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On "high" valuations -

Almost daily, well meaning people critique my stocks and they claim that their valuations are soooo high! Some of them even display a subtle arrogance by implying that shareholders of such expensive/story stocks must be out of their minds for investing...
2)...in such frothy companies.

However, when I ask them what multiples these companies should trade at? I hear crickets...

Stocks are claims on the long term cashflows of operating businesses. So, if a dominant business is growing rapidly and has a long runway, doesn't it...
3)...make sense that investors will/should pay up more for this company?

Why should a business growing at 50/60/70% pa be available for a market multiple!? Those really big cashflows in the future have to be worth something today, right?

Quality merchandise always costs more.
4) Doesn't a Ferrari cost more than a Renault? Doesn't an Armani suit cost more than one from M&S? Doesn't a Heinz ketchup cost more than a white label from your nearby supermarket chain?

If quality merchandise in all industries costs more, why should the highest...
5)...quality companies be available for a cheap or market multiple?

IMHO...the best businesses which go on to compound for years always trade at an above market multiple.

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More from @saxena_puru see all

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Puru Saxena
@saxena_puru
As a long-term investor, the time to grab shares in rock-solid companies is when others are heading for the hills.

Strong businesses always come back and the CAGR improves significantly if shares are purchased after a big pullback.

Pull up the long-term charts, you'll see.
2) Here is Starbucks 20-yr chart - $SBUX

You can see what happened after every scary pullback -
3) Here is Nike 20-yr chart - $NKE

What happened after every scary pullback?
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Puru Saxena
@saxena_puru
1) My investment philosophy + Disclaimer -

I'm a full-time investor and my concentrated portfolio is comprised of (primarily founder-led) high growth companies with large addressable markets. I usually look for dominant businesses with a special sauce (moat) which allows..
2)...them to compound their revenues, cash flows and earnings for an extended period of time (multiple years).

Usually (but not always), such disruptive businesses operate in the technology sector and they are led by visionary founders with skin in the game.

When I invest,...
3)...it is always with the intention of holding indefinitely but the business world is unforgiving and capitalism is brutal; so in reality, my average holding period is a few years.

So, when do I sell?

(i) When a company's rev. growth < 15% pa
(ii) When the mgt. deteriorates
Read 24 tweets
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Puru Saxena
@saxena_puru
1) $ZS is gaining traction amongst enterprise customers

Long $ZS
2) $ZS revenue growth -
3) $ZS billings -
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