Investors Mosaic

Long only, mega trends, best-of-breed, long-term focus
Investors Mosaic
Long only, mega trends, best-of-breed, long-term focus
Contributor since: 2012
Company: Investors Mosaic
I guess I view it differently. Since servers cost money, they are a cost. Therefore, getting more revenue from the same asset (that costs you money) is a good thing. Hence, why server utilization matters.
I am surprised by the size of the rally. Marc Benioff is so disgustingly sales-like on the conference call it's hard to listen.
Fair point. But I did say that I am willing to pay 50x forward earnings or 15x EBITDA for this business.
Here's the quote:
"The company's services, along with their competitors, are so instrumental to the proper working of the modern internet we think the company deserves a premium valuation. Specifically, we are comfortable paying 50x forward EPS and 15x EBITDA for this business. We have a hard time finding a business model that has such a long runway for growth, such a sticky business, and innate competitive advantages."
I am betting on continued strong execution by management, so if this does not play out, the stock will certainly fall meaningfully.
Another example of why CRM can't be shorted.
You are amazing.
Coffee prices and peanut prices moving in their favor for sure! My price target is $100 on 2013 EPS.
ah, that makes sense! Thanks.
Hi heliskiier,
What is DEC?
Thanks,
-IM
Good point. Obama decided to use all his political capital (mandate) to push through Obama Care. Unfortunately, he was too stubborn and did it without a single Rep vote. That created the hatred.
Hoping he learned from that experience that we need at least some compromise on both sides!
But point well taken.
No more CMG for me. I'm maxed out. Painful.
I'll take $460!
I need to go visit the Shophouse in DC to see if it's the real deal. Certainly a new leg of growth would help the stock.
Hopefully management is buying back a ton of stock here. That is the only upside to this beat down!
Einhorn 1, me 0. That's for sure. I was surprised to hear management so cautious on their ability to raise prices next year after talking about how much value their customers see in CMG from surveys. By saying they'll be patient and wait for others to take the lead on pricing is not what I expected from a market leader.
Taco Bell and others must be having an impact.
Hey The Fox,
Today is not fun. Live by the sword, die by the sword, I guess. I was very comfortable with the analysis I did, and was just wrong as fundamentals slowed more than I expected. I thought the consumer was in a better place and that competition was less of an issue.
I will re-assess what to do after the dust settles today and Monday. I hate making decisions the day of, so it will be a weekend of reflection / analysis.
Best,
IM
Hi Three Cheese Fondue,
I am all of a sudden hungry. Anyway, what makes you feel as though people are getting bullish? Anecdotally, many of my friends are scared to death of the market and want nothing but cash in the bank or bonds.
I guess my point is that the election will be the trigger for business leaders spending money again, which will drive earnings growth, increase dividends, and therefore, drive the market higher.
Here's my logic:
If the Obama wins, the Dems have the Senate, and the Rep. have the House, it will be a disaster for the Repiblicans not to compromise because the country (voters) have just said "go ahead with Obama's plan" through the vote. If the Republicans still stone wall action, they will destroy the party b/c people will blame them, not the Dems. The Republicans could choice to commit suicide and take this stonewall tactic (certainly a chance this happens), but I think that if they are thinking long-term as a party, they need to get shit done and work with the Dems.
Also, the whole election for the Republicans is 'anything but Obama" or "get Obama out of the office". If he's re-elected, this stance is mute because he'll be out of the office in 4 years anyway. Therefore, it would behoove the Rep. to make progress for the country.
But, this certainly is not "in the bag" and I could be very wrong.
I also totally agree with you that if Romney wins he can;t actually repeal Obamacare b/c they need 60 votes. He'll try to de-fund parts he doesn't like and keep what he likes.
Hi whidbey,
My thought process is built on homework and analysis, not hope. I make an effort to predict the most likely outcome of future events and place my investments accordingly. Of course I cannot be certain of the outcome of Europe and China, but I have to develop an opinion in order to make decisions. Otherwise, I'd just sit on the sidelines and never participate.
I feel as though I can get enough confidence in my outlook / expectations that I am willing to "bet" real money. I really think people can make intelligent assessments of future outcomes without relying just on hope.
What gets you willing to invest?
No kidding my article is just an opinion. Unless I am Moses from the Mountain Tops, this is just one man's opinion. Just like your comments are an opinion.
I am not sure what you are getting at.
That actually sounds like a solid short thesis. Too bad I just swore off never shorting CRM!!!
Hi jerryki,
Yeah, high levels of institutional ownership can certainly create volatility. Especially when they all panic together (or euphoria).
I can confirm that I am not Whitney Tilson.
Thanks for the support, Hank! I appreciate it. Often times it's nasty on these boards!
I'm pretty sure it was Keynes.
http://on.ft.com/T0udw5
I like the Titanic analogy!
That certainly could be a catalyst!
Thanks for the kind words golfnflying! Thanks for sharing your experience, it helps to make the points more salient.
-IM
hello dinod,
Seriously, the WDAY valuation is outrageous (my favorite word these days).
-IM
Interesting point. I can see it as a negative data point for corporate spending (CRM's primary customers). IBM is also big in data analytics and such, which Salesforce has moves into with Radian6 and other recent acquisitions.
Amazingly though, the stock is only down 1% right now.
You are taking the right approach and staying disciplined. Just as long as you keep the "risk" under control and don't make it a huge position. I am also just better at picking longs, so I am less eager to short in general.
Thanks!
Good morning, carlson73:
I think it is hard to separate what this market is more tied to right now, QE-infinity or improving fundamentals. I think both are major forces, but I really like what I see in the U.S. automotive and housing industries. These elements should provide a meaningful foundation for solid growth in 2013 - but this will be partially offset by some of the fiscal cliff happening. (I think the extension of the payroll tax will end, taking taxes up for the average person about $1,000 next year).
I am not a fan of QE because I think it distorts the market, but now we are down this road, we need to stay on it. The chance to avoid this was accepting a deep, deep recession back in 2009. Let the economy crumble for a year or so, but we'd be in a healthier position than we are now. But since the Fed has supported the market and financial system, they are in for the long-haul. Under this lens, I do think QE is having a positive impact by lowering mortgage rates to help the housing market by refinancing.
Long winded answer, but I think the U.S. and global fundamentals will begin to have a larger and larger impact on the market in 2013, which will support money flowing back to stocks from bonds. This is a key point I should have made in the article. This simple money flow will push stocks higher. I think too many people are hising out in bonds and are very under-exposed to equities.
Best,
IM
Fair point, talld,
I'm just hoping that people (rational or not) will see that the U.S. economy improving in 2013 (if my assumption are right) and all this political vitriol will fade away. Growth solves a lot of problems!
But, alas, I agree that people are not rational for extended periods of the time.
Hi www2280,
Thanks for the comment. You could be right on the softness at CMI right now, but my opinion is that this is largely priced into the stock. I also think that Europe and China will be better than people think in 12 months, so if I am right, the stock will start to reflect this in 1-2 quarters. I am happy to wait in this best-of-breed company.
Thanks,
IM