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Dan Scott

 
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  • Wall Street Breakfast: BHP Billiton To Spin Off Assets [View article]
    Why, you'll just have to purchase a "smart" home security system as well!
    Aug 19 09:49 AM | 2 Likes Like |Link to Comment
  • 2U, Inc. Has Shown The First Signs That Profitability Is Inevitable [View article]
    >>Every now and then over the course of time, after sifting through hundreds of stocks, you get lucky enough to find an underfollowed name that by sheer lack of market sex appeal is a diamond in the rough. 2014's diamond in my portfolio has to be 2U, Inc.<<

    I was thinking the same back at their IPO. Pretty rare these days for a "tech/cloud/SaaS"-type IPO to fly under the radar as much as this one did. Glad to see it finally getting a good pop upwards.

    On a somewhat related note - I know you cover QTWO as well... is it just me or have TWOU and QTWO had remarkably similar stock charts since their IPOs? Similar name, similar IPO date, similar performance... the conspiracy theorist in me is going nuts right now ;)
    Aug 14 09:51 PM | 2 Likes Like |Link to Comment
  • ChannelAdvisor: Current Valuation Hard To Justify [View article]
    Hey Jeb - Thanks for the comments. I'm actually working on a new article as we speak, should be up early this week.
    Aug 10 08:06 PM | Likes Like |Link to Comment
  • An End To Our Relationship With Yahoo, A New Era For Equity Research [View article]
    @Michael - Overall I'm very optimistic and upbeat on SA's future, but I definitely agree with you on the quality of Top Idea articles lately. A good number of them seem to follow the template: 1) Find a small stock no one's heard of; 2) Copy/paste a few paragraphs from their recent filings; 3) Conclude the article by stating the stock is either a "screaming buy" or the "short of a lifetime." SA's been making a lot of great changes lately, and I certainly hope that coming up with a more precise definition of what constitutes a Top Idea is on their to-do list.
    Jul 25 09:45 PM | 10 Likes Like |Link to Comment
  • Q2 Holdings: Solid Post-IPO Foundation And Operational Momentum Should Mean A Big Second Half Of 2014 [View article]
    Dallas - Thanks for the article, been a big fan of your analysis lately (long QTWO and TWOU). I wrote an article covering QTWO on its IPO and one of the problems I ran into was being unable to get much data comparing their service offering vs. that of their competitors... Reassuring to hear someone 'in the know' state QTWO has a superior offering.
    Jul 15 10:17 PM | 1 Like Like |Link to Comment
  • Q2 Holdings: Solid Post-IPO Foundation And Operational Momentum Should Mean A Big Second Half Of 2014 [View article]
    Have you tried checking the Yahoo Finance message boards? They generally have the level of insight you seem to be looking for
    Jul 15 10:06 PM | 1 Like Like |Link to Comment
  • Whole Foods, Wal-Mart And The Coming Commoditization Of Organic Grocers [View article]
    glorysk87 - Valid criticism. This is all definitely forward-looking and speculative in nature, which is why I made it a point to include qualifiers like "I believe..." and "I think..." as much as I did. I wanted to be clear that it was my opinion.

    I understand my analysis is light on the quantitative aspect, and that's largely because I'm looking at a potential trend that hasn't materialized yet. In terms of a cause & effect relationship, the cause is here and known, I'm trying to determine what the effects will be, if any.

    If it's any consolation I do plan on writing a follow-up article after a few more earnings releases, which will re-visit my above thesis and look at whether the actual numbers are proving me right or wrong.

    Thanks for reading!
    Jul 14 07:15 PM | Likes Like |Link to Comment
  • Whole Foods, Wal-Mart And The Coming Commoditization Of Organic Grocers [View article]
    andrewilliamson - Thanks for the response. Great points about the leverage & margins. WFM also generates an impressive amount of Free Cash Flow when compared to its competitors & broader supermarkets.

    I'll admit I'm no expert when it comes to valuation, I realize it's a mix of both art and science, but should superior margins justify a superior PE multiple? It seems to me like that's double-counting the effect of the higher margin, since your earnings will be higher as well as the multiplier you apply to those earnings? Am I overthinking this?
    Jul 14 04:24 PM | Likes Like |Link to Comment
  • Whole Foods, Wal-Mart And The Coming Commoditization Of Organic Grocers [View article]
    Absolutely. I think the major problem is with people who *don't* currently shop for organics and *don't* have a pre-existing loyalty to WFM and *don't* view organic food as a lifestyle, but rather just a higher-priced healtier option. I think this is an important issue, because that's where the majority of growth in the organic sector is going to come from.

