September 21, 2016, we entered into a Clinical Trial Collaboration Agreement (BMS Agreement) with Bristol-Myers Squibb Company, a Delaware corporation (BMS), pursuant to which we and BMS are collaborating to conduct Phase 1/2 clinical trials evaluating our IL-2-based CD122-biased agonist, known as NKTR-214, and BMS’ human monoclonal antibody that binds PD-1, known as Opdivo® (nivolumab), as a potential combination treatment regimen in five tumor types and eight potential indications,
and such other clinical trials evaluating the combined therapy as may be mutually agreed upon by the parties (each, a “Combination Therapy Trial”).

We are acting as the sponsor of each Combination Therapy Trial. Under the BMS Agreement, BMS is responsible for 50% of all out-of-pocket costs reasonably incurred in connection with third party contract research organizations, laboratories, clinical sites and institutional review boards and we record cost reimbursement payments to us from BMS as a reduction to research and development expense. Each party will otherwise be responsible for its own internal costs, including internal personnel costs, incurred in connection with each Combination Therapy Trial. Nektar and BMS will use commercially reasonable efforts to manufacture and supply NKTR-214 and Opdivo® (nivolumab), respectively, for each Combination Therapy Trial with each party bearing its own costs related thereto. The parties formed a joint development committee to oversee clinical trial design, regulatory strategy, and other activities necessary to conduct and support the Combination Therapy Trials.

Ownership of, and global commercial rights to, NKTR-214 remain solely with us under the BMS Agreement. If we wish to license the right to commercialize NKTR-214 in one of certain major market territories prior to September 30, 2018 (Exclusivity Expiration Date), we must first negotiate with BMS, for a period of three months (Negotiation Period), to grant an exclusive license to develop and commercialize NKTR-214 in any of these major market territories. If we do not reach an agreement with BMS for an exclusive license within the Negotiation Period, we will be free to license any right to NKTR-214 to other parties in any territory worldwide except that in the event that we receive a license offer from a third party during a period of 90 calendar days after the end of the Negotiation Period, we will provide BMS ten business days to match the terms of such third-party offer. After the Exclusivity Expiration Date, we are free to license NKTR-214 without any further obligation to BMS. Each party grants to the other party a non-exclusive, worldwide (subject to certain exceptions in the case of the license granted by BMS), non-transferable and royalty-free research and development license to such licensing party’s patent rights, technology and regulatory documentation to use its compound solely to the extent necessary to discharge its obligations under the BMS Agreement with respect to the conduct of the Combination Therapy Trials.

Takeda
On May 22, 2017, we announced a research collaboration that will allow Nektar and Takeda Pharmaceutical Company Limited (Takeda) to evaluate NKTR-214 with five oncology compounds from Takeda’s cancer portfolio.

NKTR has a lot of other programs and partnerships, and while I didn’t buy NKTR for their approved drugs and non-I-O programs, they have some value and I think they limit the downside risk. I believe that NKTR may have something (NKTR-214) that can generally enhance I-O therapies by making the immune system even more effective. Thus, I think that NKTR has the potential to partner with many I-O therapy developers (co-therapy) and share in the revenue if any of these combination therapies hit. I like that they are increasing their odds of success by have more shots on goal. I’m not going to go into the details and recommend that if anyone is interested in learning more that they read the recent 10-Qs and 10-Ks.

Chris

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Chris if you have timeI would like to know more about why you particularly like JUNO and WIX.
And whether you would buy them at present prices.
The others I either own or have looked at long enough to know that I like other stocks better.

Chris if you have timeI would like to know more about why you particularly like JUNO and WIX.

Mauser,

I wrote about this already and my views haven’t changed.

WIX: Saul and I had a discussion (on this Board) about this one. During that thread I gave my reasons. Bear also wrote some good stuff about Wix. Bought in May at much higher price. Added on 7/31/17 (around $63.50) and on 8/31/17 (around $65).

JUNO: I wrote about this too. It was during the week that KITE acquisition was announced. I bought at around $30 and added more between $35 and $37. I have a 3.3% position and I’m not planning on adding or selling…letting it ride until we get more clinical results.

Chris

I have been looking at Nutanix (NTNX) and wonder how are they going to scale or would they flame out like Rackspace. For one yes there is a big TAM but their SG&A is huge and so is the R&D (labor) costs. Given they have to continually tweak their API’s/code/integration with underlying stacksets I am really not sure unless they get some recurring revenue model if they will be able to produce sustainable margins in the long term. Is it a service model more than IP and they are just riding the cloud transition glory at he moment

any thoughts

Rajesh

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As a shareholder oc ANET, my biggest concern about NTNX is if Cisco would purchase them as a means of competing with ANET.

sjo

I have been looking at Nutanix (NTNX) and wonder how are they going to scale or would they flame out like Rackspace. For one yes there is a big TAM but their SG&A is huge and so is the R&D (labor) costs. Given they have to continually tweak their API’s/code/integration with underlying stacksets I am really not sure unless they get some recurring revenue model if they will be able to produce sustainable margins in the long term. Is it a service model more than IP and they are just riding the cloud transition glory at he moment. Any thoughts?
Rajesh

Hi Rajesh, I sent your question to Bert and here’s what he replied:
Saul

"I do not really know how the issue of Nutanix spend is relevant to their growth. Nutanix has had to overcome substantial headwinds with regards to product cost because of temporary high NAND prices. They have been able to manage through that problem. Fortunately, they do sell lots of software and have been able to maintain gross margins at 58%. The company is investing heavily, primarily in sales expense because the TAM is so large. Here is why they do it specifically. They get 4X the initial revenue from an average customer over 18 months compared to the initial purchase. For a major account, the ratio is 8X. For the Global 2000, it is something like 10X. Of course with numbers like those, they are hiring sales people as fast as possible. I had a lengthy discussion on Friday with the head of IR on just that point.

Last quarter, they had a mid-market user who spent $7 [million?] for Nutanix. That is an incredible number. There are similar vignettes. When you are the leader in something that is transforming a space, it would be silly not to spend to capture users while you have a significant product advantage and buyers are replacing their historic infrastructure with HCI.

Sometimes commenters on this space simply have no idea about what they are writing. This person may be a techie but he has no knowledge in detail of the product or the strategy. That happens. But they do not “continuously tweak their API’s”. The comparison with Rackspace is quite silly as well. But I will send the quote to the IR Director and see what she can tell me."

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