Then versus now

Fear of a precipitous stock price decline has a way of focusing the mind on valuation.

In his most recent portfolio review on the Saul’s Investing Discussions board, Bear had this to say about Snowflake:

Just like Cloudflare lost its premium when they had to reduce their guide, I’m extremely concerned the same could happen to Snowflake. Also, I think it is overvalued. Also I don’t see much upside.

His current assessment of Snowflake’s valuation is in stark contrast to what he expressed last November. In a message thread titled A Few More Thoughts, he stated the following:

I hold the companies I think are the best! And I believe long term, these companies are perpetually undervalued, not only when they trade at a trailing PS of 15, but even when they trade at a trailing PS of 30.

Among the “perpetually undervalued” companies in his portfolio at the time he made that statement was Snowflake. The company entered November at a 13.1% weighting and exited the month at a 11.4% weighting. The stock price at those two points was about $160 and $143, respectively, versus last Friday’s closing price of $148. Moreover, in his April 2022 portfolio review, when the price was over $171, Bear described Snowflake thusly:

At $62b [market cap], I think it’s reasonable again. Long term, it’s a high conviction winner.

So, Snowflake went from being a high-conviction, perpetually undervalued company to an overvalued company with little upside, despite now having a lower valuation. Evidently, Bear has reconsidered his prior belief that his favorite companies are perpetually undervalued even at very high P/S multiples. That’s understandable. An extreme drawdown in one’s portfolio value without the type of dramatic snapback that could previously be counted on has a way of making a SaaS-focused investor more value-conscious.

Bear’s present caution towards Snowflake is not a universally-held sentiment on Saul’s board, as other people have recently reported 20 to 31 percent portfolio allocations to the company. It remains to be seen whether such optimism is well-placed or misplaced.


I miss 2016 thru Jan 2020.
When I used to know a thing or too about a thing or two, in tech space.

Now I just know it got/was and somewhat still is too expensive…so I haven’t been drilling down, bc what is the point if I think market is dragging them lower?

Long/good thread on ANET.
You would have made 16% CAGR past 5 years if you held ANET since early 2018. Good, but not great.

I did about 40% CAGR past 5 years, so I probably made the correct call.

Sure was a lot of dogma back then too.

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