What are you buying today?

[whatstheofficerproblem]

21 hours ago, Luke said:

I completely exited every china holding just a few min ago. Big pile of cash ready to be deployed in something else. I surrender finally

 

What stocks should i buy?

 

RIP friend, you will be missed.

Bought some REGN

[Eng12345]

Sold TLN and bought JOE and AEGXF

[Gregmal]

MGM and ALCO plus a tracker in PDD

[Whensthepaintdry?]

Slowly accumulating some SSD 

[fareastwarriors]

some NTDOY 

[Cod Liver Oil]

Covered the remaining MSTR short and got put the remaining January Nike.

Edited 14 hours ago by Cod Liver Oil

[WayWardCloud]

For the past week I've been buying ADOBE.

It went from trading at PEs in the mid-30s for a decade to a PE of 20 now over AI competition fears and subdued growth.

I've been wanting to own this forever because Adobe Premiere is my main work tool in post production video.

 

I don't care where the AI generated images are coming from (Adobe's in-house LLM called Firefly or one of the competitors such as Midjourney or Sora) I guarantee you it's going to be fed right back into Premiere if video and into Photoshop if photo. There are workflow pipelines involving many different artists at every company that nobody wants to risk changing and Adobe is the master at integrating them all seamlessly together. Video editing/visual effects/color correction/sound design/graphic design all have to integrate together and turnaround times for projects are often as short as 24 hours for social content. Adobe is much more than one cool app they're an integrated platform. When another company comes up with a cool shiny new tool (it happens all the time, especially in VFX), you feed the new tool's output back into your Adobe environment and then a year or two later Adobe releases an update and starts doing the same thing natively. This is what happened with speech-to-text for example. MANY really good automated transcription websites popped up all of a sudden when natural language recognition got much better and we would export entire podcasts to them, get a transcript and feed that data right back into Adobe. Now speech-to-text is a tool in the suite and I've never paid any of those sites ever again. They don't have to be first or best they just have to stay on top of what their users want and incrementally add those functions to their software following the kaizen method to keep us locked in, which they've been historically great at.

 

I've missed the boat on investing in big AI winners (should have seen Nvidia coming) but I've been good at identifying what I call the mistake losers and I believe the AI bear case for Adobe is wrong here. This reminds me of how Alphabet initially traded down on AI fears even though they have the world's number one AI team. Adobe will incur increased capex yes but I am willing to bet they will emerge with an untouched or strengthened competitive position.

 

You get to own a mature deeply entrenched high margins enterprise software company with predictable subscription revenues and a high pricing power (if they doubled their prices I can't imagine a single professional would switch), possibly at the dawn of a golden age in fully digitally created image/video content. FCF yield is around 5% and growth 10% with a chance of picking back up to 15%+ in 2026-7.

Edited 12 hours ago by WayWardCloud

[LC]

Thanks Wayward. This one fell of my radar but I appreciate you resurfacing it. 

[Malmqky]

50 minutes ago, WayWardCloud said:

For the past week I've been buying ADOBE.

It went from trading at PEs in the mid-30s for a decade to a PE of 20 now over AI competition fears and subdued growth.

I've been wanting to own this forever because Adobe Premiere is my main work tool in post production video.

 

I don't care where the AI generated images are coming from (Adobe's in-house LLM called Firefly or one of the competitors such as Midjourney or Sora) I guarantee you it's going to be fed right back into Premiere if video and into Photoshop if photo. There are workflow pipelines involving many different artists at every company that nobody wants to risk changing and Adobe is the master at integrating them all seamlessly together. Video editing/visual effects/color correction/sound design/graphic design all have to integrate together and turnaround times for projects are often as short as 24 hours for social content. Adobe is much more than one cool app they're an integrated platform. When another company comes up with a cool shiny new tool (it happens all the time, especially in VFX), you feed the new tool's output back into your Adobe environment and then a year or two later Adobe releases an update and starts doing the same thing natively. This is what happened with speech-to-text for example. MANY really good automated transcription websites popped up all of a sudden when natural language recognition got much better and we would export entire podcasts to them, get a transcript and feed that data right back into Adobe. Now speech-to-text is a tool in the suite and I've never paid any of those sites ever again. They don't have to be first or best they just have to stay on top of what their users want and incrementally add those functions to their software following the kaizen method to keep us locked in, which they've been historically great at.

 

I've missed the boat on investing in big AI winners (should have seen Nvidia coming) but I've been good at identifying what I call the mistake losers and I believe the AI bear case for Adobe is wrong here. This reminds me of how Alphabet initially traded down on AI fears even though they have the world's number one AI team. Adobe will incur increased capex yes but I am willing to bet they will emerge with an untouched or strengthened competitive position.

 

You get to own a mature deeply entrenched high margins enterprise software company with predictable subscription revenues and a high pricing power (if they doubled their prices I can't imagine a single professional would switch), possibly at the dawn of a golden age in fully digitally created image/video content. FCF yield is around 5% and growth 10% with a chance of picking back up to 15%+ in 2026-7.

I didn’t realize Adobe was potentially a decent price atm.

 

Thanks for bringing this up as well.

[Gregmal]

9 minutes ago, Malmqky said:

I didn’t realize Adobe was potentially a decent price atm.

