The Tom Gardner Effect

(Tom, since you’ve already chimed in that you read this board, let me apologize for talking about you in the 3rd person. I would address you directly, but you also clearly stated that you planned to “drift back to the periphery” reading but not commenting.)

http://discussion.fool.com/good-morning-fools-a-happy-thanksivin…

In the post above, Tom Gardner said he had recommended LGIH in a Fool service at $41.80 on Aug 28. Market cap was well under a billion then, but it’s up almost 100% since.

He also mentioned he liked Appian and Varonis. Appian had a market cap of around 1.3B at the time, but in the last two months, that company has almost doubled as well. My guess is that Tom must have recommended Appian in a Fool service, but not Varonis (which is flat or down).

Were these just two incredibly timed picks by Tom, or does TMF have enough power to drive stocks up this much?

Tom also mentioned he liked Talend (which I own), a lot. It’s another company with a ~1B dollar mkt cap. I have a mind to buy more just in case he recommends it. Also Varonis (mkt cap ~1.4B).

Anyone else? Thoughts? Great timing by Tom or unprecedented Fool power?

Bear

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Anyone else? Thoughts? Great timing by Tom or unprecedented Fool power?

Probably a little of both. Tom chose these stocks because they are good companies and would have risen with or without the Fool effect. However, the Fool can really move the needle on a small cap company once it is recommended. We see it quite frequently in Hidden Gems as well as some of the options that are recommended in a few services. So these stocks probably would have risen regardless of the Fool recommendations but the Fool did provide a boost.

Wiseguy

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I will start off this reply with the following:
If you’re a frequent visitor to this particular board and are able to properly utilize the discussions here to make wise investment decisions for yourself, the $53/year deal ($159 for 3 years) that can often be found for subscribing to Stock Advisor, Rule Breakers, or Hidden Gems is peanuts (if not far less than peanuts). My opinion is that substantial value can be gleaned from utilizing a combination of different sources of information and/or noting overlap of recommendations. I just added a Hidden Gems subscription this past week.

I previously posted some thoughts here on the board relating directly to Appian.
http://discussion.fool.com/appn-popping-18-today-32926764.aspx?s…

I made some timing observations relating directly to the timing of 2 events in the middle of the day on Friday 12/15 and at approximately 9:51 am on Monday 12/18, and for future posterity/reference, here is a tweet with screenshots from Google finance showing price and volume for Appian (volume limited to 30 minute increments since that is now about 3 weeks ago).
https://twitter.com/riddlejT4/status/948976085353598976

This link is probably not worth much unless you subscribe, but some thoughts are included.
http://bit.ly/2CUnoI8

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Varonis was recommended by Tom on 8/28/17 as part of the Rising Stars portfolio, micro-cap stocks.
I purchased a (too small) amount on 9/5/17 at 39.57. Right now, it’s 49.80, an almost 26% increase.

BTW, I’m new to MF and very new to the ideas and methods taught on Saul’s board. I’m reading Knowledgebase and very appreciative to all of you for sharing your insights and hard work.

I’ve just retired and although I’ve been interested in personal finance and investing, I never knew how to find the tools to learn to be a better investor.

Here’s what I’ve learned in four months:

  1. Interested, ordinary mortals buying individual stocks can significantly outperform managed funds or index funds.
  2. While owning many stocks provides industry diversity, and possibly smooths out results, it’s much harder to keep track of a large number of companies to the degree necessary. (This is an interesting conundrum for me as I bought into Rising Stars, which recommends a “set it and forget it” method of investing in 40 recommended companies.)
  3. “Buying high” may not be a tragedy if the company’s growth in revenue and earnings are still positive.
  4. Focus on the company’s details; not the stock details.
  5. Pay attention to our own biases which might be a huge factor in not being successful.
  6. For now, it’s okay to not understand options.

In the future, I hope to bring you my homework, for review.

For now, thank you again for all the generous help and support.

Anne
Longtime Californian who moved to Manhattan in 2014

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Appn
What happened on dec 18?

Appn
What happened on dec 18?

As this is the free board, I will say only that an email came through cyberspace as of about 9:51 am on 12/18/2017.

For anything further, you could see my thoughts as a subscriber, or you could infer as you see fit. I do recognize that I am being somewhat coy with this, but as a paying subscriber I don’t want to give away premium content/information for free.

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Gardner reccd it and it doubled in 3 weeks?

That’s amazing as it trades 400k shares per day on avg. however the last 3 weeks vol is about 700k per day avg.

Wow

Varonis was recommended by Tom on 8/28/17 as part of the Rising Stars portfolio, micro-cap stocks.

