Hx of the Progress of my positions (complete!)

A history of the progress of each of my current positions.

I thought it might be interesting to follow the course of each of my positions. However I wasn’t sure how you all would like it as these aren’t exactly company reviews; they’re more about my history with the company and about how the stock has done (with a lot of stock prices), although I did take some information from my Brief Reviews for context. Since so many people said liked the first half, here’s the rest, in fact the whole thing, with even some updates on the first group that I wrote up last week. They are in alphabetical order by ticker symbol (so Salesforce (CRM) is among the “C”s), etc.

Amazon (AMZN) – (Slightly updated) I have a checkered history with Amazon. I foolishly sold out of a previous position in February, at the height of the end-of-the-world panic, for cash to buy other things that were down more. That was at about $500. I started buying back in a small way the next week, about five and a half months ago, at $515. I bought a real lot at about $550 to $555, some more at about $570, a little more at $595, and at $620. The price has been going straight up and I’ve been buying as it goes, with a little more at $710, 720, $740, and $760. It’s now at $766, and has become my second biggest position, and 13.2% of my portfolio. I had avoided Amazon in the past because of lack of earnings. I got into them when I realized they had started positive cash flow. Then I really felt reassured after reading Bert Hochfeld’s deep dive into AWS (their cloud services division). And now Bezos has decided to let some of that cash flow from AWS flow through to earnings. June quarter they had earnings of $1.78 per share, up from 19 cents the year before. As I wrote in my July brief review: I love Amazon and feel they have both online commerce and the cloud sewed up, as much as any one company can sew them up. I especially think that their AWS is the future for them, but they are happily sewing up retail ecommerce as well. If I had been REALLY smart, I would have invested my entire portfolio in Amazon in February at $500, and I’d be up over 50% since then (just joking…)

Arista (ANET) – (Partly updated) Interesting story. I had started a little position the week before, and then when the February panic hit, I sold it back for cash at about $53.50. This was because it was new, I didn’t know it well yet, and I needed the cash to buy more of my old favorites which were down, and in which I had more confidence. Two weeks later Arista closed at $69 and I felt like an idiot. Two weeks after that, I restarted a position with a pretty good-sized purchase back down at $62.75. I added the next week at $56.40. This stock really bounced around. From $53 to $69 in two weeks, and back down to $56 in three more weeks. I then started buying regularly with good sized purchases at $61, $63, and $66. It kept going, up to $75, before falling back down to $61, and it’s now back up to almost $72. I’m still adding a little here and there. As I wrote in my July brief review: Arista used to have a much higher PE. A year and a half ago it had a PE of 80, but now, at $63.65, it has a PE of 26. That’s much more reasonable, and why I established a position in spite of the ongoing lawsuit with Cisco, and the (minimal?) threat of “white box” competition. Cisco has won some rulings, which was expected, but Arista has already issued its work-arounds, and the majority opinion seems to be that they won’t really be much affected by losing the patent cases (but what do I know?) You should take into account that Arista’s secret sauce is not hardware, but software. Also that the Cisco CEO who had the huge grudge against Arista personnel is now gone, as is their prime R&D workgroup that competed with Arista. Arista is now my 6th largest position at 6.8%. For the June quarter, Revenue was up 37% and EPS was up 37%, and 12-month trailing earnings were up 43% from the year before. Its PE is just 25.5. And I recently discovered that Bert did a deep dive in March.

Bank of Internet (BOFI) – (Updated) As you probably know, I sold out of my three-year-old and very large position some time ago, at about $110 pre-split (or about $27.50 post-split), in response to a serious short attack which certainly had me worried at the time. Since then I’ve been in and out of tiny to small positions a couple of times. I started my current position about 11 weeks ago at about $17.70, and have added tiny amounts at multiple times since at prices from $19.10 to $15.95. I’d estimate that my average is about the $17.70, and at the current price of $16.82, my position is underwater. I think that this is still a high-risk company, not because of any concerns about its reported business, but because of worries that some of the shorts’ accusations will turn out to be true. It’s a risk-reward calculation, and I currently think it’s in favor of the reward side of the equation. It’s the smallest of my “small” positions (see July portfolio summary) at about 3.0%. I’m through adding to it. Earnings last quarter were up 65% year over year, and 12-month trailing earnings were up 46%. And it has a trailing PE of 9.45! There’s a lot of risk already taken into account, I’d say. It could go to zero but it could also go up 200% in a year or two, is how I see it, with the likelihood of zero certainly less than 50%.

