Jigsaw

L/S generalist, DMs open

[Jigsaw @JigsawCap]

@WaterworldCapi1

[Jigsaw @JigsawCap]

There are plenty of LT debates to be had, but many high GRR, mid-growth software stocks are now pretty cheap using regular valuation math

Not everything will work out, and there will be lots of disruption and change - but likely some good money to be made long from here

[Jigsaw @JigsawCap]

Lots of discussion about how to value software companies lately, so thought I'd share a few thoughts...

tl;dr it actually comes down to GAAP EBIT...

@dsundheim

1) FCF, often considered the cleanest earnings measure, is really just a source of funds for SaaS.

[Jigsaw @JigsawCap]

@rev_cap It’s actually a good framework to understand though!

[Jigsaw @JigsawCap]

The worst in-laws are the oblivious idiots that don’t suffer fools even though they are usually just as dumb the people they’re assholes to

[Jigsaw @JigsawCap]

@TMTLongShort In case I’m not being clear, GLP1s are amazing for the obese but often bad for anyone who has an ounce of self-control and wants to be healthy while still enjoying life

[Jigsaw @JigsawCap]

@SouthernValue95 I suspect the human reviews have plenty of their own biases is my point… and lots of work can be judged objectively… I think it’s a bit silly to think AI wouldn’t be a useful tool to aid in the review process at a company where roles have remotely clear objectives

[Jigsaw @JigsawCap]

@CorneliaLake Wasn’t “edge” in the 90s centered around no Reg FD?

[Jigsaw @JigsawCap]

@IdleLightkeeper Can you not still put your name down, go to a bar for 1-2 hours, come back and eat? That worked for me for like 10+ years

[Jigsaw @JigsawCap]

Feel like everyone saying this is a great idea. Isn’t this MMT-heavy if no entitlement cuts? Last 5+ yrs showed MMT-lite is an inflation and budget disaster lol

Why not just send deficit and inflation both to 10%? Just to feel alive and remember things can go terribly wrong

[Jeff Bezos @JeffBezos]

Thank you. The important part is zeroing out taxes on the bottom half. Best way to put money in someone’s pocket is to not take it out in the first place. Bottom half is only 3% of total tax revenue. But it’s very meaningful to that person. Zero it out.

[Jigsaw @JigsawCap]

@viggy_krishnan @HedgeDirty Yeah, I grew up in the Deep South, and the proclivity to settle scores physically is Neanderthal-ish — but it’s not purely geographic — I think, like most things, socioeconomics is probably the primary driver

[Jigsaw @JigsawCap]

@Amarillo_Slim1 I think your boy @TMTLongShort used it today

[Jigsaw @JigsawCap]

@pekwat Economic theory suggests that over time, ROIC=WACC will play out, and your view is right

But in the real world, there will be micro winners and losers all over the place

[Jigsaw @JigsawCap]

@WaterworldCapi1 I don’t have a view on mass unemployment theory yet… but I wonder what the societal impact of ANT + OAI arr being like $300-400B YE27. Maybe companies will just being paying for both and eat margin compression, but idk, feels like some stuff is gonna change fast

[Jigsaw @JigsawCap]

@TheLAPurchaser When they are 20%+ IRRs on a 5yr view assuming 15-25x GAAP P/E exit, depending on business quality + LT growth outlook

A couple of these are ~15%+, but for the most part, they all suck through that lens

[Jigsaw @JigsawCap]

@WaterworldCapi1 I think pretty broad consensus that this would be the fix, and if no fix, bombs away - and so, now it's time to prep for the bombs

[Jigsaw @JigsawCap]

@OnodaCapital Most of that was imprecisely but highly knowable just from paying attention to Twitter and talking to public co management teams

[Jigsaw @JigsawCap]

@tylermacro10 Yeah, the old math was good, the new math is simply acceptable… inflation probably has to get passed on to rest of value chain from here on out to maintain good enough ROICs/IRRs — fwiw I still think there’s plenty of room for that without meaningful demand destruction

[Jigsaw @JigsawCap]

@tylermacro10 Bubble is such a nebulous term though. There are pockets of excess, and currently the “bottleneck bubble” as I’ve called it is really just a big capital cycle imo with a little extra retail frenzy