6/27/24 - $accd - Probably a beat, street sleep?

27 Jun

6/27/24 :: VROCKSTAR :: ACCD
Probably a beat, street sleep?

After the M&A that showed up last Q genuinely have to wonder if the street is sleeping on the revenue figure. This is now the second time i come to this one. don't think it checks my boxes to become a core position, only trading for now.

Last q i was a bit skeptical i should be involved mainly bc growth was flattish, not profitable, no capital stack issue so meh.

Still kinda meh i'll be honest.

But w/ the M&A, gross mgns have improved. the story can also improve (sell the narrative on the conf call), trades at 3x gross profit (i think that's the right metric b/c sales is kinda skewed on growth that's not organic/ TBD) and there r no profits.

healthcare, "solution" semi-software, probably not totally AI exposed. stock looks properly beat up. balanced debt and cash. wish they simply didn't have any debt and less cash but w/e.

downside is 5-10% with 30% probability IMO
upside probably 10-15% with 70% probability.

i'll swing for this print tn into a tape that's running and prefers the beaten up stuff (lower quality) rotation - of which this seems to check the box. any sort of decent result will send this much higher than an inline would theoretically send it lower.

so i like the factor, more than the name.

let's see - i take all the shots and risk manage when i think i have a small edge and that's just it... small edge long i think.

lego.

V

27 Jun

Catatan

lol stonk down 20% AH... a bit more than i'd expect for the 5% revenue beat, reinforcement of profitability tgts. all street is looking at is the revenue range which at mid pt is 5% below cons. if this was a mega growth co on mega growth multiples i'd say "fair" - and tbh i probably wouldn't have owned it either.

but i sized up in the low 5's so i'm now at a 50 bps position. will attempt to thread the needle for a breakeven at this pt.

happens. this is why we keep the low conviction stuff on the smaller size. but i don't think the right move to cut bait... simply bc the initial reaction was too outsized.

let's see how this plays out.

FAFO w the chitcoinery sometimes. :)

keep u all posted.

V

27 Jun

Catatan

just size it up again at $4.7 so i'm 1%.
rough to be airing this out in real time... but again notes to myself and cautionary lessons learned from others.

- i fundamentally do not believe the guide is enough to merit down >25%
- short interest for a 500 mcap stock (now 400 mm lol) is high that matters in the ST and i think is driving the excess 15-20% of the move. i think it reverses.
- the conf call is interesting. i didn't plan to listen to it. but now i have to given my position lol
- 1% is probably bigger than i'd like to be. you typically don't want to be in a position like this. like being pot committed in a poker tournament (1% isn't really a breaker for me and i think downside is 20-30%) but the point is, you typically don't want to donk off chips. i'm there rn, but still think i have several outs having sized up substantially lower.

keep u posted after CC

27 Jun

Catatan

CC just ended

- really impressed w/ the CEO rajeev. this is usually the first and second reason i buy companies to hold (not trade). he's articulate, confident and was able to answer the standard low IQ questions of the "analysts"
accolade.com/leadership/rajeev-singh/

- seems like the q's were mainly focused on cheaper competition to which Rajeev simply said "maybe, maybe not but we are the HQ solution, we risk adjust our deals and they come back to us" and "category of custom healthcare is growing, will continue to grow, we help save our customers money"

i'll leave it here for now bc that's a lot of comments above for something that was supposed to just be a trade. i think this one will probably become more of a swing at 1% and TBH if this goes sub $4.5 tmr, i probably take it to 1.5%. i genuinely like what the mgmt is doing

valuation/ profitability and "wait period" to get gains here still kinda sucks. but at 2.5x gross profit, good teens growth, an outsized reaction to an overall in-line but on the softer side result... keeps me feeling "okay" to own the stock in the mid 4's. no qualms.

lmk if you know of anything to add here. wish it could have been a slightly better managed trade, but you don't win them all. the key is size and risk mgmt. we had the right idea coming into the print. probably sized/ doubled up too quickly. i'm down about 10%-ish as of now which is "fine" not ideal. would get bigger if this px action does anything stupid -30-35% at the open.

stay solvent.

V