Hochfeld on NTNX

Nutanix’s earnings report baffles Bert;



I had been intending to get some Nutanix for several months. I pulled the trigger yesterday near the bottom of the dip having demonstrated:

continued amazing growth sequentially and YoY with a beat and raise
reassuring progress specifically with the high margin software business (rather than zero margin hardware boxes)
operating leverage and improved cost control (the only margin erosion factor came completely from the increase in the price of memory chips which is a market condition that is expected to recede next year with more supply)
a reduction (not a slowdown) in SBC that was very welcoming and appears under control
validation in its competitive offering given that DELL its #1 competitor is a massive customer
alliance partnerships with Google and others

Bert has been positive for some time and went into overdrive with this article. There are some interesting back and forths in the comments between Bert and some critics. It has also been very well debated on the NPI board. I don’t see it as a sure thing but I understand the risks and criticisms and feel it is worth a shot.


My one fear stems from Goldman Sachs adding it to its conviction list and naming it the investment opportunity of the decade, which usually means they are trying shaft everyone with an opposite position on the trade with some superior or undisclosed insights.