Some thoughts for the week

Investment Analysis Clubs Saul’s Investing Discussions
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Hey I will pick a date, Friday. My annualized returns are 2,250%. Next.

Why is it that Saul needs to pick a date? Should Tom Brady pick a date when he became great? You just know it and the results speak for themselves.

Blimey!

Always interesting to categorize things. It is not that difficult pick market dominating category crushing high growth businesses with a high CAP and a real (and not made up) TAM selling greatly needed disruptive productive with founders running the company.

There, one paragraph, did not need an article.

Tinker

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22

I won’t bother commenting again on ESTC here.

Dreamer

I wish you would continue commenting on ENPH. It’s good to have you to balance things out.

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23

How many more quarters of 60%+ growth will it take until the market realizes amazon isn’t going to be a major threat? I’d guess 1
Why you think competition from Amazon has to “here and now” and why AWS is not a long-term threat?

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24

OKTA has built up an enormous network of users and at this point has become so large and embedded in the world it sells into that I doubt OKTA has any “real” competition either anymore. OKTA has built up an enormous network of users and at this point has become so large and embedded in the world it sells into that I doubt OKTA has any “real” competition either anymore

Just curious, how many organizations have AD or Active Directory versus OKTA? If an IT shop is trying to rationalize the number of software vendor, tools, which one they will go with?

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25

Superior products is a debatable claim. I worked in IT at a Fortune 50 company for 30 years. More than once I saw executives opt for an “inferior” product for reasons other than price competition.

Also, if you’ve never been there and seen what it takes to transition from one product to another. The transition costs and disruption are highly dependent on the type of product. A product like OKTA resides near the heart of virtually every business process there is. Once implemented and in general use it will be very difficult for a competitor to dislodge. Whatever a competitor has to offer, it has to be way better than a marginal improvement over some function. Being “way better” is how OKTA has been able to gain market share. It’s hard to even imagine how a competitor could offer a vastly superior product. However, competition is real when addressing new customers. But in the arena OKTA has a network effect of sorts working in its favor.

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26

Sorry…this one always stuck with me, as looking at random 3 month periods can show very different outcomes to suit any perspective.

Saul wrote on June 8th:
"Now I have 0% in Elastic, and 14% in Mongo. How has it worked out? Let’s see.

Going back exactly three months to March 7th, Elastic was at $84.94. Friday it closed at $81.40, so in three months Elastic is down 4%.

Going back exactly three months to March 7th, Mongo was at $99.46. Friday it closed at $169.97, so in the same three months Mongo is up 71%."

The idea being that the market was apparently validating the MDB over ESTC argument.
I own both.

But I would note MDB has now done just about nothing for over 4 months, and is at $143 today…quite a bit down from the $169 price on June 8th.

ESTC has of course had a nice run, and is about $100, up from $81 back on June 8th.

What does this all mean? Nothing really.
To me though, MDB got a bit too hot, and ESTC was too beat-down, and as they have similar hyper-growth rates and similar revenue run-rates, it seems they both reset to where they perhaps should be at this moment in time, with just about the same market cap of $7.5b and roughly same P/S now.

They both had same ER date of June 6th, so next ER likely not until early Sept, so a month away at least.

I have a heavy ESTC position right now, and added more to MDB yesterday, and if it falls further I will likely add some more. I look forward to watching their race up from here!

Dreamer

22 Likes