Hammer

Searching for investing tools. Looking for more than nails. Process not recommendations.

[Hammer @equitytoolkit]

Welcome to The Equity Toolkit https://t.co/UXPlonvG2q

[Blocks @myblocksapp]

1. Blocks now allows you to make and record probabalistic investment decisions. This allows (1) Better appreciation of risk/reward & (2) Ability to revisit past decisions to understand flaws in your process. As an example $RBL ...

[Blocks @myblocksapp]

$BWX
STUFF, verb "to push something into a small space, often quickly or in a careless way"

[Blocks @myblocksapp]

Integerated Research $IRI
CFO resigns after 14 years - maybe nothing - but working capital position could be interesting to watch..

[Blocks @myblocksapp]

@RaskAustralia @OwenRask Some great resources in here about the benefits of building an investment checklist. With Blocks you can set up a free account to create a fully customised investment checklist for all your favourite stocks.. https://t.co/pMSeArtPfX

[Blocks @myblocksapp]

If Promedicus $PME used their entire cash balance they would buy back <2% of stock... Alternatively the $1.4m they have spent this half to buy back .03% of issued shares could have increased R&D by 30%... 🤔

[Blocks @myblocksapp]

Elmo Software $ELO
IMO this is borderline misleading - quoting $51m cash balance without reference to debt, deferred consideration and negative working capital ($40m, $32m and ~$30m respectively at 31 Dec)

[Blocks @myblocksapp]

1/n Value Creation 🧵

Conceptually value creation is simple - how much cash do you get back for the amount of cash you put in.

Absolute: Cash Out - Cash In
Relative: Cash Out/Cash In

https://t.co/Y7bg2rR6bp

[Blocks @myblocksapp]

Want to see what the future looks like for many of today's cash burning software companies? $BID Bill Identiy - is a good case study....

A company that was valued at close to $200m is now valued at <$20m with a share price down almost 95%.

cont...

[Blocks @myblocksapp]

The Blocks software development team are located in Ukraine. They are extraordinary developers but ordinary people who this week become inspirational heroes.. Below is their latest update - its put my day in some perspective. Our thoughs are with them all
🇺🇦🇺🇦🇺🇦🇺🇦🇺🇦

[Blocks @myblocksapp]

Livetiles $LVT
Historically dreadful cash flow is improving, but revenue retention looks poor and deteriorating. Balance sheet not as strong as appears.

https://t.co/kIhTow41Tu

[Blocks @myblocksapp]

Objective Corp $OCL - clearly the quality end of the software spectrum - but only moderate organic growth of 13% and most of this seems to have come from new product offerings. Is the adressable market in ANZ enough to justify valuation?

https://t.co/wRoxIwwWpH

[Blocks @myblocksapp]

1/2 Pro Medicus $PME

An oustanding result - sales growth of 40% and margins of 65% give a "rule of 40" rating of >100%.
Using our "software process" $PME rates highly on almost all measures. But this is a competitive market with large sophisticated vendors and customers.

[Blocks @myblocksapp]

Elmo Software $ELO

Contrast between poor top down metrics (high cash burn, stat. losses) against reported SaaS unit economics that look enticing.

Calculation of churn seems key to which approach should carry more weight.

See link for full review.

https://t.co/Ot9IJMemYa

[Blocks @myblocksapp]

Balance Sheets (1/n)
Our new templates make it easy to build an investment process.
In this Blog post, we look at the Balance Sheet as an Investment Factor.

Cont….
https://t.co/RZMTSxh1Hb

[Blocks @myblocksapp]

To allow all users to experience the new featurs on the Blocks app we are now offering a free 90 day trial of our Investor Tier, including a personalised onboarding call to get you started.

Sign up today to begin building your Investment Foundations.

https://t.co/pMSeArbG1P

[Blocks @myblocksapp]

1/n... A good thread here on the drivers of share price returns and the variety of models for looking at this.
@DownunderValue @Tristanwaine

My thoughts below on how to incorporate these ideas into an investment process.
https://t.co/roixZStPpJ

[Blocks @myblocksapp]

Dubber $DUB

Similarly, the point of using ARR to value software companies was to reflect high gross margins which should deliver profits at scale.

Providing an outsourced cost function for customers boosts revenue - but is it software ARR?

[Blocks @myblocksapp]

Given its oz bank reporting season, time to repost the best article on the topic by @matt_levine

"A bank's earnings are a quantum event; they are entirely probabilistic, and the answer you get depends on who's doing the observing."

$ANZ $CBA $NAB $WBC

https://t.co/RN4ReJ503F

[Blocks @myblocksapp]

Bill Identity $BID

Is this the inevitable result for many "sort of SaaS" companies promoting themselves with ARR derivatives. Throwing out the psuedo metrics to get back to basics. (Q4 21 v Q1 22)

[Blocks @myblocksapp]

Livetiles $LVT

Interesting to see the meaningful drop in LTV calculation
($318 vs $391) due to higher churn and lower GM.