Friday, January 15, 2021

Buying Semler Scientific (SMLR) @ $85.95

Semler makes diagnostic products that help people with peripheral artery disease.
Peripheral artery disease is a narrowing of the arteries due to the progressive buildup of fat, called PAD.
If you have PAD, blood is not getting to to your extremities and you are 4 times more likely to die of heart attack and 2 times more likely to get a stroke.
- There are many treatments for PAD but the problem is with diagnosing the disease which requires a cardiovascular technician to perform the test.
- Semler invented a product called QuantaFlo which is a little clip that goes on your fingers and toes that measures the flow of blood to your extremities, giving your physician a diagnosis within a few minutes.
- Semler plays into the trend of the shift from treating to diagnosing.
- The business model is NOT selling the devices - it's the software. Rather than charging for the clip, users pay per report they produce. This creates 92% (!!) gross margin.
- $10.7M in revenue and $4.8M in net income - a 40% net margin.
- The company has showed profit for 12 quarters in a row.
- Very strong company financially. $16M in cash. No debt.
- Current Market Cap $611M. Very small cap with endless room to grow.
- The company has plans to grow with new product lines.
- TAM: Semler says that 80 million Americans should get screened every year.
- Semler's marketing strategy is to work with insurance companies, which seems like an effective way to reach doctors at a relatively low cost.
- The biggest risk: Their 2 biggest customers (Health plans) are responsible for 70% (!) of revenue. This is not a very unique risk for a small cap / new company.
- The company trades OTC.
- P/E ration is 63 - very reasonable.
- Profit margin 32.08%
- Return on Equity 63.32%
- Stocks held short of float very low at 2.84%
- Free cash flow - $7.56M
- I see nothing standing in the Semler's way to keep adding customers and keep growing for strong future returns on this investment. 

Thursday, December 10, 2020

Selling GILD @ $60.51

 Bought this on the chance that Remdisivir would be a cure for Covid. Thesis hasn't played out. Exiting to make room for more promising investments.

- Lost 29.1%

Buying AcuityAds (ACUIF) @ $7.08

 Acuity Ads is an Israeli / Canadian based advertising platform that brings together advertisers and publishers. The company offers a programatic marketing platform that enables advertisers to connect with their audiences across online display, video, social and mobile campaigns.

- This is a small Cap company - $300M

- Founder: Tal Hayek - this is his second venture. First wan was a lead generation company sold for an undisclosed amount in 2006.

- Several talented ex-8200 employees.

- The programatic company market is ripe for M&A. Acuity Ads is the smallest player in the business and seems to be growing at a nice clip - which could make it an acquisition target for a company like The Trade Desk (TTD).

- The company has been hit hard by Covid as approximately 1/3 of their customers are from the travel industry.

- Company is seeing explosive growth in Connected TV - Revenue jumped 353% Yoy.

- Connected TV is 30% of TV viewing but only 1% of TV ad spending so there is a lot of potential here.

- In the beginning of October 2020, the company released Illumin - an advertising automation platform that allows advertisers to see how their ads are performing in realtime. This allows for quick decision making and helps raise ROI.

- AcuityAds competitors don't have a competing product.

- AcuityAds plans to list on Nasdaq next year - this will raise visibilty and valuation.

- AcuityAds is worth approx. 1% of Trade Desk - clearly there is plenty of room to grow.

Wednesday, November 25, 2020

Buying Jfrog LTD $FROG @ $62.16

 Jfrog's mission is "to power a world of continuously updated, version-less software."  also known as  "Liquid Software." Basically, Jfrog allows software to be continuously updated.

"The Company has developed universal package repository, JFrog Artifactory, to fundamentally transform the way that the software release cycle is managed. Its package-based approach to releasing software enabled the category of CSRM, allowing software releases to be continuous and software to always be current. It enables organisations to store all package types in a common repository where they can be edited, tracked, and managed. Its unified platform connects all of the software release processes involved in building and releasing software, enabling CSRM."

