Corner of Berkshire & Fairfax Message Board

General Category => Investment Ideas => Topic started by: jouni1 on January 02, 2014, 01:57:33 AM

Title: UBNT - Ubiquiti Networks
Post by: jouni1 on January 02, 2014, 01:57:33 AM
came across this, and knowing there's quite a bit of tech-interested people here thought i'd post and see what you have to say.

the way i understood they mainly make network equipment, wired and wireless systems, which are supposedly better and 3-4x cheaper than cisco for example.

posted some impressive numbers last Q:

they're quite richly valued but if they can keep going at a pace even near to this, it could be a solid investment.

what do you think, is it a truly disruptive company or will they get crushed by the behemoths in a few quarters?

sorry for the low level of analysis but as i said i wanted to see if someone understood more about this than me.
Title: Re: UBNT - Ubiquiti Networks
Post by: SpecOps on January 28, 2015, 06:21:20 AM
Resurrecting this thread as I just bought some shares in UBNT.

I think they are very well placed in this industry and customers speak very highly of the company and its products. Pretty cheaply valued considering growth. Lots of worrys about increased competition in the future but I'm not convinced UBNT will be easily displaced as the market leader. My main concern is more over what management does next, though they have proven competent so far.

I wrote up a full thesis on my blog https://investingsidekick.com/ubiquiti-ubnt-investment-thesis/
Title: Re: UBNT - Ubiquiti Networks
Post by: compoundinglife on January 28, 2015, 07:49:01 AM
Apolgies in advance, this is kind of a rambly post. Also a disclaimer, I have not been very active in this space for quite a while so my perspective might be dated.

I used to own a company that built a linux based ruggedized outdoor wireless routers for WISPs. The UBNT product line eventually displaced our product which was a niche low volume product and we switched to reselling UBNT products and eventually winded down because the margins in reselling their gear were not enough to make it worth our while at the volume we were doing.

I met with management and their engineers to work on a couple of large projects we were doing in non-public spectrums. This was back in 2006 before the IPO.

The company was hyper efficient. I was very impressed with how much product they produced with such few people and how quickly they were able to get products to market. It was very clear that they were extremely cost conscious and the employees were very dedicated and the engineers were very sharp. I am no longer in that line of business, so I have not dealt with them since 2008.

As for the products, they were really good and feature rich for the price point. However their niche was really wireless ISPs and WISPs loved the simplicity of their stuff and also the super cheap price point. Is the gear as good as cisco? It is not IMO. I have run into quality issues with their gear and know some larger WISPs that have had a lot of quality issues with some of their gear. Issues that require multiple tower climbs to keep replacing stuff after they have said the issue was fixed a new hardware rev. But really the price point you just deal with it because its the cheapest option out there. Quality issues could have just been growing pains or a problem with a specific SKU. I have had mostly good experiences with their products.

There are also two primary different use cases for wifi gear. The WISP use case is that you have some UBNT gear on the tower and then a UBNT device at someone’s house with an ethernet cable out the other end. So you are mostly doing UBNT to UBNT which they have probably tested very well. It also allows you to use whatever proprietary extensions they have for better performance. If I were building a WISP I would still consider UBNT gear because it is just so cheap and featurefull for what you get. But I would likely only use it for connecting end users and try to stick with something like DragonWave ( http://www.dragonwaveinc.com/ ) for backhaul links or links that just can’t go down. But alot of WISPs out there use UBNT and are very happy with it. They have a great edge in the WISP market.

There is also the enterprise/campus use case. When you buy wifi gear from gear from Cisco or Aruba what you are getting is something that has had all the kinks worked out through experience. Wifi is very tricky because there are so many different client chipsets, drivers, variations on the authentication protocols… and it is really easy to run into issues because not everyone adheres exactly to specs. It has gotten better over the years but if I were to do a production wifi network for end users (non wisp model) I would use cisco or aruba. These companies have done huge rollouts at Microsoft campus, Apple campus etc… They have worked out all the issues with all the different types of client side hardware and drivers our there and they have handled alot of the mobility issues.

For example, I have worked on deploying WiFi that *had* to work for events with over 5K devices in a single conference center, used Cisco. Would not use UBNT for that.

I realize that this probably doesn’t help with regards to buying or selling the stock. I looked at UBNT when it IPOed and threw it in the too hard pile, just really hard for me to get a good sense of what will happen to them.
Title: Re: UBNT - Ubiquiti Networks
Post by: mvalue on January 28, 2015, 08:04:28 AM
Thanks so much for posting this compoundinglife.

It seemed to me part of the promise and peril of ubnt is selling that same WISP hardware into frontier markets - any thoughts on whether that is how some of those markets might be built out or reasons why they might not?

Obviously not asking for opining on the future, just whether these hardware offerings make sense for bootstrap ISPs around the globe w/less wire infrastructure or whether there are other options that might leapfrog that approach.
Title: Re: UBNT - Ubiquiti Networks
Post by: SpecOps on January 30, 2015, 01:29:07 AM
Thanks for the info compoundinglife, always very useful to hear from someone very familiar with the industry.
Title: Re: UBNT - Ubiquiti Networks
Post by: compoundinglife on January 30, 2015, 06:50:40 AM
Thanks so much for posting this compoundinglife.

It seemed to me part of the promise and peril of ubnt is selling that same WISP hardware into frontier markets - any thoughts on whether that is how some of those markets might be built out or reasons why they might not?

Obviously not asking for opining on the future, just whether these hardware offerings make sense for bootstrap ISPs around the globe w/less wire infrastructure or whether there are other options that might leapfrog that approach.

I think UBNT's products make alot of sense in the frontier market. The price points allow for local entrepenuers or governments to bootstrap a WISP for a low cost and incrementally expand their networks. I have no idea however how big the demand is in the developing world.   
Title: Re: UBNT - Ubiquiti Networks
Post by: Dustin T on March 05, 2015, 12:13:55 PM
I just opened a position. The price, profit margin, and everything I've read about the CEO convinces me the upside is worth the risks.
Title: Re: UBNT - Ubiquiti Networks
Post by: SpecOps on April 06, 2015, 06:33:12 AM
Another look at UBNT by blogger Jnvestor, interesting analysis

http://www.jnvestor.com/ubnt/
Title: Re: UBNT - Ubiquiti Networks
Post by: Dustin T on February 13, 2017, 07:08:04 AM
UBNT just dropped 16% because it missed earnings by a nickel (.72 vs .77 per share expected). Great buying opportunity, earnings and revenue are up actually by 20% year of over year so I'm guessing it's being punished for not being up 21%.

This company is unloved by wall street for a variety of reasons, it doesn't have a CFO (how dare they) doesn't have a traditional sales force, and the CEO owns over 50%. It's a jockey stock the same way Apple was under Jobs. I'm not claiming this is the next apple, just that it's ran by a brilliant young CEO with an excellent track record.

It's been good to me, if you read up on Robert Pera and his company, I believe it could be good to you too.

http://seekingalpha.com/article/4030431-ubiquiti-primer-survival-land-carnivores-dinosaurs

http://seekingalpha.com/article/4044624-ubiquiti-networks-ubnt-q2-2017-results-earnings-call-transcript
Title: Re: UBNT - Ubiquiti Networks
Post by: rkbabang on February 13, 2017, 08:31:13 AM
I've been watching UBNT for a while now.  I love the company's products even for the home.  Last year I was so sick of poor wifi in my house that I finally bit the bullet and got rid of my residential wireless router in my house and setup an Ubiquity wireless system.   I went with a Ubiquity EdgeRouter X to a CISCO SB200-26 switch to two Ubiquity Unifi AC-PRO  access points located each at one end of my house.   While I was running the cat6 for the access points I ended up running a bunch more to wire in all my permanent equipment (TVs, computers, video games consoles, etc).   Before doing this I tried an ASUS router, a Netgear router, and a even both together setting one as an extension.  They were unreliable (they kept crashing and needing to be re-booted every week or so), there were dead spots all over my house, I couldn't connect in my yard at all.  After installing the Ubiquity equipment I have wifi everywhere in my house, garage, driveway, yard, and even down the street a little.  They are solid, after setting it up about a year ago and getting it working they never go down or need to be re-booted, they never drop signals even for a second (that I've noticed anyway).  If anyone hates their home wifi I'd recommend going this route.  I know most homeowners never will, but these are excellent, cheap, easy to setup and maintain systems that even a small business should have no problem affording or using.  From the research I've done most of their competitors charge double or more for a similar setup.

I'm thinking about buying UBNT today.
Title: Re: UBNT - Ubiquiti Networks
Post by: awindenberger on February 13, 2017, 09:24:19 AM
I loved the UBNT story 12-15 months ago and am still pissed at myself for never buying in when it was under $30. Since then I've been waiting for a large pullback that never came. Now it finally happened, but I don't have anything else I want to sell, so hopefully it will stay down for a few months while some other picks play out.
Title: Re: UBNT - Ubiquiti Networks
Post by: gjangal on February 13, 2017, 10:38:37 AM
RJP has been a good ceo so far. Although he owns the majority of the stock he will play fair with minority shareholders. He used to have a blog where he has written his thoughts about running a company. Not sure if it's still online

Very good story so far, to me it looks like he has a roadmap and is following through with it by launching products one after another. Amplifi , the new product has great reviews on Amazon. The enterprise side seems to be growing.

The short interest on this one is crazy. north of 7 mn out of a total free float of 25mn. The market expects gross margins to contract in the future and RJP is adamant about maintaining it at 45%. I own a bit for sometime but it has been a very bumpy ride and looks like it's going to be one in the future.
Title: Re: UBNT - Ubiquiti Networks
Post by: valcont on February 13, 2017, 01:02:51 PM
Used to own the stock and loved Pera's CC's with analysts. He would be explaining the 2 year roadmap and their response "umm what's the guidance for the next qtr.". Pera is a great guy, he used to have a blog and did a video on Tesla. I thought he was spending way too much time on shooting hoops.

Their distributorship model is pretty interesting. Bulk of their revenue is lumpy and comes from countries like Russia, Iran ,Iraq and the dealings are pretty opaque.
Title: Re: UBNT - Ubiquiti Networks
Post by: gjangal on August 03, 2017, 05:54:33 AM
results out today. will be a billion dollar revenue company next year .

http://files.shareholder.com/downloads/AMDA-JI74R/4416779331x0x952276/B7971B9A-FD9F-4FFF-96CA-15F5484FDE9F/UBNT_4QFY17_Earnings_Press_Release_FINAL_08_03_17.pdf
Title: Re: UBNT - Ubiquiti Networks
Post by: Foreign Tuffett on August 03, 2017, 07:41:06 AM
results out today. will be a billion dollar revenue company next year .

http://files.shareholder.com/downloads/AMDA-JI74R/4416779331x0x952276/B7971B9A-FD9F-4FFF-96CA-15F5484FDE9F/UBNT_4QFY17_Earnings_Press_Release_FINAL_08_03_17.pdf

A solid quarter that helped allay some much of the market's skepticism about their gross margin deterioration and inventory build.