Update A Week Later: I know that I said I had no plans to buy or sell any BOFI, but I also said no one should be surprised if I changed my mind. The previous Friday it had closed at $16.82, but by Tuesday, the close before announcing June earnings, the price had been pushed down to $15.34. The results trajectory was obvious. Earnings and book value are just going up. Non-paying loans are trivial. Nothing has happened on all the shorts’ claims. In the conference call the CEO was quite convincing in his discussion of the lawsuits and short attacks. I decided this was it… A lot of other people must have thought the same as me because it opened Weds up about $1.30. Weds and Thurs I bought at:
I bought only at a higher price than the previous purchase. Why? If the price was going down I thought the shorts might have been suckering people in, but were going to mount another strong attack. I wanted to make sure BOFI had finally shaken off their power. I wasn’t looking for “better value points,” I was looking for worse “value” points (higher and higher prices). I wanted to make sure it was still moving up to new highs. I figured that the price was so low anyway, that buying 20 or 30 cents higher wasn’t going to make any difference in the long run. Then Aurelius published a short article Wednesday to try to stem the rise. Nothing happened. Then he published another desperate one Thurs morning. The rise paused for a half hour or so at about $16.90, and it took off again. It closed at $17.50 on Thurs, and $17.94 on Friday. No guarantee as to what happens in the future, but I think the shorts may not be able to push it down any more and will start (or have started?) to cover. It’s now my 9th of 16 positions at a little over 5% (average size position is 6.25%). Trailing earnings are growing at 40% and it has a PE of 9.65.

Cambrex (CBM) – (Updated below) Amazingly, this is another position that started in February. Puddinhead introduced it to our board in November, and at first I was skeptical, but he was pretty convincing. Then I read a recommendation from Singular Research published in December, and finally the December quarter earnings and conference call. Everything sounded great but they were giving single digit outlooks. I assumed they were lowballing and I took a position anyway, starting at about $37.25. Within two months I had added at $41 and $44. First quarter results came in strong and the price kept going up in spite of low guidance. With the rapid increase in price my position size was getting too big. The stock price finally hit $59 (!) a couple of weeks ago based on their new facility coming on line. That’s $59! I reduced my position because I didn’t understand why the price kept shooting up with such weak guidance. I sold from $47.50 up to $54, and back down to $52.00. All my sales were way in the green as my highest significant purchase had been at a $44.00 average price. June quarter results were definitely in line with their under 15% guidance. Twelve-month trailing earnings are up 40%, but the last quarter was up less than 10%, and revenue was only up 12%. Then Gilead, their biggest customer by far, gave worrisome low guidance with top-line worries, and Cambrex sold off down to $52.50 in a week. They are now down to my 14th largest position at just 3.1% so I’m not really worried about the remainder of my position. (Update) They have continued to sell off this week, down to $48.20, so I’m glad that I sold a bunch of my position (and I sold one more time on Monday). They are now my third smallest position at 2.7%.

Salesforce (CRM) – I had thought of Salesforce from time to time, but only in a vague way as they had a high PE, and I wasn’t entirely sure of what they did, even though they were a Fool recommendation. Then about two months ago I read Bert Hochfeld’s deep dive. He explained their valuation as a SaaS company in a way I could understand. I liked the company and started a position, and have built it up fairly quickly to where it is now my 8th largest at about 5.5%. After Arista, which swings up and down like a yo-yo, Salesforce is the most stable stock you can imagine. It’s been between about $80.50 and $83.50 for the entire two months, except for Brexit, when it dropped briefly to about $76, and then bounced right back. I have taken my entire position at an average of about $82, with the exception of the Breit drop when I added some about $78.50. I’ve never sold any. With a company like this, that leases its software instead of sells it, you can’t look just at recognized earnings. I don’t want to fill this up with statistics, but their operating cash flow for the past three April quarters were $0.47 billion, $0.73 billion, and $1.05 billion. Their deferred revenue was $2.34 billion, $3.06 billion, and $4.01 billion. Unbilled deferred revenue was $4.8 million, $6.0 million and $7.6 billion. They are moving along. They provide cloud services. They will do fine.

CyberArk (CYBR) – (Slightly updated) CYBR does cybersecurity, but a different kind, not with a firewall around the perimeter, but monitoring the internal privledged accounts. Andy wrote an excellent summary of it last year. MF RB recommended it last November. I wrote a long Quarter End Review in March (post #17806), which I modestly thought was excellent too. Bert did a deep dive in July. I took a little starter position at about $41 about four and a half months ago, but sold it four weeks later at the same price. I don’t even remember why. Three weeks later they were up to $46 or so, and I decided enough of this crap. Take a position! I did seven weeks ago, starting at $46, and have kept buying as it has risen to $56. It’s my smallest position though, at just 1.7% of my portfolio. Revenue for the past three years has gone 66, 103, 161 million (up over 50% each year). Earnings for the last three years have gone 24 cents, 44 cents, 99 cents. However they are super lowballing with for this year guidance to 83 to 86 cents! Heck, as of March quarter earnings are already up to $1.06, and they were guiding to 86 cents!? No one else seems to believe them either as the stock price has grown 36% from $41.50 to $56.20 in the last 11 weeks.

