On Wednesday October 25th, we presented the quarterly results from our vetting idea hunt. Click HERE for the call replay.
Watch a 10 minute overview of the call below:
These are ideas generated from my team’s rigorous vetting process. We challenge ourselves to read more, listen more, ask more, so that we can unearth ~10 stocks each quarter that we may never have looked at before, or have not looked at recently. It’s a starting point for analysis with the goal that at least 1 (and as many as 3) become homerun ideas where our knowledge becomes deep and we develop advantages.
This is one part of my team’s 3-part process in covering Technology.
1) Launch new ideas from our Quarterly Idea Hunt, meant as a starting point for idea generation, less deep and more broad. Example:
2) Deep dives on stocks with the aim of getting the call right, adding unique analysis and data sets. Examples of recent deep dives include:
- Callidus Software Short, 9/25/17
- Sabre Corp Short, 7/21/17
- Intel Corp Moving off of Best Ideas Short, 5/31/17
- Corning Long, 3/15/17
3) Top down thematic research meant to drive toward unique idea generation in Tech. Examples:
- Halftime Report, 7/10/17
- Software: What Comes Next, Part 1, 08/27/17
- Semiconductor Indigestion, 8/20/17
Please email for access to our BB calls and notes.
Below is a taste of what we discussed on the call:
Sony (SNE) – A ne’er do well finally seeing multiple positives all chugging through simultaneously. Will management find a way to spoil the fun? Eventually, but the up-current is too strong to avoid (for now).
Cree (CREE) – Absolutely too many ways to win, hear ye, hear ye, doing the work with aim of building large position on red days / weakness ahead of a multi-year run.
Alteryx (AYX) – We want to be long the ongoing investment cycle in the data persistence layer. Partner and customer feedback risks need to be engaged.
Nutanix (NTNX) – A software stock masquerading as a hardware company finally seeing the veil come off. Underneath is an important piece of the software stack for enterprises to gain modern day software tools that will help them manage workloads in a dynamic resource environment; fears exist of zero incremental profit on rapid revenue growth.
Maxim (MXIM) – One of the last few solid available take-outs in semis, trading at 16x EV/FCF. Will it be sold? We don’t know, but even though the stock has moved nicely since our first note, a 5% FCF yield like peers would put the stock higher still.
VMware (VMW) – The current march of hybrid cloud armies prop up VMW today, but Azure stack will threaten much of this position, and eventually VMW will need to face challenges from intensifying competition. Will the market position of the new business generate enough dollars to cover the fall in the core? We will address that.
Equinix (EQIX) – A levered overpriced commodity business where conventional equity research relies on demand anecdotes rather than understanding supply growth. Use of adjusted FCF by management and analysts further obfuscates reality. More downside than upside.
Itron (ITRI) – Trying to sell investors on a razor/blade strategy in an ancient tech business that isn’t growing as evidenced by soft data points. Management turning to M&A and a big restructuring to move the dial but already trading at a lofty 33x PF EV/FCF for a business that is struggling to grow organically. We will flag our concerns.
