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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Graham Osborn who wrote (59767)	8/19/2017 8:16:04 PM
From: Graham Osborn	Respond to of 78750

There is actually a good summary in Burry's letters of my prime concern on UBNT - namely that since very little progress has been made in reducing the sharecount through buybacks, the net economic impact is very similar to if the company were issuing SBC approximately equal to buybacks annually (a simplified reading). One could argue however that SBC is actually much lower, so this cost does not represent a long-term economic cost as SBC would. To be sure though, that assumes that the buybacks are somehow less durable than a defined SBC plan - a divergence which has yet to be illustrated over the company's public operating history. I am not sure which interpretation is correct so if anyone has views on this I'd appreciate them.

To: Graham Osborn who wrote (59767)	8/19/2017 11:12:19 PM
From: Paul Senior	Read Replies (3) \| Respond to of 78750

UBNT. Ok, I've looked again at it, and I'll agree that general metrics (the metrics I generally use anyway) say this thing is overvalued. It now has even higher p/sales and p/stated bv than before, and p/e is now higher than historical median. I'm not so much concerned with book value here (stated or tangible) as I am about the very high price/sales. Maybe though I'm wrong to consider p/sales as a warning. What are still holding me to the stock are the high profit margins and forward earnings estimates of the seven or so analysts who follow the stock. Analysts could be very wrong in predicting increasing earnings next couple of years. I don't understand UBNT's market, and as I said earlier, I'm worried that they might hit a wall on revenue growth. (We are looking at a company with $63M in '09, $198M in '11, $321M in '13, $596M in '15, $822 TTM now (per Morningstar). So I am relying on analysts to at least determine that the direction of revenue continues up. If I go with the analysts, all of whom believe revenue will continue to increase and thus also earnings, I model that UBNT, now at $65.94/sh, might be at $75+ sometime in early 2018, and might be $100+ in 2019. (My fair value estimates and assuming stock market doesn't crash.) So I am planning to stick with the stock at least until I see next q. results. Maybe I should write a disclaimer to others here(?): If someone wants to argue this isn't a value stock now and wasn't when I first posted it, that's a fair point. And I may have taken a little liberty in posting it here because it does fit a specific model of "value" that I have that maybe nobody else here has or uses. It's jmo, and I've been wrong many, many times. I'm not recommending the stock to anybody other than to maybe look at it. If UBNT doesn't make sense for somebody, that's fine. We move on to other companies and stocks.