HubSpot (HUBS) – (As of Friday a week ago) I’ve been in this company for about six weeks now, and it’s become my 12th biggest position at 3.8% of my portfolio. I took my initial (and main position at $47.50, and it promptly fell to $42, and then went straight up in 4 weeks to its current price of $54.50. I added some near the bottom at $42.50 and some more on the way up at about $52. (Update) The price, which was $54.50 on Friday, fell by Weds to $50.60. I deployed some of the money I took from RUBI into HUBS at $51.00 to $52.50. With earnings it rose about 15% on Thurs and Fri to close the week at $58, which is by far a new high since I’ve been in. (End update)
HubSpot was originally brought to the board a little over a year ago, in June of 2015, by excellent posts by Neil and by Okapimoon (or maybe it was on Neil’s board on evaluating a company, I’m not sure). I considered it at that point and decided it wasn’t for me. They had negative trailing earnings (37% more negative than now), negative cash flow, which means they were burning cash (now their trailing cash flow is positive), and at $50, I didn’t see it.

Let me tell you a little about it: HubSpot provides a comprehensive cloud marketing and sales platform, aimed at medium-sized businesses, that is formed around the concept of “inbound” marketing, which its cofounders pioneered (and literally wrote the book on). Inbound marketing is based on bringing customers to you, rather than going out and chasing them. While they’ve broken into positive cash flow, trailing earnings still has a way to go, but trailing losses come down every quarter (meaning each quarter is better than the year before). Revenue was up 49% from 2013 to 2014, and up 57% from 2014 to 2015. Not only are those extraordinary rates of growth, but they are accelerating. Customer count rose 33% last year, so a 57% rise in revenue means that each customer is spending a lot more on average from year to year.

And Bert wrote them up in June, so I reread my notes from Neil and Okapimoon, and my own from when I evaluated it in 2015, and decided to buy in to stay. They are hugely better on every metric, every quarter. That includes: revenue, adjusted earnings, operating cash flow, customer count, subscription revenue per customer per month, etc. What’s their moat? They are the market leader in their space. They earned the highest customer satisfaction score in the space. Customer satisfaction is an excellent moat. Gartner ranks HubSpot as the best overall marketing automation software with a rating of 88. Most users believe that their solutions are much easier to use, require much less training and are far more intuitive than the competition. Sounds like a moat to me.

LGI Homes (LGIH) – (Not updated this week) This stock has been discussed at great length on the board so I won’t devote as much space to it as a relatively unknown stock like HubSpot. I’ve been in LGIH to 10 months now, taking an initial fairly large position at about $31 average. The stock stayed between $32.50 and $29.50 for eight weeks, then shot up briefly to $35.50, and then the January and February panic arrived, sending the stock down to a low of $19.50 on Feb 11th, when blood was flowing in the streets. I bought all the way down to $19.50, buying larger amounts under $21.50, and then buying more on the way back up to about $28. Those buys averaged at about $24 and I ended up doubling my initial substantial position. (By the way, you’ll notice that, while I exit a crashing position like INFN or RUBI if I feel there may be good cause for the crash, I don’t exit at all if I feel there’s no objective cause, as with LGIH). As LGIH got above $30 and kept going, I had a big problem: The huge position, which I was comfortable with when the price was in the low 20’s (because the position wasn’t so huge at that price), became way too big when the stock price was over $30, so I started trimming off some of those excess shares that I had bought in the low $20’s in Jan, Feb and Mar. It’s currently at $34.35, having hit $36 this week. LGIH is my biggest position by far at 17.5%. It has a PE of 12.5 (you can imagine how low it was in February, …down to about 9). It’s revenue in the March quarter was up 34% and EPS was up 73%. Closings were up 32% this quarter so revenue was probably up a little more. I joked in my AMZN write-up that I should have put everything in Amazon in February and I’d be up over 50%. Well I did put a lot in LGIH, and it’s up 75% from the Feb 11 bottom.

LogMeIn (LOGM) – (Major update below!) This stock is a one day position for me. I bought it Friday at about $85.10 and it closed at $85.90. It’s just a 1.0% position and my smallest. I first looked at it in June of 2015, a little over a year ago. Okapimoon did a nice post on this one too. Then, after June 2015 results (a year ago) I wrote the following:
After results were announced they shot up from about $65 to $72. I don’t understand this as it seems like everything is slowing down for them. Their price is $72.20 and their trailing earnings are $1.35, which gives them a PE of 55, which is pretty high. Trailing earnings are up 67%, however.
Here are their last five Earnings comparisons:
June 2014 - 29 up from 13 = up 123%
Sept 2014 - 32 up from 14 = up 128%
Dec 2014 - 35 up from 16 = up 109%
Mar 2015 - 33 up from 22 = up 50%
Jun 2015 - 35 up from 29 = up 21%
That sure looks like massive slowing of earnings growth, so what’s all the celebrating about? Well, how about Revenue?
June 2014 - 55 up from 41 = up 34%
Sept 2014 - 58 up from 43 = up 35%
Dec 2014 - 60 up from 45 = up 33%
Mar 2015 - 61 up from 49 = up 24%
Jun 2015 - 65 up from 55 = up 18%
So revenue growth is slowing quite rapidly too. How are they going to grow into that 55 PE ? What am I missing?

Ant gave a nice response (which I’m paraphrasing):
The factors you may be missing from looking at the growth slowdown are:
The 18% growth would have been 27% in constant currency and their target was in constant currency
They are moving to subscription model. Thus billings matter and not just recognized revenue.
Their deferred revenue growth is up by 26%
Their established lines are growing slowly, but their new, small revenue streams are growing rapidly. As these expand, overall growth will rise.
They launched new services (Join.me, Rescue lens, Xively) late in the quarter. That should drive up growth going forwards.