There are several good articles on this name on Seeking Alpha for those interested.
Title: Re: UBNT - Ubiquiti Networks
Post by: gjangal on August 03, 2017, 11:40:45 AM
Yeah. to me it's very surprising that the market has 8-9m shares short in a company which has a 30m share float and the ceo owns 50% of the company. The company dominates the WISp niche. It's taking market share from cisco, aruba and ruckus in the Wireless LAN space.

 It was bootstrapped by a guy from 0 to 1b in revenue with little or no capital and just an idea. He is one of the most under rated ceos out there.
Title: Re: UBNT - Ubiquiti Networks
Post by: Foreign Tuffett on August 03, 2017, 10:19:12 PM
Yeah. to me it's very surprising that the market has 8-9m shares short in a company which has a 30m share float and the ceo owns 50% of the company. The company dominates the WISp niche. It's taking market share from cisco, aruba and ruckus in the Wireless LAN space.

It was bootstrapped by a guy from 0 to 1b in revenue with little or no capital and just an idea. He is one of the most under rated ceos out there.

Pera actually owns  ~71% of the company! Since he doesn't take a salary he is very aligned with outside shareholders. I agree that he's a great CEO; sell side analysts don't give him much credit because he (1) semi-openly disdains them (see his treatment of the Bloomberg analyst on the Q1 2017 call) and (2) isn't a great public speaker and doesn't come off as being as 'polished' as the typical CEO of a company UBNT's size.

Another thing to keep in mind is that Robert Pera's father Edmund Pera, CEO of Armanino Foods, is also a very good, outside shareholder-friendly CEO.



Title: Re: UBNT - Ubiquiti Networks
Post by: pau_ on September 18, 2017, 06:55:13 AM
I own this. Andrew Left is calling it a "complete fraud" https://www.youtube.com/watch?v=hVnnGj_J7O8

Edit: I was expecting a smoking gun with that kind of allegation. He's basically saying their numbers are "too good" when compared to competitors, and that there aren't really enthusiasts in the "ubiquiti community", and that Robert Pera "doesn't high five" Cramer.
Title: Re: UBNT - Ubiquiti Networks
Post by: pau_ on September 18, 2017, 07:24:19 AM
I would actually skip the video and just read the paper if you're interested in his arguments: www.citronresearch.com/citron-exposes-ubiquiti-networks/
Title: Re: UBNT - Ubiquiti Networks
Post by: rkbabang on September 18, 2017, 08:16:31 AM
Used to own the stock and loved Pera's CC's with analysts. He would be explaining the 2 year roadmap and their response "umm what's the guidance for the next qtr.". Pera is a great guy, he used to have a blog and did a video on Tesla. I thought he was spending way too much time on shooting hoops.

Their distributorship model is pretty interesting. Bulk of their revenue is lumpy and comes from countries like Russia, Iran ,Iraq and the dealings are pretty opaque.

His blog is here: http://www.rjpblog.com/

As far as the Citron "research", using the word "misunderstood" is apparently a red flag?  As is being driven by making money? Wow that is some high quality analysis.

In my opinion the Ubiquiti Community is great.  Every question I had setting up my system I found the answers to easily with a quick search of the discussion boards.   If as a homeowner with no experience setting up a commercial network I had bought a Ruckus or Cisco setup would I have been able to have all of my questions answered easily online without the need to talk to company support (which is usually awful regardless of the company).  Not only that, but I would have paid a hell of a lot more for the products.  In reality I never would have purchased them to begin with.  Not only are Ubiquiti's prices the lowest by far, but the community makes using their products easy even for the non-professional.
Title: Re: UBNT - Ubiquiti Networks
Post by: gjangal on September 18, 2017, 08:53:02 AM
It's a decent sized position for me. There is a high probability that he is just manipulating the price for his own benefit. Based on price action i think he has shorted it from the top and probably will cover in this down move

It's a wait and watch for me. I don't think there is fraud on a large scale. Small discrepancies in financials are a given for any public company because if the complexities in reporting
Title: Re: UBNT - Ubiquiti Networks
Post by: Dustin T on September 18, 2017, 09:49:10 AM
Unconcerned, none of the "evidence" seemed like anything more than silly conspiracy theory stuff.

Robert Pera's actions speak louder, share buybacks, low salary, all of this reflects very well on his long term belief in this companies future.
Title: Re: UBNT - Ubiquiti Networks
Post by: valcont on September 18, 2017, 07:59:31 PM
Just read the report. The only thing that bothers me is why haven't they hired a CFO yet? Its been couple years already and the last replacement was a complete disaster who ended up costing them $46m.

UBNT has always been attacked by the shorts for the usual reasons. Opaque distributorship, dealings in shady countries, Distracted CEO.. As for the margins, UBNT has lower GMs of ~45% compared to CSCO's ~63% so makes sense that having a community to support and sale the equipment should lower the opex. Not aware of their recent offerings but their Access router network were a great system compare to the CSCO and were the only option in Middle Eastern/Russian countries. That should explain a higher margin in those countries and more cash outside US.

I would not discard the report altogether. I didn't understand parts of their business and the lumpiness of the revenue so I sold.
Title: Re: UBNT - Ubiquiti Networks
Post by: eclecticvalue on September 18, 2017, 08:03:31 PM
Valcont, He tweeted about it today. Apparently CFO's are only used to appease Wallstreet and serve themselves. He must salty after the last CFO. He likes his CAO.
Title: Re: UBNT - Ubiquiti Networks
Post by: gjangal on September 19, 2017, 03:52:12 AM
Valcont, He tweeted about it today. Apparently CFO's are only used to appease Wallstreet and serve themselves. He must salty after the last CFO. He likes his CAO.

I couldn't believe he said that, not a very mature comment by a CEO
Title: Re: UBNT - Ubiquiti Networks
Post by: scorpioncapital on September 19, 2017, 03:56:43 AM
"Chief financial officers are responsible for planning the financial future of a company, while chief accounting officers handle the more day-to-day activities."

If you have a capital allocator/founder/CEO leader at the helm making financial planning, I have to agree all you really need is a CAO. And as a 70% shareholder, I can see where he's coming from. Almost running it like a private co.  I suppose he has the right to do whatever he wants within the basic rules.
Title: Re: UBNT - Ubiquiti Networks
Post by: gjangal on September 19, 2017, 04:44:59 AM
Generalizing a class of c suite people with such words is a sign of immaturity. All they care about is options and moving to the next company.  He said this on his twitter feed. That is definitely a sign of immaturity. Brilliant CEO but not the best choice of words
Title: Re: UBNT - Ubiquiti Networks
Post by: watsa_is_a_randian_hero on September 19, 2017, 06:55:37 AM
Valcont, He tweeted about it today. Apparently CFO's are only used to appease Wallstreet and serve themselves. He must salty after the last CFO. He likes his CAO.

I couldn't believe he said that, not a very mature comment by a CEO

did he delete this?  I looked last night, and again this morning; i couldnt find it
Title: Re: UBNT - Ubiquiti Networks
Post by: Foreign Tuffett on September 19, 2017, 07:11:22 AM
Valcont, He tweeted about it today. Apparently CFO's are only used to appease Wallstreet and serve themselves. He must salty after the last CFO. He likes his CAO.

I couldn't believe he said that, not a very mature comment by a CEO

did he delete this?  I looked last night, and again this morning; i couldnt find it

Yes, I believe he did delete it.
Title: Re: UBNT - Ubiquiti Networks
Post by: DooDiligence on September 19, 2017, 09:25:54 AM
Is this an example of bad optics obscuring good judgement?

I saw his Tweet about BRK only having 20 employees & it created the impression (in my mind) that this guy couldn't possibly be a good capital allocator (the cash piling up kinda agrees.)

I don't really understand the biz but thanks RKB 4 the anecdotal (it helps...)

Probably won't do anything but it's fun to look at!
Title: Re: UBNT - Ubiquiti Networks
Post by: Foreign Tuffett on September 21, 2017, 12:10:15 AM
Is this an example of bad optics obscuring good judgement?

I saw his Tweet about BRK only having 20 employees & it created the impression (in my mind) that this guy couldn't possibly be a good capital allocator (the cash piling up kinda agrees.)

I don't really understand the biz but thanks RKB 4 the anecdotal (it helps...)

Probably won't do anything but it's fun to look at!

The vast majority of their cash is overseas so "cash piling up" isn't a fair critique of Pera's capital allocation abilities. That said, Pera's inability to spell Warren Buffett's name correctly doesn't bode well for the next spelling bee he enters.   

If you want to learn about the business there are many good articles on Seeking Alpha that discuss the company's products and general strategy.
Title: Re: UBNT - Ubiquiti Networks
Post by: Foreign Tuffett on September 21, 2017, 12:20:44 AM
Unconcerned, none of the "evidence" seemed like anything more than silly conspiracy theory stuff.

Robert Pera's actions speak louder, share buybacks, low salary, all of this reflects very well on his long term belief in this companies future.

I agree. Pera's actions have been very different than what one would expect if UBNT was engaged in material and longstanding fraud. Pera hasn't taken any material compensation since 2013, he is extremely parsimonious with stock based comp, and has also been aggressive about repurchasing shares whenever the stock drops significantly. The recent stock sale notwithstanding, he has also sold far less shares than would be expected for a CEO engineering a fraud. Contra Left, almost every indication is that Pera thinks the stock is quite valuable. 
Title: Re: UBNT - Ubiquiti Networks
Post by: plusalpha on September 22, 2017, 01:04:16 PM
Contrary to the title, many good things about Ubiquiti.
https://seekingalpha.com/article/4108704-ubiquiti-time-run
not an indepth article but good comments to go thru.
Title: Re: UBNT - Ubiquiti Networks
Post by: Dustin T on September 22, 2017, 01:13:29 PM
Unconcerned, none of the "evidence" seemed like anything more than silly conspiracy theory stuff.

Robert Pera's actions speak louder, share buybacks, low salary, all of this reflects very well on his long term belief in this companies future.

I agree. Pera's actions have been very different than what one would expect if UBNT was engaged in material and longstanding fraud. Pera hasn't taken any material compensation since 2013, he is extremely parsimonious with stock based comp, and has also been aggressive about repurchasing shares whenever the stock drops significantly. The recent stock sale notwithstanding, he has also sold far less shares than would be expected for a CEO engineering a fraud. Contra Left, almost every indication is that Pera thinks the stock is quite valuable.

Exactly, if Robert Pera were smart enough to pull of that kind of fraud, it's unlikely he would be dumb enough to hide his ill gotten cash in the Memphis Grizzlies.

I've actually enjoyed watching the short and distort crowd attack UBNT. Every day they post a new article, but nothing of substance, just cryptozoology level stuff.
Title: Re: UBNT - Ubiquiti Networks
Post by: gjangal on November 09, 2017, 07:22:33 AM
Q1 results out

http://otp.investis.com/clients/us/ubiquiti_networks_inc/usn/usnews-story.aspx?cid=2283&newsid=49695

Revs growing at 20%. Forecast revenue growth 15%. Enterprise segment  around  50% of revenue and growing at 50%

40-50% of float short for this company sound a unreasonable to me
Title: Re: UBNT - Ubiquiti Networks
Post by: rkbabang on November 09, 2017, 08:01:42 AM
I don't believe UBNT's numbers. I'm not even convinced that all of the reported cash exists.

