What are you buying today?

[cubsfan]

On 5/19/2021 at 2:50 PM, cubsfan said:

Buying TEN @ $13.75 - looks like the right time in the auto cycle for this one. Had a blowout Q1. With pent-up demand & low interest rates - the biggest issue seems to be the leverage. 

Sold TEN - $20.50

[Castanza]

3 hours ago, cubsfan said:

No, it's a great point. The share-based-comp of these hyper-growth software/cloud companies is out of control. Can't justify it, other than it's industry wide and worse for the real high flyers. I'm trying to assemble a few of the really strong cloud services guys into my portfolio. Back in 2012, I held my nose and bought 2000 shares of Service-Now, a company I knew well. Paid $21 at IPO - egregious price. Sold it at around $50 - nosebleed valuation. Now it's $500. 

Anyway, I picked up PaloAlto a few months ago on a dip. Been waiting for the opportunity to grab Splunk. This licensing/rev rec change is the opportunity for me to do it. Both PANW and SPLK have established their dominance (like NOW) in cloud based security/event management. They have the opportunity to be like CRM and NOW - just dominate in cloud tools and deployment.  This whole area is in in infancy. 

So, yeah, they are pigs, just like the guys at CRM were 15 years ago. 

It sucks paying up for these hyper growth companies - but I do not expect SPLK's competitive position to deteriorate any time soon. Keep an eye on them. PANW too.

Cubs you used to work in software sales right? 
 

Small position in $FNMAS why not...perhaps the reckoning day has arrived?

Edited June 4, 2021 by Castanza

[fareastwarriors]

Picked up some more $PSTH.

[Spekulatius]

4 hours ago, cubsfan said:

No, it's a great point. The share-based-comp of these hyper-growth software/cloud companies is out of control. Can't justify it, other than it's industry wide and worse for the real high flyers. I'm trying to assemble a few of the really strong cloud services guys into my portfolio. Back in 2012, I held my nose and bought 2000 shares of Service-Now, a company I knew well. Paid $21 at IPO - egregious price. Sold it at around $50 - nosebleed valuation. Now it's $500. 

Anyway, I picked up PaloAlto a few months ago on a dip. Been waiting for the opportunity to grab Splunk. This licensing/rev rec change is the opportunity for me to do it. Both PANW and SPLK have established their dominance (like NOW) in cloud based security/event management. They have the opportunity to be like CRM and NOW - just dominate in cloud tools and deployment.  This whole area is in in infancy. 

So, yeah, they are pigs, just like the guys at CRM were 15 years ago. 

It sucks paying up for these hyper growth companies - but I do not expect SPLK's competitive position to deteriorate any time soon. Keep an eye on them. PANW too.

Thanks for the color. SPLK for me is particularly egregious because they have high dilution (5-6% annually) while not growing all that much. Other serial diluters are PLTR, WDAY, ESTC and I am sure there are many more.

At least those have been growing at a recent clip, while SPLK has not.

NOW is actually reasonably attractive here and I think I might enter a smallish position on a correction. They are superbly  managed should be able  to keep growing for quite some time.

Edited June 4, 2021 by Spekulatius

[cubsfan]

1 hour ago, Castanza said:

Cubs you used to work in software sales right? 
 

Small position in $FNMAS why not...perhaps the reckoning day has arrived?

Yes - 30 years in enterprise software sales in the F1000 market. All selling to corp IT departments. Seen a few paradigm changes. This last generation of SAAS & Cloud software is the real deal. Enormous savings in deployment costs for IT departments and business lines. Controlling this shit is another story. It's hair raising for IT departments, but they have no choice. Like most of these paradigm shifts, security and management control tools are the last to mature. The cloud opens up tremendous security concerns.

Where's my data? How do I know it's really secure? Who else can see this shit?  The IT departments lose control - at the same time they are responsible for the data leaks, breaches, etc. It's a nightmare.

So PANW, SPLK, NOW, CRWD are winning the IT business and are going to dominate as they crush the legacy vendors who can't cloud enable the old stuff.