A subscription model certainly does change things, and the deferred revenue and cash flow growth were important, but I still thought it was too expensive and didn’t buy back then at $72. It was still around that price a year later (now) when the reverse merger was announced last week. I wasn’t even looking at LOGM, but Bert wrote a deep dive explaining why the synergy opportunity in the merger was even much greater than is taken into account. I decided to take a small fling.
(Major Update) It was a one day position, as I said, and I thought it over and decided against it. I realized that buying it was to take advantage of a one-time mispricing in terms of possible synergy, but at three times the size, with two thirds from a staid and stagnant company, it was no longer going to be a rapidly growing growth company. I sold out and reinvested the cash into companies I could see growing relatively indefinitely like BOFI, HUBS, SSNI, PAYC, ANET, AMZN, etc).

Mitek (MITK) – Neil first introduced us to Mitek in December and at first I wrote some very skeptical comments. Then Ian Richards responded:
Sure, this is not a perfect investment. Window dressing of non-GAAP, insider sales, litigation, an investment year ahead. All these are valid concerns. But there are some very strong positives. The millennial generation are mobile-centric. Banks, insurance companies and others are experiencing high rates of abandonment from prospective customers that do not like filling in long forms on mobile devices. Mitek’s ID software provides a solution to a problem that is causing a lot of problems. Better than that, they already have established relationships with their target customers. And they can build this market without raising development capital, because their mobile deposit product is providing a steady, growing stream of cash flow to finance R&D and development of the market. The total addressable market is huge compared to their current revenue. They have proven that they can execute. They have no debt. I like risk/reward scenarios where the upside is huge. The downside is mitigated by the mobile deposit business.

I liked Ian’s points, so I read the last couple of earnings reports and took a baby starter position in January. Then, later in Jan, Mitek got recommended by a Zacks newsletter I get, then still in Jan, it announced a collaboration with Harland Clarke, the largest check manufacturer in the world. I changed to a considerably larger position. (They have made a lot of announcements since, including new customers, awards for innovation, patents granted, suits won, etc). Thus, I started my position with Mitek seven months ago, and bought most of what I eventually ended up with between $5.05 and $4.05, with an average price of roughly $4.50. The price stayed around $4.50 for six weeks and then took off, rising to $6.70 in the next seven weeks. That was about a 50% rise! It dropped briefly to $5.60 on profit taking and then, in another amazing six weeks, peaking out at $9.20! I trimmed at $8.45 up to $9.17 and back down to $8.10. But this was small amounts. The stock kept dropping, falling in 5 weeks down to $6.40 (with Brexit). I started buying at $7.77 and bought down to $6.80, buying back just about exactly what I had sold. Then it shot back up again like another yo-yo and I sold again, more this time, at an average price of about $8.20, and bought a tiny bit back at $7.67. My graph has a clear dividing point: the B’s are below $7.80, and the S’s are above $8.00.
Okay, what was I doing here? Well this is a tiny company, with a small market cap, which had shot up from a low of $3.90 to a high of $9.30 in four and a half months. I didn’t want to let my position get large, and was happy to keep my position, but-at a reasonable size. Besides its trailing earnings are 27 cents. At $9.30 its PE was 34 and management was saying that they were devoting so much expense to building out their business that they expected zero earnings growth this year (I’ll grant they are probably low balling). I think they will probably do very well but I’m happy keeping my position size down in the 3% range.

PayCom (PAYC) – (Update below) Andy wrote a great introduction to PAYC over a year ago, back in June 2015. I read all I could on it and may have taken a tiny look-see position at the time. Then in October they reported Sept 2015 quarter results and this is what I wrote:
PAYC reported adjusted earnings of 8 cents, up from 5 cents. The reports trumpeted that it beat estimates by a penny, but 8 cents doesn’t cut it for a company selling at $39.00. On top of that the last three sequential quarters of adjusted earnings were 12 cents, 10 cents, and now 8 cents! And it’s not “seasonal”. Last year they made 3 cents, 4 cents, and 5 cents in the same three quarters. I’d be very cautious about this no matter how good the “story”.
I probably should have paid more attention to revenue being up over 50% year-over-year each of those three quarters, but I did what I did, and PayCom kind of dropped off my radar. It probably worked out okay as while I wasn’t paying attention, the price rose from the mid $30’s in June 2015, to the low to mid $40’s in October, but then dropped to $22 in the February end-of-the-world panic. In May of this year Bert wrote a wonderful deep-dive which was quite positive, and I started a small position at $37.50. The next week or two I added a bunch more at $39.50 or so. Then there was a MF recommendation in June. About 6 weeks after I took my first position I sold a little for cash at $41.00, but bought it right back as soon as I could at $41.50. I’ve continued buying the past 5 weeks up to $46.80. It closed a week ago Friday at $47.20. It was my 11th largest position at 3.5%. In March they earned 33 cents, up from 12 cents, but that was a March quarter anomaly this year, and each year going forward, as they help their clients file ACA (Affordable Care Act) forms during the quarter, which brings in a lot of revenue with very little expense and thus very high margins. (Update) They announced June results with revenue up 50% and earnings up over 100%. I continued to add to my position all week. It finished up $4.30 or 9% on the week at $51.50. It’s now my 10th largest at 4.65%.

