Author Topic: CRM - Salesforce.com  (Read 50474 times)

Palantir

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Re: CRM - Salesforce.com
« Reply #120 on: April 23, 2014, 08:11:19 AM »
^So again, your opinion  of whether the analysis is great or not depends on the market price? Cool.

Your sarcasm is a wonderful addition to the conversation. All I'm saying is that being wrong over a year or two doesn't mean the analysis is wrong. Over 3-5 years, you must assume the market is correct.

Have you looked at CRM's performance since inception? Do you realize that the arguments made against CRM right now are the same as years ago, especially as you note that over 3-5 years the market is correct.
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jschembs

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Re: CRM - Salesforce.com
« Reply #121 on: April 23, 2014, 08:17:04 AM »
We're not talking about short positions initiated 5 years ago, we're talking about short positions initiated in the last year.

jschembs

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Re: CRM - Salesforce.com
« Reply #122 on: April 23, 2014, 08:18:18 AM »
^So again, your opinion  of whether the analysis is great or not depends on the market price? Cool.

Your sarcasm is a wonderful addition to the conversation. All I'm saying is that being wrong over a year or two doesn't mean the analysis is wrong. Over 3-5 years, you must assume the market is correct.

Have you looked at CRM's performance since inception? Do you realize that the arguments made against CRM right now are the same as years ago, especially as you note that over 3-5 years the market is correct.

I'm not disagreeing with you that shorting CRM 5 years ago would've been a horrible decision.

tombgrt

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Re: CRM - Salesforce.com
« Reply #123 on: April 23, 2014, 08:18:44 AM »
I have been short these kind of stocks for 3 months and on average I am in the plus. A period of 3 years would be short, markets can stay irrational much longer. In the case of crm I believe that various things can't keep up appearances for another 1-2 years and especially if the stock price slumps. Funny fact is that the market has been right about crm for a xouple of years now (or so it seems) exactly because the stock has been rising!

Palantir

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Re: CRM - Salesforce.com
« Reply #124 on: April 23, 2014, 08:19:48 AM »
^So again, your opinion  of whether the analysis is great or not depends on the market price? Cool.

All investing is a cash to cash transaction, so the end price always matters. But it doesn't mean that you can't make decisions based on fundamentals rather than other things (momentum, how charts look, etc). I think Tom is making his decisions based on fundamentals, and so trying to say that he's not an investor or whatever is unfair.

The market always has the option of being irrational. That goes for shorts as well as long. What if everybody on this board had bought BAC at $7 because of how the fundamentals looked and years later it was at $3? That's the same kind of thing you're saying.

We have to be right on process because we control that while we don't control outcomes.

To some extent I agree with you, but when you say that tombgrt is making an argument on fundamentals, how can you be sure that he really is fundamentally sound and the market is being irrational? How do you determine who is being rational? :) As you surely have noted, a significant section of stocks continually trade at very high valuations and have done so for years on end. At some point, isn't it worth wondering that maybe the process is not as ironclad as previously thought?
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writser

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Re: CRM - Salesforce.com
« Reply #125 on: April 23, 2014, 08:24:05 AM »
To some extent I agree with you, but when you say that tombgrt is making an argument on fundamentals, how can you be sure that he really is fundamentally sound and the market is being irrational? How do you determine who is being rational? :) As you surely have noted, a significant section of stocks continually trade at very high valuations at conventional metrics and have done so for years on end. At some point, isn't it worth wondering that maybe the process is not as ironclad as previously thought?

"The four most dangerous words in investing are: 'this time it's different.'" Sir John Templeton, legendary investor and philanthropist.

Obviously they agree with John and you do apparently not. No point in starting a fight here ..

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tombgrt

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Re: CRM - Salesforce.com
« Reply #126 on: April 23, 2014, 08:39:50 AM »
^So again, your opinion  of whether the analysis is great or not depends on the market price? Cool.

All investing is a cash to cash transaction, so the end price always matters. But it doesn't mean that you can't make decisions based on fundamentals rather than other things (momentum, how charts look, etc). I think Tom is making his decisions based on fundamentals, and so trying to say that he's not an investor or whatever is unfair.

The market always has the option of being irrational. That goes for shorts as well as long. What if everybody on this board had bought BAC at $7 because of how the fundamentals looked and years later it was at $3? That's the same kind of thing you're saying.

We have to be right on process because we control that while we don't control outcomes.

To some extent I agree with you, but when you say that tombgrt is making an argument on fundamentals, how can you be sure that he really is fundamentally sound and the market is being irrational? How do you determine who is being rational? :) As you surely have noted, a significant section of stocks continually trade at very high valuations and have done so for years on end. At some point, isn't it worth wondering that maybe the process is not as ironclad as previously thought?

As with going long in value investments, you can't be sure until it actually happens, simple as that. The difference with going short/options is that you have a more prominent timing element and the fact that long positions generally increase in value during your holding period. So yeah, you want to be proven right at a certain point.

But what the market has done the last 5 years shouldn't make it any more unlikely that my thesis plays out by say 2016-2017. It is what it is and it has led me to believe that those stocks are currently overvalued. If the price action of the last few years didn't occur, I wouldn't be talking about being short CRM anyway.

I wouldn't have shorted CRM in 2010-2012 exactly because there was all this room for future expectations and beating of market expectations with stellar growth. CRM is running out of options to surprise investors while the stock keeps going up fiercly despite these changing circumstances. I have a hard time explaining this in English but to me it seems there is simply a shift in the underlying business reality. Internal growth slowing which they have to keep up with expensive acquisitions, debt to be refinanced soon, expenses increasing faster than revenue, bigger players making progress so competition starts to increase, stock compensation to pay employees has reached a point at which say 50% drop in the share price would be catastrophic, ... etc. You could say that they got too big and they used up all tricks to keep fooling the market for long. That is why I am short now and not 2 years ago or some time in the future.
« Last Edit: April 23, 2014, 08:42:21 AM by tombgrt »

Palantir

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Re: CRM - Salesforce.com
« Reply #127 on: April 23, 2014, 09:01:28 AM »
^Fair enough then, thanks for explaining your POV.
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enoch01

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Re: CRM - Salesforce.com
« Reply #128 on: April 23, 2014, 10:17:31 AM »
Those of you who are short using options, what kind of expected returns are you estimating?  $55 2016 puts are priced at $9.6.  Personally I estimate the expected payout on something like that would give you a double.  But I don't have confidence in the odds.  Of course if you know it's going to $10 in the next few months or something, more power to you.

All else equal, I would like to short Salesforce.  The only problem is that lots of people appear to be really excited about shorting it as well.

writser

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Re: CRM - Salesforce.com
« Reply #129 on: April 23, 2014, 10:50:51 AM »
7% of shares outstanding is shorted. That's quite a lot but not even close to SHLD, LULU, HLF, SODA and some other controversial names.
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