Research Diary

Long-time readers should note some significant changes in how I communicate in the public domain. The primary purpose of this forum is now to attract new contacts with professional industry expertise to share research and receive feedback (confirmation / refutation) regarding my investment theses.

Accordingly, this document should not be construed as an endorsement or recommendation of the companies or securities discussed herein. I am not an investment advisor and this is not an investment thesis. It is merely one part of the story, which I present for debate in hopes of determining all risks and upside potential. The disclosure at the end of this piece is critical to understanding the content of this document. Further, I frequently trade my positions and may buy, sell, or short the securities mentioned herein at any time, regardless of the facts or perceived implications of this article.

If you missed any of last week’s research, you missed a lot. Today’s post is just “ok”, so if time is limited, I recommend taking a few minutes to catch up on my recent posts!

Why Is The MFIN Rising?

It’s been a long time since I covered my short against the stock I call “Muffin” — Medallion Financial (MFIN). They’re a public company focused on financing taxi medallions (which, when Uber and Lyft came along,  because a very bad business to be in).

However, today I received a Seeking Alpha article that made me realize that the stock has come roaring back from $1.60 to $4.60. It appears overvalued again (for all the reasons I had before), so I’ve reopened my short position.

I’m starting small, in case it continues upward. This strategy buys me time to do more research and will give me the room / opportunity to short more. In my mind, the only possible bull case is that taxi medallion prices have now been reset, making medallion loans an o.k. business again (even though most past loans are still hopelessly under water).

One last note: A few weeks ago, I took my first cab ride since 2016… and I hope it’s the last until 2026. I was reminded of all the reasons why Uber and Lyft have taken over. The car was wretched, the driver was surly, and the fare was double what I’d pay for an Uber.

Lose, lose, lose.

Stay tuned…

Is Hubspot On The Spot?

Every once in a while someone asks why I give my research away for free. Each time, I give the same answers… but the list has grown a bit over time:

  1. I do it because my mentors did it for me. They made my life. It’s the reason I was able to retire (which I aptly call, “fleeing the matrix”) at age 38. Sharing the work I already do is the least I can do to pay it forward.
  2. Charging for my work in the 2014-2015 time frame had noble intentions, but proved to be a life-altering mistake. Aside from that brief period, I’ve done this 100% for free for over nine years (since 2009) and have enjoyed it immensely.
  3. Many professionals do it because it forces them to do better work than they’d do for themselves. Nobody wants to look like an idiot in front of an audience.
  4. It tests your work against the audience who reads it. Many professionals contact me and that makes it all worth while. It costs $0 for other people to see it (and many of them contribute valuable info too !)
  5. Writing helps me think thinks through. For me, writing is like doing a puzzle. Neatly assembling the pieces on a single page enables me to see the whole picture (or, see that the picture is cloudy, ugly, missing pieces, etc.)!
  6. It’s a great outlet. I’m not a gifted artist, but stock picking is something of an art. Maybe that’s why I find it calming to write about my findings.
  7. I’d be lying if I said that “talking my book” isn’t a good reason to write. However, knowing how the SEC operates, you can bet that I’m doing everything that is practical to avoid making any trades that can be construed as inappropriate. To be sure, the greatest benefit of talking my book is stimulating a group research effort… and it’s working!

What’s all this have to do with Hubspot? Read on…

On Mar 30, 2018, at 6:33 PM, XXXXXX wrote:

MG

I am a hubspot customer as you know and they are trying to sell me more of their great stuff. Take a read of the last message in the thread below! You like?

XX

On 3/30/18, 5:18 PM, “xxxxxx” <xxxxxx@hubspot.com) wrote:

XXXXXX,

I really hope you are having a great Friday.

I just stepped out of a segment wide meeting and we are falling just shy of our best quarter ever. I pulled my director aside and would not be reaching out to you if I didn’t think it would be worth your while. I remember when we first connected, you mentioned you were a fan of deals and I’ve got one for you.

I have been given approval to offer you a 40% discount on the discussed package below, should you be able to complete an agreement link by EOD tomorrow.

I replied:

“That’s interesting, but I can’t say that I like this. Their record quarter was last quarter ($106.5 million). This quarter, they are expected to make $109.7 million (a record by $3.2 million).

If they really are “just shy of their record” one day before the end of the quarter, it makes me a bit nervous”

Of course, this could have just been a sales person using sales tactics. He could also be just referring only to his segment (he was in a segment-wide meeting). Lastly, many tech companies do a lot of their sales on the last day of the quarter (I once went from $0 in sales to well over 100% of my quarterly sales goal on the final day of the quarter).

As I write this, I’m thinking it all through (see #5 above) and realizing that this quarter started and ended with a holiday (New Year’s Day was a Monday and March 30 was good Friday, making the last day of the quarter land on a Saturday.

The fact that HUBS is still trying to pull in business on Good Friday and asking for a contract to be inked by Saturday is worrisome. At the very least, it will keep me from buying the pullback (after its massive run).

HUBS

In fact, it’s something to monitor for the entire tech sector (and any other company that closes most of its business at the end of the quarter).

2013 was the only year over the past decade where Easter weekend landed at a more inopportune time for tech companies. In that year, the NASDAQ Composite fell 3.5% during the first three weeks of April. That’s the second worst performance of the past 10 years (only 2010 was worse).

Of course, we’re coming off of a pretty bad month for stocks, so we’ll see how it all fleshes out…

MoviePass Blurb of the Day

This tidbit was shared by one of our reader-contributors:

“MoviePass back to only selling $9.95 a month plan, annual sale ended!”

Reply

Mark Gomes

March 30, 2018 at 10:43 pm

Wow. I wonder why. Maybe they finally decided to slow things down ahead of the summer movie gauntlet (after talking about it, a week or two ago).

Thanks for the heads up. The impact on their cash flow is going to be very interesting to watch…

 

More Research:

 

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Disclosures / Disclaimers: I am short MFIN. However, this is not a solicitation to buy, sell, or otherwise transact any stock or its derivatives. Nor should it be construed as an endorsement of any particular investment or opinion of the stock’s current or future price. To be clear, I do not encourage or recommend for anyone to follow my lead on this or any other stocks, since I may enter, exit, or reverse a position at any time without notice, regardless of the facts or perceived implications of this article.

I am not a financial advisor. Nor am I providing any recommendations, price targets, or opinions about valuation regarding the companies discussed herein. Any disclosures regarding my holdings are true as of the time this article is written, but subject change without notice. I frequently trade my positions, often on an intraday basis. Thus, it is possible that I might be buying and/or selling the securities mentioned herein and/or its derivative at any time, regardless of (and possibly contrary to) the content of this article.

I undertake no responsibility to update my disclosures and they may therefore be inaccurate thereafter.  Likewise, any opinions are as of the date of publication, and are subject to change without notice and may not be updated. I believe that the sources of information I use are accurate but there can be no assurance that they are. All investments carry the risk of loss and the securities mentioned herein may entail a high level of risk. Investors considering an investment should perform their own research and consult with a qualified investment professional.

I wrote this article myself, and it expresses my own opinions. I am receiving no compensation for it, nor do I have a business relationship with any company whose stock is mentioned in this article. The information in this article is for informational purposes only and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.

The primary purpose of this blog/forum is to attract new contacts with professional industry expertise to share research and receive feedback (confirmation / refutation) regarding my investment theses.

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