I haven’t seen any posts on this company recently. Looks like probably I held on to my tiny position in spite of my doubts and mostly the members of the board have moved on.
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Kingran,
I still own some UBNT. From what I can see their legacy Service Provider business is holding them back. They have great growth taking place in the Enterprise segment (44%) but SP was down 8% and total growth ended up 18%.
The company is not covered well. The conference call lasted 5 minutes. There were maybe 2 or 3 questions. Not one question on the Service Provider business which I would have asked about.
At this point, I have better places for my money which means we will soon likely see a big rise in the stock price (as soon as I get out).
A.J.
I had used Ubiquiti as an example to ask when a stock would “fall off” from being on-topic for discussion here, due to their slowing revenue growth rate. With the institution of a dividend to their capital return program, that might push UBNT even further from being “on-topic” here.
I still have half of my UBNT shares position that I had held since May 2017. If there is some unjustified price drop associated with a FUD event that gets overblown, I may look to add more again in the future. For now I plan to simply hold onto my shares.
For my speculation about the start of paying a dividend rather than their historically-preferred use of buybacks as a capital return for shareholders, I think the dividend is partially intended to allow Robert Pera to service a loan used to buy out his other Memphis Grizzlies shareholders. Additionally, it appeared that they had no desire to buy shares at prices above about $70/share based both on their average price paid for repurchases ($70.11, if I recall correctly) and on the much lower volume of shares repurchased in the most recent quarter (falling to about 1/10th to 1/8th of the volume from my rough recollection of the exact numbers) as compared to the quarter before.
If Ubiquiti as a company isn’t super keen on paying more than $70 per share presently, I don’t suppose I will be either.
Feel free to look back at my prior postings on Ubiquiti here on the board, as I had previously probably been one of the more bullish UBNT shareholders.
-volfan84
still long UBNT, but with only about a 3% (probably a bit less) position
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On dividend, my view is simple. Currently Pera is holding close to 75% of outstanding shares. UBNT/ Pera are hitting limits on the buyback. I see the dividend as a positive and the company is doing it not necessarily because the company doesn’t want to buy above $70 but they still want to return capital to the shareholders. Outside of paying down the debt, they have no real meaningful use of cash.
Outside of tarrif’s I don’t see any major issues besides the SEC investigation. It is the SEC investigation that stopped me from making this more than a tiny position.
Kingran,
I would tend to agree with your synopsis of the dividend strategy versus buying back shares at this time. UBNT is valued a decent amount above where it was while going through some growing pains that were bigger than today’s blips on extra shipping costs. However, it isn’t valued above where it was when it was growing like a weed. Those days are quite far behind us though.
Again, the Enterprise segment is growing like a stock we would discuss here, but the Service Provider segment is holding them back. I’d write IR a question on this, but may not have the interest any longer.
FWIW, I don’t personally give too much weight to the SEC investigation. While UBNT has had some accounting hiccups in the past, they have rectified those with outside consultants and I don’t believe the investigation will find anything significant, but that is obviously a guess.
I’m guessing this board doesn’t desire much more on UBNT, so feel free to email directly or post over on the UBNT board for further discussion.
A.J.
I am still long. Here is a recent IBD “The New America” article on it.
https://www.investors.com/research/the-new-america/ubiquiti-…
It starts out talking about the “Fraud” charges then gets into the company and its prospects…
Ubiquiti has historically worked with smaller distributors, said Suppiger. But it in recent years engaged with more established names. That includes Ingram Micro, which has “certainly brought more validation to the business.”
…
Ubiquiti is a company that is “really fueled by product cycles,” said Suppiger. That points to a few potential catalysts for sales down the road.
For one thing, the upcoming transition to a wireless standard known as 802.11ax from the current 802.11ac. That should presumably fuel another upgrade cycle, he said. There’s also the pending shift to 5G technology.
…
Ubiquiti is “now past its fast growth phase, but we note the company is still growing faster than the overall market in which it competes, largely driven by its pricing strategy,” said Credit Suisse analyst Sami Badri from his initiation coverage in May. Badri has a neutral rating and 73 price target on the stock.
…
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If Ubiquiti as a company isn’t super keen on paying more than $70 per share presently, I don’t suppose I will be either - volfan84
Along with earnings they just announced $200m buyback program. There is still stubborn 5M shorts. I suppose the shorts are feeling the pain.
But as an investor Pera’s high ownership is a concern, he can do anything with the company and investors have no say. Sell side analysts stopped coverage.
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If Ubiquiti as a company isn’t super keen on paying more than $70 per share presently, I don’t suppose I will be either - volfan84
I was definitely wrong there. Their average cost was $89.97/share between July 1st and November 7th (which actually looks a bit higher than it should have been for that period). So, they raised the price per share they were willing to pay by more than $20, it would appear, considering their average price paid was almost $90/share. This definitely furthers my thought previously presented that Robert Pera might like to take Ubiquiti private at some future point.
“From July 1, 2018 through November 7, 2018, the Company repurchased and retired 3,260,811 shares of common stock for $293.4 million at an average price of $89.97 per share.”
http://otp.investis.com/clients/us/ubiquiti_networks_inc/usn…
-volfan84
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UBNT declared results Friday and the stock jumped by 16%. The company is growing in NA and EMEA and so is inventory, :). The press release states the increase is due to timing of the product launch.
I guess the company deserves benefit of doubt here. Let us see where the inventory settles in next quarter. They are still buying back shares and another $170M or so is left in the authorization. So, if the stock drops then we can expect this $170 m “put” will come to rescue.
I am holding on to my tiny position here. The stubborn 5M short position was slowly going down and then jumped back during Dec 15 to Dec 30 period, OOuch, those shorts should be hurting now. When the shorts throw the towel is the time to sell, I guess.
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Kingran,
Thanks for posting. I wrote about the quarter a bit here.
https://discussion.fool.com/ubiquiti-networks-ubnt-34130344.aspx…
It was interesting to see your post as I looked back at what I wrote in late August. I was less sanguine at that point. However, the Enterprise segment is growing quite well and leverage has been showing up in the model even though this quarter’s 75% growth compares against a bad quarter last year.
I may not hold everything I own as it is quite a large position, but I still think the company has room to run.
A.J.