Just FYI.
In a recent new pick (discussed and owned by some here) from Tom in a paid service, he had this statement.
I love the discussions on Saul’s folder – although I’ve only gathered one stock idea from there
I can’t say I’m surprised, but I thought it was good to know.
-FrickNFool
Not too surprising with this board currently having 9 of the top 25 Best Of listings …
I’m surprised he only got one idea, though it may be because a lot of what we discuss here was on his radar already.
I’m surprised he only got one idea, though it may be because a lot of what we discuss here was on his radar already.
Or because his stocks are generally much more conservative, so he finds ours interesting but not ones he’d choose.
Or because his stocks are generally much more conservative, so he finds ours interesting but not ones he’d choose.
Truedat. Also, recommending some of the itsy-bitsy companies that tend to be in favor here, to hundreds or thousands of subscribers, could be … um … problematic.
We don’t have to worry about the needle being moved too far when buying a wee one unless Saul or Bear beats us to a stock. By that time the price is already up. 
Dan
Good morning, Fools, a Happy Thanksiving to all.
I am thankful to each of you for providing a neverending flow of fascinating research. You are helping the world, and each other, to invest — - better. I check in here almost every day, reading quietly, thinking, learning. We have many similar thoughts about business and the markets.
I’ve enjoyed the research into individual companies as well as the thinking on market levels, volatility, portfolio construction, and the like. This single message folder is a shining example of Foolishness — - a perfect reminder of why we started The Motley Fool.
I also enjoy and welcome your criticism. We are not without flaw and never will be. Constructive, thougtful criticism and the push for us to get better helps us. Sometimes, we’re slow to respond. Other times, we act decisively and quickly. I promise you, though, that we are always listening — across Fooldom — to try to make the world better for investors and to introduce more investors to the world.
I have only gotten one unique investment idea from this discussion, for two simple reasons. (1) In some cases, I’ve already been following the business or invested in it and (2) I only have so many recommendations I can make (one each month in Stock Advisor, 5 each quarter in Motley Fool One, and around 25 unique small-cap recommendations in Discovery Rising Stars and Homerun stocks.
I first bought Arista Networks in the Everlasting Portfolio in Motley Fool One in July 2014. I’ve added methodically ever since. We had the pleasure of welcoming Jayhsree Ullal to one of our Fool One member events. I’m going to try to make that interview available to you all here. It was devastatingly convincing. Arista Networks is a 10% position in the Everlasting Portfolio.
I found Talend and Trade Desk in my own research. Then I was delighted to find research references to them here. I think that’s when I began really reading the folder regularly. I particularly believe in Talend (and not simply because the CEO attended my alma mater, woop!). We just interviewed Jeff Green at Trade Desk this past week. I’m going to try to share that transcript here as well. I’m extremely impressed with Jeff; as I told him, when I buy a company whose leaders I believe in, they become my college professors for the years ahead. I expect to learn a lot following Jeff.
So what is the one company I got from you, Saul, and your band of merry Fools? Well, I had one slot left in our 40-company recommendation list in Rising Stars. I had never heard of it. But I began reading here. I dated back and read all the research I could find. I dove through the company filings. I liked what I saw, so as our last investment in the service, I added LGI Homes at $41.80 on August 28th. Thank you all very much for that! Under no circumstances would I have ever found LGIH without all of your help.
I’ve mandated that Bill Mann, Andy Cross, I and our team of analysts hold each of these investments a minimum of five years. I know from reading here that there is healthy disagreement with that. I understand the arguments. Not to stir the pot, but I remain confident that for most investors, letting great businesses (particularly small-caps) compound for years leading into decades is the best way to generate market-thrashing, tax-efficient, business-loving lifetime returns (and the learning rewards are even vaster).
To that end, I offer two companies that I haven’t seen mentioned here (though I may just have missed it). Varonis Systems and Appian. I happen to love them both.
Now I will drift back to the periphery, listening and reading. Thankful to you, Saul, and to everyone here. Your passion for investors is contagious; your insights matter. I hope each of you finds many reasons to be thankful today and this weekend, and I hope we cross paths in the years to come.
Foolishly, Tom
Thanks very much for your nice words, Tom. That’s very kind of you. We do all try to work together and help one another in the MF spirit, and I appreciate greatly that one of the MF leaders has also found our board interesting and useful.
Best wishes and Happy Thanksgiving,
Saul
A huge honour. Rare to have a co-founder of TMF post but I believe when it comes to this board, praise recognised and well deserved.
Just came back from Singapore and the journey was never ending, but re-read parts 1-3 Saul. Got chatting with the fellow next to me who turned out to be a stock broker and to cut a long story short, he borrowed my lap top when I went to sleep and was still reading 2 hours later through my “Saul Knowledge File”.
