Michael Pace

[Michael Pace @Msp194]

@acemoney21 Been some surprising dispersion in HC. Prob need rates lower to some extent for the full complex, but does seem like strong possibility if so

[Michael Pace @Msp194]

@carrynointerest https://t.co/I4q37L35i7

[Michael Pace @Msp194]

@viggy_krishnan @CousinGraig @evrgn11112231 The dynamic of scaling laws only increasing, amort periods so far shrinking, and a pot cap on intelligence needs for prob a vast majority of workloads is a tough dynamic. Do new/unknown ones open up larger px gaps? Don’t need ASI for back office work and amort 12 figs gets tough.

[Michael Pace @Msp194]

@seedy19tron Response to post-HALO call and who requested pause pre-data should be required reading, lot of bad takes on it out there

[Michael Pace @Msp194]

@CloisterRes Gonna do it like induction and take 4 hours? Lollll

[Michael Pace @Msp194]

@CousinGraig @bubbleboi Always noisy though and with ANSS big year-end Q1, always was going to be a big headwind there (look at historic backlog for them Q4/Q1). Also w divestitures headline rates messy. Not surprised but think “headline” nums missing the nuance a bit.

[Michael Pace @Msp194]

@evrgn11112231 @GavinSBaker Coming back hot

[Michael Pace @Msp194]

@viggy_krishnan @CousinGraig @evrgn11112231 The dynamic of scaling laws only increasing, amort periods so far shrinking, and a pot cap on intelligence needs for prob a vast majority of workloads is a tough dynamic. Do new/unknown ones open up larger px gaps? Don’t need ASI for back office work and amort 12 figs gets tough.

[Michael Pace @Msp194]

@evrgn11112231 @EmperorChud_ Yeah I hear you. Wouldn’t speak for anyone else, but if you listen to Ricky’s interviews just don’t think he’d describe himself as strictly fama/french or old school value investing.

[Michael Pace @Msp194]

@evrgn11112231 @EmperorChud_ Totally fair and I understand, my only comment was in regards to “value” being restricted to something as simplistic as TTM or NTM GAAP. I get you’ve got a diff view on the TV angle.

[Michael Pace @Msp194]

@evrgn11112231 @EmperorChud_ I think painting every software company in the same light makes no sense. You have a diff view on that, same way you disagreed when the market might’ve thought MCO or META had AI risk. On both of which I agreed with you. But end of the day, that’s a view everyone needs to take.

[Michael Pace @Msp194]

@evrgn11112231 @EmperorChud_ I understand you don’t and that’s fine, it’s what makes a market. Personally don’t understand the obsession with singular point in time GAAP metrics vs a broader mosaic, but different ways to fish.

[Michael Pace @Msp194]

@evrgn11112231 @EmperorChud_ But pretty easy to scenario out the spectrum of worlds, and I think you can find value in software in that paradigm.

[Michael Pace @Msp194]

@evrgn11112231 @EmperorChud_ If you model forward incr margins and dilution you’ll find there’s plenty interesting. If you don’t have a view on the terminal risk that’s fine and its own issue, anyone going to -20%+ growth in 3 years is uninteresting regardless of mult.

[Michael Pace @Msp194]

@evrgn11112231 @EmperorChud_ Why only ever look at trailing multiples, esp as DCF guy?

[Michael Pace @Msp194]

@evrgn11112231 I don’t get the impression at all that’s what he was doing. It’s a tough game in the end, crazy impressive career imo.

[Michael Pace @Msp194]

@ContrarianCurse

[Michael Pace @Msp194]

@JaredSleeper Would just come down to GICS code, custom prime baskets, and ETF inclusion unfort

[Michael Pace @Msp194]

@ryan_c_walsh Netskope, ServiceTitan, Elastic

[Michael Pace @Msp194]

@pekwat @SouthernValue95 @JigsawCap @BagholderQuotes It’s no different than valuing the hyperscalers on current FCF. It assumes no ROIC, there’s no fwd modeling of increased dilution and depreciation period, etc. No one would honestly say hey put a mkt mult on $0 of FCF for AMZN, GOOG, etc.

[Michael Pace @Msp194]

@pekwat @SouthernValue95 @JigsawCap @BagholderQuotes The point is it’s overly simplistic to assume companies with the potential to grow FCF above market by a drastic amount deserve to be valued on a depressed number. SBC is often amortized over multiple years when investment in S&M made sense (2% dilution for 20%+ topline?)