Beth Kindig bearish on AYX?

Bert Hochfeld is certainly the most popular tech analyst among the readers of this board, and for good reason. Last year around the time of the SaaS sector rotation, I finally bit the bullet and bought a subscription to his Ticker Target newsletter, and am glad I did. Beth Kindig is another tech analyst that I enjoy reading (her free articles), and her name comes up occasionally on this board. She runs a similar premium service to Bert, though it has several differences, which you can read about on her website, beth.technology. I’ve been impressed with everything I’ve read from her. She seems to be very knowledgeable about tech, top-notch, and anybody who reads SeekingAlpha knows how much junk there is out there. Her and Bert are very different – she’s in her 30s in SF, and he’s in his 70s in NYC. One reason I haven’t paid for her premium service yet is because I already have SA, RB, and TT, and read this board daily. I might sign up when one or more of these expire. But I also might pass, as it’s $500/year, much more than Bert’s. However, she has called the top 3 of 5 tech stocks this year (INSG, SHOP, ZM), two of which aren’t held by most people on this board. https://twitter.com/Beth_Kindig/status/1258151847635738625?. If INSG rings a bell, it was discussed here a few weeks ago: https://discussion.fool.com/insg-34477004.aspx.

First, an OT question that I’ve been wanting to ask for months. If anyone is a subscriber to both Bert’s and Beth’s premium services, there’s a good chance that they also follow this board. So let me ask those folks: Is there one of these services that you prefer over the other, and if so, why? What do you see as the the pros and cons of one vs. the other? If you had to pick one, which would it be?

But that’s not the main point of this post. Nor is the following, but I’m including it because it’s of general interest to this board. Beth has written free articles on ROKU and TTD this week, which should interest a lot of you. Here’s the one on TTD (a long time favorite of hers, which which she’s no longer recommending), which is especially relevant because they post earnings tomorrow (Thurs 5/8):

https://www.forbes.com/sites/bethkindig/2020/04/30/the-trade…

“To be transparent, I had predicted ad-tech to be one of the best tech trends in 2020. This prediction came true as January and February were record months for ad revenue. However, the story has changed now that large brands are reducing ad spend, or as Google recently said in their earnings report, March `experiences a significant and sudden slowdown in ad revenues.'”

She also has an article that’s worth reading on ROKU, which she’s been very bullish on since its IPO. Since I don’t think this was mentioned in Saul’s “A reassessment of Roku” thread last week, I’ll post the link here:

https://www.forbes.com/sites/bethkindig/2020/04/30/will-roku…

Anyways, this is also not what this post is about. I follow Beth on Twitter, and was caught off-guard by a very surprising response to one of her tweets this evening:
https://twitter.com/togepi420/status/1258155910850998272. Note the following exchange:

@togepi420: good call on alteryx
@boomorbust109: You have a link to the bearish article on $AYX?
@Beth_Kindig: No, was in a note to premium subs!

Reminder: one of the Rules of this Board is No Blabbing! This information is for her paid subscribers only, so if you know what she wrote, do not share it here!

That, along with the following observation that Klay2 just posted (post #66675):

Believe or not, AYX is one of the only few high flyer SaaS stocks that didn’t perform. The other one I can think of is PAYC.

OKTA, MDB, TWLO, ZS, SHOP, FSLY, TTD, COUP, TWLO, etc., are all doing great.

There are so many wonderful things about this board, I’ve learned a ton and am eternally grateful to Saul et al. As powerful as the crowdsourcing method is, it can lead to having certain blinders. And so I can’t help but wonder what is Beth Kindig seeing about AYX that we aren’t? If this were some nameless SA author preaching value over growth, like why ZM should be shorted (LOL!), etc., I wouldn’t blink an eye. But Beth is one of the best tech analysts out there, and this, along with Klay2’s comment about AYX and PAYC being an outlier might not just be due to a 1-penny earnings miss, or them being “too transparent” during the CC. MajorFool20 (post #66662) pointed out decreasing revenue growth for Q1, but that info wasn’t available before this evening.

