I hope that a lot of you have joined me for the ride on SYNA, UBNT, Z, PFIE, AMBA, HZNP, AIOCF, SCTY, AFOP, SZYM, and all the rest. After all the growth stocks got pounded and pounded down to a bottom, we sure came off that bottom four weeks ago or so. Wow!
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Huge day today for SCTY!
Can’t thank you enough for this board and all the wisdom you share with us.
Nate
Good call Saul. I did paper trade since I do not have cash and you hit it. Very nice and congrats!..
I am learning a lot from this board…
Johnny -
Hi,
Don’t post much but read a lot on this board. Glad I found it. Wish I had found you guys about 3/4 years ago. I’d be much better off now. Not that I’m not doing bad, just would have been better.
I have a lot of your picks Saul, and am doing quit well on most of them. I have bought AFOP about three times now and have a pretty fair amount of shares. Everything I read is good but the price has been dropping pretty steadily this past week or so. Any body see anything that I might have missed? I probably only need more patience.
Thanks again for all the good guidance on this board.
Gayle
I have been following Saul for almost exactly one year. When he makes a move I’ve followed his advice…sometimes often blindly, to my shame. It all started for me on the WPRT board when he was politely pointing out that PSIX was profitable right now. And that WPRT was burning through money at a horrible rate. He was crucified on the board but I quietly sold out my WPRT and moved the money into PSIX….and have made obscene profits for the past year…you should check out the 2 stocks price movement the past 12 months….one has deteriorated and one has prospered. I’ll let you guess which one.
Now that Saul gives us monthly updates on what he is buying and why, every fortunate person on this board will profit by considering very very carefully his time proven wisdom. He won’t always hit a home run, but we have been beating all the averages plus any newsletter advisory service.
So yes, let’s take our hats off (again) to Saul for our nice little summer rally. I’ve enclosed that post (#1375). It’s not too late if your investment horizon is long term.
Jim
Author: Saul
Subject: Interim update on my positions Date: 5/14/2014 3:06 PM
Recommendations: 24
This was an extraordinary two weeks and I did a lot more buying and selling than normal. This was really A LOT MORE BUYING AND SELLING THAN NORMAL FOR ME, but you don’t see many two week periods in the market like this either.
I’m reprinting my positions that I posted on April 26th and alongside them I’m posting in italics what I’ve done since. Remember if I haven’t bought anything of a stock, it doesn’t mean there was anything wrong with it, just that it hadn’t dropped as much, and thus wasn’t as compelling a buy as others (CELG is an example).
These were my position descending order, starting with the top six:
SYNA – I bought a small amount at about $57.75
CELG
UBNT – I bought a bunch at $31.95 and $30.92
BOFI – I bought a little at $80, and a lot at $78.50
AMBA
MTZ – I sold a little for cash at $38.85, as it hadn’t dropped much.
Next I had 10 positions ranging in size from 5.0% to 3.2% so you could think of them as centered around the average position range.
SZYM – I bought a little at $10.70 and then a lot at $9.03 to $9.27
WAB – I used part of this for cash. I sold a bunch at $75. I like the stock but there were a lot of extraordinary bargains floating around.
HZNP – I bought a moderate amount at $12.91 to $14.45
AFOP – I bought a little at $15.70 (I wish I had bought more! )
Z – I added some at $90.
CSGP
SCTY – I bought a tiny amount at $52.50
JCOM – I bought some at $47.80
CALL – I bought a bunch at an average price of $16.30 after the drop
PSIX – I sold a little at $77 for cash to buy other stuff (hadn’t fallen much and high PE)
JCOM had been a new position. Next we had two more new positions, Pandora (a Rule Breaker recommendation) and MANH (a two times Hidden Gem recommendation). MANH was not a very fast grower and I said I probably won’t make it too much larger. These were 2.5% to 2.1% so you could have called them half positions.
