SNCR - Whoa

Investment Analysis Clubs Saul’s Investing Discussions
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Wow. Down 47% today, and I didn’t miss a decimal point there.
Hope nobody is still in this name.

Take care,
A.J.

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Apparently having your CEO and CFO leave at the same time isn’t seen as a favorable event!

http://www.rttnews.com/2768110/synchronoss-technologies-sncr…

Anyone know the backstory?

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Wow. Down 47% today, and I didn’t miss a decimal point there.

Wow, glad I got out when I did, and urged everyone to do the same. I hope others followed my example. If you remember, this was the case of the infuriatingly stupid acquisition.
Saul

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Looking back I see it was just in December when I exited, furious at what they had done. The price was then $41. Now down to $13 and something. Amazing!
Saul

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I wonder how much money could be made buying puts on companies you sell?

Cheers
Qazulight

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I wonder how much money could be made buying puts on companies you sell?

Watch out, sometimes they happily keep on going up just to spite me.
Saul

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Looking back I see it was just in December when I exited, furious at what they had done. The price was then $41. Now down to $13 and something.

Good call, Saul. Have you consider becoming a short seller?

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Good call, Saul. Have you consider becoming a short seller?

Hi Chris, I can truly say it has never even crossed my mind. You are going against the overall long term trend of the market, and you have unlimited potential losses. It just doesn’t appeal to me.

Saul

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I can truly say it has never even crossed my mind. You are going against the overall long term trend of the market, and you have unlimited potential losses. It just doesn’t appeal to me.

Yes, why mess with the approach that works so well for you.

Now there are different reasons why you get out of stocks. Sometimes you get out because there are better uses for your money. Other times you get out because you think there is something really wrong. In the second case, it would be interesting to track how the stock prices of the “flawed” companies perform at 3 months, 6 months, and 12 months after you get out. If we find out that on average these companies have a negative return then maybe there’s an opportunity. On the other hand, we must ask would this opportunity outweigh simply investing in the companies that you believe will do well.

Chris

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Here’s a re-post of my post from Dec 9th explaining why I was getting out:

…Maybe I should explain why I’ve been selling my shares.

After a long wait, they finally turned the corner. Their cash cow activation business had slowed down but was still raking in the dough. Their cloud business had become over 50%. Their new enterprise business with Goldman and Verizon was finally bearing fruit. Earnings had taken off again after several quarters of flatlining. All they had to do was sit back and rake it in.

So what did they do?

  1. They sold their cash cow, which was guided to be $74 million for just the next quarter, and 37% of their total revenue for the quarter. That’s wrong! You keep your cash cow legacy business until it becomes a small enough part of your total that you don’t miss it.

  2. They are taking on new debt of $900 million which is roughly half their capitalization.

  3. They are acquiring a company that they clearly didn’t need (based on the “sit back and rake in what you have earned” scenario). This is a huge acquisition. This acquired company is almost half their size, is losing money, and has grown revenue VERY slowly. Why is SNCR doing this? You mean they couldn’t find a bolt-on acquisition that would make them happy?

  4. The CEO that has made them so successful is choosing this crucial moment, with everything in flux, to remove himself from the day to day running of the company.

  5. And who is replacing him? The CEO of the slow growing, money-losing huge acquisition. What a great choice.

This is no longer the company I was invested in. It’s barely recognizable. It’s an unknown quantity, with a huge debt load, less revenue, a huge money-losing appendage, and a CEO who is also an unknown quantity. Just saying. You may convince yourself you should stay in (because you are already in?), but not me. It may do fine, but it will do it without me.

Best,

Saul

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Wow Saul. What a great call. You should have sent that to their board of directors!

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Saul said:

Wow, glad I got out when I did, and urged everyone to do the same. I hope others followed my example.

But I thought we weren’t supposed to just blindly follow your example. :wink:

Yes, I’m joking, I understand the difference.

I’ve been reading your board for over 2 years now and think I’ve learned a lot. I never invested in SNCR so didn’t have to make a call on staying in or not, but what I’ve seen mostly is Saul has an uncanny knack of getting out of stocks at the right time. Not saying he’s always right about it, and being right depends on what time frame you’re looking at. But more times than not, when Saul gets out of a stock, it seems to be a good move.

I did follow your lead in getting out of SBNY and am happy for that move. I know it may go back up and end up being a good investment in the future for those still in it.

I guess my point is to never take Saul’s notices of getting out of a stock lightly. He doesn’t seem to do it lightly, and there’s usually good reason.

I definitely don’t always sell what Saul does, I’m still in BOFI, SWKS, SKX, and others, as I deemed them still good investments for my time frames, but do give it serious thought when Saul exits a stock.

Just my thoughts…and thanks Saul, for sharing yours.

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