My Brief Reviews on all 15 of my stocks

I’ve now finished these brief informal reviews of all the 15 stocks in my portfolio, and here they are. As I was doing them for myself they will vary in quality, thoroughness, and length. I haven’t brought yesterday’s prices up to date on those I published yesterday. Please remember that my conclusions may change anytime.

Apr 2016 – AMZN - My Review
I love Amazon and think they have both online commerce and the cloud sewed up, as much as any one company can sew them up. I keep adding small amounts whenever I can, and am now up to about 8% of my portfolio. I’ll probably keep adding, only held back by the absence of significant earnings (which is a real lack).

Apr 2016 – ANET - My Review
Like CYBR, Arista used to have a much higher PE. A year and a half ago it was about a PE of 80, now it’s at about 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. Trailing earnings are up 58% and they don’t seem to be leveling off. Nonetheless, I’ve been building my position very slowly and it’s only at 4.3% of my portfolio. I’ll keep going slow. Especially as I’m not a techie and don’t have a clue what they actually do.

Apr 2016 – CASY - My Review
We all know and love Casey’s, the company. Everyone who knows Casey’s stores loves them. But CASY, the stock, has gone nowhere since I bought it from $104 to $108 about seven months ago. Granted last quarter’s earnings were slightly disappointing, but the quarter before was great, and if you pool the two quarters, this year was up 29.7% from last year. Casey is expanding, building new distribution centers, etc, trying new stuff like deliveries and pizza apps, and maybe investors are a little skeptical. And probably worried about a potential rise in the price of oil, as low gas prices are their sweet spot, but gas won’t stay this low forever. We’ll have to see. It’s at a PE of 20 and I have a 4% position. I’m just holding for now.

Apr 2016 – CBM - My Review
They supply little pieces and finished compounds, and generic meds to big drug companies like Gilead, and also many others, but Gilead is still a big part of their business. They’ve just built out a large facility with plenty of empty space so they can “keep up with demand”. But at the same time they give very conservative guidance of maybe 15% revenue growth. On the other hand, EPS is up 135%, from 99 cents to $2.33, from 2013 to 2015.

I started to buy at $36 in February and to my surprise it’s now up to $44-$45. Its PE is now 19.5 and it has grown up to a 6.5% position due to price appreciation and my adding a little here and there on the way up. They successfully provide shovels to all the miners who want them, but they will never shake the world. I’m expecting quite good earnings comparisons for the first quarter, but I probably will add only minimally from here and let it build by appreciation if that’s what it’s going to do. My 6.5% position is nothing to sneeze at.

Apr 2016 – CYBR - My Review
It’s obvious to everyone that security from hackers is more and more important in the modern world. This little company has an important niche where it has become the dominant player. It’s growing rapidly, profitable, cash flow positive, has plenty of cash and no debt, all the things you’d hope to see in a little company in early expansion, but rarely do see. So what’s the catch?

First, it has earnings of $1.00 and a price of $39.60, which gives it a PE of 39.6! (The good news is that roughly a year ago it had a stock price of $75, earnings about 71 cents or less, and a PE of over 100. This is a much better price).

Second, there’s always a threat that one of the much bigger cybersecurity companies will decide to make a determined move into their little niche, with a better mousetrap. (Not sure it will happen as all those companies with CYBR’s products already installed are simply not going to change their whole internal security system unless they have a good reason. And CYBR’s niche may be too small for the big guys to want to get in a fight over it.)

Three, it’s an Israeli company which gives it more of a war-risk than most. (It has offices and manufacturing all over though.)

It’s my smallest position though because of its high PE, and because I just got into it three weeks ago. In cautious mode.

Apr 2016 – GBX - My Review
This is just a little dalliance for me. This company is a dominant and innovative figure in railroad car construction. When the oil boom was on they were booming too. Now that oil isn’t booming for the time being, they are priced as if no one will ever use a railroad again.