Thank you, Anne. Very good to know. Strangely I can’t find any Varonis articles since then on the public side of the Fool. (that’s how I tell whether things are a Fool rec or not)

Is Rising Stars part of Motley Fool One? I hadn’t heard of it until Tom mentioned it.

Bear

The impact that The Motley Fool has on share prices is a worthy question. I do think that, at times, particularly in small-cap investments, we begin to look like an institutional investor. I’m not opposed, in the years ahead, to working to determine the size of our ownership stake in public companies. I believe it can help us become a greater force for long-term principles in the public markets. Of course, I want the companies to know —- that we invest in, and even that we don’t —- that Fools are looking to optmize their investmeents results over 5- and 10- and 20+ years. All of my investments begin with a commitment to own the shares a minimum of five years. Because I believe the outliers winners will render the losers completely irrelevant, this puts us in position to be a louder voice with Boards and management teams. We love business at The Fool. And tax-deferred returns. And learning.

At present, I honestly don’t know what our impact is. However, I think it’s smaller than we might think. In the case of Appian, while the stock has gotten bumps from our recommendations and investments, there’s simply no question that the bulk of the buying is coming from larger institutional investors. Certainly, many of them are Motley Fool subscribers (and yes, at some point I want us to introduce institutional pricing). But institutions are driving the real volume here. It’s also worth nothing, though, that Appian has a relatively small public float. The market cap is now north of $2.2 billion. But you have the Founder/CEO, Matt Calkins, owning nearly 50% (and maintaining voting control). You have Novak Biddle owning a large chunk. Neither of these are meaningful sellers going into the IPO and in the secondary. And you have other founding members and long-term employees owning shares. The actual float is quite small. I would expect our impact on Appian is a little larger than normal.

Here’s where I track back to our holding period, though. I will be owning Appian for at least five years. I’m actually expecting to own it for the next 20 years. That isn’t an exaggeration. Because I focus my eyes on businesses, and search out patterns that have emerged in my own investments and in historical analyses of companies, I just don’t get much excitement from a great month, quarter, or year for an investment (I don’t ask that anyone view investing or the markets similarly.) I’ve been greatly influenced by investors like Shelby Davis Sr, who started with $50,000, effectively never sold a stock, died with 1200 stocks in their portfolio, and without adding much new money at all, ended up with $900 million. He did use low-cost margin, which I wouldn’t, but even without that, his returns and wealth creation are profound. Buffett has said that the best time to buy stocks is right now, and the best time to sell is never. And even though Fidelity won’t confirm it, I have reason to believe that the rumors are true — the best performing Fidelity accounts in history are those whose clients forgot them as they lay dormant for years and decades.

I say all that because the bump in a stock like Appian, while fun and surprising, isn’t material to my overall investments today and won’t matter much looking out 5-20 years. Either this will be a great business, riding a major trend, with A+ leadership for a very long time…or it’ll drift away into obscurity among my investments. Other companies mentioned like LGI Homes and Varonis and Arista Networks, et al, any bump they might have gotten from Foolishness is, I believe, similarly meaningless. My suspicion is that what The Motley Fool offers to great, emerging companies in the public markets is continuing exposure for years/decades in the event that they serve their shareholders well with great strategy, execution, culture, leadership and impact. Looking back 20 years, Jeff Bezos was a regular on The Motley Fool Radio Show. Amazon was, in relative terms, pretty unknown to NPR listeners. And it was viewed as highly questionable by the financial markets. Had Amazon executed poorly, it would have disappeared like America Online or Excite@Home or Yahoo. But since it executed brilliantly, the exposure it got from Fools was more about long-term relevance than short-term market movements.

Finally, I haven’t vanished to the sidelines here for any other reason than that I don’t want to interrupt the great conversation and diligent research here. I read this discussion group every day. I love the portfolio reviews that you all share here. Ultimately, I’ve come to believe that the structure of a portfolio, the average holding period, the number of holdings, and the ability to weather volatility matters as much as stock selection. From my side of this 25-year experience at The Fool, I’ve read far too many stories of people stopped out of Netflix or who traded Netflix, etc —- it makes it hard to lose sight of the importance of portfolio management. I say “as much as stock selection” and not “more” because the individual company research being done here and at The Fool is a very, very powerful driver of long-term wealth. It’s also a great way to learn more about our world, which can have a multiplier effect in other areas of life. So, thank you, Fools.

Tom

PS If the team here ever wants to delve deeply into JD.com, I’d be curious to hear your thinking. This is a company that Bill Mann truly loves. And I think he may be right.