If this belief is common that would explain the large amount of shorts. 

What is the basis for you thinking that this company is a fraud?   I know first hand that the products are real and work as advertized.

Title: Re: UBNT - Ubiquiti Networks
Post by: Dustin T on November 09, 2017, 08:21:44 AM
I don't believe UBNT's numbers. I'm not even convinced that all of the reported cash exists.

I believe cash is the hardest thing to falsify both to the auditors and the bankers who have lent them money. Both the auditors and the bankers involved are large and well known, I think the cash is almost certainly real. It would take incompetence or criminal complicity on the part of to many individuals for that story to be likely.
Title: Re: UBNT - Ubiquiti Networks
Post by: Value^2 on November 09, 2017, 08:57:33 AM
They have higher operating margins than Apple, while they sell low priced bulk products in industry which suffer from overcapacity. Sounds reasonable? Only Chinese reverse-mergers have better margins than UBNT.
 
Title: Re: UBNT - Ubiquiti Networks
Post by: Jerry Capital on November 09, 2017, 09:13:03 AM
This is not good.

"Ubiquiti Community

As a result of a reporting error, the previously furnished Prior Investor Presentations and the investor presentation used by Company management dated as of May 2017 referenced 4 million registered users in the Ubiquiti Community, and the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2017 reported that the Ubiquiti Community included over 4 million entrepreneurial operators and systems integrators. In actuality, as of December 31, 2016, the Ubiquiti Community included approximately 609,000 registered users, while there were approximately 4 million registered user sessions at https://community.ubnt.com during the calendar year ended December 31, 2016. The information on https://community.ubnt.com is not part of this Current Report on Form 8-K."
Title: Re: UBNT - Ubiquiti Networks
Post by: Foreign Tuffett on November 09, 2017, 01:26:29 PM
Speaking of buybacks, if you look at UBNT's cash flow statements, the company has repurchased more stock then excess cash generated, when considering the change in US cash balances. The company's Amended Credit Agreement is co-signed by the US and Cayman Islands subs and allows for unrestricted borrowing and repayment by either sub. However, the US uses a worldwide tax system and the credit agreement is invalid if UBNT is not fully compliant with all tax laws.

If all of the cash was rightfully generated in the US (as you'd hope) then it would appear as if there could be a gap in international cash generation and the cash balance reported. I want to be careful in my wording because I have not had a chance to speak to UBNT yet.

There has been instances in the past of balance confirmation issues (some very large):
https://www.accountingweb.com/aa/auditing/audit-fraud-the-confirmation-angle
https://attestationupdate.com/2013/08/05/3-bank-confirmation-frauds/

Would you be able to break down your math that leads you to these conclusions?
Title: Re: UBNT - Ubiquiti Networks
Post by: Foreign Tuffett on November 12, 2017, 03:39:31 PM
Here's one of the earliest examples I have. I've already archived and saved screenshots of all of the important websites, LinkedIn profiles, ect. Lets see how many getting deleted or changed from this point on :)

Flytec CEO says they had $3.3m in sales in 2011
https://www.linkedin.com/in/osniarruda 

$UBNT says Flytec had $39.6m in sales in 2011

This implies Flytec had an AR balance with UBNT of $6.17m to $6.57m. This is more than the claimed sales...

Why would the CEO under-sell his sales achievement by more than a magnitude? Who's lying here?

Here's some more info about Flytec Computers:
First, to go off the last post, so it's not just a LinkedIn profile as my only evidence. The below link also supports the $3.3m in revenue. I'm not sure when it was last updated but they have info from 2017 on there. The CEO of Flytec actually purchased the building at the below address in Doral, FL, yet the name of a courier business, Servientrega, is on the front of the building. Servientrega leases the majority of the building and Flytec operates out of a single unit within the building (as they have prior to the CEO purchasing the building).

Although circumstantial (this will be a pattern in my posts), what's interesting is the huge gap between the revenue UBNT says Flytec does and the sales everyone else (including Flytec) says Flytec does. Considering the private business revenue estimates are generally good at creating a range that includes the right number, one would guess that Flytec does roughly $3.3m - $20.0m in revenue. UBNT has stated that this number is much higher since they went public.
Hoovers: $15.576m
GovTribe: $3.3m
Owler: $65.7m (with 61 employees) - use with caution as this data is crowdsourced (unlike the others). However, notice the 3 guesses entered throughout the last 2 years.
Mantra: $20.02m
Credability: $10.5m

I will fully outline the importance of this disparity as I go. However, consider my quoted comment with respect to Flytec's CEO's LinkedIn and the GovTribe record . UBNT's 2011 income statement would certainly fit industry norms if $39.6m in revenue was removed, as opposed to UBNT reporting eye-popping margins that have been unfathomably consistent (zero operating leverage) despite revenue CAGR of 27.9% over that period!!! In addition, UBNT claimed that Flytec grew roughly in-line with UBNT from 2011-present. This implies a cumulative gap in UBNT's financials of $100's of millions.

Support for the above:
https://govtribe.com/vendor/flytec-computers-inc-miami-fl-dba-flytec-computers-usa
https://www.google.com/maps/place/3043+NW+107th+Ave,+Doral,+FL+33172/@25.8017374,-80.3691684,3a,75y,80.11h,90t/data=!3m6!1e1!3m4!1sbPpdyKkffJdA_lAPc7QlhA!2e0!7i13312!8i6656!4m5!3m4!1s0x88d9beb250962019:0x4f961e7c3739ab49!8m2!3d25.801749!4d-80.3690841
http://www.hoovers.com/company-information/cs/revenue-financial.flytec_computers_inc.e249956799377d7c.html
https://www.manta.com/c/mhw5v8t/flytec-computers-usa
https://www.owler.com/iaApp/1008717/flytec-computers-company-profile
https://credibility.com/computer-and-computer-peripheral-equipment-and-software-merchant-wholesalers/us-fl-doral/flytec-computers-inc

Everything said about Flytec basically says they are a terrible reseller, who sometimes ships orders with packaging or shipping labels from different distributors (which occasionally are other "official UBNT distributors"). Again, circumstantial, but UBNT's business model reminds me quite a bit of the specialty pharma industry (especially the "grey market" or wholesale specialty pharma industry). Products are often "sold to" other wholesale pharma companies until they finally exit this "grey market". See below for the FDA's presentation on the issue.
https://www.resellerratings.com/store/Flytec_Computers_Flytec_USA
https://www.fda.gov/downloads/aboutfda/workingatfda/fellowshipinternshipgraduatefacultyprograms/pharmacystudentexperientialprogramcder/ucm528194.pdf




More on the CEO:
The CEO is Osni Muccellin de Arruda, formerly "considered the largest computer products smuggler in Brazil"
http://www.gazetadopovo.com.br/vida-e-cidadania/presos-contrabandistas-de-computadores-9y279wkbtp9suvmgue19dwxn2

The Pacific Invest company is this one: http://www.pacificinvest.com.br/

The charges were ultimately dropped against Osni, though others did serve time. I'm not sure how Osni got the charges dropped. Again, circumstantial, what's interesting about the case is the money was laundered through Pacific Invest and one of the partners of the government-sanctioned currency exchange firm was involved.
http://www.justica.gov.br/central-de-conteudo/combate-a-pirataria/relatorios/iii_report_cncp.pdf (p.105/208)

This part of the story is interesting because my later posts will try to determine how UBNT moves cash around. For most of UBNT's history, Flytec was the largest customer and still is a very important customer to this day.

Despite Flytec's importance to UBNT's growth, they are not listed among the top "Distributors & Master Resellers" for UBNT (see pic).

Side note: Interestingly, P.W. Batna Magadalena Mucha (PW Batna), the distributor from Citron's report that does indeed operate out of a backyard tent, with a handful of employees (FB made it possible to find a couple - gotta love social media!), is not even listed as one of the 38 official Distributors & Master Resellers or as a Reseller. We will discuss PW Batna and Streakwave Wireless at a later time.

Luckily for me, Flytec is Florida corporation so we are able to learn a little more about them. Flytec is the only Florida-based company registered to Osni. The filing introduces us to Osni's right-hand man, Denis Figueiro, who is the registered agent and VP of Flytec. I believe Flytec has 4-9 employees in the US, though I've only found 6 (one of them seems to work as a salesmen for both Comcast and Flytec?). To be fair, Relationship Science reports 25 employees worldwide


Flytec's Florida data:
http://search.sunbiz.org/Inquiry/CorporationSearch/SearchResultDetail?inquirytype=OfficerRegisteredAgentName&directionType=Initial&searchNameOrder=ARRUDAOSNIMUCCELIN%20P070000990601&aggregateId=domp-p07000099060-4d7b2e47-1065-43c8-a599-44a2adb0faae&searchTerm=Arruda%20%20%20%20%20%20%20%20%20%20%20%20%20%20Osni%20Muccelin&listNameOrder=ARRUDAOSNIMUCCELIN%20P070000990601


A final side note: A company called Mikrotik, a listed competitor of UBNT, has an extremely similar growth trajectory and project margins, and almost every important UBNT reseller specializes in selling UBNT and/or Mikrotik products and generally nothing else.


To summarize, all of this is for one distributor. I am attempting to detail various facts about them that will ultimately be used to show that claims made by UBNT are unlikely to be true. You can see why it's going to take me awhile to detail everything I know about UBNT and their distributors/partners. I don't think it's an accident that UBNT looks so internally chaotic or that they don't have a COO or CFO.

I took 15 minutes and looked into a few of the claims you've made here. I stumbled onto the following almost immediately:

1) Flytec and Servientrega do not appear to be in the same building in Doral, FL. Servientrega is across the street from Flytec (3043 vs. 3047). Assuming Flytec occupies and operates in the entire building (which it seems to based on signage clearly visible using Google Street View), claims about Flytech doing only $3 million in annual revenue look almost laughably low. Also note that the building looks exactly like the building featured in a video on Flytec's "About Us" webpage on its website.

Also, based on the same video Flytec clearly has more than the "4 - 9 employees" US-based employees that you estimate. What do you mean when you say that you've "only found 6" employees? Do you think every last warehouse worker and secretary in America can be tracked down on the internet via their employer?

2) You bring up the specialty pharmacy industry like it's some sort of spectre haunting Flytec's business model, but I think you are missing the obvious. Flytec's Doral, FL building looks to be within a few miles of the Miami International Ariport. Miami is a well-known conduit for goods to move from the US to Latin America. It's likely that a big part of Flytec's business model is to ship wireless networking equipment via air freight to Latin America. This may be why the name of the company is what is it:  F-L-Y  T-E-C-[H]
Title: Re: UBNT - Ubiquiti Networks
Post by: Grant on November 13, 2017, 03:17:56 PM
In addition to what Foreign Tuffett said,

Flytec Computers Inc. (https://www.flyteccomputers.com/) has always been listed as a reseller in the U.S., and Flytec Computers SA (http://www.flytec.com.py/) has always been listed as a distributor in Latin America. Osni founded both. As a multinational, I don't believe UBNT distinguishes between the the two different entities in its reporting.

