I consider myself both a Saulinian investor and Stitch Fix fan. I own a 4-5% position. But it raises a good question that I’ve discussed w my pal, Phoolio18.
The way I see it is the Saulinian method tries to get as close as possible to objective truth. Because A and B are actually happening it will lead to C. And it’s based on the idea that the market is underpricing the near certainty of future earnings. It defies logic to think a cloud/SaaS with 95+ % retention rate will decelerate, etc.
But Stitch Fix requires a leap of faith - that if X-catalyst happens - growth will accelerate maybe even go nuts. There’s a greater degree of risk, of course, because the big catalyst may not materialize.
I personally feel the big catalyst will come. Maybe it will be a bricks-and-mortar component, new feature or ad campaign. Or maybe there’s just a thing where once X # of people adopt a service, growth goes parabolic. SFIX offers a better way to buy clothes than spending hours hunting through malls. Especially if you’re busy.
Anyway, I think this is an important distinction - SFIX is a little further from certain than the beloved Cloud/SaaS stocks here are.
The question I discussed recently with AJ is why invest in what might be when you an invest in what is? I guess one hopes that being in early on an event you’re confident will happen will offer a big reward. The way I see it SFIX is so well run that worst case scenario is modest underperformance, while best case is mainstream adoption. And the brand is so well managed it would be a fantastic jewel in many crowns - costco, wal-mart, target, amazon to name a few.
Best,
BD