NTNX: Huge Federal Opportunity

I’m working on my first article as a TMF. It’s on what I think investors are missing about NTNX. Here’s one of them.

I think their public sector business is going to see explosive growth.

  1. As we know they recently announced their largest deal ever - $20mil federal deal.

  2. We also know the recently received the FedRAMP Ready Designation for Frame (recently acquired) which puts them a step closer to the “moderate” designation “which will provide public sector customers with a secure, compliant, high-performance service for running applications in certain public clouds that have been fully certified by the federal government”.

link: https://ir.nutanix.com/company/press-releases/press-release-…

  1. The public sector has seen some success with multi-cloud growth, but there’s a lot of opportunity for Nutanix to gain market share. In September, the white paper “Rise of The Multi-Cloud Environment in Federal Agencies” came out for the third consecutive year (presented by Nutanix).

The 2018 data shows: 95% of respondents used some form or combo of cloud in their agency environment, 48% used hybrid or multiple clouds, and 71% said this works well/very well.

link (had to sign up, but it’s free): http://www.i360gov.com/whitepapers/the-rise-of-the-multi-clo…

Hopefully I’ll have the article finished and published by the end of this week!


**first article as part of TMF’s pilot program to see if I will be a good fit to be a writer.


My advice is do your research and document what you are writing about. One of the things that makes Bert so good at what he does (other than he has much talent and experience for it) is that he documents what he writes about.

The difference between posting here where we can wing it, and writing professionally is professionalism.

Further, a pet peeve I have with almost every Fool article by a non primary writer is they say something at the end about how expensive the shares are or how stupid it would be to buy now, or some such things to CYA in case they are wrong about what they just wrote about. I hate that.

As to Nutanix, seems people want to know what I own. Up until earlier this year, for the prior 18 months or so I owned Twilio from its IPO, sold near the top, and never bought it back again (which was a missed opportunity, but better than buying and holding it to the top and back down again and then back up - so I am not real upset about it). Other than that, although I wet through shuffles here and there was SHOP, ANET, and NVDA. Earlier this year, for reasons similar to what Saul articulated (and what I said I needed to find some new blood to accelerate things again) I sold those stocks (albeit I dabbled with Nvidia here and there as I shuffled about) and have currently settled on three stocks. I have specified in the past why I felt no special anxiety holding just three stocks, when those were the three stocks.

As for now, Nutanix is one of the stocks I hold. I bought a “ton” of Nutanix at $42. Reasons are quite obvious why and no, I do not feel an ounce of anxiety about it.

As we are talking about Federal opportunity, Zscaler also has just received Federal certification for mid level security. This is not political, but an example of what Zscaler does. Had Hillary Clinton used Zscaler security, she could have had the server that was said to be in a bathroom or closet or whatever, and without need of any appliance or such, she could have securely communicated all over the world. Instead, with the set up she had, it is quite probable that every piece or data on her server was hacked, and often in real time when she was in foreign territories.

Again, I am not saying right or wrong, but demonstrating how disruptive Zscaler is. Even if you are on a public WiFi, your communication through the WiFi is invisible to the internet. You are therefore as safe communicating from a Starbucks WiFi in china as you are on the corporate WiFi. The security is at the user and between the app and the user, and creates a secure tunnel between the user and the app that is invisible to the rest of the internet.

Thus, although this is not Zscaler’s market (they do not sell to individuals, only enterprises - no profit selling to individuals) even HRC’s simple server set up could have been secured to a standard that would exceed what the Federal security would have given her, had she stayed within the State Department system without having to have complex appliances and data center gateways.




You are therefore as safe communicating from a Starbucks WiFi in china as you are on the corporate WiFi.

Are you really that sure about that? I find that hard to believe that China would allow that at any level.


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You can look up the issue with Zscaler itself, or look at the technology analyst article I linked to a few days (week ago here) regarding Zscaler.

The tech analyst (not related to Zscaler and quite clear he is quite cynical by such claims and is a long time expert whose opinion is requested quite often by the media) specified quite clearly that using Zscaler it does not matter whose WiFi you are using because as long as you have the Zscaler app running on your device (and it is always one and connects with no delay) the tunnel it creates is an isolated tunnel that is invisible to the rest of the internet.