Per the S-1, a distributor used to take delivery of product at a U.S. address for sale in SA, greatly throwing off the geographic revenue figures. This stopped or began to stop 2011Q3. I believe this distributor was Flytec.

Flytec claims to have six employees and $3.3M in revenue as late as 2017. I don't think they should be taken seriously as their videos, office space and parking lot clearly show at least a dozen employees.

PW Batna is listed as a European distributor.

I scrape data from two (soon to be five) UBNT distributors, and have generally found my results consistent with UBNT's reported figures. The flat guidance this quarter was no surprise.

MikroTik is UBNT's closest competitor, but they're unfortunately not public.

UBNT recently increased the size of its revolving loan with Wells Fargo, with no increase in interest rates or fees. To me this indicates they're confident the cash (flows) are real. Given the simplicity of UBNT's balance sheet, I would be extremely surprised if they managed to fool Wells Fargo and KPMG. Verifying bank statements and cash balances is fairly easy.

The forum user count is a classic example of UBNT screwing up because they don't spend any money on management or controls.

Starting with a conclusion isn't a sound way to conduct an investigation.
Title: Re: UBNT - Ubiquiti Networks
Post by: gjangal on November 13, 2017, 05:20:34 PM
the short case is getting very interesting

Total diluted shares - 79.1mn
Insiders. - 57.6mn

Edgepoint - 6.3mn
Akre - 2.3mn

This leaves about 14 mn shares float.Of which 10.2mn are short as of Oct 31. Securities lending rates for UBNT are between 10-14%. Shorts could get squeezed here
Title: Re: UBNT - Ubiquiti Networks
Post by: rkbabang on November 14, 2017, 10:28:17 AM
the short case is getting very interesting

Total diluted shares - 79.1mn
Insiders. - 57.6mn

Edgepoint - 6.3mn
Akre - 2.3mn

This leaves about 14 mn shares float.Of which 10.2mn are short as of Oct 31. Securities lending rates for UBNT are between 10-14%. Shorts could get squeezed here


I just bought some more.  I can't find anyone with a real reason to think this is fraud other than a gut feeling they seem to have.  I'm not convinced. It doesn't make sense that insiders would own so much stock yet run the company into the ground making their assets worthless.  If Robert Pera starts unloading his shares in a big way I'll start getting nervous.  In the meantime I'm waiting for the squeeeeeze.
Title: Re: UBNT - Ubiquiti Networks
Post by: chrispy on November 14, 2017, 11:58:54 AM
Agree.
Title: Re: UBNT - Ubiquiti Networks
Post by: Grant on November 14, 2017, 11:17:10 PM
I am long UBNT, but am selling $70 covered calls. I have near-term concerns; mostly I don't think UBNT will hit its FY2018 mid-point revenue guidance. I rarely mind exiting such a volatile stock at an all-time high. Who knows what'll happen with such a high short interest though?

The trouble with building a case based on unusual incidents is that this is an unusual company. You'll find lots smoke regardless of whether or not fire exists. This is especially true when looking at South American distributors, who are necessarily shady. I wouldn't trust anything Flytec self-reports, for obvious reasons. I wouldn't be surprised if Flytec Inc. did $3.3M in 2011, but I'm fairly certain Flytec SA did far more.

I have little interest in Flytec because they do not expose any data I can scrape. However they've been an UBNT distributor for years, and it'd seem fairly safe to trust them to keep paying their bills. Corruption is simply a fact of life in many foreign countries, and does not necessarily indicate a problem for the supplier.

In the latest 10-Q I'm fairly certain "Customer C" is Ingram Micro. This means Flytec could have a maximum A/R contribution of 11%. Since South America was 13% of revenues, I highly doubt Flytec was more than 6%.

Frankly I think the fraud shorts are asking the wrong questions. Do they really think KPMG and Wells Fargo are being fooled? After Andrew Left more or less claimed UBNT's cash horde is fake on CNBC?

The right questions are all R&D related and perhaps outside the short's areas of expertise. I worry neither LTU or AirMax AC seem to have MU-MIMO APs in their pipeline. I worry LTU won't be all it's hyped up to be, and the future of fixed outdoor wireless may actually be standards-compliant LTE gear. I worry the new uFiber products won't catch on. There's tons of optionality in UBNT, but also quite a bit of risk. Fortunately with a little technical knowledge it's easy to figure out how their products will do long before the market does.
Title: Re: UBNT - Ubiquiti Networks
Post by: Dustin T on November 15, 2017, 11:08:31 AM
I appreciate your thoughts on this Schwab, it's a good sized position for me and most of the bear cases I've seen have been essentially slinging mud trying to drive the price down. Nothing very coherent just lots of innuendo and minor criticism about board size and using words like "misunderstood"

If I understand what your numbers allude to above, it's that the money they make in the U.S. and overseas doesn't seem to match up with the taxes they pay and that they are either quite aggressive in tax avoidance or are possibly engaging in tax evasion? Or are you also suggesting that some of the cash isn't there?

They have been audited and granted a clean financial bill of health by two of the big four auditing firms. Does that cover the taxes being paid correctly too? I don't assume it's impossible to fool an auditor, but I'm trying to learn more about what all constitutes an audit and how far a company might have to go to fool an auditor.

Title: Re: UBNT - Ubiquiti Networks
Post by: Grant on November 15, 2017, 11:26:47 AM
Schwab, if you want good feedback I'd suggest sharing your spreadsheet. Perhaps it's my background in engineering and not finance, but I cannot follow your math and logic at all. How do specific distributor A/Rs affect maximum possible U.S.-based assets? Why ignore the largest distributors, Ingram Micro and Streakwave?

They have 78 distributors listed on their website, but ">100" listed in their latest investor presentation. I know of at least one distributor (Amazon) that isn't listed on their site, so the 100+ figure seems possible.

Dustin T, from what I understand their auditors would check foreign bank account balances and bank statements. Wells Fargo probably would as well, as they lend to UBNT using the foreign cash as collateral. Given the simplicity of UBNT's balance sheet, PwC, FTI And KPMG would surely focus on the foreign cash in their auditing. In order to fool these audits I think you'd need to either collude with your audited bank(s) or have another line of credit secretly feeding cash into them.
Title: Re: UBNT - Ubiquiti Networks
Post by: Grant on November 15, 2017, 12:11:07 PM
What balance sheet metric did I misrepresent?

You did say you were "attempting to detail various facts about them that will ultimately be used to show that claims made by UBNT are unlikely to be true". I read this to mean you wanted to show your work. If not, my apologies.
Title: Re: UBNT - Ubiquiti Networks
Post by: Grant on November 15, 2017, 04:54:06 PM
I just bought some more.  I can't find anyone with a real reason to think this is fraud other than a gut feeling they seem to have.  I'm not convinced. It doesn't make sense that insiders would own so much stock yet run the company into the ground making their assets worthless.  If Robert Pera starts unloading his shares in a big way I'll start getting nervous.  In the meantime I'm waiting for the squeeeeeze.
I'm not an experienced enough trader to guess at the likelihood of a big squeeze, but in normal conditions I wouldn't be thrilled to buy at these prices. UBNT is extremely volatile. Every six months to a year there's usually some big scare which pushes the price down. Last Feb it was contracting margins, last Sept it was fraud, etc. In 2014 the stock fell 33% after earnings because of an increase in inventory.

UniFi is showing great international growth and likely still has some domestic growth ahead of it, but it's entirely possible for UBNT's fixed outdoor wireless revenue to continue to stagnate. We'll know more in the upcoming months, as AirMax GPS sync gets refined and LTU ptmp enters beta.
Title: Re: UBNT - Ubiquiti Networks
Post by: Grant on January 24, 2018, 06:59:28 PM
Are you guys still holding at these prices? I posted a summary of my thoughts on Q2 here: https://seekingalpha.com/article/4124178-it-sounds-like-shorts-getting-nervous#comment-77410396

At its current price UBNT seems fairly valued to me, but I'd like to hear some opinions from traders on how the squeeze might pan out (I'm much more of a fundamentals guy myself).
Title: Re: UBNT - Ubiquiti Networks
Post by: Dustin T on January 25, 2018, 05:50:36 AM
Are you guys still holding at these prices? I posted a summary of my thoughts on Q2 here: https://seekingalpha.com/article/4124178-it-sounds-like-shorts-getting-nervous#comment-77410396

At its current price UBNT seems fairly valued to me, but I'd like to hear some opinions from traders on how the squeeze might pan out (I'm much more of a fundamentals guy myself).

I'm holding with no intentions to sell, I would trim the position if something more attractive was available but this market doesn't have a lot of great value options.

I would agree it's fairly valued though.
Title: Re: UBNT - Ubiquiti Networks
Post by: chrispy on January 25, 2018, 06:24:32 AM
Relatively small position for me that I am going to let go untouched.

Their ability to consistently create and develop new hardware, with minimal downside due to failure, makes me believe that a home run product could happen at anytime and there is no way to foresee it. Frontrow was not much of a hit, but Pera said the cost to develop such great technology was very cheap to them compared to an acqusition. One can think of the frontrow poor release results as acquiring great technology for very, very little.

Edit: with a majority of sales to international markets, the falling dollar is a tailwind along with repatriation.
Title: Re: UBNT - Ubiquiti Networks
Post by: rkbabang on January 25, 2018, 07:33:03 AM
Relatively small position for me that I am going to let go untouched.

Their ability to consistently create and develop new hardware, with minimal downside due to failure, makes me believe that a home run product could happen at anytime and there is no way to foresee it. Frontrow was not much of a hit, but Pera said the cost to develop such great technology was very cheap to them compared to an acqusition. One can think of the frontrow poor release results as acquiring great technology for very, very little.

Edit: with a majority of sales to international markets, the falling dollar is a tailwind along with repatriation.

+1.  Me as well.  It is a small position and I intend to just hold.  I like the company, the products, the CEO (who owns a ton of stock), the fact that they have been buying back the few shares that the CEO doesn't hold, and the fact that they seem to take a long term view rather than a quarter by quarter view as many companies who care about what wall street thinks.
Title: Re: UBNT - Ubiquiti Networks
Post by: Grant on January 25, 2018, 10:13:19 AM
Their ability to consistently create and develop new hardware, with minimal downside due to failure, makes me believe that a home run product could happen at anytime and there is no way to foresee it.