Rubicon Project (RUBI) – Just to show you how wrong I can be, here’s what I wrote when I was preparing this on Monday (before earnings).
I got this one from Bert’s deep dive in April. He called it The Strange Case of the Always Conservative Guidance. (They beat guidance by 100% or more every quartersince their IPO). This one hasn’t turned out real well for me so far, although the company’s results have been outstanding. I took my initial position at $19.90 but the next week when they announced Great Earnings (31 cents, up from 2 cents), and Great Revenue (up 73%), and bragged about how good business was, but refused to raise guidance, the analysts finally got fed up. The stock sold off 27% in a week, and continued to a low of $12.60. I essentially added all the way down to $12.90. It closed Friday at $14.12, with a PE of 10.7, my 10th biggest position, and 3.5% of my portfolio. Its earnings in 2015 of $1.03 were up over 400% from 20 cents in 2014, so that kind of statistic is meaningless, but their revenue was up 82%, so unless their business is about to collapse, the present PE of 10.7 seems pretty ridiculous. (I wrote a review in May here:
http://discussion.fool.com/rubicon-project-rubi-8211-my-quarter-… which you may find useful.

Then, on Tuesday, they again announced good earnings, but also announced that their business actually WAS(!) in danger of collapsing, although they didn’t phrase it that way. The stock was down 33%. I wrote this:
After reading the entire transcript of the talk, they are pretty clear on what the problem is: What they are saying is that the quarter as a whole was good, and mobile and video and Orders (their three new and fast growing areas of the future) are growing fast as expected, BUT their cash cow, desktop ads, is slowing down rapidly and progressively, partly because of the shift to mobile, but especially because (they acknowledge that) they miscalculated how fast header ads would come in, and they are experiencing leakage of ads to other companies with header platforms. (A header ad never even gets to their exchange). They are rectifying the problem, and have their own header ad platform, but they realize they were slow in getting it out in the field. They are doing a full court press and believe they will have it all solved by the end of the year.
Positive spin: It could be that this is another overly conservative estimate (almost certainly true, based on their past) and they will do better than they forecast.
Negative spin: Maybe they won’t get it all out there as fast as they think. Maybe their business will suffer from header ads long term. Maybe Facebook and Google will eat their lunch, irrespective of the header problem.
I don’t know the answer but I decreased my smallish position by roughly a half. They are very cheap, and they are undoubtedly underestimating where they think they will be, and lightening my position may not have been the best thing to do. When they reported the March quarter, and they dropped 25% after earnings and a low guidance, I thought it was silly and bought more. When it happened again this June quarter, the second quarter in a row, and they explained why they were reducing estimates, it no longer just low guidance! It was a real problem! I figured that maybe the people selling a quarter ago knew something I didn’t know. And maybe there was a reason the price never really bounced back. To get 2016 earnings down to where they are estimating we will see some large drops in earnings the next quarters. And the issue is whether there is something fundamentally changed: Ad blockers? Facebook and Google? More competition that they hadn’t had before? Header ads being rapidly adopted, that will permanently detract from their exchanges? A decline in growth rate of online ads (they can’t keep growing faster and faster forever)? I don’t know, and reduced my position size and then sold out this week. I felt I had other choices where there weren’t so many rocks in the path, and where the path to success for the company was clearer. (This stock could be a success though without the company being a big success, with just a little stabilization it would probably rise from here). Hope this helps explain it. I did take a big hit on this investment.

Signature Bank of NY (SBNY) – I do think this is one of the best banks in the world to invest in. Growing fast, low expenses because of its business model, not as cheap as Bofi, but a lot safer. It has been another yo-yo for me. I started my position a little over six months ago, after it was written up by Ophir Gottlieb’s newsletter. I first bought at $130. It rose to $142, sank to $120, rose again to $143, sank to $133, rose to $147, sank to $131, rose to $139, sank to $115 on worries about taxi medallion loans, rose again to $131, back to $118, and closed Friday at $124. They have trailing earnings of $7.74, a PE of 16, Book Value of $65.10 (up 23% from a year ago!!!), an Efficiency Ratio as good as it gets of 31.3% (which is incredible!). They are my 3rd biggest position (after LGIH and AMZN), at 12.4% of my posrtfolio. I’ve bought at prices from $144.50 to $116.20, and have never sold a share. Still buying.

Shopify (SHOP) – I started buying Shopify about 5 months ago when it was recommended by a favorite MF service, and then re-recommended the very next month. I bought most of my position between $26 and $29, but added a little at perhaps around $32. I hadn’t wanted it to get too big as they weren’t making any profit (but Revenue has doubled every year, compounded. This is Revenue in millions of dollars (Hold on to your hats!):
2012 - 24
2013 - 50
2014 - 105
2015 - 205
And even now, revenue is up over 90% each quarter. They announced earnings this week and the stock price went from $33.50 on Tuesday, to $37.00 by the end of the week (up about 10.5%). And, by the way, Bert wrote them up in May.