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Shelby Davis being a new-to-me name, here are some quick links.

https://en.wikipedia.org/wiki/Shelby_Cullom_Davis

https://www.amazon.com/Davis-Dynasty-Successful-Investing-St…

http://www.bankers-anonymous.com/blog/the-davis-discipline-a…

This one mentions “how to generate 23.2% returns”, which sound eerily close to Saul’s 26% returns.
https://www.suredividend.com/shelby-davis/

http://www.valuewalk.com/2011/02/shelby-davis-spectacular-un…

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Wow, Appian is entering silly territory. Up over 13% on the day as of this morning.

Did someone with deep pockets on this board decide to buy this morning?
(Note: asking that jokingly, rather than actually expecting an answer)

I say all that because the bump in a stock like Appian, while fun and surprising, isn’t material to my overall investments today and won’t matter much looking out 5-20 years.

Tom,

Very cool to get a response on Foolish market-moving power from none other than the Fool CEO! Thanks for taking the time!

I’ll refrain from trying to guess whether Appian will ever be a $50B or $100B company. If that happens, doubling from 1.3 billion to 2.6 billion really is a blip, and your argument for LTBH makes sense. But I think the number of companies that don’t ever get that big is a lot greater than those that do, so I would never blame anyone for trimming their position when they think a stock has out-kicked the company’s coverage. Just makes sense to me.

With LGIH, I will be so bold as to say they never become a 50 or 100 billion dollar company.

Interesting food for thought, Mr Co-Founder. Let me take this opportunity to say thank you for The Fool, and thanks most of all for these message boards (or folders, if you like)! They are truly priceless.

Bear

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Shelby Davis being a new-to-me name, here are some quick links.

Davis Dynasty is a very worthwhile read. I believe I first discovered it on a reading list TMFTom posted for HG subscribers a decade or so ago.

-mekong

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Let me take this opportunity to say thank you for The Fool, and thanks most of all for these message boards (or folders, if you like)! They are truly priceless.

Bear

That this particular board is free is pretty incredible. That I have come across it at what is still a pretty young phase of my life (I am 33.5 now) is quite a blessing, I would say.

While it is a free board, a starting-from-scratch investor or someone using nothing but information from this board wouldn’t be able to find it as valuable as many of us. Due to it being more a “graduate level” discussion here, I have yet to suggest to anyone in real life that they visit this board…although my wife would immediately recognize what I was talking about by simply mentioning “Saul”.

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Let me just take this opportunity then to echo a few sentiments…

  1. The boards are incredible. What a resource!

  2. Different thread, but if you’re an investor and are regularly on these free boards, how do you not have subscriptions to some of the Fool’s newsletters? The material you get is fantastic and the boards on the premium side are great for discussing specific stocks.

  3. Thanks for the book recommendation, Mekong!

  4. The Gardner Brothers and Saul are practically celebrities in my household. Once Saul and I exchanged a few emails, and my wife saw them. She asked, “Is that the Saul?” I was like, “Yeah, can you believe it?” We speak Saul’s name in hushed, reverent tones around here :slight_smile:

  5. Yeah, yeah, I’m biased. But I was a member using these boards long before I worked here.

Matt
Long Saul’s board and the Fool’s newsletter services

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Like Tom, I’d like to see some analysis from the this board’s braintrust re: JD.com. I picked up some share in November and added to my position after reading the article below, which is a good starting point.

https://seekingalpha.com/author/brian-lin/articles#regular_a…

Any takers?

PS If the team here ever wants to delve deeply into JD.com, I’d be curious to hear your thinking. This is a company that Bill Mann truly loves. And I think he may be right.

Primarily for the sake of record-keeping, I will note within this thread that JD.com was up 4.5% on the day after TMFTomGardner’s asking about it late last night/early this morning.

With JD’s present market cap of just about $65 billion, JD’s average daily volume over the past 10 days of greater than 10 million shares per day, and with the market having a generally good day (for the stocks I pay attention to, at least), I am going to chalk the 4.5% gain as being almost entirely unrelated to Tom’s mention…but maybe 0.2-0.4% of the 4.5% gain could be attributed to his simply asking the question/making the request for a closer look.

I know a lot of you probably own shares of JD, but I am pretty sure that Saul has stated that he will not invest in any Chinese company. He can correct me if I am remembering this wrong, but this is probably not a company that he will even consider.

Larry

The Gardner Brothers and Saul are practically celebrities in my household. Once Saul and I exchanged a few emails, and my wife saw them. She asked, “Is that the Saul?” I was like, “Yeah, can you believe it?” We speak Saul’s name in hushed, reverent tones around here :slight_smile:

Wow, Matt, I haven’t got many appreciations like that in my life. Now, if I could only teach my wife to feel that same way, and speak my name “in hushed, reverent tones”!:grinning::grinning::grinning:
Saul

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Wow, Matt, I haven’t got many appreciations like that in my life.

Yeah you have. Maybe don’t hear it that often, but it is out here!

Jeb

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