It's actually not hard to foresee their successes - just read the forums. Their products tend to ramp up slowly, so there's usually lots of time between when the community figures out a product will be a hit and when Wall Street does. Their two huge successes (AirMax and UniFi) were easy to spot.
Title: Re: UBNT - Ubiquiti Networks
Post by: gjangal on January 25, 2018, 02:49:27 PM
i am also in the fairly valued camp. But if growth continues like previous years for a few more years, it maybe still undervalued. It depends on growth

I had lent my shares out to the securities lending desk. They returned it around when it was 67. I thought it was a signal for a short squeeze. We may be in the midst of a short squeeze already
Title: Re: UBNT - Ubiquiti Networks
Post by: gjangal on February 08, 2018, 08:28:09 AM
Results are out , stock has taken a beating. i think writing down frontrow was a good thing. Enterprise still growing nicely. Cash net of debt is ~335 mn

http://ir.ubnt.com/sites/default/files/2018-02/UBNT%202QFY2018%20Earnings%20Management%20Prepared%20Remarks%20FINAL.pdf
Title: Re: UBNT - Ubiquiti Networks
Post by: gjangal on February 09, 2018, 11:31:44 AM
I just read the transcript , i agree with you, it’s a bad response. I was also surprised by how short the q&a session was , there was like 3 or 4 questions
Title: Re: UBNT - Ubiquiti Networks
Post by: Value^2 on February 17, 2018, 07:23:59 AM
Pera's answer to the cash question on the call was plainly awful. He took the loan instead of repatriating cash because he already started the process. He said he thinks everything is in a bubble so he's increasing leverage to buyback his stock.
And  you believe that's the real reason?  ;D
Title: Re: UBNT - Ubiquiti Networks
Post by: gjangal on February 20, 2018, 06:29:54 AM
SEC subpoena

https://www.sec.gov/Archives/edgar/data/1511737/000165495418001671/0001654954-18-001671-index.htm
Title: Re: UBNT - Ubiquiti Networks
Post by: pau_ on February 20, 2018, 10:24:04 AM
Apparently there's a company that does FOIA requests to discover undisclosed SEC probes. The tweets are vague probably because it's a subscription site and they're trying to sell their product. I'm long but considering getting out.

https://twitter.com/probesreporter/status/966002707982180353


Quote
We’ve been tracking an undisclosed SEC probe at $UBNT since DEC-2016.

Quote
2/ Investors should ask: What changed to prompt disclosure of an SEC probe $UBNT management previously did not view as material enough to disclose?

Quote
3/ investors in $UBNT should also ask if the 13-Feb subpoena is the first ... or the latest???
Title: Re: UBNT - Ubiquiti Networks
Post by: Dustin T on February 20, 2018, 10:35:50 AM
Apparently there's a company that does FOIA requests to discover undisclosed SEC probes. The tweets are vague probably because it's a subscription site and they're trying to sell their product. I'm long but considering getting out.

https://twitter.com/probesreporter/status/966002707982180353


Quote
We’ve been tracking an undisclosed SEC probe at $UBNT since DEC-2016.

Quote
2/ Investors should ask: What changed to prompt disclosure of an SEC probe $UBNT management previously did not view as material enough to disclose?

Quote
3/ investors in $UBNT should also ask if the 13-Feb subpoena is the first ... or the latest???

Looking at the history of the "probesreporter" tweets didn't lead me to think they had much in the way of unique knowledge. A bunch of vague innuendos about well known companies and some Trump rants.

I'm long UBNT and of course I find an SEC investigation as troubling as you, but I understand only 1 in 10 SEC investigations leads to proceedings and I would assume most often they lead to penalties and fines. I'm holding and watching.
Title: Re: UBNT - Ubiquiti Networks
Post by: gjangal on February 20, 2018, 11:39:49 AM
In this case it looks like they want to look at processes and internal controls. AFAIK if there is no ‘material’ weakness in internal controls and no falsification of accounts, UBNT may escape with a rap on the knuckles and a fine

Looks like they need a oversight layer in the company atleast.

Title: Re: UBNT - Ubiquiti Networks
Post by: bci23 on February 20, 2018, 03:41:56 PM
Just listening to the CEO talk, something isn't right here. When he talks about how he built UBNT its way too generalized with buzzwords and lacking any sort of specifics to demonstrate that he actually went through the pain and struggles of starting a company. I dunno if its big enough to bring the whole thing down but there is clearly something wrong here imo.
Title: Re: UBNT - Ubiquiti Networks
Post by: chrispy on February 20, 2018, 03:55:53 PM
I had a small position and wasn't too concerned with Left but this is a little bit more concerning. Sold my shares at a slight profit this morning.

Probably was before and is definitely now out of my circle of competence...
Title: Re: UBNT - Ubiquiti Networks
Post by: pau_ on February 20, 2018, 03:58:43 PM
I should add that I use their products, know people who are passionate about their products and install them, and know one person who used to work for them who speaks highly of their engineering. At least some of the product and community-channel story rings true to me. But yeah, Pera lacks polish. I cringed a bit when he said recently during a conference that he doesn't usually read but read this book called The Outsiders and it resonated with him. This after Valeant's implosion (not that that invalidates the book completely).
Title: Re: UBNT - Ubiquiti Networks
Post by: bci23 on February 20, 2018, 05:42:22 PM
I should add that I use their products, know people who are passionate about their products and install them, and know one person who used to work for them who speaks highly of their engineering. At least some of the product and community-channel story rings true to me. But yeah, Pera lacks polish. I cringed a bit when he said recently during a conference that he doesn't usually read but read this book called The Outsiders and it resonated with him. This after Valeant's implosion (not that that invalidates the book completely).

I don't even think its polish thats the issue. I think a founder/CEO can be "unpolished" and still demonstrate knowledge, competence and authenticity but i don't get that feeling from Pera.
Title: Re: UBNT - Ubiquiti Networks
Post by: Grant on February 21, 2018, 01:40:00 PM
After having sold last month, I just went long again yesterday. I sold $50 Mar puts and bought $55 Jan 2019 calls. When the IV dropped today I bought my puts back. I may add to my calls later this week. Given there is now a greater chance of significant fraud having occurred, I feel calls offer a better risk/reward than shares.

However I still judge this chance to be very small. They recently repatriated $712 million in cash. If there's significant fraud, where did this money come from? Did someone loan it them, and if so who? Why did Wells Fargo just increase their line of credit for the second time since the Citron Report?

The SEC investigation into Citron's charges was expected and doesn't concern me. What does is that their subpoenas may have required a search warrant be granted from a judge, indicating a (relatively) neutral party found probable cause. If I'm wrong about this I'll buy more, but I can't find any good sources on this.

In the short term I'm very bullish. There's little chance of a Wells Notice being issued in the next month or two. Pera also has a mountain of cash and is willing to use most of it to repurchase stock. We know he bought back at an average of $54.98 last quarter, so he was probably willing to buy up until $58 or so. This quarter that number will probably be higher. At the current PPS he has enough cash to repuchase almost 60% of the float! Shorting here is suicide. If you're looking to sell UBNT, my advice is to wait a month or three.

Just listening to the CEO talk, something isn't right here. When he talks about how he built UBNT its way too generalized with buzzwords and lacking any sort of specifics to demonstrate that he actually went through the pain and struggles of starting a company. I dunno if its big enough to bring the whole thing down but there is clearly something wrong here imo.
There's far more information available on the community than he could present to investors, even if he wanted to. I would suggest reading his community blog posts on AirMax: https://community.ubnt.com/t5/Ubiquiti-Announcements-and-News/From-Integrated-Product-to-Challenging-Goliath/ba-p/1858930
And UniFi: https://community.ubnt.com/t5/Ubiquiti-Announcements-and-News/UniFi-The-Beginning-of-The-Higher-Market-Disruption/ba-p/1919286
Here's one on AirMax AC Gen 2: https://community.ubnt.com/t5/Ubiquiti-Announcements-and-News/Filtering-in-3-Domains-Why-PrismStation-is-the-Greatest-Product/ba-p/1961669

As you can see, Pera is rarely humble when discussing UBNT's future prospects. However he's often quite honest about past mistakes.

In times like this it's helpful to remember his quote from the investor's meeting:

Quote from: Pera
...we just like to take what the market gives us. Look at the Teledyne and Singleton. If we can buy stock at fractions of a dollar, we feel it's undervalue, then we buy it back because it will only help our end goal of increasing long-term EPS. If we can retire more shares, our EPS long term is only going to be higher. So it's painful, but the way I look at it this long-term shareholders again getting paid off the pain.
Title: Re: UBNT - Ubiquiti Networks
Post by: Grant on February 21, 2018, 02:43:41 PM
They recently repatriated $712 million in cash.

No, they didn't.

What am I mis-reading? Per the 10Q they paid 15.5%  in "Repatriation Tax" totaling $110.5 million. $110.5M / 15.5% = $713M. I assumed this was for repatriated cash. The latest 10Q states "as of December 31, 2017, we held $676.0 million of our $823.8 million of cash and cash equivalents in accounts of our subsidiaries outside of the United States" but does not mention cash balances at a more recent date (though the older filings don't either).

Are you saying U.S.-based companies are taxed on the cash holdings of their subsidiaries, even if they don't repatriate the cash?
Title: Re: UBNT - Ubiquiti Networks
Post by: Foreign Tuffett on February 21, 2018, 05:09:24 PM
Apparently there's a company that does FOIA requests to discover undisclosed SEC probes. The tweets are vague probably because it's a subscription site and they're trying to sell their product. I'm long but considering getting out.

https://twitter.com/probesreporter/status/966002707982180353


Quote
We’ve been tracking an undisclosed SEC probe at $UBNT since DEC-2016.

Quote
2/ Investors should ask: What changed to prompt disclosure of an SEC probe $UBNT management previously did not view as material enough to disclose?

Quote
3/ investors in $UBNT should also ask if the 13-Feb subpoena is the first ... or the latest???

Looking at the history of the "probesreporter" tweets didn't lead me to think they had much in the way of unique knowledge. A bunch of vague innuendos about well known companies and some Trump rants.

I'm long UBNT and of course I find an SEC investigation as troubling as you, but I understand only 1 in 10 SEC investigations leads to proceedings and I would assume most often they lead to penalties and fines. I'm holding and watching.

I don't think he (it's run by a guy in Minnesota) has any particularly unique knowledge either. The Probes Reporter site lists "132 US Companies" as having undisclosed SEC Probes as of the first of this year. Insofar as I can tell, he's just sending out Freedom of Information requests on every large publicly traded company and then looking for anything that comes back Exemption (b)(7)(A). That's it.
Title: Re: UBNT - Ubiquiti Networks
Post by: Foreign Tuffett on February 21, 2018, 05:13:05 PM
Just listening to the CEO talk, something isn't right here. When he talks about how he built UBNT its way too generalized with buzzwords and lacking any sort of specifics to demonstrate that he actually went through the pain and struggles of starting a company. I dunno if its big enough to bring the whole thing down but there is clearly something wrong here imo.

You don't think Pera founded UBNT? I think even the most hyperbolic short case would grant that Pera founded the company.
Title: Re: UBNT - Ubiquiti Networks
Post by: Foreign Tuffett on February 21, 2018, 05:41:20 PM
I am long UBNT, but am selling $70 covered calls. I have near-term concerns; mostly I don't think UBNT will hit its FY2018 mid-point revenue guidance. I rarely mind exiting such a volatile stock at an all-time high. Who knows what'll happen with such a high short interest though?

The trouble with building a case based on unusual incidents is that this is an unusual company. You'll find lots smoke regardless of whether or not fire exists. This is especially true when looking at South American distributors, who are necessarily shady. I wouldn't trust anything Flytec self-reports, for obvious reasons. I wouldn't be surprised if Flytec Inc. did $3.3M in 2011, but I'm fairly certain Flytec SA did far more.

