There is an incredible thread on the UBNT board at MF RB. Alex (Atruthbomb), noted that he had 40% of his portfolio in UBNT, which aroused some discussion. Here’s how he answered. I’ve edited it a lot to make this a reasonable size extract from a very long post. Wherever you see a … (triple dot) it means I’ve cut out a bunch, and I’ve corrected spelling in some places.
… Having strong conviction for this company is perhaps an understatement, I have been following Robert Pera for several years now… There are few companies that I have ever had high enough conviction to go all in. The first was Tesla in 2012, the second was Apple back in 2004 when I first bought my first ipod mini. I believed in Jobs and Musk …They saw something the market did not, and once they got started, they had an immovable momentum to get that idea to materialized. In their wake they created a culture and a fanbase, some people even call it a community or a religion.
What made them special is exactly what makes Robert Pera special. Their drive was not money but to disrupt the market…. People with this kind of mind … don’t see the boundaries that ordinary people do. This allows them to go confidently in the direction of their vision, because they see it so plainly, even in markets that don’t exist. … Ubiquiti has done that, you can simply go to their facebook page and see 300,000 fans and realize how huge that is for an under-the-radar company that focuses on a niche market. Robert Pera has stressed the importance of social media’s ability to leverage a playing field by capitalizing on transparency of superior products vs. the old business model of using relationships and marketing to create a business model. …. Ubiquiti is creating the largest network of guerilla ISP operators (WISP), i.e, the Ubiquiti World Networks … From estimates I have gathered 4000 WISPS have joined so far and there is no reason that this will not gain traction exponentially. I have spoken to WISPS, they are so excited and they love Ubiquiti. From a review standpoint, no one doubts the 5 star quality and pricing of UBNT’s equipment, you can go to any site, amazon or YouTube and see for yourself.
This is not the only reason I am investing 40% of my money in UBNT. There is also a fundamental aspect. The company has a 23 P/E ratio, 33% operating margins, and 65% return on equity, a growth rate of 30% Y/Y, a PEG of 0.80 and a CEO who owns an additional 65% of the companies shares who recently issued a 75m$ buy back because he believes the stock is undervalued and that Wall Street doesn’t understand their buisness model (which I agree). In a market of stretched valuations where stocks are so expensive. I believe this to be both a value and a growth stock that wallstreet has kicked to the curb because no one understands it.
The opportunity: 4.2 billion people do not have access to the internet. Of the 3 billion people who do, only a small percentage have access to fast internet. With more people shifting from traditional medias to online means of consuming content, the need for highspeed internet will only grow and Ubiquiti’s leading technology in this space will only get better as most capital expenditures are R&D …Connecting people to highspeed internet using conventional networks would cost trillions and trillions of dollars, money that simply does not exist… Pera is empowering an industry and disrupting the old industry. Not that he would ever allow his company to be sold. But I believe … UBNT is a serious buyout candidate which deserves a buyout premium, well above what it currently trades at….