- The company is Israeli. Run by Shlomi ben Haim. Founder led. 

- Growth is outstanding:

Subscription revenue grew 63% Yoy to $117M

Free cash flow grew 61% yoy to $13.3M

Customers spending over $100K/Year grew 68% Yoy to 286.

- Jfrog is facing possible competition from Amazon, Microsoft's GitHub, IBM's Red Hat and Google's cloud platform, But I feel this environment will favour the non exclusive player plus, Jfrog has a huge head start over the others.

- Also, since Jfrog actually packages Google, Microsoft and Amazon software.. will Google be happy letting Git Hub (Microsoft) package it's code?

- The most compelling argument to buying Jfrog is my conversations with tech people who actually use this product daily, and they say it's something the can't do without - that's all the 'Buy' signal I really need.


Tuesday, November 17, 2020

Deep Dive: Fiverr International (FVRR)

 Fiverr is an Israel based company that owns and operates a platform connecting contract (GIG) workers with employers.

- I bought Fiverr June 8, 2020 at $58.43. Current price: $178 - Up %200

- The world is moving in a very fast clip to the Gig economy. Companies would rather outsource many more services than they used to.

- This trend, enhanced by the Covid pandemic will not stop once the pandemic is done.

- Employers seeking services increased this quarter by 37% Yoy.

- Average spending per buyer increased 20% to $195.

- Buyers spending more than $500 account for 57% of core revenue.

- Revenue is up 88% (!) Yoy.

- Gross margin - 83%

- Fonder led: Micha Kaufman and Shai Wininger own together more than 20% of the company.

- The growing platform is creating a positive feedback loop - Buyers who come in to find a designer, can engage further services such as SEO, Marketing etc.

- CEO Micha Kaufman has a 96% CEO approval rating on Glassdoor.

- Maket cap is $6B - looks like there's plenty of room to grow.

Wednesday, November 11, 2020

Sell Amarin Corp (AMRN) @ $4.04

Amarin lost their patent dispute loosing any advantage they might have had regarding the patent for their Vascepa drug,.

- No patent means anyopne can make and distribute the drug.

- Prices will drop 80%-90%

- No point hanging on to this investment. I have better things to do with the funds.

- Selling @ $4.04 afte buying on March 13th @ $12.57 - Taking a 67% Loss.

Saturday, October 31, 2020

Why Cerence (CRNC) is one of my favorite investments.

 Cerence ticks all the boxes for a great investment:

- It has a strong defensible moat as it sells it's AI Virtual Assistant technology for connected cars to: BMW, Daimler (Merceds-Benz), Volkswagen, Fiat Chrysler, Ford, General Motors and Toyota.

- This 'Car Virtual Assistant' technology is too insignificant for auto manufacturers to copy as this is a small component which isn't a differentiator for the brand.

- I like that the company is 100% focused on the car industry. Cars aren't going anywhere, and virtual assistant technology isn't either.

- In-car voice assistants have already overtaken smart speakers in terms of consumer reach.

- Although the business is super viable today, autonomous driving technology will transform the automotive industry and create new ways for virtual assistants to help out as part of the digital economy.

- Nearly 300 Million cars around the world already use Cerence's AI Tech.

- Cerence was spun off last year from Nuance Communications, a leader in voice communication technology, so although the company is new to the market, the product itself has years of experience baked into it.

- Cerence enjoys a "lock-in" effect. Because they provide white label software to their OEM customers, they are integrated into the customer's technology and not easily replaceable if competition were to come along.

- Signed a contract with Audi Connect in Q1 2020

Cerence is also exploring new areas like gaze and gesture recognition, which will be critical to driver monitoring systems (DMS) that will be increasingly incorporated into advanced driver assistance systems (ADAS) that will serve as stepping stones to full-fledged self-driving cars. 

- With a market cap of under $2B there is plenty of room to run.