He is now a Fool and we promised to keep in touch.
Happy Thanksgiving to all.
the journey was never ending, but re-read parts 1-3 Saul. Got chatting with the fellow next to me who turned out to be a stock broker and to cut a long story short, he borrowed my lap top when I went to sleep and was still reading 2 hours later through my “Saul Knowledge File”. He is now a Fool and we promised to keep in touch.
Nice story branmin, thanks.
Saul
I feel like I should jump into this message thread since it was my post on Stock Advisor (which pointed out that I was surprised that the Rec. was a Tom Rec. rather than a David Rec.) that Tom responded to.
Simply wow and well deserved words from the founder of Fooldom. Indeed the gesture from TG makes me proud to be a Fool. Thanks really to all and everyone for my individual success too.
The question I have (Tom) about your instructions to employees to hold to compound lies in your reasoning in terms of the unique and extraordinary times.
Madly-extended and unprecedented artificial stimulus and interest-rates have caused valuation multiples wildly to expand: let’s say for the kind of companies we talk about here, for the sake of argument, 70%. Every half-competent investor feels like a genius.
The TMF mantra is ‘the market always bounces back’. But why should it? Multiples went up for a reason; logically multiples will revert to the mean, typically over-shooting to the downside first when that same reason is thrown into reverse.
Here’s something your brother David said a long time ago about your view on ‘the right price to pay for companies that are profitable and established and growing’:
‘… we like to look for stocks whose FCF multiple is about in line with the percentage of the company’s 5-year expected growth rate. For example if a company is trading at 15X FCF and you think it can grow sales and profits by 15% or more (annualized over the next 5 years), get a little bit excited.’
The piece went on to say there will be exceptions (citing Dell) which will always trade at a higher multiple than the growth rate owing to quality but the message was clear. Paying a P/FCF of 40 or 50 or more was not part of the plan.
I have to say that for the sake of caution, I am reluctant to award any company a growth rate (annualized over the next 5 years) of more than 25% and therefore P/FCF for the book cost of my investments in growth-companies-with-all-the-figures should be no more than 25. Instead they are routinely over 40!
I tell myself that FCFM and growth and margin and the rest are remarkable and ahem, about that extremely uninspiring FCFY… ‘well, hey, it’s all relative’ and so they are worth it. But are what might be called the best companies in the world on fundamentals really worth it, or rather will it always be so?
It seems clear to me that investors in Very Highly Rated stock should be careful. I suspect the usual will happen: the market will not be merciful to exceptionally high multiples and it is not a given that the market will bounce back. So the downside may be a re-base at - what? What would DG have paid then for Dell? Let’s use that and compare it with current average multiple paid. Will that precipitous drop matter over 10 years? Are these techy companies good for 10 years? (Was Dell?)
If a really good company is bought on a P/FCF of 40 and the multiple finally re-bases at 25, investors may need to factor that in to that chart showing ‘the stairway to heaven’ and make sure it still works.
I know it genuinely is different this time, infant companies go from zero to hero in no time flat. What has changed however, is not only that, but continual disruption. The market is febrile and the competition arrives quickly.
Would be most interested to know your views. The question is critical to portfolio returns: hold unless you need the cash for a better investment. I am usually a ‘buy-to-hold’ investor but that ‘to’ now carries serious implications. As David G said in those far-off but more normal days, ‘What would be a good price - the right price?’. What indeed: the price then, or the price now?
To that end, I offer two companies that I haven’t seen mentioned here (though I may just have missed it). Varonis Systems and Appian. I happen to love them both.
Time to take a closer look at Appian…sorry if someone here on the board has already done so and I have happened to miss it. I’ll look back through to see if there has been much.
I took a look at both of these companies following Tom’s post and decided to take a position in Appian - and to align with Tom’s philosophy of a minimum 5 year holding period.
I imagine many folks here grew disillusioned with its progress (stock price) in the intervening period (and likely forgot about the recommendation) so it wasn’t unsurprising to me when Kingran received a less than warm welcome (although the vitriol which accompanied it was off-putting and un-warranted, imo) with his query.
My position is +179% over the period (Nov/Dec '17) which is admittedly a much longer period than is typically discussed here, but c’est la vie.
I’m grateful Tom took the time to bring it to our attention. I’m grateful I happened to read his post and take the time to perform diligence in Appian.
I’m grateful you folks keep this board going - I’ve invested in a few companies as a result of reading here and it’s been to my benefit.
There is a difference between getting only one idea there and believing in the companies mentioned. Could it be that he already had many of the companies on his radar and got only one “New” idea from this board?
I belong to several services and suspect this to be the case.
Gordon
Ooops. I just saw that I replied to a post that was more than two years old.
Gordon