 

Thanks for bringing this up as well.

Hogwash. #MOAB

[Cod Liver Oil]

@WayWardCloud I am involved with a team building an AI music/video technology. My head designer said he has shifted over the last couple of years from 100% Adobe CS to 10% now. He is primarily using Figma, Runway and Midjourney. He sees Adobe as a bloated suite of products which has superior competitors. Adobe has been a great business but I am concerned that it is legitimately being disrupted.

[WayWardCloud]

44 minutes ago, Cod Liver Oil said:

@WayWardCloud I am involved with a team building an AI music/video technology. My head designer said he has shifted over the last couple of years from 100% Adobe CS to 10% now. He is primarily using Figma, Runway and Midjourney. He sees Adobe as a bloated suite of products which has superior competitors. Adobe has been a great business but I am concerned that it is legitimately being disrupted.

Thanks for the color @Cod Liver Oil, this is why I LOVE this forum!

 

Figma really is awesome and I wish they didn't back away from the merger, that does worry me a bit.

 

I see Runway, Midjourney, Sora as great exciting new tools you plug into a bigger environment. If they stay superior to Firefly over the long run and at a low enough cost per generation to make a profit they may take a big slice of the new TAM of AI generated images that's being created. I don't see how this disrupts Adobe's legacy software too much just like I couldn't see how generative LLMs were disruptive to Google Search. It feels more adjacent than replacement and if anything it will create more content to touch up.

 

But then again I'm not an AI head designer (that sounds really cool!)

Edited 9 hours ago by WayWardCloud

[Eldad]

1 hour ago, WayWardCloud said:

For the past week I've been buying ADOBE.

It went from trading at PEs in the mid-30s for a decade to a PE of 20 now over AI competition fears and subdued growth.

I've been wanting to own this forever because Adobe Premiere is my main work tool in post production video.

 

I don't care where the AI generated images are coming from (Adobe's in-house LLM called Firefly or one of the competitors such as Midjourney or Sora) I guarantee you it's going to be fed right back into Premiere if video and into Photoshop if photo. There are workflow pipelines involving many different artists at every company that nobody wants to risk changing and Adobe is the master at integrating them all seamlessly together. Video editing/visual effects/color correction/sound design/graphic design all have to integrate together and turnaround times for projects are often as short as 24 hours for social content. Adobe is much more than one cool app they're an integrated platform. When another company comes up with a cool shiny new tool (it happens all the time, especially in VFX), you feed the new tool's output back into your Adobe environment and then a year or two later Adobe releases an update and starts doing the same thing natively. This is what happened with speech-to-text for example. MANY really good automated transcription websites popped up all of a sudden when natural language recognition got much better and we would export entire podcasts to them, get a transcript and feed that data right back into Adobe. Now speech-to-text is a tool in the suite and I've never paid any of those sites ever again. They don't have to be first or best they just have to stay on top of what their users want and incrementally add those functions to their software following the kaizen method to keep us locked in, which they've been historically great at.

 

I've missed the boat on investing in big AI winners (should have seen Nvidia coming) but I've been good at identifying what I call the mistake losers and I believe the AI bear case for Adobe is wrong here. This reminds me of how Alphabet initially traded down on AI fears even though they have the world's number one AI team. Adobe will incur increased capex yes but I am willing to bet they will emerge with an untouched or strengthened competitive position.

 

You get to own a mature deeply entrenched high margins enterprise software company with predictable subscription revenues and a high pricing power (if they doubled their prices I can't imagine a single professional would switch), possibly at the dawn of a golden age in fully digitally created image/video content. FCF yield is around 5% and growth 10% with a chance of picking back up to 15%+ in 2026-7.

I have FY 2024 EPS of 12.36 which puts them about like always, 34x. 
 

I see where Morningstar is trying to say it is at 24x normalized. I guess they are backing out the 1 B acquisition term fee. 

[WayWardCloud]

Should have mentioned forward PE, my bad!

I find a 2025 GAAP PE of 26 and non-GAAP of 20.5.

If you compare to previous years it really is much cheaper than it used to be except for the brief September 2022 dip which was a great time to buy.

 

 

Edited 9 hours ago by WayWardCloud

[Eldad]

3 minutes ago, WayWardCloud said:

Should have mentioned forward PE, my bad!

I find a 2025 GAAP PE of 26 and non-GAAP of 20.5.

If you compare to previous years it really is much cheaper than it used to be except for the brief September 2022 dip which was a great time to buy.

 

 

Thanks. Interesting for sure

[MungerWunger]

the bulk of the adjustments to go from GAAP to Non-GAAP EPS is from Stock-based and deferred compensation expense ($ 4.69)

 

From their earnings release: https://www.adobe.com/content/dam/cc/en/investor-relations/pdfs/11214202/a56sthg53egr.pdf

[Dalal.Holdings]

6 minutes ago, MungerWunger said:

the bulk of the adjustments to go from GAAP to Non-GAAP EPS is from Stock-based and deferred compensation expense ($ 4.69)

 

From their earnings release: https://www.adobe.com/content/dam/cc/en/investor-relations/pdfs/11214202/a56sthg53egr.pdf

 

Amazing