They ranked "learning about new (and potentially related) business areas" as a top reason for making an acquisition. Beginning in the late '90s, Rexam shed diverse businesses in cyclical industries and grew scale in cans. Which was mentioned in latest call. My investment thesis is that like Zoom, Fastly’s intense focus on a limited set of difficult problems with the goal to create noticeably better outcomes for developers and DevOps teams, will ultimately drive investment returns over the long term. ESTC growing 35% vs 25% is about how dependent they are on field sales vs bottoms up, how well their sales process translates to virtual, how much resource usage increases in their existing customer base, whether perceived ROI and criticality are strong enough to prevent a company cutting their IT budget from getting rid of ESTC, where in the priority list for CIOs in coronavirus are their various products and many other judgment calls.
The event ran this past week and highlighted a number of enhancements to Cloudflare’s serverless edge compute product.
Investment Thesis What do we make of Slack's ( WORK ) valuation now that the company's shares trade publicly after their direct listing on the NYSE? Second, if bad news comes out, then everyone will likely be forced to run for the exits at the same time. The study concluded that the market prefers "expansionist" deals, in which a company "seeks to boost its market share by consolidating, by moving into new geographic regions, or by adding new distribution channels for existing products and services. The second shoe is, How will Wall Street respond? Why? Justifying a deal as being "strategic" ex post facto is, in most cases, an invitation to inferior returns. Toronto: 1 October 2002.14.
"Perhaps you're rolling your eyes and saying to yourself, "Well, of course our company uses an investment thesis!" Of those who did, fully half discovered within three years of closing the deal that their thesis was wrong.Studies conducted by other firms support the conclusion that most companies are terrifyingly unclear about why they spend their shareholders' capital on acquisitions. So how can an analyst generate a higher return per idea?A higher Hit Rate is very difficult to achieve.
No way they will trade on 13x sales in that scenario. For the past five years, none of the players has broken from the pack and tried to steal market share from the other three by offering a lower price. That will be the "economic owners' FCF". However, looking at the holders list, you determine that other hedge funds are well aware of this opportunity, as the top shareholders include large hedge funds such as Lone Pine, York Capital, TPG Axon, and Hound Partners.It may not be a bad thing that other hedge funds are involved. In our work with companies that are thinking about doing a deal, we often hear that the acquisition is intended for "strategic" reasons. If it is dilutive, it's probably high-growth and attractive, and we can't afford it." All prices USD. SpringTide was a Major Investor in PathologyWatch’s $3M Series Seed round in early 2019, taking a board seat. BITCOIN INVESTMENT THESIS 8 The stock-to-flow ratio (stock divided by flow) is a metric commonly used to quantify the scarcity, or hardness, of commodities. For example, our survey of 250 senior executives across all industries revealed that only 29% of acquiring executives started out with an investment thesis (defined in that survey as a "sound reason for buying a company") that stood the test of time. The entire stock market might have been going up rapidly, or the sector as a whole might have had a big rally, and relative to the sector the stock underperformed, so it may actually be cheap on a relative basis.You may also want to compare several valuation metrics simultaneously.
Many experienced investors will tell you that there is hardly anything as valuable in keeping them focused and intellectually honest as this simple exercise. These situations should not take place for long according to basic economic theory, but they can and quite often do.
Is senior management arguing that a deal's inherent genius is too complex to be understood by all stakeholders, or simply asserting that the deal is "strategic"? This will lead to adverse price movement that could destroy your holding.Hedge funds in general tend to be short-term focused, so it could turn into a situation where one investor exits swiftly and triggers a domino-effect panic, crushing other investors in the wake.Looking at charts can be very deceiving and can create misleading signals. Why would a company's leaders ever knowingly take steps that would decrease their EPS?The answer, of course, is to invest for the future. In this post, I will dig into the changes announced and what these imply for usage of Cloudflare’s Workers product. In other words, there was no statistical correlation between future stock performance and whether the company did an accretive or dilutive deal. There is more concern that AMZN are going to be taking their business and influencing pricing. Many of the best acquirers write out their investment theses in black and white. From there, you need to understand how much you make when you are right and how much you lose when you are wrong. Fortunately, that notion is relatively easy to confirm or disprove. Or, you might predict stronger earnings growth and less multiple expansion, or vice versa.As you can see, it pays to think through different scenarios needed to achieve your target return.A common mistake analysts make is to say that they believe a stock will appreciate by an amount but have earnings expectations that equal or are very similar to those of sell-side earnings estimates.