Interesting article by John at Brontecapital on XRO.
http://brontecapital.blogspot.com.au/2014/01/xero-and-precious-petals-of-new-zealand.html
It closed today at $39.74 up 10% since my last post last week. Given its rate of appreciation it may yet be bigger than RIO/CBA by years end!!
Hit a high of 42.96 in early March but has now retraced to $34.50 in less than a month. Just reported a loss of $NZ35 million ($32.4 million) in the 12 months ending March 31, compared with $14.4 million in the previous year.
Market cap of $1044m and -14% ROE, great business! This freight train has crashed and the lemmings who lined up to buy it at $40+ are now feeling the pain of a speculative swan dive. Herd behaviour in the market was the only reason XRO had such a stratospheric market valuation, pure spec stock. It was trading at $15 last Oct and that's probably where it belongs now, at best.
Market cap is $4.4B actually.
Did you read this link?
http://brontecapital.blogspot.com.au/2014/01/xero-and-precious-petals-of-new-zealand.html
Dones't change the fact that it's expensive and priced for A LOT of growth for a long time, but it changed my perspective somewhat.
If your fund manager had underperformed the index because they did not own market weight in Xero (ie all of them) and they have not explored the software extensively themselves fire them.
Hadn't seen it, thanks for the link but it's not considered analysis but rather another "I like the product so bought the stock" story while pouring scorn on fund mangers that did not jump on the bandwagon early. I have read other reports on XRO and they do have ONE excellent cloud based accounting product. To say they are priced for perfect execution would be an understatement.Did you read this link?
http://brontecapital.blogspot.com.au/2014/01/xero-and-precious-petals-of-new-zealand.html
Dones't change the fact that it's expensive and priced for A LOT of growth for a long time, but it changed my perspective somewhat.
Investing in something that by all quantitative measures is in my opinion, overvalued, isn't what I would want my fund manager to do. But maybe I'm failing to see the true potential of the company...
I agree but I think the point was that they failed to realise the potential when it was $6, then they want to change the rules to make their performance look good.
What's more, I don't believe this to be true either:
If your fund manager had underperformed the index because they did not own market weight in Xero (ie all of them) and they have not explored the software extensively themselves fire them.
The stampede out of spec tech continues as the hot air balloon that stocks like XRO were riding continues to deflate, down another 12% to $28.25 as I write this.
Did those fundies who should have been fired by investors for not speculating on XRO actually foresee this bloodbath? Perhaps it was wise to stand aside after all when investing OPM.
Annualised subscriptions are actually $93m per annum, not $50m per annum.$4bn for a $50mil/annum revenue company? this is the most overvalued company on the history of the ASX..reminds me of the uranium bubble in the mid 2000s.
The stampede out of spec tech continues as the hot air balloon that stocks like XRO were riding continues to deflate, down another 12% to $28.25 as I write this.
Did those fundies who should have been fired by investors for not speculating on XRO actually foresee this bloodbath? Perhaps it was wise to stand aside after all when investing OPM.
There's a stampede out of Tech? a Bloodbath? i created a Tech watchlist 6 weeks ago and the only stock to fall significantly is XRO, it was always going to pull back from such a stupid valuation.
There is a bit of a sell off amongst various names.
XRO, REA, SEK, TPM, IPP, MNW, MBE, FLN, UNS etc.
Then a few high PE stocks (which includes the names above) also been heading down...
MFG, PTM, BTT, DNA, DMP, RHC, GEM, FOX, QUB etc.
So far the damage is pretty localised so the broader market is barely feeling it... but over-valued, over-hyped stocks are always there in a bull market, so the question is whether a deflation of these names signify the bull coming to an end.
Just working from a subset of SKCs list (all from recent highs)...There's a stampede out of Tech? a Bloodbath? i created a Tech watchlist 6 weeks ago and the only stock to fall significantly is XRO, it was always going to pull back from such a stupid valuation.
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