    People who currently shop at WFM aren't going to switch to Wal-Mart or Kroger for their organic food. But what about people who already shop at WMT or KR for their groceries? I could be wrong, but my guess would be that the majority of them will end up getting their organic foods from those stores as well.
    Jul 14 01:34 PM | 2 Likes Like |Link to Comment
  • Whole Foods, Wal-Mart And The Coming Commoditization Of Organic Grocers [View article]
    Hi Michael -

    My 'band wagon and orchestra' was not active six months ago because WFM wasn't on my radar at the time. There are lots of stocks out there, I'd love to be able to constantly keep tabs on every single one but it's just not possible.

    To be honest, I first became interested in WFM after it got crushed post-earnings last May. I knew that WFM was a solid company, and I knew that the market was prone to overreactions, so I decided to look in to WFM thinking it would be a great buying opportunity.

    >>I happened to visit a Wal-Mart this weekend and it's laughable to compare WFM and WMT in the same sentence. <<

    I completely agree, which is why I didn't make the case they were directly comparable. I apologize if I didn't make that clearer.
    Jul 14 01:24 PM | 3 Likes Like |Link to Comment
  • Whole Foods, Wal-Mart And The Coming Commoditization Of Organic Grocers [View article]
    Completely agree that WMT has reached geographical saturation, and I think that's why its stock is valued at 15x earnings. Major supermarkets are also trading around 15x. WFM definitely still has some growth potential and I think it should trade at a premium to this 15x, I just don't think there's *enough* growth potential to warrant a 30x-40x valuation.
    Jul 14 01:06 PM | Likes Like |Link to Comment
  • 2U Inc.: Fails On All Fundamental Measures [View article]
    In my opinion, TWOU doesn't really have any 'true' public comps right now. I think it's dangerous to go with the broad "cloud computing" label for purpose of comparison, because the sector is so large that you can essentially pick and choose companies to reinforce the point you're trying to make. You pointed out SMT which trades at a 0.5x P/S, but someone could just as easily point out ECOM (8.3x), DWRE (20.9x), WDAY (31.7x), CNQR (9.3x), and CVT (10.1x) and argue that TWOU is wildly undervalued at just 7.5x.

    Revenue concentration from USC certainly is a risk, but I think that's more due to the young age of the company (2009) and the fact that online higher education hasn't gained widespread acceptance yet. I don't think it signals a flaw in the underlying business model.

    For the payback period/contract length... are you looking at it on the student-level or the school-level? From my understanding, TWOU signs a 10-15 year contract with the university, builds out the online platform, and then collects a percentage of tuition from the university for every student that enrolls in the online program. Obviously no student will remain enrolled and paying tuition for 10+ years, but as long as kids continue to enroll in higher education and universities continue to beef up their online offerings, I don't understand how it could be "irrelevant."

    (Disclosure: Long TWOU, but cautiously. Will be watching the next few earnings calls closely)
    Jul 11 09:48 AM | Likes Like |Link to Comment
  • 2U Inc.: Fails On All Fundamental Measures [View article]
    Are Fleetmatics and Salesforce.com really the most relevant points of comparison here? That's like saying Radioshack and Whole Foods are similar since they're both retail.

    Could you provide a little more commentary on why you think they won't be able to scale? You say it 3-4 times throughout the article, but the only support you give for it is a paragraph copy/pasted from their S1.

    Also, the payback period of 4-5 years is certainly a risk, but is it offset any by the fact that their typical revenue-generating contract is 10-15 years in length? That part didn't seem to get mentioned.
    Jul 10 11:00 PM | Likes Like |Link to Comment
  • 2U -4.6%; SA Pro author criticizes fundamentals, earnings quality [View news story]
    TWOU has been having pretty volatile daily swings ever since its IPO, a 4-5% drop isn't anything out of the ordinary. Not to detract from the article (I can't see it yet due to embargo), but I'm not sure how big the cause/effect relationship is here.
    Jul 9 02:42 PM | Likes Like |Link to Comment
  • Wall Street Breakfast: Must-Know News [View article]
    I wonder how many heart attacks were caused this morning by investors thinking the value of their AAPL stock fell by 85% over the weekend.
    Jun 9 09:28 AM | 3 Likes Like |Link to Comment
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