They have a backlog that will last for a couple of years and only about 10% of it is energy related. I bought shares a few weeks ago at a PE of less than 4(!) and a price of $27. When they announced earnings just where they said they would be, and confirmed earnings for the fiscal year at about $5.90, the price went up to $32, (Wow, up to a PE of 5(!), but it’s now settled back to $29.40. I’m keeping it a very small position (1%).

Apr 2016 – INFN - My Review
I really had to wonder what’s going on with this one. Everything is good. Revenue is substantially up, earnings are way up, margins are stable to up, they are going into new fields, growing geographically, there is more and more need for bandwidth, etc etc. So why is the price stuck in the $14 and change range??? down from $25 a year ago??? A couple of possible reasons.

One, it is no longer the story stock with a great story and future but no earnings. Now it’s a regular company and is being evaluated according to its real earnings.

Two, it’s a technology company and it lives in a tough neighborhood, with tough competitiors and tough customers.

It has a current PE of 19 and I don’t think we are going to see any PE expansion. Oh, maybe moving between 17 and 22, but 30-35 times earnings is gone for good! I think the price will rise, but it will rise in sync with earnings growth, keeping the PE around 20. Just my guess.

Apr 2016 – LGIH - My Review
You don’t get much better than this. Annual Revenues of $143, $241, $383, $630 million dollars. Annual Earnings of 43, 107, 138, 250 cents. It’s my biggest position now at 15% of my portfolio and with a PE of 11. It fell from $35.50 to $19.50 amid fears that the oil crunch would kill the market for houses in Texas and the west. That hasn’t happened at all, and the price is back up to $28. I have added as recently as this week, but as it’s at 15% I probably won’t be adding more right now.

Apr 2016 – MITK - My Review
This is even a smaller company than PN. It has some great things going for it and it is expanding as fast as it can. In fact, that expansion and hiring new sales teams for cross selling will cut earnings growth to zero or less this year. The good news is that they keep signing up large new clients. The bad news is the expenses mentioned above, and the constant legal expenses that they are now taking out when figuring their adjusted earnings. I bought at $4.10 up to $4.70, and to my amazement they are now at $6.12 (it’s been as high as $6.70). This means their PE has grown to 24.5! Granted, they have a huge open field in front of them, but a PE of 24.5 with little or no earnings growth expected for this year, is a bunch. My position is small (3rd smallest at 3.3% of my portfolio). I’m not sure what to do with this one either. I’ve been tending to add a tiny bit when it gets down to $5.85 or $5.90, and it usually finishes the day over $6.00. I’m probably going to just hold now and see how everything comes out.

Apr 2016 – PN - My Review
I’m not really sure what to do about this one. It seems to be an interesting company which has found its niche and is growing like a weed (annual revenues of $56, $103, $210 million dollars!). That’s pretty amazing even if a part is by acquisitions. And it’s profitable. The price had fallen to $3.65 in early March in connection with manipulation over warrant exercises, and now, in April, is at $8.86, which is up 143%. Although the PE is still at just 11.4, this position has grown to almost 8% of my portfolio. With a tiny company like this, and management which is clearly doing a good job, but who I don’t know anything about besides that and I’m thus not sure I entirely trust, I don’t want my position to get too large. I sold one-twentieth of my position at $8.45 to keep my position size in check. If I suddently see the price at $10 in a couple of days I’m sure I’ll sell some more.

Apr 2016 – SBNY - My Review
This remains one of the best banks in the world. March quarter earnings announced. Very good (but not outstanding) earnings (which were up 23%), great growth in Book Value, incredible Efficiency Ratio of 32.2%. Some concern over their exposure to Taxi Medallion loans, but those are only about 4% of their total loans. They are my 4th biggest position at 8.7% of my portfolio, with a PE of 19 at the current price of $147. (Price has been as high as $162 and as low as $120 in Feb). I’ve been in since January and I bought from $140 to $120 and back. I’ll hold now.

Apr 2016 – SKX - My Review
This company is doing wonderfully, with no obvious threat in sight. It sold off for no particular good reason, except that the price had risen a lot this year. I’m comfortable with it as one of my big three largest, and oversized, positions. It’s currently about 13% of my portfolio, at a price of $29.50, and a PE of 18.7. This is a great company, and selling at a very low price when compared to other companies in the same field. I may add a small amount but it already is a quite large percent of my portfolio.

