Quote Originally Posted by Snoopy View Post
I must say that reading this thread does give a fascinating insight into fear and greed.

Despite reading this thread, I don't follow the company itself closely because I am one of those 'old school' investors that BAA refers too who demands that a company 'makes a profit' before my investment hound's nose goes into action. I do appreciate that software companies can grow quickly and that new customers and incremental sales can turn a loss making venture quickly into a profitable one. (this is in contrast to something like ATM which needs physical product to sell, so I know for sure that A2 milk production cannot be ramped up to meet ATM investor expectations., which is how I know for sure that ATM is currently overvalued). But I also know that what seems to be the 'best' software in a market segment can still be usurped, and PPH shareholders could be left with nothing. So what we have here is a classic 'high risk' 'high return' investment scenario.

As Winner has noted the 'EV/Gross Margin multiple' of about 18 (a new statistic that has been invented for companies that make no money and so can't be analysed using traditional metrics) is above the industry average. This has become proof enough, to the PPH disciples, that nothing will go wrong and that as long as the share price keeps going up, then no fundamental analysis is required.



To reinterpret the comment that Ggcc made, the idea that you can have growth without profit is a relatively new investor concept. 'Growth' used to be synonymous with 'growth in profit' and I find it somewhat disconcerting that this old rule no longer applies. As with all investment bubbles, what tends to happen is that new investors find that the old rules do still apply, but only after all after the inevitable crash. I am not saying PPH will crash because amongst all the losers there will also be winners. But sorting out who the winners and losers will be in advance is a problem to this FA investor.

If I was to invest in PPH, I would be looking not for a path to breakeven cashflow but a path to actual profit. Then when investors find how small the profit really is, what sort of 'multiple deflation' investors can expect as a consequence. Of course as with all 'speculative investments' no serious study as to what the profit might be is ever carried out. And then 'investors' are 'surprised' when the share price collapses.

I will save my next post on this thread for when PPH makes a profit. I guess that means, very likely, this is my last post on this thread?

SNOOPY
We had many posts and conclusions like this on the ATM thread in the early days. I do however agree PPH is high risk high return investment, like HBL, ATM, XRO, DIL and many others have been.