I have been researching Sailpoint Technologies (SAIL), which just came onto the market a couple of weeks ago. I am hesitant to buy such a young company, because I’ve been burned bad before when buying a company fresh off its IPO. However, it’s now on my ‘Young Public Companies’ watchlist, and I’d love to find compelling reasons to add a small, speculative position.
Here’s the kind of help/feedback I’m looking for… if you were researching a company fresh off its IPO, what questions would you be asking that would steer your research? Here are some that I have already asked:
•How much was the IPO?
•What does the company plan to do with the IPO proceeds?
•What competitors are in the space, and how have the fared?
•How does this company differentiate itself in the marketplace?
•What clients does the company have so far (recognizable companies)? Does it seem like a diverse list of clients?
I’d love to learn about some of the questions that drive the research y’all conduct on your stocks of interest.
I’d want to know some of its history before the IPO, especially financial history and whether it’s still run by the founder(s).
Methinks your question is a little too close to “How do you invest?” to answer in a post. Likely 99% of the answers you seek are located to the right in Saul’s Knowledgebase ------------------------------>
For IPOs, you get all the information you can get and that’s it. When it comes to company-generated information, you will probably never know something that your competing investors don’t for an IPO. If it seems like there sometimes isn’t a whole lot of information for IPO’s, guess what. That could be one reason so many consider it gambling.
I do have one suggestion that may help you overall for IPOs or century-old firms alike: I can find 10 reasons to own any company you name. What I’m always looking for are reasons NOT to own a company. For example, the world’s highest grossing company surely has many reasons that anyone can find to own shares, right? But it only takes 1 big reason to give it a pass. Say the CEO is an aviation fanatic and requires a fleet of 787’s be at his disposal. Yes, that’s far-fetched, it’s the idea that counts and it isn’t that far-fetched. I do recall one CEO who recently spent millions upgrading his castle which was discovered during the project to have been paid for using 100% corporate funds. “It’s in my contract,” I believe was his reasoning. Fair enough. Investors should have known.
If you find 8 reasons in favor of buying a stock, you still need to keep digging. If you find 1 big reason to favor passing on a company, you can immediately suspend your effort and spend your time more productively elsewhere.
ElonFeeNix, the first thing I’d want to know is what the heck is “identity governance” because my starting point is the business model “what the heck do these people do?” Google has the answers.
What’s Changed: Gartner’s 2017 Magic Quadrant for Identity Governance and Administration (IGA)
Sailpoint comes out on top. Of note is that Sailpoint is dedicated to IGA while for the three closest competitors, Oracle, IBM, and CA Technologies, IGA is just a small part of the business. If you want to be invested in IGA (not a given) Sailpoint is your choice.
What is IGA? Does it have moats? Is it a commodity product? These are the questions I would research before digging into the entrails of Sailpoint itself.
Top 5 Vendors in Identity & Access Management (IAM) market at RSAC 2017
Google: the identity governance market
Thanks for the responses. I will be looking more into:
•The history of the company.
•The CEO (and other important prominent folks)
•The identity governance industry
•Is their a moat?
•Can I find more about the demand of such products
I agree with RaptorD2 that, with any company, finding a reason to not invest is more powerful than finding a handful of reasons to invest (and that is something to do with any company, not just recent IPOs). I am not in a rush, and may very well wait for the first earnings report to get a better feel for things.
I appreciate learning more about the thought process of other investors. It has helped in my own research over the past year.
One more question you should ask.
Since they are a small fish in a pond with big fish, do they have the staying power if the other fish decide this is going to be a big pond and spend Billions of dollars in R&D?
They may have the best mousetrap right now, but if Oracle etc decide to jump in with both feet instead of just put a toe in the water, will they blow SAIL away.