This may be slightly out of date, but I cut and pasted it from my Mid-Quarter Review in February: SKX had a PE of 19 and was growing trailing earnings at 65%. For comparison, NKE whose revenues last quarter were up all of 4% (compared to Skechers up 32%!), and whose trailing earnings were up 22% (compared to Skechers up 65%), has a PE of 29.

Apr 2016 – SHOP - My Review
They have been doing wonderfully, doubling revenue every year compounded: 24, 50, 105, 205 million dollars. Still no earnings but ttm losses are shrinking every quarter (40, 33, 21, 15, and 13 cents). Revenue seems to be all recurring. They dominate their space. Even AMZN closed their competing product in 2015 and told people to use Spotify. It’s quite expensive with a P/S ratio of about 12.5 (but of course if sales come anywhere close to doubling again, that will be cut in half). It’s very atypical for me, so I’ve kept my position fairly small. It’s my 12th largest position out of 15. Current price is $32.00. I started buying four weeks ago at $26.50 and added up to $30.00. I might add tiny little dribbles more, as it goes up.

Apr 2016 – SNCR - My Review
This isn’t a company that is going to take over the world, but it’s an interesting, relatively unknown, boring sounding, but surprisingly innovative little company that is quite profitable, moving into new areas, and consistently growing earnings and revenue. It’s at a very low PE of 14.5 at its current price of $32.50. It also has started positive Free Cash Flow, which went from $0 in 2014 to over $60 million in 2015. Its cloud revenue, which is recurring, is now over 50%, and growing more rapidly than the legacy activation revenue. They are spending money building out products with Goldman Sachs and Verizon, which will affect EPS negatively in the first quarter especially.

What worries me is whether they will be able to compete with the big boys in the cloud area (AMZN, MSFT, GOOGL, AAPL, etc). The price dropped from $52 to $22.50 on these fears, abut it’s now back to $32.50. I added at $27 and $24 and sold some back at $32. It’s just a 4% position, and I think I’ll hold for now.

Apr 2016 – SWKS - My Review
Although I really like the company, its prospects, and the management, I decided I had had too much in SWKS so I reduced the size of my SWKS position by a third from 21% to 14%. I will now just hold it, especially as the price is only $72, and the PE is 13.


Thank you, Saul, for this review. It is very helpful and very much appreciated.

I have not reviewed it in great detail yet, but one thing jumped out at me: it appears that INBK is missing from your review. Was that unintentional, or perhaps you sold your shares during the month (?)


I have not reviewed it in great detail yet, but one thing jumped out at me: it appears that INBK is missing from your review. Was that unintentional, or perhaps you sold your shares during the month (?)

I believe Saul sold out of INBK due to lack of coverage from Airban and low liquidity.


Thanks Charlie,
I may have misread that post, but I thought Saul had merely reduced his position in INBK to free up some funds, ie- not that he had sold out completely.

If you are correct, thanks for the clarification.

I went back and reviewed Saul’s end of March review:

“I’ve reduced my position in INBK, which was fourth last month…”

Perhaps Saul has posted about INBK since then, and I just missed it(?)

Saul, I would just mention that I like Israeli security companies precisely because of the war-risk. If you face an existential threat, it concentrates the mind on security wonderfully. For example the world noted Stuxnet demonstrated a special capability in this sector.

I have owned CHKP for years but I do not own CYBR.

PANW and FTNT seem to be favored but I cannot make a case to own them as the story is too well-known.


PANW and FTNT seem to be favored but I cannot make a case to own them as the story is too well-known.

I don’t know about that. CYBR (which I hold) is very much a niche player. All industry competitors have noted that clients are moving towards a singular platform approach. PANW has a shot at being that dominant platform provider the way Check Point was for firewalls. FTNT I actually do not think is a well known story as PANW and FEYE hog the limelight. (I am in all 3).