I have little interest in Flytec because they do not expose any data I can scrape. However they've been an UBNT distributor for years, and it'd seem fairly safe to trust them to keep paying their bills. Corruption is simply a fact of life in many foreign countries, and does not necessarily indicate a problem for the supplier.

In the latest 10-Q I'm fairly certain "Customer C" is Ingram Micro. This means Flytec could have a maximum A/R contribution of 11%. Since South America was 13% of revenues, I highly doubt Flytec was more than 6%.

Frankly I think the fraud shorts are asking the wrong questions. Do they really think KPMG and Wells Fargo are being fooled? After Andrew Left more or less claimed UBNT's cash horde is fake on CNBC?

The right questions are all R&D related and perhaps outside the short's areas of expertise. I worry neither LTU or AirMax AC seem to have MU-MIMO APs in their pipeline. I worry LTU won't be all it's hyped up to be, and the future of fixed outdoor wireless may actually be standards-compliant LTE gear. I worry the new uFiber products won't catch on. There's tons of optionality in UBNT, but also quite a bit of risk. Fortunately with a little technical knowledge it's easy to figure out how their products will do long before the market does.

I would add that, after UBNT was defrauded out of almost $50 million, they retained FTI Consulting "to provide an Interim Chief Accounting Officer and other resources" (quote is from the FY 2015 10-K). So whoever inside Ubiquiti is pulling off this fraud also managed to hoodwink FTI Senior Managing Director (and former UBNT Interim CAO) Mark Spragg.

http://www.fticonsulting.com/our-people/mark-c-spragg (http://www.fticonsulting.com/our-people/mark-c-spragg)


Schwab711, you are clearly skeptical of Ubiquiti. What's the short case as you see it? What aspect of the company or its operations is fraudulent?


Disclosure: While I've been long UBNT in the past, I don't currently have a position.
Title: Re: UBNT - Ubiquiti Networks
Post by: Grant on February 21, 2018, 05:52:00 PM
Previously, foreign generated cash could be indefinitely reinvested overseas so there was no need to book a liability representing the future tax payable. Now that there is a finite window to defer taxes on foreign income (8 years) so a credit was required.

They haven't paid the $110.5m yet. It was a non-cash event. It is also not a tax on the cash balance, just for clarification. The $110.5m represents taxes that UBNT owed, but never paid, at the present repatriation rate.

Thanks! I clearly misunderstood how this works. I'm much better at analyzing technology than finance and SEC filings. With this in mind I won't be adding to my position.

I don't think he (it's run by a guy in Minnesota) has any particularly unique knowledge either. The Probes Reporter site lists "132 US Companies" as having undisclosed SEC Probes as of the first of this year. Insofar as I can tell, he's just sending out Freedom of Information requests on every large publicly traded company and then looking for anything that comes back Exemption (b)(7)(A). That's it.

After seeing UBNT on Probes Reporter I filed a FoA request with the SEC. I did indeed get that response: "We are withholding records that may be responsive to your request under 5 U.S.C. § 552(b)(7)(A), 17 CFR § 200.80(b)(7)(i)..."
Title: Re: UBNT - Ubiquiti Networks
Post by: Grant on February 21, 2018, 06:03:48 PM
There is something of a conspiracy theory floating around: these short attacks are perpetrated by Steve Kaplan, founder of Oaktree capital, who wants controlling share of the Grizzlies. He commissioned Left for the initial attack, and pressured the SEC into starting a formal investigation.

I never put much stock in this, but the timing of this investigation is odd. With all the crypto-currency scams like RIOT, LFIN and a good portion of all ICOs, one would think the SEC would have better things to do than investigate what is at the least a real and profitable company.
Title: Re: UBNT - Ubiquiti Networks
Post by: Grant on February 21, 2018, 06:07:31 PM
Just listening to the CEO talk, something isn't right here. When he talks about how he built UBNT its way too generalized with buzzwords and lacking any sort of specifics to demonstrate that he actually went through the pain and struggles of starting a company. I dunno if its big enough to bring the whole thing down but there is clearly something wrong here imo.

You don't think Pera founded UBNT? I think even the most hyperbolic short case would grant that Pera founded the company.

Yeah, unless you think a lot of WISPs are in on the scam, there's no question he founded Ubiquiti. Pera's original idea of using 802.11 gear for fixed outdoor wireless is what enabled the WISP industry as it exists today. The original AirMax was wildly successful, which is why so many have copied it (chiefly Cambium's ePMP line). For the history behind AirMax, see the story I posted earlier (which is sadly missing pictures): https://community.ubnt.com/t5/Ubiquiti-Announcements-and-News/From-Integrated-Product-to-Challenging-Goliath/ba-p/1858930

Here's Pera talking to some engineering students in Taiwan about FrontRow: https://www.youtube.com/watch?v=QHxGWALMvxA
Title: Re: UBNT - Ubiquiti Networks
Post by: Grant on February 21, 2018, 10:05:14 PM
Schwab711, What about UBNT is a black-box to you?

They have historically not done a lot of business in China. TPLink cloned an older version of UniFi, so it's probably preferred for people who want to spend less money and don't mind using what amounts to state-sponsored networking hardware. Last quarter they saw a big jump in Asia revenues, which might be related to Tencent's recent adoption of UniFi.

I would not call Ubiquiti extremely sophisticated. It's mostly a bunch of engineers. They make lots of elementary errors on their less-successful product lines which can probably be traced back to their lack of oversight. Confusing user sessions with user count was unfortunately par for the course.
Title: Re: UBNT - Ubiquiti Networks
Post by: Foreign Tuffett on February 22, 2018, 08:04:40 AM
Relatively small position for me that I am going to let go untouched.

Their ability to consistently create and develop new hardware, with minimal downside due to failure, makes me believe that a home run product could happen at anytime and there is no way to foresee it. Frontrow was not much of a hit, but Pera said the cost to develop such great technology was very cheap to them compared to an acqusition. One can think of the frontrow poor release results as acquiring great technology for very, very little.

Edit: with a majority of sales to international markets, the falling dollar is a tailwind along with repatriation.

The bolded is incorrect.

From UBNT's most recent 10-K: "Our sales are denominated in U.S. dollars, and therefore, our revenues are not directly subject to foreign currency risk."
Title: Re: UBNT - Ubiquiti Networks
Post by: bci23 on February 22, 2018, 10:38:31 AM
Just listening to the CEO talk, something isn't right here. When he talks about how he built UBNT its way too generalized with buzzwords and lacking any sort of specifics to demonstrate that he actually went through the pain and struggles of starting a company. I dunno if its big enough to bring the whole thing down but there is clearly something wrong here imo.

You don't think Pera founded UBNT? I think even the most hyperbolic short case would grant that Pera founded the company.

I'm not questioning whether he founded it (he obviously did), i'm questioning whether he is a guy that legitimately built the company from $0 to $1b revenue in 15 years like their financial statements say. I listen to soo many founders talk about their business and its usually never a doubt that these folks have been in the trenches and grinded it out from the very beginning. With Pera theres just something off but I can't really pinpoint what is it. It might be something minor in the grand scheme here or it might be something major i dunno but i have little doubt there is something off here between the story that is told/portrayed publicly and the reality of what has actually gone on.
Title: Re: UBNT - Ubiquiti Networks
Post by: Grant on February 22, 2018, 10:49:55 AM
Edit: with a majority of sales to international markets, the falling dollar is a tailwind along with repatriation.

The bolded is incorrect.

From UBNT's most recent 10-K: "Our sales are denominated in U.S. dollars, and therefore, our revenues are not directly subject to foreign currency risk."

As the USD drops, prices at distributors (and resellers) drop, increasing demand. This can be seen in Amazon data (camelcamelcamel.com). Also, some European distributors like eurodk.com offer pricing in USD, EUR and GBP. The USD price is (relatively) fixed while the others vary with exchange rates.

Historically the company has done better with a weaker dollar.
Title: Re: UBNT - Ubiquiti Networks
Post by: Grant on February 22, 2018, 11:31:21 AM
I'm not questioning whether he founded it (he obviously did), i'm questioning whether he is a guy that legitimately built the company from $0 to $1b revenue in 15 years like their financial statements say.

We know from various channel checks and simple Google searches that UBNT ships a lot of product. UniFi access points have been popping up everywhere since 2016. Suppose the books are cooked or channels are stuffed in a manner which doubles the real revenue from $500M to $1B this year. Maybe the company doesn't turn much of a profit, but it clearly makes something since growth has been organic.

Is this kind of fraud common? Pera is fabulously rich (and can afford to buy the Grizzlies) either way. He has no great reason to want the share price higher (most evidence indicates he wants it lower).
Title: Re: UBNT - Ubiquiti Networks
Post by: Foreign Tuffett on February 22, 2018, 11:56:17 AM
Edit: with a majority of sales to international markets, the falling dollar is a tailwind along with repatriation.

The bolded is incorrect.

From UBNT's most recent 10-K: "Our sales are denominated in U.S. dollars, and therefore, our revenues are not directly subject to foreign currency risk."

As the USD drops, prices at distributors (and resellers) drop, increasing demand. This can be seen in Amazon data (camelcamelcamel.com). Also, some European distributors like eurodk.com offer pricing in USD, EUR and GBP. The USD price is (relatively) fixed while the others vary with exchange rates.

Historically the company has done better with a weaker dollar.

Good point. I stand (somewhat) corrected.

I still think it's noteworthy that, unlike a company like PM, UBNT's financials at a given level of sales and expenses won't be ravaged by currency fluctuations. Again from the 2017 10-K:

"A 10% appreciation or depreciation in the value of the U.S. dollar relative to the other currencies in which our expenses are denominated would result in a charge to our income before income taxes of approximately $3.2 million."
Title: Re: UBNT - Ubiquiti Networks
Post by: oddballstocks on February 22, 2018, 08:44:19 PM
What's the consensus on these guys?

I ask as someone who's considering some of their gear.  I need a 10GigE fiber switch, theirs is $550, a similar Cisco offering is $2500.

Looking at this: https://www.ubnt.com/unifi-switching/unifi-switch-16-xg/

The main rub on them is the support.  Support?  What's that?  When we buy Cisco gear the support contract usually costs 30%-50% of the purchase price, but that also means someone will be onsite and will remain until the issue is fixed within two or four hours 24/7/365. 

Seems like you need to buy a backup Ubiquiti everything if that's the case.  I'm not opposed to buying two switches at a time when they're 20% of the Cisco cost.

Does anyone have actual enterprise experience with these things?  I'm looking to push a few hundred Gbps through these things at once on dedicated machines in a datacenter.

I'll say this, if you head over to Spiceworks the IT managers on there LOVE these things as well.

I like Cisco's gear, but the prices make me cringe.  The other place Cisco gets you is licensing.  You buy a switch, you own the hardware.  But you aren't legally allowed to use the software unless you obtain a separate license from Cisco.  From there they turn on and off features based on what you'll pay.