P – No change
MANH – I sold all my position to buy more enticing things
Next I had six small positions ranging from 1.5% to 0.9%. PFIE and INBK were new. LNKD, I had had before and sold at $240 or so, and bought back at these lower prices. ELLI was reduced in size as I had sold some to buy stocks that were way down or new purchases.
NGVC – I luckily had sold a third of my position at about $36.50 for cash, and then got out of the rest at about $25 after the conference call.
PFIE – I bought a lot, a tiny bit at $4.50 and all the rest mostly between $3.90 and $4.05
INBK – Added some little dribbles, half at $21.60 and half at $20.25
LNKD – I bought some at $150, and a little at $139, then ended up selling most of it at $145.30 for cash to buy stocks like BOFI
APPY – Sold out for cash.
ELLI – I continued to sell ELLI for cash and sold out.
Then two tiny positions at 0.65% and 0.38%. TSLA was smaller then it had been because I used it, like ELLI, for cash for purchases.
TSLA – I finished selling out for cash at $201
KRED – I’ve slowly added and it’s now about a 0.7% position, still by far my smallest position
To summarize,
I sold out of ELLI, TSLA, APPY, NGVC, MANH and now have just 21 positions, which is very concentrated for me. These weren’t really surprising sells. ELLI and TSLA I was already selling at the last report, APPY and NGVC were small positions, and as for MANH, I had already said I wouldn’t buy much. None of these came from my top 17 positions.
I reduced my positions in LNKD and WAB for cash to buy other things. LNKD because t was a very high PE and I had more confidence in BOFI, SZYM, etc. - WAB, because it hadn’t fallen hardly at all and the chances of seeing a 30% to 40% bounce in six months were nil, while I could hope for that with each of the five below that I bought a bunch of.
I bought a bunch of UBNT, BOFI, SZYM, CALL, PFIE
I bought a moderate amount of HZNP and JCOM
I bought a little SYNA, AFOP, Z, SCTY, INBK
The other nine positions you could say that I liked them enough to hold my whole position or almost my whole position, but that there were other positions that seemed like better purchases to add to right at the moment. AMBA and CELG I didn’t add to partly because they were already very large.
Saul
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I likewise learned to pay attention to Saul and the various active members of this board via postings re: the WPRT fiasco that he partially saved me from. Thanks Saul!
From MF I already had Z, AMBA, SCTY.
Following this board I added SYNA, UBNT, HZNP, AFOP, SZYM, though only 2-3% of my holdings each so far.
June has been great so far! I should have liquidated even more stable holdings to amp up some of the above. May still do that.
I’d like to give back at some point - the only thing I’m expert at is computer stuff (e.g. the RB SPLK reco is an existing holding of mine that I’m keen on) so maybe I’ll find opportunity to provide insight before too long. Cheers.
the RB SPLK reco is an existing holding of mine that I’m keen on
Hi utah chris
Maybe you could say more about what you like about it. I was turned off by them losing more money each year, and even losing money last quarter non-GAAP. Also the CEO paying himself an $18 million stock bonus last year, in spite of the company losing money. Maybe I’m missing something.
Saul
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Although all of us are required to do our on research and not follow you blindly, I would like to thank you again Saul. We have benefited a lot from your wisdom and advice.
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Saul, I wanted to bring to your attention a medical device company called Inogen (INGN). Though I know device companys have fallen out of favour as the ACT takes effect, their product is very novel. Essentially they are replacing oxygen cylinders that patients need to lug around by a small carry on electronic device that supplies oxygen directly from the atmospheric air. They have been growing nicely and IPOed 6 months back.
I was in it earlier but bailed out when the market hit the bottom and put that money in some of your holdings 
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I’ve been along for UBNT, AFOP, and SZYM. The best part is that the ride is just gettin started. UBNT is one my larger positions while AFOP and SZYM are around 3%.
Looks like CALL may follow in their footsteps. The street appears to like their new app.
