Hi all,
In light of Investor Day, I wanted to write a few quick thoughts and an update on my positioning re: NTNX. Apologies as I didn’t have time to edit.
Investor Day
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If you are a shareholder, I highly recommend listening to a few of the audio recordings of the presentations. Specifically, Dustin (CFO) and Chris Kaddaras (new Sales lead) did very well.
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If you don’t have time, check out some of the presentations. Again, Dustin’s (CFO) helped clear up a few outstanding financial questions about their path forward and gave the audience a lot of hope: https://s21.q4cdn.com/380967694/files/doc_events/2019/03/Dus…
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I didn’t listen to everything, but I read a few of the presentations and listened to a few talks. There were times that I felt really excited about their opportunity, and other times that I felt frustrated that they kept dodging the same questions about “lead gen”. It’s funny, the same honesty and philosophical ramblings that were very endearing about Dheeraj for the last couple of years, have become very frustrating now. He’s clearly a genius, but I hope someone coaches him on how to better answer questions directly.
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That being said, Chris Kaddaras is a real star, and he seemed like the only one that was shooting straight with the analysts. He said multiple times that there were just “execution” problems, plain and simple. And to me, that is the only thing that makes sense. In the Q&A the analysts kept asking over and over for more clarity, suggesting that maybe they had introduced too many products or why they didn’t spend enough lead-gen money. Without saying that the previous head of Sales dropped the ball (which I’m fairly certain is what happened), he very simply said (paraphrasing): listen, in the EMEA there were no execution issues and we’ve been consistently outperforming the entire company. This is simply a matter of execution as a sale org.
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They mentioned that they have a couple of good data points to believe that they have addressed the lead-gen issue already. Although it may take a couple of quarters to fully show up.
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Most importantly, they reaffirmed the $3b number, although pushing it out 2 quarters. Again, if they hit this number, this will only be a speed bump in the price appreciation. However, that “if” has become a significant “if” in light of recent missteps.
Update on Positioning
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As I mentioned in my last post, I took a decent-sized short-term trading position after earnings, and in advance of Investor Day, as the stock had capitulated and was significantly oversold. Not to mention that it is worth much more than $33. I closed most of that position today ($41-42). Those options paid off handsomely, and helped close the gap on my losses. I still do have a minor short-term position and will monitor it closely over the next few days, hoping for a few upgrades. I will avoid TA on this board, but suffice it to say, there was a clear trading range from $36-46 previously, and I don’t expect this to go above $46 for awhile (although I’d be happily proven wrong).
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Long-term, I have begun trimming the position slightly, to bring it more in line with a Tier 2 position in my portfolio. I still do believe in it long-term, especially with the valuations of other companies I hold, but I don’t have the blind confidence I once had, as management made a few significant missteps. That said, their engineering vision and opportunity if executed, is as good as almost any company in our universe. But as they say, ideas are worth nothing unless executed properly.
Stephen