Interested to know what your job is, FlyingCircus? It sounds a lot like I deal with… even 4 years after switching systems we still deal with using work arounds due to delivering an MVP - out of the box experience and trying to limit customisation which makes future upgrades difficult. The thing is, complex products don’t work well with out of the box solutions. Even where the gaps are know and identified, work arounds tend to be the solution when trying to know what to prioritise.
Pretty sure this is the book from early 90s where i first picked up that concept.
Dreamer
If your theory was a stock, I would short it.
Feel free to start a “This is the Conspiracy Theory Thread” thread and we can populate it with ancient aliens junk too.
The problem with conspiracy theories, in my opinion, is that by and large I have found humans to not be terribly bright, and these theories give said humans waaaaaay too much credit in manipulating time/space/people/events around them.
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Saul is in his mid-80s, I believe. Biden is 80 and running for reelection. My father is nearing 80 and still my biggest threat in fantasy football league every year.
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Hey look - a human contradicts himself. That never happens! (we all do it)
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Probably either feels bad his followers are in dumps with him, and trying to share good news, and/or it is fairly common for people who aren’t sure if something is really meaningful or not, to then share it in the hopes others will point out if said info is actually relevant or not.
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ZM had growth metrics out the wazoo, and that was what the SaaS/momentum guys wanted to see. AYX was good metrics at the time, until their lack of cloud focus hit them in the mouth. UPST biggest cheerleader was JonWayne and they did have great growth and made sense in a bull market and healthy low-interest-rate economy. TDOC makes/made a ton of sense, especially in lockdown environment, but problem became when all companies realized they could just implement video chat themselves and TDOC overpaid and screwed up LVGO merger.
None of those points hold up under scrutiny…sorry.
Dreamer
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I don’t think enough people follow Saul’s board to move the market. These are not small companies, they range from mid cap to large cap. When they were at their peak, I think some of them had a market cap of 100 billion.
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Sauls board and his group of cohorts is a complete mess. They haven’t had a good new idea in almost two years. Now they can’t find any cloud name to feel good about investing in. They complain about CRMs, now the economy. Yet right in front of them is a company like HUBS. I’ve forgotten about HUBS, but I certainly don’t claim to be an expert on cloud. HUBS tonight came out with strong earnings. It’s a cloud based CRM model. It’s up 45% YTD, and another 5% AH, and tomorrow will be trading at a 52 wk high. I’m guessing it was off their radar because two years ago it dropped to only a 30% grower.
This is what I don’t get with these guys. Even Muji the expert. Why are they now failing badly. Why can’t they find a HUBS to invest in.
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Now, “The Day After”, it’s very easy (but totally unfair!) to look for stocks which did well in the last months and write what you wrote about a lot of people you don´t know.
Many of them are certainly much smarter than you think.
That´s none of your business, you should have found yourself stocks like HUBS or SMCI.
It´s your money, your portfolio, your future.
The most common thing people do is criticize others or blame them for their own mistakes or failures. I guess it´s good for the ego.
This board was extremely quiet a year or two ago, but in the last few days some very interesting posts have appeared.
I’m glad Dreamer’s initiative has paid off.
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You mean like DDOG today? Just another example. Saul and others run from and out of just another name that now seems it might be getting its mojo back. Good earnings this morning. They dump SNOW in fear of valuation, something that was never an issue in their go go highs. Up big in sympathy with DDOG this morning.
Saul announces he’s buying two new names but won’t announce anything more then that. So when do the thousands of followers he built, he loved being the leader of, when do they get those names, once their up 30%?
You miss my point Clubber, I’ve never been a follower of Saul. I’ve owned some of the same names, I own SNOW and CRWD now, but I’ve always been diversified. Never bought into the own 7 stocks in the exact same sector model. I would and have never blamed anyone for any pick or loss I’ve taken. I’m pointing out that when you think you are a king, when you build your little empire, you better understand that you have a lot of followers now, that do try to keep up with you, that you do have a responsibility to them like it or not. Otherwise don’t put your name on the door.
