The Wheat From the Chaff

I’m probably not the only one who grows tiresome of all the valuation discussions. I’m firmly in the Tinker and Saul and Gardner camp of the the truly special companies deserve their valuation.

This author does a good job of putting that further into a comprehensive argument.

Many investors have missed the investment opportunities of a lifetime by refusing to invest in the disruptors of our time (AMZN, NFLX) simply based on concerns over valuations.
The discussion shouldn’t be about whether or not we are in a SaaS valuation bubble, but rather how to separate the wheat from the chaff.

Sure, SaaS businesses have inflated multiples today compared to where they used to be in 2011. But when you look into the individual companies driving these multiples higher, they often have outstanding stories and are disrupting entire industries.

Looking holistically at a group as diverse as cloud-software companies can be enlightening, but also misguiding. That’s why investors need to dig into the details and separate the wheat from the chaff.

https://seekingalpha.com/article/4273285-call-saas-bubble

I don’t mean to start another 30 post thread on the topic. You do you. This was a well researched piece on why I invest like me.

Darth

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While some specific companies like OKTA show nose-bleeding valuations compared to their fundamentals, many of them are trading at premiums that could be well deserved over time once you put them together in perspective and pit their performance against the rule of 40.

I feel like this is what I’ve been saying. I enjoyed the article. It’s amazing how cheap some of those companies are (like TWOU and TLND). Bargain shopping isn’t usually the way to go, though. I hope we can stop arguing about valuation and find some diamonds in the rough, because I’m afraid our best days with the Okta’s of the world are behind us.

Bear

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There is a line that caught my eye:

More than half a decade later, best-in-class SaaS businesses continue to be valued at high multiples that scare away most prudent investors. [emphasis added]

In other words, SaaS is not for prudent investors. It’s probably just the lack of a copy editor but it shows how deeply “value” is ingrained in the minds of investors. He probably meant “risk averse” investors.

Denny Schlesinger

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Duma, these free boards are a great resource. Please stop advertising your off board slack on these free forums.

At least use the “email author” feature instead of posting publicly.

Thanks

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Duma, these free boards are a great resource. Please stop advertising your off board slack on these free forums.

At least use the “email author” feature instead of posting publicly.

So to be consistent, I assume you will not allow anyone to mention Bert’s board or Seeking alpha?

For Pete sake, you don’t want clutter here with a very restricted focused topic of SaaS stocks and I merely offer to bring market discussions off board.

The inconsistency in your approach vs mentions of Bert’s board and SA is interesting.

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Bert and SA didn’t take traffic which had previously been on a public TMF board and move it to a private channel. Not even slightly equivalent.

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Let’s end this thread now please. We won’t let this turn into a back and forth bicker.

Duma, please respect the board and the Fool policies of not advertising other sites or platforms of your own on their boards.

Thank you.

NO MORE REPLIES TO THIS THREAD PLEASE

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Duma did not start this. All he did was give some good insight and offered to continue what was becoming off topic to be taken off board for those interested. It was not taking any posters from the Fool, and there is no profit motive unlike the Fool or any of the myriad links that take people off board for the pecuniary interest of the linked to site, including Bery and SA that actually compete with the Fool and use the Fool to recruit traffic.

Duma did not violate the terms of service, nor did he steal a single post from Saul’s board that was on topic for this board but may have interest from those here to continue an off topic for this board but not on Slack.

If you want no response to your post then don’t over step your bounds. We all, myself and Duma included treat Saul’s board w respect and stick w in his rules.

That is unlike say those who protect Bert’s board vehemently on this board.

Respectfully,

Tinker

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Tinker, Duma

Instead of saying “join us in Slack for more” why not just have the discussion on Sauls board?

After all, it’s why we are here.

Just a Fool

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Instead of saying “join us in Slack for more” why not just have the discussion on Sauls board?

JAF:

Because I followed Saul’s Monday morning rules…my post said this referenced a known short. It involved trading and market timing.

Both have been OT on this board.

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For the third time, and for the people who respect this board. Please stop posting and replying to Tinker/Duma.

Let them get the last word. That’s the only way this thread will end and we can get back on topic.

Thank you all for respecting each other and what we are trying to do here. Let’s not let this board get ruined like some others have recently.

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