Quick update: I added a bit more to my PTON position last Thursday and also have started a larger analysis of DOCU. I’ve been aware of the company for a long time because of a friend (on this chain) who worked as an exec there and have always liked the concept (e-signatures), but their growth was below par of my other companies and they’d had some challenges gaining traction. CLEARLY that has changed the past 9 months and they seem to be accelerating in growth, adding new products, and seeing significant tailwinds from Covid. They have added a new “Agreement Cloud” platform product that heavily used AI to analyze existing contracts and machine learning, as well as a product called (Hit return to soon) “Analyze” that does risk analysis. I’ve established a small 2% position last week also and am looking to increase that position. More to come! Cheers!
The stock dropped almost 15% after earnings, not because of lack of performance or dropping the ball…I just think the expectations were built in and people sold the news to take profits. I considered it an opportunity to get in and feel this company will benefit significantly going forward from the digital transformation going on. Entire industries (like the mortgage industry) are now changing the laws around notaries and signatures to finally allow remote e-signatures. Anyone who has ever bought a house or building can attest to the nightmare that surrounds the mountains of paper and dozens of required notarized signatures…this has not become a relative “breeze” and I can’t not imagine we will ever go back to the old antiquated way of doing it!
Not that I put much faith in Investment Banks or their analysts, but it doesn’t hurt that Morgan upgraded them today with a price target of $260 either!
User comment: Thanks Victor! Been using Docusign for a long time as a business. Interesting to hear about their growth. Curious how you feel about Dollar Cost Averaging as a strategy vs your 3 traunch approach.
Victor: Thanks for the question, Brandon. It is a super loaded question, of course. I prefer something of a hybrid, as you know (ie buying in thirds or fourths early on vs spreading it out too long). The typical argument is between a single lump sum investment up front and Dollar cost averaging which advocates a regular weekly or monthly investment over a long period of time. The main problem with Dollar cost averaging, while it might minimize your downside risk, will also minimize or reduce your upside potential on these fast growth companies. While The argument can be made that it’s better to put it on remote control then never make the one lump sum payment upfront and thereby never get into the The investment at all, my argument is that I want to invest in the company up front at the time of doing the research and as soon as I see that they are growing fast…. and not wait a year or more and spread it out Over a period in which they might slow their growth down or fade away. There are benefits to DCA, and depending on your risk profile it may be best for you, but my risk profile and my high growth stock portfolio of companies don’t really fit with the DCA approach. For example, if I had invested over time in a company like AYX, That I bought at around $22 the first time and $26 the second time, my DCA would be much, much, much higher because I would have been purchasing it between $22 all the way up to $163. On a sidenote, if you are in AYX today, it appears they really, really like the new CEO that was announced yesterday. The stock is up over 25% today!! And It’s particularly amusing to me as a “Matrix” movie fan that they have hired “Mr. Anderson” to usher this digital transformation company into the future! -Cheers