The last Cisco switch I purchased the hardware itself was about 30% of the cost, the rest was SmartNet and licensing for features.
Title: Re: UBNT - Ubiquiti Networks
Post by: oddballstocks on February 22, 2018, 09:36:05 PM
Replying to myself...

Spent an hour reading networking forums on this stuff.  Seems like the Ubiquity stuff is junk for the enterprise.  Lots of reports of dead ports, needing to power cycle, recommendations to buy cold spares.

I will probably look for a late model Cisco switch and buy it refurbished.

I was hoping to save a lot!  But by the time I added up having to buy duplicates, plus the time to duplicate configs and create a process to manage that the cost savings disappeared.

Looks like people like their stuff for home routing?  That makes sense.  Unplugging a router is easy.  If anything of ours goes down sometimes has to drive to a location to fix it, minimum 1hr round trip.
Title: Re: UBNT - Ubiquiti Networks
Post by: Grant on February 23, 2018, 11:05:33 AM
@grant: Can you elaborate on what channel checks you are referring to?

Several of us longs track inventory levels at distributors like shopblt and streakwave. I used to track Amazon rankings until I discovered camelcamelcamel.com. There's plenty of discussion about this over on Seeking Alpha.

oddballstocks, yeah UniFi is most well known for its WAPs and controller. It's done very well in SMBs, but has not significant penetrated the enterprise (yet?). I have no experience deploying UniFi in an enterprise environment, but the impression I get is that non-UniFi switches and routers are often used with UniFi WAPs.
Title: Re: UBNT - Ubiquiti Networks
Post by: Foreign Tuffett on March 05, 2018, 07:58:49 AM
IMO this is back to a level that approximates fair value (around 16X TTM operating profits).
Title: Re: UBNT - Ubiquiti Networks
Post by: Foreign Tuffett on March 05, 2018, 09:57:29 AM
IMO this is back to a level that approximates fair value (around 16X TTM operating profits).

How do you arrive at 16x EBIT as the appropriate level?

They have no recurring revenue and are dependent on illicit sales tactics from the Flytec's of the world. They were just subpoenaed for financials, accounting practices, audits, 3rd party relationships, and distributor practices (and likely a separate misleading/false statements in SEC filings investigation, but whatever).

If this happened to any other company, given what is already publicly known about their business practices, wouldn't we at least be prepared for the company to restate prior financials (based on the scope of the subpoenas alone)?


Days' Payable currently stands at 7 days. Down from 38 days six months prior and 55 days 1.5 years ago.

The Cash Conversion Cycle was 1 day in FY2013. It's now 109 days.

Schwab711 you've clearly been following UBNT for some time and in some detail. I understand your skepticism, but I think you're missing the forest for the trees.

All or nearly all of the actions Pera has taken indicate that he thinks the UBNT's stock is very valuable. If the company is fraudulent in a material way, Pera is either (1) unaware of it (2) in complete denial. I think both these possibilities are exceedingly unlikely. Also, unlike most stock frauds, Pera isn't promotional. Quite the opposite in fact. as he's very quick to note when he and his company have made mistakes and missed opportunities. Have you watched the IR day video?

Does UBNT have poor corporate controls? Yes. Is the company materially fraudulent? No (although it's very difficult to prove a negative, so there's always room for doubt here).

Disclosure: I just finished selling out of my position in UBNT today, but may buy back in at any time.
Title: Re: UBNT - Ubiquiti Networks
Post by: oddballstocks on March 05, 2018, 10:39:14 AM
An update to my previous post.  I spent a long time investigating their actual products.  They are alluringly cheap.

I think for home use, or maybe a small lab these are appropriate devices.  But I wouldn't put these in an enterprise environment. 

They overcommit each port, and the switches don't have enough bandwidth to support full line rate switching.  If you plug servers into all ports you'll experience a rash of dropped packets.  Solutions are "don't use all the ports" to "expect dropped packets, these are cheap" etc. 

You can replicate their products if you're interested.  They use a Linux switching package/platform.  If you Google you can find switch chassis that you can install anything you want on.  So you can buy your own blank hardware, install the same linux and voila, you have a custom switch.  It's a LOT cheaper, but you need knowledge and time.

In the end I just paid the Cisco-tax.  Took eight minutes to configure the switch and I'm on my way.  I expect this to run issue-free for years in a datacenter, out of sight and out of mind.

They are really pushing the envelop on prices.  If they could develop something rock solid stable then they'd have a significant shot in the enterprise market.  I'm sure someone would even create a company to provide paid support.  That could be a good market, problem is people buy for price when they buy Ubiquiti, and it's unlikely they'll buy support too.  Double edge sword.
Title: Re: UBNT - Ubiquiti Networks
Post by: Dustin T on March 05, 2018, 04:54:26 PM

The IR day is part of what makes me so uncomfortable with Pera. He didn't want to talk about accounting specifics during the IR day, despite that being the reason for Citron's claims and setting up the IR day. He doesn't care about the differences between COGS and SG&A. Most of the questions were softballs that didn't resolve outstanding concerns. I've listened to it in entirety a few times and I still don't understand why they had the event or what I was supposed to be comforted by from it.


I would like to clarify that the IR day was set up in advance of Andrew Left's claims and refuting Citron was not the purpose of the IR day. You can read into it what you will as to whether he should have used that forum to refute those claims, but if you read through them they were far from a well thought out case. I am certain you can make a more convincing short case than Andrew Left.
Title: Re: UBNT - Ubiquiti Networks
Post by: Grant on March 09, 2018, 01:09:49 PM
I'm really fascinated with how resilient UBNT's investor base is.

Many of UBNT's retail investors are WISPs and networking professionals who have made a lot of money with UBNT gear. They aren't the sort of people prone to believe UBNT is a fraud, or pay much heed to Wall Street. Also, the SEC investigation seems to simply be a follow-up on Citron's allegations. While it's not good news, it's not entirely unexpected.

They have no recurring revenue and are dependent on illicit sales tactics from the Flytec's of the world. They were just subpoenaed for financials, accounting practices, audits, 3rd party relationships, and distributor practices (and likely a separate misleading/false statements in SEC filings investigation, but whatever).

If this happened to any other company, given what is already publicly known about their business practices, wouldn't we at least be prepared for the company to restate prior financials (based on the scope of the subpoenas alone)?

I wouldn't expect this, no. The SEC subpoenas marked the transition from an informal investigation to a formal one. They are voluntary, and did not indicate a warrant was issued (meaning no judge looked at this and found probable cause). Also, the data I've seen (https://www.cornerstone.com/Publications/Articles/Disclosures-of-SEC-Investigations-Resulting-in-Wel.pdf) indicates very few SEC investigations result in Wells Notices.

Additionally, the company repurchased shares at an average price of $57.28 last quarter. My guess is they'll buyback until ~$62 this quarter. SEC investigations aren't known for their speed. Longs know this, and probably saw little near-term downside to purchasing under $65. I bought $55 2019 calls on the recent dip. I'm holding them until we see at least $75. I would not consider shorting UBNT under this price.

Note the timing of the SEC subpoena disclosure: a week after it was received, and the first day the company could resume buybacks after their ER. Disclosing SEC investigations are also completely voluntary. IMO what happened on Feb 20th was a short trap, which worked flawlessly. Assuming UBNT is repurchasing up to $62, by my estimation they should have been able to retire 1.1M shares.

All or nearly all of the actions Pera has taken indicate that he thinks the UBNT's stock is very valuable.

This. When we aren't sure if we can trust what someone says, we should look at their actions to determine their motive. I do believe Robert issued aggressive FY2018 guidance and held the investor day so he could sell stock at a higher price, and I also believe he thinks the shares are very valuable.

I'm continually baffled by the determination of shorts to bet against an insider with seemingly limitless buyback funds at his disposal. How exactly do they think they'll win? If you're going to short UBNT, do it at a price far above where Pera is willing to repurchase shares!

oddballstocks, in addition to your points, UBNT is currently experiencing a shortage of almost all of their switches.* This is not the sort of problem enterprise users want! As I've said before, if UBNT penetrates the enterprise it'll probably be the WAPs leading the way. Their switches have never been as compelling of products.

* I'm not sure how much of this is due to low supply or high demand, but it's at least partially due to the Chinese New Year.
Title: Re: UBNT - Ubiquiti Networks
Post by: Value^2 on March 10, 2018, 12:50:25 AM
all of the actions Pera has taken indicate that he thinks the UBNT's stock is very valuable.

Like for example: selling +$61million UBNT stock @ lower prices than it trades today.

S   2017-08-28   2017-08-30 16:06:14   Ubiquiti Networks, Inc.   UBNT   Pera Robert J   (CHIEF EXECUTIVE OFFICER)   1,000,000   $61.25
Title: Re: UBNT - Ubiquiti Networks
Post by: Grant on March 10, 2018, 07:25:01 AM
I really appreciate the stats but your Wells Notice sample includes a large portion of pre-GFC subpoenas that faded during the crisis. I suspect that specific 5y period is quite the outlier. Especially with the current enforcement regime (which I commend, this far).

Between 2003 and 2007 (post-Sarbox) there were 4,520 investigations initiated by the SEC. In this same time period there were 114 Wells Notices issued. Yes it'd be nice to have more recent data, but these numbers suggest nothing will come of this.

Also, the average length of time between disclosure of a formal investigation and a Wells Notice was slightly longer than a year. Moveover, the SEC likely has its hands full with a smorgasbord of crypto-scams. This is one reason why I say UBNT is a terrible short here.

If someone had of posted they shorted at $80+ I would not have objected. I got out of all my UBNT long positions in Jan.

Buying back stock with borrowed money is easy for desperate folks. Not saying it must be so, but UBNT should be repatriating funds at their first chance. Let's see if they do.

If they don't repatriate a lot of their cash and I see a plausible explanation of how UBNT could be fooling auditors and bankers, I'll sell my calls. Otherwise I plan to hold them at least until we see how well LTU and uFiber Gen 2 is selling.

That's illegal, but par for the course.

I can't speak to the legality of it, but I was glad to get decent guidance regardless of the motivation. "Analyst" guidance has always been crap, especially for longer time periods. I think their low-end guidance being no new product line successes was fairly accurate, but obviously the FrontRow debacle threw a wrench into this. We could still hit the low-end targets though.

Like for example: selling +$61million UBNT stock @ lower prices than it trades today.

Yes. He sold at an ATH. I can't blame the guy for wanting to diversify (insider buys are more predictive than insider sells for reasons like this). At the time no one knew the Citron squeeze was coming.
Title: Re: UBNT - Ubiquiti Networks
Post by: Grant on March 22, 2018, 01:22:20 PM
Evidently UBNT has hired a team of wireless engineers from Ruckus: https://wirednot-wordpress-com.cdn.ampproject.org/c/s/wirednot.wordpress.com/2018/03/07/ubiquiti-gets-serious-about-hospitality-market/amp/

Having used and liked Ruckus products in the past, I think this could be great news. It reminds me of Pera poaching the AirFiber team from Motorola. The problem with Ruckus gear was always its cost, so if their talent can be combined with UBNT's cost structure, great things could be done.
Title: Re: UBNT - Ubiquiti Networks
Post by: gjangal on May 10, 2018, 05:55:07 AM
https://finance.yahoo.com/news/ubiquiti-networks-reports-third-quarter-123000032.html

The most important thing i was looking for was the repatriation of cash. That sends the best signal to shorts

Let’s see what the market says
Title: Re: UBNT - Ubiquiti Networks
Post by: chrispy on May 10, 2018, 06:04:39 AM
The overseas cash was the only significant question I had... Very impressive numbers.
Title: Re: UBNT - Ubiquiti Networks
Post by: Foreign Tuffett on May 10, 2018, 07:01:44 AM
The overseas cash was the only significant question I had... Very impressive numbers.