I took the time to post about it a few days ago/week. Should not be difficult to find the article I linked to, and then you can review it and let me know if you think there is any issue with the analysis that the expert who wrote the article described. The author has no connection with Zscaler and is a general tech consultant/expert (he disclosed his credentials).

If there is an issue with what the author laid out, let us know and then I would be happy to follow up with you, either with my personal knowledge or other sources.

Thanks Andy.



My bad. I did not post it on this board. Here is a link:


Review and then let me know what you think we should discuss in regard to our prior comments.



Tinker, thank you for the advice and replies so far. I think most of the stocks we talk about here will look undervalued when we look in the rearview mirror in 5 or so years.

Zscaler is another incredible company, but please let’s keep this thread focused on Nutanix and what we believe investors might be missing.

I have my ideas, but I love the thought of “crowd-sourcing” from the best community of investors I know to help generate awesome content for TMF articles.

I will definitely be writing about Zscaler too. Again, just want to keep the thread focused.

Thank you all.


Down 7% today. My NTNX lots are averaging down 26%, with one lot down 33%. I’m not disputing that the markets have NTNX wrong. What I’m wondering is, however, how long are people thinking before the market corrects its mistakes? I normally would not have held a stock performing this poorly this quickly for me (all shares bought within last 2 months). I haven’t sold any yet, but boy am I getting really close to doing so. It’s making me wonder if I have the risk tolerance for the investing style you guys have here.

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This is personal… and probably OT, but for me it comes down to the performance of the business.

Absolutely nothing has changed in a negative manner with Nutanix’s business. In fact, I would argue that after their last earnings report, Nutanix’s future looks brighter than ever before.

Also, Nutanix is not falling by itself. We’re currently in some type of major decline for tech and specifically SaaS type stocks which were almost all major out-performers over the last 2 years.

So for me, I’m not selling anything. If I have extra money, I’m going to invest more.

Again, it all comes back to time horizons. This is exactly why I don’t invest any money I could potentially need in the next 3 years.

This is not something to celebrate as a lot of real people are losing real money. But, for patient, disciplined investors, I think this will be looked back upon as a great buying opportunity for many of these tremendous businesses.

Stay the course!


It’s making me wonder if I have the risk tolerance for the investing style you guys have here.


We are coming off a 10 year bull market in which there was little risk in investing in the types of companies Saul likes to choose. As interest rates rise, a lot of the risk in investing in these companies will rise too.

I think we would probably be at least a year to 5 years away from a recession, so the Bull market probably won’t end in the near term. In fact, I expect that November-December to be a really good month (barring a metaphorical meteor-hit to earth).

Stock selection will increasingly matter to investing results from here on out. About a year ago, one could simply throw money into almost any growth stock out there and have a excellent chance of success…that type of market would slowly be going away and one has to be more selective.

Just a week or two ago, people were debating me about how well a investor needed to know a company like Nutanix. Some people argued that all a person needs to know would be fundamental numbers.

The reason I disagreed with that would be because I am a creature born out of the 2009 recession and a lesser extent the Tech recession too. I am not the type of investor that likes to sit in pajamas in the basement and zip in and out of stocks based on price momentum. I like investing in companies and sitting in them for 5+ years and for that I need to know the company well.

I discovered in the 2009 recession that when I did not know a company well enough to have a bit of faith then I would sell, sell, sell often too quickly and I missed a lot of good companies bouncing out of that 2009 recession. Some people sitting on 10 bagger and growing companies were companies that I sold in a panic in the recession. These days, I want to know a company well enough so I don’t get easily scared out if I buy it. I want to know most of the probable reasons I would sell a company beforehand and not some inane technical rule like the stock dropped 7% from my buy point.

But to each their own when investing.



I posted that to the wrong board sorry about that.

Thanks Tinker,

Discussed this a while ago. ‘Tis one of the best bull thesises for ZS.

Ok that was good. Securing the application instead of the device. Now I understand why China or any other entity wouldn’t have a problem with ZS like they might with a VPN.


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Your readers may like to know why NTNX has dropped so much since EC compared to many of the other fast growing tech stocks. I don’t know how you will address it though. I somehow find the answer that analysts don’t understand the diminishing hardware rev. as too simplistic. Maybe analysts are not selling but all the sales are due to the robo advisors.

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