[cubsfan]

31 minutes ago, Spekulatius said:

Thanks for the color. SPLK for me is particularly egregious because they have high dilution (5-6% annually) while not growing all that much. Other serial diluters are PLTR, WDAY, ESTC and I am sure there are many more.

At least those have been growing at a recent clip, while SPLK has not.

NOW is actually reasonably attractive here and I think I might enter a smallish position on a correction. They are superbly  managed should be able  to keep growing for quite some time.

Yes, but SPLK is dominating the event management area. The SPLK stuff grows like crazy. It's tough to deploy and requires lots of prof services (Like the SAP days). But you can customize it to your IT environment and that puts them squarely in the F1000 wheelhouse. So like an Oracle deployment or SAP deployment, once you get that animal customized to your environment - it's NOT coming out - ever. In the meantime, when the reporting and data proves it's value - revenues grow like crazy - hence their extremely high renewal rate and $$ based renewals in excess of 100%. 

Service Now is a fabulous company. I'll take a 2nd look. Thanks. They need to buy SPLK.

[Castanza]

1 hour ago, cubsfan said:

Yes - 30 years in enterprise software sales in the F1000 market. All selling to corp IT departments. Seen a few paradigm changes. This last generation of SAAS & Cloud software is the real deal. Enormous savings in deployment costs for IT departments and business lines. Controlling this shit is another story. It's hair raising for IT departments, but they have no choice. Like most of these paradigm shifts, security and management control tools are the last to mature. The cloud opens up tremendous security concerns.

Where's my data? How do I know it's really secure? Who else can see this shit?  The IT departments lose control - at the same time they are responsible for the data leaks, breaches, etc. It's a nightmare.

So PANW, SPLK, NOW, CRWD are winning the IT business and are going to dominate as they crush the legacy vendors who can't cloud enable the old stuff.

All of what you say sounds very familiar. My company uses NOW and also Splunk (which I’ve helped to deploy). Definitely can be a major pita. It’s a good product though, and certainly offers a lot of visibility and customization. My one grip, and I’m sure other companies are the same way, but it’s a lot to maintain. Our company decided to hire some dedicated Splunk resources since it became unmanageable for the typical IT teams. Definitely a sticky business though. Gives upper management more to bitch and moan about 

I wish I would have bought NOW a few years ago. I saw how engrained the software was to companies once implemented. 

[Spekulatius]

On 6/4/2021 at 8:41 PM, Castanza said:

All of what you say sounds very familiar. My company uses NOW and also Splunk (which I’ve helped to deploy). Definitely can be a major pita. It’s a good product though, and certainly offers a lot of visibility and customization. My one grip, and I’m sure other companies are the same way, but it’s a lot to maintain. Our company decided to hire some dedicated Splunk resources since it became unmanageable for the typical IT teams. Definitely a sticky business though. Gives upper management more to bitch and moan about 

I wish I would have bought NOW a few years ago. I saw how engrained the software was to companies once implemented. 

@cubsfan and @Castanza This is actually very valuable information. I never thought of SPLK software category having an extremely wide moat. That changes the thesis for the better, despite the somewhat ugly looking financials.

[Broeb22]

Bought some ARLO and VZIO. 

[Castanza]

14 hours ago, Spekulatius said:

@cubsfan and @Castanza This is actually very valuable information. I never thought of SPLK software category having an extremely wide moat. That changes the thesis for the better, despite the somewhat ugly looking financials.

I would say the moat of NOW is greater than Splunk. The difference is, one is a foundation for ticketing, event monitoring, external documentation db reference, team organization (think corporate teams, IT depts, engineering depts.), external tool building db reference. Where the other tool (Splunk) is more of a bolt on/ external tool. Both are sticky, but I think the Splunk segment is a bit less “rootable”. It will be interesting to see what companies like Palantir push out for corps. 