Skechers (SKX) – We’ve talked a lot about Skechers. I bought in over two years ago between $15 and $18 split adjusted. They hit $53.50 a little over a year ago. I sold just a little (unfortunately) at $51.50, before they dropped to $25 over a few months. This week they had the lowest close I’ve seen in a long time at $23.50. Their earnings from 2012 to 2015 have been (in cents)
2012 — 6
2013 – 39
2014 – 91
2015 - 150
I may have miscalculated one of those adjusted earnings, but you get the idea! Their Revenue also doubled in 3 years from 2012 to 2015. But the Stock Market gods apparently aren’t happy. At any rate, Skechers is my fourth largest position at 9.5% of my portfolio and a PE of 13!!! Their trailing twelve month earnings growth is 24%. And their last six months earnings, that the gods were so unhappy with, were up 25% from the year before. I’ve taken a pretty large hit in SKX since the high, but am still ahead on my initial position.

Synchronoss (SNCR) – I got into this as a MF RB a year and a half ago (MF recommended it at $45.70 and I bought my initial position at about $46.00 or $46.50), but if you’d like to learn more about it, Bert has recently written an article on this one too, to my surprise. (How did he ever run across it?) I’ve never really been in love with Synchronoss, but I have stayed with it (somewhat surprisingly). While I’ve often sold shares for cash, I’ve somehow always kept a position, and added back at times as well. This is an interesting, relatively unknown, boring sounding, but surprisingly innovative little company that is quite profitable, moving into new areas, and consistently growing revenue, It’s at a PE of 18.5 at its current price of $41.50. Its Free Cash Flow rose in one year from $0 in 2014 to over $60 million in 2015. Its cloud revenue, which is recurring, is now over 55%, and growing much more rapidly than the legacy activation revenue. They are spending money building out enterprise products with Goldman Sachs and Verizon. This spend affected earnings negatively in the first two quarters of this year, so that they were flat with the year before. Some of the products they’ve been working on were released near the end of the June quarter. Some six months ago the price fell from the $45 where the MF recommended, getting as low as $22.50. It’s now back to $41.50. I think they’ve turned the corner finally this quarter with their shift to a cloud-based recurring revenue model. Others seem to feel the same way as the stock rose well over 10% in the last three days of this week after earnings, were announced. Management hopes that the enterprise software products they are building out with Goldman and Verizon will start bringing in significant revenue in 2017. It’s my 11th biggest position at 4.4%.

Silver Spring (SSNI) - This is a relatively new position, just three months old, and first recommended by Ophir Gottlieb’s newsletter in April. While Gottlieb’s newsletter brought it to my attention, I feel that he doesn’t actually understand the company and just cheerleads. Then, after I had a small position, Bert Hochfeld did a deep dive in May. I first bought at $14.20, about a third of my current position, then another similar size position at about $12.80 about a month later. Then two weeks later, with Brexit, it fell to a low of $10.30. I only added a little there. I saw no stock specific news but everything was down, and this wasn’t my highest conviction place to put the cash I had. It finished the post-Brexit week up 19.6% from that Monday’s close, at $12.34. I bought more a week ago at about $12.55 in response to some large awards and them winning a patent defense. They were one of the nine stocks with earnings this week (Thursday, after market). Thursday, before earnings they fell to a close of $11.95, but they finished Friday up 10.4% at $13.19. I’m now mostly in the black except for my first purchase. This is now my 7th biggest position at 5.7%. If you are wondering what they do, this is an internet of things company that does smart lighting and stuff for utilities and cities. They just signed up Con Edison for all of NY City, which is a big deal. They also have cities from Manchester England, to Miami and Sao Paolo, and lots more. In spite of competition from GE and others, this little company that you never heard of seems to be the big dog in the space, having won the three huge (multi-million points of installation) contracts that have been out on competitive contracts this year, which incidently gives them a huge backlog already under contract.

Skyworks (SWKS) – As you know I had been reducing and reducing and reducing my position. Now it’s gone. For a long time I had a lot of faith in management, but I now realize that they were just whistling in the dark. Skyworks may do well depending on whether Apple has a good year, but I realized that they will never be the master of their own fate. Compare Amazon, PayCom, HubSpot, SalesForce, Shopify, for example. They can go out and find and sign up a myriad of small customers, who then become tied in forever. Skyworks, on the other hand, is dependent on a few large, powerful customers who are always looking out for a supplier with a better or cheaper product, and who also don’t want to be dependent on a single supplier. I closed out my position. My history was mediocre. I initially bought over two years ago at $52. It went up to $110 at one point and then melted down again, and I finally sold my last in the mid-$60’s. I wish I could say that I was smart enough to sell it all out over $90, but I wasn’t. I sold some at the high prices because those high prices were making my position size too big, and started reducing it down from 22% to 18% to 16% to 14% to 12% while the price was gradually dropping, so I sold all along the way. I’d buy a little too, but issues kept coming up about competition, and especially about the technology, and I realized that I simply wasn’t technically savvy enough to evaluate the situation. In additionally they were in a tough sector, as I said above with large powerful customers. Anyway, I’m gone.