You pick up that flute and play Pied Piper, that’s on you.
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I will fade this move. Back to 60’s in a week or two, if not sooner. 50’s eventually. It is now a 30% grower, and debuted rich on the stock market and then got stupidly rich, and now still just richly valued.
Too many folks out there looking at % off ATH, when that ATH should never have existed in the first place.
Stock has done nothing, essentially nothing, for 3 years.
SNOW is the next to get humbled…if not this ER, then probably next.
Dreamer
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Did you catch Sauls Mea Culpa tonight? It’s a doozy. He’s now into PE and more shocking he now owns Tesla stock, after years of not even allowing it to be discussed.
So I was always very skeptical of Saul as you have been Dreamer. Always voiced it, even though it went over as well as Rosanne singing the National Anthem. Let’s just say I didn’t have many fans voicing it. I’ve always felt that there was no way this 80 year old man had all his money in 8 hyper growth stocks. Not even close. No way.
The fact is if he has done 30% a year for forever he would have had tens of millions, if not 100 million, and he wouldn’t be talking about how he’s now comfortable enough to pull money out so he and his wife can live out their lives comfortably. What? How much do two people that old need? He has always said he was 100% invested, always scolded anyone mentioning a cash position, yet now he admits to 47% cash?
Saul has been just enough BS that I can’t really take a whole lot of what he claims seriously. Has this entire run been a bit of a sham? Who knows. So now what. Does his following all shift now? Abandon hyper growth and PS, and shift to PE? Really? This far into a bear market? Glad I never bought into their model in the first place.
Oh and Tesla. He could have owned Tesla all these years, yet now he has seen the light. We talked about the legend of Saul and his time being up. I think tonight it officially ended.
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Saul has suddenly realized he used to make bank for a few decades by focusing on PE and other things. Of course, the entire board will now morph and likely follow his lead, although I expect quite a few to stay loyal (at least in their own minds) to a strictly SaaS/Growth focus.
So many time on his board, I spoke out about how there was zero track record for expecting no-profit SaaS to command 40x PS multiples and somehow be amazing stocks to own, from a strictly CAGR point of view aka is my port growing every year.
So I am banned from that board for basically stating all the things that Saul is now finally openly stating. Which is hilarious and sad. Also funny to look back at old posts where Saul questions my port moves and tells me to open my own board (because he didn’t realize I had one) when I am LITERALLY the only guy I know on TMF who posts every single trade in just about real time.
You can’t make this stuff up, folks.
Case in point:
"I have no doubt many here can make good gains on ZM, CRWD, and DDOG in the short-term.
Don’t see how anyone can expect a quadruple, as you brought up, anytime in the next few years, as it would be market cap territory that is not common for sub-$1b or sub-$2b revenue runrate companies.
In today’s constantly changing/evolving/disruptive landscape, to imagine holding a $12/15/20b mkt cap for 3-4-5 years, when their P/S is currently over 40, seems like a setup for a fairly low CAGR in years 3-4-5, as you are getting multiple years priced in TODAY.
I get it…no one is supposed to argue with Saul, due to his track record…but here is the thing no one seems to grasp: there is no track record on $10b+ mkt cap companies with P/S over 40. From what I can tell, Saul made great CAGR for decades and P/E was a factor. I understand the “why” behind the switch to cloud/saas focus. In 2018, there was little care about profitability. Now, all of a sudden, we like to say there is. So what changes in 6-12-18 months from now?"
This was just a couple months before covid…Nov 2019. Reread that a few times.
and I continue:
"That smacks of momentum investing, with no reasonable expectation that a stock like DDOG will be held for 4 years, while sustaining a legacy-Saul-average CAGR of 25%+/year. And there is nothing wrong with momentum investing, but I have seen it stated by most on this board that they don’t believe they are momentum investing.