Usually there’s complete agreement between Beth, Bert, and this board for most of my double-digit positions. And if I was forced to go “all in” on only one stock for 5 years, it would be AYX. Since it’s my second largest holding at about 15%, I might just fork over $65 for a 30-day subscription to Beth’s site to see what she thinks about it. But I thought this was worth bringing to the attention of this board, because it seems like most of us on here own it, and there’s potentially something important that we’re missing. Perhaps others might like to check it out as well.

Matt
long (in order of size) ZM, AYX, CRWD, DDOG, TTD, TDOC, ROKU, OKTA, ESTC, WORK

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Very interesting. I too subscribe to a couple of paid newsletters and if they are good then the cost of the subscription is well worth the cost but you can’t subscribe to them all. If it were $30 then I’d probably bite but $65 seems a bit steep. I do like differing opinions because they make you force you to check to see if the story has changed. I was worried about AYX because they were onprem and it seemed logical that they would slow with the COVID-19 issue but I did not trim. Thanks for the great post.

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Near the end she says:
“Notably, The Trade Desk has been a recommendation of mine throughout the past and up until this month. The company may become a recommendation again in the future.”

This (and the rest) strikes me as short-term thinking. (Note I do not know the author’s track record or philosophy, so I’m just reading this article and reacting, for what that’s worth.) After stating all the fundamental reasons for TTDs success to date and her bull case, she seems to switch to some macro-level guesses for the bear case. It sounds like the primary point is that TTD is like all the other platforms and it has a low barrier to exit for a market she expects to change its thinking because of “distress”…? I don’t understand this point. If they were doing well before, why would a distressed market cause them to suddenly start losing share? Reduced ad spend I can understand, but spending elsewhere, for this reason, seems like a weird concept to me.

It is an interesting read and she clearly has a respectable depth of knowledge, but I didn’t read anything that leads me to revisit my reasons for investing in TTD. I mean, is anyone here considering selling because of the bear-case-points here? To me, they look like they are expanding and growing, not teetering on the edge of disaster.

Regardless of opinions, we’ll find out more tomorrow when they report earnings! Perhaps if she is right about the valuation we’ll get a chance to buy at a better value, if all else is well.

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Beth Kinding, Bert and all other analysts and bloggers have a track record which is made transparent by tip ranks. Every call they make goes in their profile. From that perspective it totally makes sense to do short-term calls like this. Based on her arguments and what others like Google saw in March it wouldn’t surprise me if Trade Desk will report a similar slow down for March. But on the other hand as that is public information it should already be baked in in the current stock price. We will se if that is the case later today.
Thomas

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Hi Matt, You asked about a comparison between Bert’s and Beth’s services. I subscribe to Bert’s and value it highly. I subscribed for a few months to Beth’s and cancelled. Here was the reason. Bert writes updates on stocks like us almost daily (2 or 3 times a week at least). When he recommends a stock he then gives you follow-ups at every significant piece of news and each earnings report. Beth writes an annual review of a company and then seemed to give no followup as far as I could tell. And half her stock report seemed to be extensively based on tech analysis by someone on her staff. I just wasn’t my thing.
Saul

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Matt,

I am a subscriber to various free and paid resources; TMF (nearly all of them due to my serious case of FOMO), Bert’s Ticker Target (for about a year now after hearing Saul mention it on this board), Beth.Technology (for about 9 months after finding it through the free service), and a few other free open forums of like-minded individuals I respect.

Regarding the sharing of information: anything I share below is with the express approval of Beth Kindig with the understanding that 1.) I do not share in its entirety her published materials (PDFs,Blog Updates, Monthly Spreadsheets, Forum Postings, etc.) 2.) I paraphrase her comments and do not copy-n-paste from her website, and 3.) I acknowledge her as the source.

Now for the anticlimactic response to your Alteryx concern regarding what Beth Kindig referred to in her Premium Service: Her take is nothing more than the brilliant minds on this message board have debated in the past at length. Based on her interpretation of a Covid and post-Covid economic landscape (in the near term) she feels that AYX will have its work cut out for it and have a bit of an uphill climb due to the fact that it is a fee based license service and is considered, in her opinion, to be steep in price for the product. Her concern is that sales MAY falter or the cycle slows in a depressed economic environment that MAY see tech layoffs announced in Q2 and Q3. In this brief AYX reference in her Update Blog, that she provides to premium members once or twice, sometimes, three times a week, she is simply weaving a cautionary tale. In that same paragraph, she speaks to the upside of AYX should the economy make a rather quick recovery.