Atlassian (TEAM) – Not much history here. I bought this a couple of weeks ago at $28. They announced earnings on Thursday and they are now at $32 (up 14%). Recommended by Kevin in July. After I got interested I discovered Bert’s deep dive from May. Revenue was up 43% for their fiscal year (June). Free Cash Flow was up 45% (and was 21% of revenue). Not bad! It’s my next to smallest position at about 1.9%.

This was an interesting week. I had nine, count them, nine (!), of my sixteen companies announcing earnings in three days (Tues, Weds, Thurs). That’s a lot of information to absorb in a short time. The stock price changes for each of these - from each one’s close before earnings on Tues, Weds, or Thurs, to Friday’s close - was:

BOFI – up 17%
HUBS – up 15%
SNCR – up 11%
SHOP – up 10%
SSNI – up 10%
PAYC – up 9%
TEAM – up 6%
ANET – 0%
RUBI – down 29% (I’m now out of RUBI as you know).

Yes, it was an interesting week!

Hope this continued to be interesting.


For Knowledgebase for this board,
please go to Post #17774, 17775 and 17776.
We had to post it in three parts this time.

A link to the Knowledgebase is also at the top of the Announcements column
on the right side of every page on this board


Continues to be interesting.
Thanks for the work you put into this Saul.


Absolutely right, Frank.

Many thanks from us all, Saul, for your fantastic “Progress of positions” update.


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Thank you for sharing Saul, I’m learning a lot from this board!


Skyworks (SWKS) – As you know I had been reducing and reducing and reducing my position. Now it’s gone.

Wow! Wow! - considering the strong conviction you had in this during all of our discussions on this board over the years, this shows just how flexible you are in your thinking and stock holding positions, very impressive.

My quick thoughts on your others:

Amazon - wish I had bought in years ago or even months ago. AWS seems to be a total gorilla

SFDC - Ditto. I think these guys are THE business platform. Most of our corporate apps appear to be built off SFDC in my company

ANET - with the legal threat contained they could do really well although I see this area full of interchangeable technology. Infinera’s record gives me cause for concern here

SBNY - I’d like to buy into this but I can’t see the point with the growth rates and value offered by IBNK and BOFI

Silver Spring - I like and I hold. Based in Singapore I see the huge motivation and potential to be the smart city of the future. The one disappointment I have is that they seem exclusively focused on purely smart grid rather than smart anything else. I would have thought they could build out an entire smart city concept.

Atlassian - I’m interested

RUBI - Yeh pissed off here

CYBR - I hold too and have had even traded this successfully. I’d watch it carefully in case either the sector implodes, or elevated concerns emerge thanks to FireEye or someone slipping on a banana skin as well as any removal of a takeover premium expectation.

Mitek - hold and like

Synchronoss - hold but hardly notice them. They clearly aren’t going to win any awards for “most electrifying corporate PR campaign of the year”

SHOP - hold and like a lot but worried clients might disintermediate them

PAYC - hold and like but worry that WorkDay may become the industry gorilla and PAYC become the chimp

Cambrex - can’t get interested

LOGM - sold out of mine as well. I was interested in the one time uplift. Maybe I will buy back in on weakness as I liked the underlying business and I agree with the synergy point

SKX - Utterly frustrated by this one. RRRRrrrr

LGIH - holding onto this. The lower for longer and strong housing market is really boosting this one. Seem pretty safe and resilient as well as fast growing. If Oil comes back it could even accelerate

HUBS - I really want in on this

Other Saul like stocks that I’m interested in:

Patriot Nation - I sold out my arbitrage trade last week.

EBIX - I really want to get in on this. These guys are massively disrupting the market and seem to be a much more professional outfit than PN. They are getting PN for a steal and have an incredible growth trajectory of their own

Criteo - still hold and like, these guys are the market leaders

WorkDay - as an alternative to PAYC, I’m watching these

Abiomed - still hold but will look to exit in the next 3-4 months I expect. I’m worried about the St Jude risk as well as whatever the Presidential candidates are intending in the healthcare industry

Fortinet - hold and like as strong growing, profitable and professional outfit that is not too overvalued in cyber security

MBLY - still hold and believe they will be the mid term leader in a massively disrupting industry. Profitable and very fast growing

CEVA - momentum building in LTE and IOT, earnings growing very well and they fill the gap left by ARM in IP licensing

Ubiquity - I shouldn’t have sold out of these and now that they appear turned around I’m interested in renewing my position

ZOES - still unique and growing well even if very highly priced

GRUB - looking to sell into strength on this and move on

SEDG - still believe in the potential growth in this but worried about customers and competition

NetEase, AliBaba, NOAH and CTRP for those that are prepared to consider China.

