Thoughts on VEEV

It has been a while since I have seen any discussion of VEEV on this board. I used to follow it more closely but I haven’t in the past year since I have been out of it. I noticed that is still down a good bit from its high back in April and was wondering if anyone has any thoughts or insight on where it is headed.

I like Veeva the company a lot I’m not sure about the stock. I bought some shares over the last year and it hasn’t done much. They have a great business and product, superb leadership, but I think where the stock is held up is their TAM and that the growth has slowed from 30%+ to in the low 20s. They are a victim of their own succes, almost every major life sciences company already uses them. Most growth will be from verticals in their product offerings and that may prove to mean lower growth over the shorter term.

I’m in a wait and see with them right now. No intentions to make any moves.

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I’ve had a position since March of last year and I have a small gain. I may consider selling and putting my money into one of my other positions. But I’m loathe to sell a stock unless there’s a change in the fundamental or longer term picture. It’s consolidating recent gains since the beginning of 2016.

I still think it’s a longer tem winner but I’m not sure about its TAM.


I’m long and I like it

growth drivers - new customers, new verticals

been slow lately, but I am up 30% since 2/28/17

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I rank my stocks into three categories relating to my conviction on them.

  1. Buy and ‘forgets’. These are my Alphabets and Amazons, Disneys. Solid ones that aren’t going to die but may not be rapidly growing. Might not be fireworks in the portfolio but give a solid base. The goal of owning these stocks is firstly beat interest rates and inflation, and secondly beat the market.

  2. ANETs and NVDAs. Large companies with solid moats, printing cash, with the potential to grow a lot more. More risky than #1s, but really not that risky. Not 1s because they still have the potential to be disrupted, so have to keep an eye on them and actively follow them. Goal - solidly beat the market.

  3. Aggressive growth stocks. Most of the stocks on this board, virtually any biotech, talend (not so much love but come on, have you listened to the earnings call? What’s not to like. Explosive explosive growth continues!). These stocks have huge potential to change their industry, but are also extremely risky. A very close eye is kept on them. Goal here is to double or triple in value in a few years.

Now certain things are between these categories. I’d say SHOPIFY might be in the process of leaving #3 and on its way to #2.

This is a long-winded way to get back to Veeva. Veeva for me is in-between 1 and 2. It’s got such a stable business with its customer retention. It’s dominated its industry. The company has a reliable revenue stream for years to come. I don’t have to worry that this company could suddenly die in a recession. The growth potential will come from expanding into new industry’s, which it is slowly starting to do. Unfortunately, it has been relatively slow this past year. With the run-up in stock price in 2016 to early 2017, the shares have gone nowhere this past year.

I have my Veeva shares in a taxable account because I see this as a slow grower for years and years to come. I can sit back and relax as the value slowly compounds on itself, and not have to worry about tax with this one as it is sitting tightly (unless things change of course).


More risky than #1s, but really not that risky.

If you think ANET and NVDA aren’t that risky, you are fooling yourself.

Great companies, sure.

NVDA is trading at over 50x PE in a highly-competitive industry, one where they sit on top for now.

ANET, similarly, is trading over 60x PE. I suspect it will have a nice quarterly report, but we should at least be completely honest about the risk you are taking to make these returns. Paper gains are only part of the story.

The markets are filled with former tech darlings that turned into also-rans virtually overnight. Miss one cycle, or someone out-innovates them and these stocks will go down over 50%. Miss expectations and you’re down double-digits overnight.


I guess I wasn’t clear. Risky as in crash and burn in a sudden great ball of fire.

ANET and NVDA may very well be disrupted, but there will be signs of that happening and it would be years before either company goes bust. All great companies at some point need to successfully complete a business pivot in order to survive. Microsoft has done it recently. Apple has done it starting with the ipod. Remember what twitter was before it was twitter? Nokia failed, so far (did you know it started life in the 1900s as a paper mill and only in the 90s really become a mobile phone maker. Now that’s a pivot!). Then the iphone came out and smartphones, leading to their current situation. Maybe they’ll make a comeback.
Blackberry failed. Both had the opportunity and capital to attempt to change but they either chose not to or have so far failed at it. Investors had plenty of time to leave the sinking ships before they went down with them. I’m fully aware that invested capital may very well take a huge hit, but I do not believe it would go to zero unless you ignore the signs and cling on tightly to the stocks because you are price anchoring.

Some of the companies here are leveraging debt and growing massively. What happens to them if a recession were to suddenly hit? Some might survive. Most discussed here may even flourish. But one needs to watch them like a hawk.

I’m not worried about NVDA or ANET if a recession were to happen. Watching the stock price would suck, for sure, but they will survive. Disruption is an altogether another matter.

ANET was at risk a couple years ago if, instead of CISCO trying to sue them out of business, they employed their hefty capital weight into reimagining their legacy services and actually tried to make better (heck, even slightly worse would’ve been fine) products and services than ANET. Short-sightedness has cost them.

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