Good Article on UBNT

If anyone is still holding.

Now looking at the specific actions of Pera, and he continues to stick to his longer-term vision for Ubiquiti. He is fully aligned with shareholders’ interests, as he takes an annual salary of zero dollars and no stock options/grants while continuing to hold 65% of the stock, as summarized in the most recent annual meeting proxy statement:

Mr. Pera, our Chief Executive Officer, holds a majority of our outstanding common stock. In July 2013, Mr. Pera determined to reduce his base salary to $0.00 per fiscal year. We did not grant Mr. Pera any equity awards in fiscal 2011 through fiscal 2014 as he was a majority stockholder of our company throughout those fiscal years.

Pera’s only “salary” over the past 2 years has come from the one-time sale of 500k stock in 2013 as part of a non-dilutive secondary (~$8m), as well as another ~$9.8m in 2014 coming from his share of the newly instituted annual company dividend. Why some might point out that Pera could have simply created the dividend this year as a means to indirectly pay himself a big salary, the fact remains that he has taken out less than 1% of his share in the company since going public over 3 years ago. That is quite impressive and should leave no doubt where the dedication and aspirations of this man is.

I found his commentary in the November conference call a bit amusing, but also genuine sounding when one analyst probed whether Ubiquiti will consider a buyback after the big drop in stock price:

http://seekingalpha.com/article/2787485-ubiquiti-networks-ta…

Robert

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I found his commentary in the November conference call a bit amusing, but also genuine sounding when one analyst probed whether Ubiquiti will consider a buyback after the big drop in stock price:

Robert
When Pera said in answer to that question that he hadn’t looked at the price of the stock in weeks, doesn’t that bother you at all? Not at all? I bet he knew the score of every Grizzlie basketball game during those weeks!.. And maybe even how many points each of his players had scored.

Saul

Saul

I was shaking my head until it was spinning off. I go through the same gyration with my 17 year old. That said, my 17 year old is brilliant like Pera and most of the time I go along with him.

Robert

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Saul

One more thing about my investments. I don’t mind some risk/rewards that others may avoid. Lots of margin. UBNT was my only loser in 2014 and it was a beauty. I usually hold only 3 or 4 stocks. Right now I am APPL (54%), TSLA (24%) and UBNT (22%). For the previous 5 years I was as much as 90% APPL. I was up about 38% for the year and would have been much higher if not for UBNT. I will let it play out until earnings or maybe another quarter.

Robert

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Of course it was AAPL.

Robert, You are a braver man than I am, putting all your money in three stocks. Even AAPL has had very down years. I remember, as I was in it for one of them.

Saul

Saul,
How does knowing the price of the stock make him a better CEO? I think he explained it very well when he said that you can’t look at the business on a quarter by quarter basis but that you must judge it on 3 year increments. This guy has a longer view then the price fluctuations of a stock day by day. I bet if you where to ask him how much he had in inventory or how much revenue he made last quarter he would be able to answer those questions. But the price movement of the stock really has no bearing on his management skills. In the article that Everett pointed out on SeekingAlpha I picked up two very interesting points.

When I first wrote about Ubiquiti in January of 2013, the forums typically had about 500-600 concurrent users on them. Today, at the time of writing, this is over 2,000 users, and in the last 24 hours there have been nearly 600 forum posts alone. The community has grown about 4x in only 2 years, which shows the momentum of Ubiquiti products.

Pera’s only “salary” over the past 2 years has come from the one-time sale of 500k stock in 2013 as part of a non-dilutive secondary (~$8m), as well as another ~$9.8m in 2014 coming from his share of the newly instituted annual company dividend. Why some might point out that Pera could have simply created the dividend this year as a means to indirectly pay himself a big salary, the fact remains that he has taken out less than 1% of his share in the company since going public over 3 years ago. That is quite impressive and should leave no doubt where the dedication and aspirations of this man is.

Saul this doesn’t sound anything like a man who is neglecting his business. It sounds like a man who is growing a business and he still owns 65% of the stock.

Andy

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Hi Andy,

I think I agree with your assesment. I am continuing to hold my position and will evaluate it again next quarter.

Anirban

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Count me among those who continue to hold UBNT. As mentioned earlier, I have an overweight position in the stock. As a value investor, I rather like the financial metrics. Granted, I consider the US dollar strength a strong headwind, given that UBNT’s market is concentrated in emerging markets. Even so, I believe Pera developed a product with broad appeal…a product that has “legs.”

I’ll continue to hold through the next quarterly report. I’m not thinking I’ll be disappointed but, if I am, I’ll reevaluate, as I always do. All in all, I’m comfortable holding my UBNT shares.

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I’m in between most of you. I was loaded with UBNT and decided to get rid of most of it. Needed the loss to offset some profits but kept a fair amount in all 3 of my accounts. Will re-evaluate at the quarter earnings and decide then what to do. Can always buy more when it’s safe.

Gayle

When Pera said in answer to that question that he hadn’t looked at the price of the stock in weeks, doesn’t that bother you at all? Not at all? I bet he knew the score of every Grizzlie basketball game during those weeks!.. And maybe even how many points each of his players had scored.

------------------------
Saul,
How does knowing the price of the stock make him a better CEO? I think he explained it very well when he said that you can’t look at the business on a quarter by quarter basis but that you must judge it on 3 year increments. This guy has a longer view then the price fluctuations of a stock day by day.

Okay,
When I wrote that I wasn’t saying that Pera wasn’t a smart guy.
I wasn’t saying that he didn’t have a great long-term vision for the company.
I wasn’t saying that he was insider selling.
I wasn’t saying that he was taking too much salary.

So what was I saying?

I was saying that Pera seemed that he was so over-confident that he was putting the company on autopilot to run itself. It wasn’t only the question about the stock price he couldn’t answer. There were a bunch of questions about foreign markets that he couldn’t answer. He simply didn’t have a clue. He’s supposed to be CEO for God’s sake! And saying “I’m thinking in three year increments” is just an excuse for not knowing, it’s not a good reason.

He’s obviously brilliant, and the conference call may have been a wake-up call for him, that he better get back to running his company and stop putting all his energy into playing games with his basketball team. He’s obviously bright enough to refocus. The question is: Does he have the temperament? I’m just saying that I’m not sure he is. He’s more like a bright teenager with a toy that he liked a lot for a while, but now he’s put it aside most of the time because he has a brighter new toy.

Believe me, I know I may be wrong, but I don’t like investing my money under these circumstances.

Saul

For FAQ’s and Knowledgebase
please go to Post #4941

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Hi Anirban,

Good to see you back. I don’t think next quarter is going to be a very good quarter either, but I do think Q3 and Q4 will be very good. Just my thoughts.

Andy

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