Other not very Saul like stocks I like for growth that may or may not be profitable or growing fast enough…

Ones I hold…
Mazor - as a robotic play
ARCAM - for 3DP
NCLH - cruise lines for an ageing world
Cypress - for IOT
Sierra Wireless - for IOT
BOX - for cloud storage
KMI - for turnaround in natural gas

Ones I am considering:-
LKQ - considering for long term growth and value play - thanks to Denny
Ituran - considering thanks to discussion on this board
Kroger - considering as an under valued and the class act of its sector
Twileo - considering as a potential dominant play emerging
Essent - considering thanks to discussion on this board
Allergan - considering as an extremely good value play after the recent yoyo affair with Pfizer and Actavis



Hi Ant, glad you found it so interesting.

Wow! Wow! - considering the strong conviction you had in SWKS during all of our discussions on this board over the years, this shows just how flexible you are in your thinking and stock holding positions, very impressive.

Yes, But as I wrote: For a long time I had a lot of faith in management, but I now realize that they were just whistling in the dark. Skyworks may do well depending on whether Apple has a good year, but I realized that they will never be the master of their own fate. Compare Amazon, PayCom, HubSpot, SalesForce, Shopify, for example. They can go out and find and sign up a myriad of small customers, who then become tied in forever. Skyworks, on the other hand, is dependent on a few large, powerful customers who are always looking out for a supplier with a better or cheaper product, and who also don’t want to be dependent on a single supplier. I think that explains why I changed my mind.

On Arista, I see the difference between them and INFN in that Arista essentially sells software solutions.

Cambrex - can’t get interested
I’ve reduced down to 2.7% myself.

On PayCom, how can I be too worried when earnings have risen over 100% year over year on average every quarter for years?

Silver Spring’s Starfish platform is specifically to build out in every direction, but to tell the truth, I don’t see how they can accept too much more business. My goodness!

With CYBR, I don’t see FireEye slipping on a banana skin affecting them at all. Hacking isn’t going to go away. It will only become a bigger and bigger problem. They seem to have work cut out for them as far as the eye can see.



Silver Spring’s Starfish platform is specifically to build out in every direction, but to tell the truth, I don’t see how they can accept too much more business. My goodness!

I’m very skeptical of SSNI’s Starfish initiative. I’ve been following the IoT phenomenon for a couple of years and everyone and their dog has an IoT standardization/tech initiative. I don’t see how theirs is any different. On the other hand they’ve been quite frank about not seeing any revenue from that for the forseeable future.

Their networking modules on the other hand are pretty impressive - cheap, simple, no additional wiring needed, no setup or maintenance - just install the light as usual and it will “magically” appear in your back end application. Sure, somebody will replicate that, but there are millions of communities across the world that don’t have them yet. The market is an open field.



From a portfolio construction standpoint, do you have any worries about sector concentration? Seems that more and more of your portfolio is starting to tilt towards technology, which requires a much more watchful eye since it’s such a disruptive sector (I suppose you could consider Amazon to be retail, but most of its profit is coming from AWS)


I’m very skeptical of SSNI’s Starfish initiative. I’ve been following the IoT phenomenon for a couple of years and everyone and their dog has an IoT standardization/tech initiative. I don’t see how theirs is any different. On the other hand they’ve been quite frank about not seeing any revenue from that for the forseeable future.

Yeh I’m concerned Stenlis. There’s a lot of competition out there. Whilst I’m surprised GE or Philips or ABB doesn’t have this sewn up, here’s on of my favourite ones from the UK…

Check out the British competition - Telit, which turned in 6% growth and anticipates growing 20% in the second half…
It seems Telit is putting Sierra, CAMP and Spansion/Cypress to shame.


SFDC - Ditto. I think these guys are THE business platform. Most of our corporate apps appear to be built off SFDC in my company

This has to be our next discussion. are they really built off and integrated with SFDC or using SFDC as a platform to launch as a matter of ease? I spend most of my time supporting SFDC but I am not sure everything that a company ties to the platform generates revenue for them. Though it may make them sticky

From a portfolio construction standpoint, do you have any worries about sector concentration? Seems that more and more of your portfolio is starting to tilt towards technology, which requires a much more watchful eye since it’s such a disruptive sector (I suppose you could consider Amazon to be retail, but most of its profit is coming from AWS)

Good question: As of Friday’s close, my non-tech positions were:


They add up to about 60%. If I reduce that by half of Amazon as they are really a hybrid, it’s still well over 53% not tech, and about 46% tech. That’s probably not very much different from the way I’ve always invested, to tell the truth, and I’m comfortable with it. Thanks for making me think about it though.



This has to be our next discussion. are they really built off and integrated with SFDC or using SFDC as a platform to launch as a matter of ease? I spend most of my time supporting SFDC but I am not sure everything that a company ties to the platform generates revenue for them. Though it may make them sticky

Hi Jon
Actually it’s a bit of both.
So apart from providing our CRM - our timesheets for the advisory part of our business is built off and integrated into SFDC, Chatter our instant messaging is again built into SFDC as well.
Our finance, business intelligence, HR & knowledge management appear to be launched through SFDC as you say.