So, again: I am unaware that there is any established track record on $10b+ mkt cap companies with P/S over 40.
If there is, please let me know…I will be happy to be wrong.
Otherwise, you are declaring a truly new paradigm, and that “this time it’s different”."
Ok. I think I am moving on with my little chip on my shoulder from being excluded from that board. That same board that told me TTD was a bad idea (Bear in 2018 and others). That same board that told me GLBE was a bad idea (wsm, Saul, Bear, and others) in 2021. That same board that told putnid that he was irresponsible for his large ENPH investment. The same board that said “no TSLA discussions”.
Yep. That same board that for some reason thinks NOW is the right time to suddenly own TTD, GLBE, ENPH, and TSLA. Except for GLBE, most of the best gains for those stocks are either behind them or won’t happen from current entry levels.
Of course, all my bad ideas are great ideas if they decide to come up with them on their own. Ha.
Moving on…
Dreamer
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Last point on this. Then I’m back to my own stomping grounds.
Dreamer you were right to always point out what you were pointing out. It was the right thing to do. Some people will only see that now.
What Saul and his followers became was a cult following right off the valuation Cliff. Everything you couldn’t discuss a year ago, that’s now the new topic of discussion? PE? Valuations? Cash? Going to be interesting to watch it all play out. Lots of followers are going to have to buy new hats.
Anyway, best of luck moving forward. It’s been fascinating to watch it all play out. Some people really got tumbled in all of it though, especially the majority that only joined in at the end of the run.
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JDC I just took an IT portfolio manager job at a small but growing non-profit, in the end stage of an e-commerce component system replacement. Very small and inexperienced IT development team; they’ve been running a mashup of Salesforce, Nimble, and Wordpress (free edition, of course) for years. CEO declared “thou shalt be done by June” therefore by the end of June we are supposed to have implemented a new product in place of (most of) Nimble. Oi.
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@LifeOfDreamer - I’ve spent most of my time on Saul’s board, but trying to become more flexible and learn from others who look at things differently. In the spirit of learning, I hope it’s OK for me to post an open/honest question here.
I’d love to get your perspective on how you think of this, using Datadog as an example. How do you determine your ‘right’ price - or your belief that it will break into “the $60s or $50s”?
I understand that it’s slowing rapidly, but it is also starting to produce a fair amount of profits (albeit non-gaap). Do you look at its 52x NTM FCF multiple? Its progression towards EPS?
I’m a relatively young investor who has been brutally humbled by the market, by no one’s fault but my own, so keen to get yours (or others’) perspective on this topic.
-RMTZP
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One of these threads on this board has a couple of posts on value of DDOG. Started by Dreamer.
“@!#(!$)(UY!!!”'ed if I know how to find it.
I love the “tags” and “categories” search engine. I should not complain, as the old Google search method would probably work.
Look out 3 or 4 or 5 years. Plug in revenue growth curve. Select P/EV based on more mature SaaS companies at similar growth rate (Service Now, Salesforce, ??). Tweak for share dilution. Reality check on market cap.
Dreamer had more negative take on declining revenue growth rate than I did. Still had a decent CAGR on stock price, as I recall. I have DDOG as one of my 20 targeted holdings and it is currently a full position. Not to put words in Dreamer’s mouth, but I think his view is that DDOG is an investable stock over that multi-year term, but he thinks that Mr. Market will offer a Blue Light special shorter term. Plenty of reasons to hold that view. “Wall of Worry” is always there, but doesn’t it seem slippery and steep right now?
KC
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KC answered this pretty much, but if you do find the earlier DDOG thread, my guess is you will notice that growth slowed faster than my conservative estimates. So even more reason for it to get hit hard, in shorter-term (3-6 months or less) if entire market goes down.
ZS popped today…so “all clear”?
How many times has NET retraced to 40s after going to 60s? How many times has DDOG retraced to 60s/70s after being in 80s/90s?