I expect PANW to become the gorilla. I expect FTNT to do well and I expect CYBR to get bought out.



Apr 2016 – ANET - My Review
… I’ll keep going slow. Especially as I’m not a techie and don’t have a clue what they actually do.

See this article (old, but still generally accurate) for a layman’s explanation:…

Also this short slide deck comparing financials to Cisco:…

In my view, Cisco decided they couldn’t compete with Arista in the marketplace, and so has sued them. Unfortunately, Arista made some bad decisions (especially the copying Cisco’s manuals), and the suits are still ongoing. My own belief is that with the suits starting in 2014, Arista is having plenty of time to rework any code in case the remaining suits are eventually ruled against them, so the long term impact to Arista is likely to be small. Right now, Arista makes the better product, and big companies are still buying it in droves, so they don’t think Arista is going away any time soon, either.


See this article (old, but still generally accurate) for a layman’s explanation

Thanks Smorgasbord! Actually what all articles describing Arista say is that the advantage is in the software.



And here’s an old whitepaper from Arista themselves:…

Summary/translation of their two big advantages over Cisco:
• Arista uses off the shelf hardware (“merchant silicon”).

This lets them use whatever hardware is the fastest or best bang for buck.
This reduces costs to develop and therefore reduces costs to their customers.

• Arista’s software is itself distributed, as opposed to individual hardware components each holding their own state. This is huge for scaling and optimization.

Here’s a snippet from the whitepaper:
Traffic patterns that once centered on the use of lightly utilized links in and out of the data center (north-south) for mainframe and client-server applications such as email have been supplanted by highly distributed applications that drive heavily utilized links for server-to-server and server-to-storage (east-west) traffic within the data center.

Translation: Business network traffic is not just an application on your laptop getting data from a server, or an application on a server putting up HTML pages on your laptop. Applications are now distributed not only between client and server, but among various servers. Hence, there is a lot of traffic between servers. Arista’s products support that traffic well.

Another snippet:
Arista’s products … were first used in high frequency trading applications for their wire speed performance, ultra-low latency and high reliability. Arista’s solutions were subsequently adopted by 6 of the 7 largest hyperscale cloud computing companies for their scalability, low latency, programmability and resiliency. As enterprises have aimed at replicating the efficiency and agility of cloud architectures, and as they seek the agility and cost structure of the hyperscale cloud providers, they are also discovering the benefits of breaking from the status quo and are applying the Arista advantage to their business.

Translation: Arista started at the high-end of the market (cloud scale) and is moving downstream to higher volume enterprise scale solutions.

Yet another snippet:
"We built a fundamentally new architecture for the cloud, which has as its foundation a unique multi-process state-sharing architecture that separates state information and packet forwarding from protocol processing and application logic. In EOS, system state and data is stored and maintained in a highly efficient, centralized System Database (SysDB). The data stored in SysDB is accessed using an automated publish/subscribe/notify model. This architecturally distinct design principle supports self-healing resiliency in our software, easier software maintenance and module independence, higher software quality overall, and faster time-to-market for new features that customers require.
Arista EOS contrasts with the legacy approach to building network operating systems developed in the 1980’s that relied upon embedding system state held within each independent process, extensive use of inter-process communications (IPC) mechanisms to maintain state across the system, and manual integration of subsystems without an automated structured core like SysDB. "

Arista’s software architecture is distributed rather than isolated within boxes. If one component goes down, the other components can step in to avoid down time. In addition, instead of each box talking to each other through time-consuming IPCs, the boxes can access centralized data more quickly, so overall the system performs faster.

Arista is the new model - it’s not about building better mousetrap hardware, but implementing a better mouse catching solution. They can improve catching mice by changing software, not replacing hardware. Customers can add more cheap hardware as their needs require and still have a unified, optimal mouse catching solution that can be easily monitored and configured.


And here’s an old whitepaper from Arista themselves:

Thanks smorgasbord, I didn’t read the linked paper but your synopsis was superb and gave me a better idea what is going on.