Hope that helps. Free to take questions about the service, as I have done in the past, through the “Email Reply to Author” feature.

Keep in mind, I am not a card carrying Beth.Technology loyalist. I simply prefer to seek out other services (free and paid) that discuss the type of companies we discuss here on Saul’s board. If I had to choose one, my preference is for Bert’s style of writing, his use of the english language, depth of knowledge and willingness to present complicated topics in a digestible format.

But all members of Saul’s board can rest assured knowing that the breath of companies discussed here and the depth of analysis presented here is unique and as good, if not better, than paid services on the other side of the fence. With perhaps just a few outliers, I always find it interesting, regardless of the service or forum visited, the high level of intersection between the sets of companies discussed…I think I was just trying to make a Venn Diagram reference on an investment message board.

Carry On Here…you’re not missing too much with the others out there and it leaves you more to invest in AYX.

Harley

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This (and the rest) strikes me as short-term thinking…After stating all the fundamental reasons for TTDs success to date and her bull case, she seems to switch to some macro-level guesses for the bear case. It sounds like the primary point is that TTD is like all the other platforms and it has a low barrier to exit for a market she expects to change its thinking because of “distress”…? I don’t understand this point. If they were doing well before, why would a distressed market cause them to suddenly start losing share? Reduced ad spend I can understand, but spending elsewhere, for this reason, seems like a weird concept to me.

I didn’t read anything that leads me to revisit my reasons for investing in TTD. I mean, is anyone here considering selling because of the bear-case-points here? To me, they look like they are expanding and growing, not teetering on the edge of disaster.

Rafes,

I could not agree more. I did not invest in TTD for stock performance this week, this month or in the short term. I invested in TTD because I believe it offers monster returns @ 5X-10X over the next 5+ years. (I do not invest in a stock unless I believe they can increase by 5X+ in 5 years. That is my litmus test.) As the Fool has taught us, patience can serve an investor well.

Beth’s entire article was written for traders rather than investors. Very similar to the business news TV channels. Not my cup of tea.

I couldn’t care less what happens to TTD stock today after they report. Their strong competitive position is undeniable and well positioned for the future. TTD has been and will continue to be one of my top 3-5 positions moving forward.

My port is +37% YTD after +45% last year. Will stay the course with growth stocks, invest and hold wherever possible, and will not panic. This Board is among the best part of my investing day (even though I am not allowed to discuss TSLA which you might say has had a decent run lately :slight_smile: )…

Fool on!
-Rockleppard
(Long TTD, TSLA, OKTA, TDOC, LVGO, AYX, MDB, DDOG, MELI, RUBI, ZM).

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Rockleppard,

“Beth’s entire article was written for traders rather than investors. Very similar to the business news TV channels. Not my cup of tea.”

An insightful comment; as Saul alluded to in his post on this thread, there is discussion of Technical Analysis, Trading and Options in the Beth.Technology service that, in my opinion, is equally balanced, if not more so, with a similar amount of LTBH strategy content.

Don’t confuse this with the idea of the author speaking out of both sides of his/her mouth. The philosophy or investment strategy for the Beth.Technology service is an effort to look for entry points in great companies for long term holds while trading stocks. They do this knowingly in the service in an effort to serve various styles of investing on the site. Beth would tell you that she only recommends stocks that make great buy and holds and never trades into stocks that she wouldn’t want to own long-term.

This is my last post on this topic. I just thought your comment needed some clarification as it relates to the service.

As far as it relates to me and my use of the service; I am hard core LTBH with a portfolio that is extremely diversified to the point of inefficiencies. I do not trade stocks but learn from the material presented and the discussions in the forums on a daily basis as I do here on this great message board.

At this point, we are well outside the bounds of OT.

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Believe or not, AYX is one of the only few high flyer SaaS stocks that didn’t perform. The other one I can think of is PAYC. – Klay2

I’m not addressing AYX at the moment. Plenty of other folks are already weighing in on that and I have no wish to be redundant. Although I will say that AYX and CRWD are approximately tied for #1 in my portfolio at around 16% each.