I actually didn't think they were that good. Revenue growth is getting more-and-more difficult to come by. This is the first quarter since at least early 2016 where revenue didn't grow Q/Q. The Service Provider segment, which I think is the "moat-ier" part of their business, isn't growing at all, and may even be shrinking.

Of course, bulls can point to aspects of the short case that have been debunked: The cash is real! The Grizzlies ownership situation has been resolved!
Title: Re: UBNT - Ubiquiti Networks
Post by: chrispy on May 10, 2018, 07:15:42 AM
I wasn't comfortable with holding and sold out but am cheering Pera on. The Enterprise numbers have increased
Title: Re: UBNT - Ubiquiti Networks
Post by: Schwab711 on May 10, 2018, 07:23:50 AM
Very impressive that they repatriated. I was clearly wrong in that regard. I'm not sure I can add much else at the moment. Congrats to the longs!
Title: Re: UBNT - Ubiquiti Networks
Post by: gjangal on May 10, 2018, 07:39:39 AM
i do appreciate the comments everyone made on this thread.

My whole thesis was only one point that this was a real business with real cash in the bank. Such a business doesn’t warrant 40% of float to be short. I m still HODL ing as i think the shorts will be forced to buyback. At lower prices this was undervalued but not so much anymore

Brokers were ready to offer a lending rate of 14% to holders of this stock . Wonder what rate they lent to short sellers
Title: Re: UBNT - Ubiquiti Networks
Post by: Grant on May 10, 2018, 07:47:52 AM
I actually didn't think they were that good. Revenue growth is getting more-and-more difficult to come by. This is the first quarter since at least early 2016 where revenue didn't grow Q/Q. The Service Provider segment, which I think is the "moat-ier" part of their business, isn't growing at all, and may even be shrinking.

I don't think it actually shrunk. All my indicators say demand for AirMax AC 2 is increasing. UBNT revenues are based on shipments and can sometimes be lumpy. It's also possible WISPs are deferring purchases until LTU PtMP is available.

That said, a collapse of the Service Provider segment is my worst fear with UBNT. 5 GHz gear faces increasing competition from 60 GHz and LTE technology, neither of which are offered by UBNT. It's quite possible AirMax revenues will head towards zero over the next 5-10 years. Hopefully uFiber and LTU will succeed.

Of course, bulls can point to aspects of the short case that have been debunked: The cash is real! The Grizzlies ownership situation has been resolved!

Yup, for those who missed it:

Quote from: 8-K
On May 8, 2018, the Nominating and Governance Committee of the Board determined in accordance with the Company’s Insider Trading Policy and Guidelines with Respect to Certain Transactions in Securities that Mr. Robert Pera be permitted to pledge up to 28% of the shares of the Company’s common stock that he beneficially owns to secure one or more loans with financial institutions, provided that the principal amount outstanding under all such loans would be significantly less than the value of the pledged shares under such loans. See Item 1A, Risk Factors in Part II of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2018 for additional information on these loans.

I'm very bullish in the short term because of the huge short interest. Without the fraud thesis or Pera selling to buy the Grizzlies, there's no reason to keep paying 27% borrow fees on this stock.
Title: Re: UBNT - Ubiquiti Networks
Post by: Grant on July 30, 2018, 08:43:58 PM
Looks like Facebook is dragging lots of tech down. I'm glad I got out last week: https://twitter.com/glbeaty/status/1021502228111261696
Title: Re: UBNT - Ubiquiti Networks
Post by: gjangal on August 24, 2018, 04:43:10 AM
https://finance.yahoo.com/news/ubiquiti-networks-reports-fourth-quarter-113600656.html

Regular dividend of 0.25 a share announced.

Revenue growth 18% YOY
Title: Re: UBNT - Ubiquiti Networks
Post by: Schwab711 on August 24, 2018, 07:26:32 AM
Boy, was I wrong here. The results look strong, the new credit agreement makes more sense, and the dividend was a smart move. I would hope they get hit with a fine on Reg FD violations but it's not going to effect operations.

This article almost certainly refers to UBNT, in case anyone was wondering why I was so negative:
https://www.pogo.org/investigation/2018/05/pwc-whistleblower-alleges-fraud-in-audits-of-silicon-valley-companies

Quote
First, its controller was duped by an email phishing scam. The controller wired money as directed by a phony email despite the fact that company policy required two signatures for such wire transfers—and despite the fact that the party the controller paid wasn’t on the company’s vendor list.

Second, the company neglected to disclose to the auditors its close relationship with a business “entity” that shared its address and performed research and development at its direction. The entity was not included in the company’s financial statements until auditors raised the issue, he wrote. (Keeping the entity off the company’s books would have reduced the company’s reported expenses, Botta explained to POGO.)

Third, as Botta reported, the company apparently failed to notice that, when it sold a shipment of products, the buyer had a contractual right to return thousands of them. (That could affect the company’s ability to record revenue from the sale, Botta clarified for POGO.)

Botta told the SEC that he proposed stating in PwC’s audit report that the company had “a material weakness” in “the skill and competence of the finance department.” Botta wrote that, in response, he “was put under significant pressure” by superiors at PwC and was told that if he pursued that path, it was unlikely he would be promoted to partner.
Title: Re: UBNT - Ubiquiti Networks
Post by: Grant on August 25, 2018, 10:46:00 PM
Schwab711, I read the complaint the article refers to a few months ago. If I recall correctly, two of the four anonymous companies cited could've been Ubiquiti, but it wasn't clear either was. I hope the SEC does find something, that'll give me (and Pera's buybacks) another entry point. I haven't had a position since I sold my calls in July.

It seems like tariffs are the next major catalyst. Unfortunately they're something I'm completely unfamiliar with.
Title: Re: UBNT - Ubiquiti Networks
Post by: Schwab711 on August 26, 2018, 05:34:48 AM
I know the 2nd paragraph I quoted to be true for UBNT as well. It would be pretty funny if half of Silicon Valley is hiding corporate entities to improve their financial results.

I think avoiding tariffs has been the key to their success in South America, so maybe the US/China trade war will actually increase margins/sales.
Title: Re: UBNT - Ubiquiti Networks
Post by: Foreign Tuffett on September 10, 2018, 06:21:02 AM
Ben Moore, who is effectively the COO of the company, has resigned.

https://www.sec.gov/Archives/edgar/data/1511737/000141588918001336/form8k-09072018_010911.htm (https://www.sec.gov/Archives/edgar/data/1511737/000141588918001336/form8k-09072018_010911.htm)

This leaves Pera and Chief Accounting Officer Kevin Radigan as the company's only executive officers. ???

I've owned oversized long positions in $UBNT twice in the past, but can't  come close to underwriting an investment at the current price.
Title: Re: UBNT - Ubiquiti Networks
Post by: gjangal on September 10, 2018, 08:02:41 PM
Valuations wise it seems fully valued here. Ben Moore is a large shareholder ( if i m not mistaken it’s about 3-5mn shares). it will be interesting to see what he does.
Title: Re: UBNT - Ubiquiti Networks
Post by: Foreign Tuffett on September 11, 2018, 06:29:28 AM
Valuations wise it seems fully valued here. Ben Moore is a large shareholder ( if i m not mistaken it’s about 3-5mn shares). it will be interesting to see what he does.

Moore has been selling big chunks of his UBNT shares.
Title: Re: UBNT - Ubiquiti Networks
Post by: gjangal on September 11, 2018, 07:23:57 AM
 originally he had closer to 1.5mn shares( not 3 as mentioned above ), he is down to 675k now. Has been actively selling in the past year.
Title: Re: UBNT - Ubiquiti Networks
Post by: gjangal on November 09, 2018, 06:12:01 AM
https://finance.yahoo.com/news/ubiquiti-fiscal-1q-earnings-snapshot-123130130.html
Title: Re: UBNT - Ubiquiti Networks
Post by: chrispy on November 09, 2018, 07:37:43 AM
Very nice to see.

Wish I would've keep my small position. Cutting the grass and watering the weeds...
Title: Re: UBNT - Ubiquiti Networks
Post by: gjangal on February 08, 2019, 06:00:52 AM
https://www.sec.gov/Archives/edgar/data/1511737/000151173719000007/exhibit991-12312018nex.htm
Title: Re: UBNT - Ubiquiti Networks
Post by: rkbabang on February 08, 2019, 06:26:05 AM
https://www.sec.gov/Archives/edgar/data/1511737/000151173719000007/exhibit991-12312018nex.htm

Another great quarter. Share buybacks at a good average price ($34.7 million at an average price of $97.31) and keeping dividend the same.
Title: Re: UBNT - Ubiquiti Networks
Post by: chrispy on February 09, 2019, 05:11:58 AM
Very impressive results
Title: Re: UBNT - Ubiquiti Networks
Post by: chrispy on August 09, 2019, 12:08:03 PM
Switching to NYSE listing, most likely because of the listing requirement. They also announced today 0.5b worth of shares to be repurchased which is about 1/3 of the float not owned by Pera
Title: Re: UBNT - Ubiquiti Networks
Post by: rkbabang on November 08, 2019, 06:54:04 AM
Another amazing quarter.  Stock way up today.
https://www.businesswire.com/news/home/20191108005150/en/Ubiquiti-Reports-Quarter-Fiscal-2020-Financial-Results

Revenues of $323.3 million, increasing 14.3% year-over-year
GAAP diluted EPS of $1.43, increasing 23.3% year-over-year
Non-GAAP diluted EPS of $1.44, increasing 23.1% year-over-year
Repurchased 3,635,534 shares of common stock at an average price of $114.49 per share during the quarter and an additional 995,495 shares of common stock at an average price of $120.11 subsequent to September 30, 2019
Title: Re: UBNT - Ubiquiti Networks
Post by: chrispy on November 08, 2019, 11:19:10 AM
Great quarter.

Pera does his own thing and it has worked. Long term shareholders have been rewarded.
Title: Re: UBNT - Ubiquiti Networks
Post by: gjangal on November 08, 2019, 08:35:14 PM
not a shareholder currently , but hat tip to RJP for executing and pushing ahead with his vision. Buybacks have been timely and minority shareholder friendly.
Title: Re: UBNT - Ubiquiti Networks
Post by: chrispy on November 09, 2019, 05:56:05 AM
The shares arent necessarily expensive now although I am not buying here. New line of products released, trading at 30PE with 20 percent growth, small amount of publicly traded shares that will be bought back, shorts will have to cover. Pera is an inventor who makes products people use to build businesses and can keep r&d low.

They continue to move up market