Subject: Re: Hypergrowth valuation
I'll have to confess I too was a little enamored by Saul's picking capabilities. At one point I had almost 10% in his picks but despite a significant effort I was never able to find any way of projecting long term success relative to their price.
On 7/2020 I gave up and posted this on the MI board:

The question is not whether or not there are SAAS companies with useful products and explosive growth
but weather their potential earnings will be capable of supporting their current prices. Same well hashed
problem Tesla has. Square, Spotify, Shopify, Tesla, and Zoom have the same market cap (combined) as
Berkshire Hathaway even though Berkshire's trailing net income is 297 times higher.

Saul started his board at the beginning of 2014, the first year there were less than 5000 posts on his
board and he reported a loss of 9.8% looking into different types of fast-growing companies.

End of 2015 there were ~10,000 new posts that year and he reported gain of 16.7% while the S&P was
down 0.7%. SAAS were not yet a topic.

End of 2016 there were ~9,000 new posts and he reported a gain of 2.5%, S&P500 up 9.5%. Companies
invested in LGI Homes, Signature Bank, Shopify, Amazon, Synchronoss, Ubiquti . . . Looks like he is just
starting to discover cloud based SAAS companies.

End of 2017 the discovery year >8700 new posts and a reported gain of 84.2%. Now in companies like
Shopify, Arista, Hubspot, Alteryx, Nutanix, Square. Saul is very open about how his stock selection
criteria change over time based on his experience. Example: https://boards.fool.com/reflec......

End of 2018 the explosion almost 11700 new posts and another big gain of 71.4% in a volatile +96 up -26
down year. A mid year post on his investing criteria evolution: https://boards.fool.com/why-my......

End of 2019 another ~14500 new posts and a gain of 28.4% in another volatile year up +77% mid year
with a drop down to +10% at one point.

Over the last 5 years Saul's board has attracted some excellent talent including individuals with direct
expertise and/or experience in the companies being evaluated. There is no doubt they find companies
with explosive growth. In my view (with no solid evidence other than past experience) it is more than
likely that the prices of many of those companies have become overvalued relative to their actual
earnings capabilities. However, Saul appears to be one of those individuals that as the saying goes is fast
enough on his feet that will quickly adapt and move on to other profitable opportunities.

I do have concern that he has become too focused on SAAS companies with little concern for any
diversification. Posts on any valuations are discouraged. Good luck to the continuing players and thanks
to Saul for a good run but at this point I've pulled my play money out. Probably means a long and
profitable run for those still in.

http://www.datahelper.com/mi/s...
There were words of caution from several others if one had looked for them

RAM