PAYC

Underperform?

(In all fairness, PAYC is having a bit of a pop today, so some things have changed since Klay2 posted the quote above. And nothing against what he said…I simply may have a different perspective on what performance is acceptable.)

The company:
https://investors.paycom.com/press-releases/press-release-de…

First Quarter Revenues of $242.4 million, up 21% from the comparable prior year period

First Quarter GAAP Net Income of $63.0 million, or 26% of total revenues, or $1.08 per diluted share

First Quarter Adjusted EBITDA of $117.9 million, or 49% of total revenues

Comment: Growth is slow compared to most everything discussed on this board. But it has been a very steady grower for a long time and I value that.

The stock:
Paycom reported on 4/28. Yahoo says it closed on 4/28 at $236. It’s $271 now, up nearly 15% in a bit more than a week. I’ll take that any day… er… any week.

Note: During our little market crash, I decided I’d like to own a steady performer like PAYC due to it’s solid long term prospects and I also noted that the stock had been hammered from a high of $325… down to $165. I bought at $201 (didn’t notice right away how much it had dropped), so I’m up 35% since 3/20.

Is this a typical hair-on-fire “Saul stock”? I’d say not. But I like my PAYC position anyway. Not spectacular, but I’m not concerned about another company swooping in and displacing them either.

Note: PAYC has been slowly grabbing “market share” in my portfolio. Was 2.9% not long ago, now at 3.4%. Overall, I’m up about 11% for the year, down 20% from the peak value earlier this year.

Rob
Rule Breaker / Supernova Starshot Home Fool & STMP/MTH Maintenance Coverage Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.

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There were doubts on Alteryx’s short term performance posted here on this board. This earnings result shouldn’t come as a surprise, and it is better than expected. There were people here who thought Alteryx’s business might even decline year over year.

Alteryx has two disadvantages in this climate that are reflected in its results. First is that it sells its software through long term contracts (1-3 years) and they are required to recognize a large portion of the revenue up-front when the contract is signed, instead of spread evenly across the contract’s duration. That means that if new contracts slow down (as one might imagine is happening now), revenue growth is going to take a big hit. On the other hand, once the economy starts up again, revenue growth should accelerate considerably. We have some indication that this is already happening.

Second, their product itself is not going to see huge demand spikes in this environment. DataDog, Crowdstrike, Twilio, Zoom, etc are all companies that see huge demand spikes with work from home. Alteryx will see its day in the sun as companies start to recoup from the immediate aftermath and try to figure out how to clean up all the mess.

Imagine a hurricane. As it’s coming in, people are buying ropes to tie things down and boards to cover their windows. That’s Zoom and DataDog. After the hurricane people buy brooms and shovels to clean up the mess. That’s Alteryx.

I also subscribed to Beth’s service for a spell. You can pay membership monthly and cancel any time, which I appreciate. She presents a bit of a different take, which I do like. As for TTD, she does not like demand-side platforms and believes the supply side is better. This goes against the grain of what you see on the fool and hear from Jeff Green, so I really enjoyed taking in both perspectives. Her annual research reports are informative.

My only issue is that I really don’t like the technical analysis. It works, except when it doesn’t. I’m glad I subscribed because now I understand that its not for me. I had to stay with it a minute to understand. I much prefer Bert’s approach for the reason Saul outlined.

There is one thing that Beth has that Bert doesn’t. Bert focuses exclusively on the IT space while Beth branches out into other branches of tech. It just happens that they are both very bullish on cloud. But Beth will cover other companies, like semiconductors, that Bert doesn’t touch. So if you like semiconductors…

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Rockleppard! Congrats on the portfolio returns! Good job. I’d like to add my perspective here.

Beth’s entire article was written for traders rather than investors. Very similar to the business news TV channels. Not my cup of tea.

I consider a “trader” to be someone who is moving in and out of different positions every few days without any real concern for how the company that is underlying the ticker is actually performing. I disagree that this article was written for traders because her most recent articles (sell TTD, buy ROKU and ZM) mirror the same moves I took a month earlier.