On macro level, are we “all clear”? If so, then these might be bottoms. But is this macro backdrop providing the same favorable conditions that allowed DDOG price to previously pop to $145-150+ previously? Doesn’t seem like it.
- So even if macro only gets better from here, why will returns we saw for SaaS in 2016-2021 suddenly return?
- I think #1 is moot, because I don’t think macro is ok. I think it is wounded and may need a bit of bed rest before it gets up and about again. Right now it is running on adrenaline.
Dreamer
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@LifeOfDreamer thank you for your reply. In terms of ZS popping on “all clear”, I see it as ‘normalizing’ as its multiple got closed to mid-20s FCF on '24 estimates.
I agree on not assuming '16-'21 returns will remain, but also want to be open to the opportunities that appear.
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what historical reference do you have for mid-20s FCF and how it impacts multiples?
Not picking on you, specifically, but too often I would hear someone from Saul’s board talk about a stock that had a 40 P/S which got “beaten down” to 20 P/S and was now “a bargain”. When in reality a 20 P/S is very rich.
I realize you are talking FCF and not P/S, but FCF ratios seemed the hottest new thing to do when everyone wanted to pretend that stock comp doesn’t matter and that share/mkt cap dilution doesn’t matter.
On top of all that, I just kind of doubt there is any historical reference to look at for ZS, which IPOd 5 years ago, and declare their FCF ratio is now normalizing.
How about PE and actual GAAP earnings?
Dreamer
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@LifeOfDreamer I appreciate you asking these questions, because it forces me to think about aspects that I previously ignored.
I’ve learned the hard way that 20 P/S is indeed very rich. What I’m trying to answer is - what is a ‘fair’ valuation. Even after today’s pop, Zscaler is <10 EV/S (NTM), which seems more reasonable.
Fair point. Continuing with the ZScaler example, their SBC as a percentage of revenue has gone down from 41% to 29% in a year. On the latest transcript, the CFO indicated that “you will see it continually going down on a year-over-year basis” so nice too know management is thinking about this too (and its showing too).
I look at more mature SaaS companies (e.g., Atlassian) as a benchmark.
P/E is still quite inflated in the 90s. But the ‘hope’ is that with continued revenue growth in >30% and profitability progress, it begins to ‘normalize’ quickly.
Just sharing how I see things, but open to criticism. I’m here with a humble attitude ready to learn, and I appreciate those engaging.
-RMTZP
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Here is another one…I am not sure how to make sense of this…
It has a meteorical rise in just the last year - 200%…and sure, P/E “looks” very low.
However, I distinctly remember how the P/E was low for UPST while it was having an astronomical rise, and while it was falling down…and everyone kept saying look at its low P/E…BUY BUY BUY…and now the damn thing is negative P/E.
Ditto with SHOPIFY - I had bought it in 2021 highs…and yet when 2022 started, and its downturn was already well on its way, I looked at the P/E and stupidly asked folks about it being a better buy now with the P/E being smuch smaller…Yet, within months of my buying, the P/E rose astronomically…I just wasnt able to understand why…until, I understood that the earnings, once it takes a hit…the whole castle falls, especially those that went up loftily !!
Not saying that this is the case with this…and in fact would greatly appreciate if anyone else has a greater understanding on this…Why is the earnings foolproof for this?
And why is this not another UPST in hidden plain sight?
PS: BTW, There is ONLY one reason why some stocks rise parabolically in a very short period of time - Just look at the short interest!!! And there is ONLY one reason why stocks fall dramatically lower in a very short time - Again, look at the short interest…The earnings result, however spectacular, can only do so much - no way is there any scientific explanation as to why a company suddenly becomes a better company by 30%, 40% 45% etc. after one earnings report!!! Lesson learnt…the hard way - thank you UPST!
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This one popped up on my CANSLIM screen. Just quietly going up like crazy and no one talking about it on the news…doc
edit: regarding Super Micro Computer
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