No. of Recommendations: 54
In my port (such as it is, if it is so still be definition) MDB at this marketcap is inviolable. I have been itchy on the other holding(s) I have. Not out of fear of loss but out of trying to be too perfect.

One rule I usually have is that never to buy anything “cheap” in the conventional sense, albeit “cheap” in the relative sense, but still pricey conventionally is the ideal.

I have taken to breaking that rule today. Nothing for timing, no big FUD event, no big 30-100% bounce of days of yore, but because, in the end, I just could not stand back anymore. It had to be done.

I have been in and out of Nutanix the last couple of weeks. Pretty much know it like the skin on the back of my hand (I could not pick it out in a police line-up but it is a well known phrase with clear meaning) and have been going through WHAT IS WRONG WITH NUTANIX!

On NPI, although little group work on this one, mostly me, it is clear what drove Nutanix down. It was not the leaving of their president, it was not the delay in Xi, it was not IBM mentioning their multiple cloud product, it was not anything else but the earnings call. The evidence is irrefutable in regard. It was on the earnings call, there and there only, when the share price started to descend in a frightfully spirally fashion, and continues to this day to do so.

But it cannot be that simple, can it? I mean Wall Street has access to near perfect information and there are no such incongruities between reality and information that is known to the market! That is what my finance professor taught and convinced otherwise he could not be. This from the #5 MBA program in the world.

But yes, it is true. I have seen this from vast experience. There are times that stocks get cheap based upon real things that we do not necessarily see but market players that count do. Never forget Lernout Hauset (however that is spelled - I did not invest in it, but it was so popular as it had so much going for it and yet was reasonably priced - was a total sham). But then there are times when things get cheap based upon nothing fundamental at all. Either through industry propaganda (as happened to both Qualcomm and Rambus - and those two towered as the FUD from the industry propaganda cleared), or the dressing is not correct.

Here, there is nothing wrong with Nutanix other than it is going through a transformational change yet again. Nutanix is reinventing itself again. Nutanix was here about this time in 2016 as well, as EMC was bought by Dell and VMWare became this conglomerate of “lets eat small fry Nutanix’s lunch!” And Nutanix had one moderate quarter with disappointing guidance (that quickly was exceeded). We are at a similar point not.

Yet what do we know? Nutanix is the leading HCI software vendor in the world, beating out VMWare. Nutanix software sales are growing like mad, deferred revenues cranking, billables running, and execution to the software transition going better and faster than planned (ie, wonderful execution), with new products on the cusp of being delivered that may be another game changing paradigm for local databases. And despite the momentum towards the public cloud, most AI will be done on local databases, connected to public clouds, because the cost of moving that data, and the security issues, are not minor concerns.

In addition, as I have seen with almost every great investment that I have ever been in, there are critics who are calling Nutanix out for being unprofitable and investing too much in the business and not trying to sustain the bottom line! Watch Square, Netflix, Amazon, Salesforce...it is a very long list.

Long way to say, NOTHING IS WRONG HERE. NO WATER BEING TAKEN ON. NO NEED TO TURN ON THE PUMPS. KEEP THE WATER BUCKETS IN THE CLOSET. Just make sure we have enough food rationed as the voyage will be a big longer than we like.

What I have noticed is that in cases like this big money leaves because there is a hiatus. Money managers get graded quarter by quarter. There is no need to rush into anything. And besides, they are mostly only interested in the last 20% of returns anyways. Better to reduce their risk. But they also act like herd animals. At some point the right person will say the right thing, and it will be after you have given up, that you want to sell, and then a few days more, and boom, suddenly the market turns around and announces how smart they are vs. you, as they find Nutanix is accelerating their growth! And then act on it.

Tinker
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