As we were moving into April I thought that I should move some of our stock positions so we could take advantage of the COVID and eventual post-COVID world. That meant that I would be selling companies that would be most impacted by an economy where many small businesses would be failing and many people would have their spending capital constrained. This meant I should sell consumer facing firms. So I sold MasterCard, Square, and The Trade Desk. Bear in mind: I think these are outstanding companies that will be successful for many years after I am gone. But if they are going to be dead money for the next 6 months, or year, or two years, I should be able to move those investment dollars to companies who are more likely to profit during that time.

The second half of this exercise was to identify those companies that might benefit from the new reality of less going out and socializing and more staying at home and working from home. This pointed to Zoom and Roku (new positions for me) and more shares of Okta. I think these firms have proved that they can do well outside of a COVID world, but it also seems like they should perform well in it.

These trades were made April 8 and all of the shares were inside IRAs. So if I’m wrong at least I won’t have to pay taxes too.

So you may not agree with Beth, and with the returns you’re pulling in you have certainly earned that right! But adjusting your portfolio to take advantage of the pandemic does not necessarily mean you are a trader, even if you have to sell The Trade Desk. (FWIW, I only sold 10% of our TTD, still #5 in our portfolio, so we’re good!)

Take care.

Jeb

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Beth writes an annual review of a company and then seemed to give no followup as far as I could tell. And half her stock report seemed to be extensively based on tech analysis by someone on her staff. I just wasn’t my thing.

I have a subscription but plan to cancel because I do not find it helpful. She gives superb analyses and is very tech savvy. She does follow up now and then when something is important but you’ve got to seek out the information. She delegates buy and sell recommendations to a chartist. I can’t judge his success or lack thereof.

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Now for the anticlimactic response to your Alteryx concern regarding what Beth Kindig referred to in her Premium Service: Her take is nothing more than the brilliant minds on this message board have debated in the past at length. Based on her interpretation of a Covid and post-Covid economic landscape (in the near term) she feels that AYX will have its work cut out for it and have a bit of an uphill climb due to the fact that it is a fee based license service and is considered, in her opinion, to be steep in price for the product. Her concern is that sales MAY falter or the cycle slows in a depressed economic environment that MAY see tech layoffs announced in Q2 and Q3. In this brief AYX reference in her Update Blog, that she provides to premium members once or twice, sometimes, three times a week, she is simply weaving a cautionary tale. In that same paragraph, she speaks to the upside of AYX should the economy make a rather quick recovery.

I too have a subscription to beth.tech and was reluctant to say anything about her AYX comments earlier.
At this juncture I’d like to say first that she is quite tech savvy and articulate and provides useful insights. However in regard to AYX i do not interpret her remarks as 'bearish", just that it may be a while before AYX regains fullstride. Personally I intuit that they will be back to growth sooner rather than later because their product is so valuable.

More pertinent to this subject are some remarks made during the conference call. AYX sees the COVID experience as expanding their accessible market and accelerating growth because corporations throughout the world, large and small have experienced the need for effective data base integration and analysis. More than once during the call it was stated that if corporate managements had not learned the importance and value of data based analytics during the pandemic they never would. This coupled with some of the anecdotal commentary states the matter clearly, at least IMHO.

Berts greatest comeback hits. Ayx, Crwd, DDog, TTD, SQ, and Fsly. I made good money on all of these except FSLY, which of course just had the best earnings of them all, lol. I am not skilled enough to do a deep dive on FSLY, but both Bert and FSLY now have my complete attention. Thank you Bert.

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Berts greatest comeback hits. Ayx, Crwd, DDog, TTD, SQ, and Fsly. I made good money on all of these except FSLY, which of course just had the best earnings of them all, lol. I am not skilled enough to do a deep dive on FSLY, but both Bert and FSLY now have my complete attention. Thank you Bert.

I’ve learned that hard way that it’s best not to trade in and out of some of these names. If the longer term story is intact, just set it and forget it. Stay long or stay put.

Dave

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IT IS TIME TO END THIS THREAD. We have heard about Bert versus Beth until it’s coming out of our ears (and, while it was useful to us, that’s enough).

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