[cubsfan]

^ I wouldn't argue with that at all. NOW has a massive moat since it gets so tied into IT operations and the automation/customization benefits are huge. But Splunk definitely has a moat. Trying to make sense of billions of security and operational events into something that makes sense is a massive problem for IT departments. These types of tools have been around forever, but Splunk's ability to tie many of these collector tools together and generate meaningful information makes it the leader. Once you do that, you find more to do, and like NOW - it's not going to get ripped out. Most Splunk customers seem to double/triple their initial usage within a year or so. So I think a few years from now - like NOW and Palo Alto - Splunk will have enough critical mass with it's sales force and total offering (acquisitions) that they will be the undisputed leader.   We will see.  I might be too early, as that seems to be my curse.

 

Splunk is undergoing a switch in their pricing model from data based pricing to usage based, as well as cloud enablement.  Most of the users hated the data pricing, as you loaded up your data and paid for that regardless of processing. Now you can load all you want - and pay for what you process. This should make it much easier for companies to see what SPLK can do for them - and just pay for that. You'll see Splunk usage skyrocket in my opinion. Add the cloud enablement in, and that will make it easier for many companies to get started with Splunk. 

 

So, yeah, it's expensive - but this pricing model change slows revenue growth down in the short term (1-2yrs?) and hence the hit to the stock.

[Gregmal]

Shorted some PSTH 6/18 $22 and 22.5 puts

[ASTA]

sold schw bought more baba

[Gregmal]

On 6/3/2021 at 3:56 PM, Gregmal said:

$20 CLF calls a few months out.

Took 150% of basis off the table. Letting the rest ride. Go make it a MEME now Reddit. 

[gfp]

Nice timing on that one!

[Gregmal]

19 hours ago, Gregmal said:

Took 150% of basis off the table. Letting the rest ride. Go make it a MEME now Reddit. 

After looking at the chain, I sold some more of these and then shorted some slightly OTM puts expiring 6/18. Real fat premiums on those. 

[sethatk]

KTYCF and BSM

[Castanza]

47 minutes ago, sethatk said:

KTYCF and BSM

+1 BSM

[K2SO]

Adding to a small position in Largo Resources (LGO.TO). 

Historically a vanadium miner, now turning into a stealth battery/green energy play. 

 

[Ice77]

OSTK - the furniture biz is selling at half of where it should and so we essentially get a portfolio of a couple dozen blockchain investments (w 70% carry for ListCo) basically for free. That sort of crypto exposure is rarely available in the public markets. 

[Gregmal]

On 5/14/2021 at 11:05 AM, Gregmal said:

Rebought some MX. ~21.50

Took some off at $26 on new buyout offer. Stock still cheap though. 

[Gregmal]

On 5/20/2021 at 3:25 PM, Gregmal said:

Nearly tripled my position in ALCO over the past few days. What do you do when you have maybe 10-15% potential drawdown risk and 10-100% highly probable, eventual upside? Especially with a hard asset play where drawdowns will just be temporary and simply add to the upside? Swing big. Worst scenario IMO is it continues to be dead money and pays you 72c a share(which they're about to start ramping). Cash is trash.

 

https://seekingalpha.com/news/3706008-alico-announces-178-increase-in-dividend-additional-ranch-land-sales-and-update-on-esg-initiative

 

Well, there's most people's annual returns...inside a month, on a highly asymmetric investment. Not selling yet, still favorable outlook here and shares are cheap. 

 

[cubsfan]

Started Energy Transfer (ET) $11.27 - dividend 5.4%, forward PE 5.  Like Gregmal says, everyone hates energy!

[gfp]

42 minutes ago, Gregmal said:

 

https://seekingalpha.com/news/3706008-alico-announces-178-increase-in-dividend-additional-ranch-land-sales-and-update-on-esg-initiative

 

Well, there's most people's annual returns...inside a month, on a highly asymmetric investment. Not selling yet, still favorable outlook here and shares are cheap. 

 

Yeah that market reaction is pretty funny considering they had basically already pre-announced everything they said today. Maybe added some specifics but this “news” was out there

[thowed]

Congrats, Greg, this was on my list of RE to check, courtesy of your good self - I've got to speed up!