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I bought in to SPLK 3 times.
SPLK $28.18 12/27/2012
SPLK $48.22 07/09/2013
SPLK $72.58 11/26/2013
My enthusiasm was based on 3 main things:
- I think the space they are in is really important, they were there first, they have a good lead, and it’s only becoming clear now how useful it is
- At my workplace the products are highly regarded and often talked about by many people
- The RB recommendation validated 1 & 2 for me
But now that I examine the numbers… (I took them from 10Q and 10Ks, hopefully correctly)
4/30/12 7/31/12 10/31/12 1/31/13 4/30/13 7/31/13 10/31/13 1/31/14 4/30/14
Revenue 37.2 44.5 52 65.2 57.2 66.9 78.6 99.9 85.9
Earnings -16.1 -13.7 -5.5 -1.4 -16.1 -29.8 -16.5 -16.6 -50.8
Stock-based comp 2.7 3.9 4.7 19.5 9.8 12 14.3 33.2 42.7
Earnings less stock-based comp -13.4 -9.8 -0.8 18.1 -6.3 -17.8 -2.2 26.3 -8.1
I find my enthusiasm tempered. Revenue growth is great, about 50% annually. But really no profit yet.
Why no profit? They made 267m in FY2014. Here’s what they spent it on:
215m Sales & marketing
76m R&D
54m G&A
For a 78m GAAP loss, or a 2m loss if you subtract off the stock-based comp, if I have the numbers right. Anyway, I’m not sure how I feel about sales & marketing being 3X R&D for a tech company. Maybe it’s normal.
Here is what their CFO said on the May 30 call:
"Turning to margins. The detail I give for operating metrics are non-GAAP and exclude non-cash stock-based compensation, payroll taxes related to employee stock plans, and amortization of acquired intangible assets. Q1 overall non-GAAP gross margin was 89% in line with prior quarters. Non-GAAP operating loss was $3.6 million, representing a negative margin of approximately 4%, better than our expectations due to higher-than-forecasted revenues and still reflective of our continued investment philosophy around our products and field.
Non-GAAP net loss for the quarter was $4.2 million and EPS was negative $0.04 per share based on a weighted average share count of 117 million. Cash flow from operations was $18.9 million and free cash flow was $14.7 million.
Looking forward, we expect Q2 total revenues of between $92 million and $94 million with license revenues contributing 60% to 62% of the total. As I said on the last call, license revenues should increase gradually in the second half, reaching about two-thirds of total revenues in Q4. We expect Q2 non-GAAP operating margin of between negative 2% and negative 4% as we continue to build on our market segment specialization, our product portfolio and expand our field coverage.
For the full year, we’re increasing our revenue outlook. We now expect total revenues to range between $402 million and $410 million. And we still expect non-GAAP operating margin to be about breakeven. We’ll continue to run the business cash flow positive and we reiterate our full year operating cash flow margin at 20% of revenues with similar seasonal trends across the quarters as we’ve seen in prior years. We’re planning on CapEx of around $20 million this year due mostly to facility build-outs. In addition to our San Francisco headquarters expansion, we’re also planning projects in London, Seattle, D.C., Plano and Shanghai, as we scale our business globally."
I’m still digesting what this means. Not sure when they plan to turn a profit. Cheers.
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Hi Utah Chris,
Thanks for explaining your reasoning on SPLK. I understand your enthusiasm based on people using and liking their products at work, and on MF recommendations. I was also going to congratulate you on your three purchases, but then saw that your average price was just about flat with the current price, which has come down quite a bit from your last purchase.
It’s hard to tell about companies that are spending a lot on sales and marketing. Zillow is doing that too, but nowhere near as high a proportion of Revenue as SPLK (53% of Revenue last quarter for Zillow, compared to 80.5% for SPLK, and Zillow is profitable). I guess I prefer to see a company that can grow revenues and make a growing profit at the same time.
Saul
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