Book review: Nothing but net

Nothing but the Net: 10 Timeless Stock Picking Lessons from One of Wall Street’s Best Technical Analysts. 2021. Mark S.F. Mahaney. McGraw-Hill.

in Nothing however a communitya widely known American expertise analyst Mark Mahaney He summarized his life’s work in over 300 pages. The e book presents 10 invaluable classes traders can use to choose expertise shares within the years to return. These classes are conveyed by means of case research about corporations, making the e book an fulfilling learn.

The e book gives an informative historical past of some notable expertise shares that thrived and others that failed. It covers Amazon, Fb, Google, Netflix, and Uber intimately, and explores their product improvements, buyer focus, income development, and administration power. The narrative additionally examines corporations like Yahoo, eBay, Priceline, Spotify, Blue Apron, Zulily, Groupon, and Snap to derive fascinating insights.

Mahaney shows analytical rigor when he lays out his details in an orderly method. For instance, it presents three motion questions for coping with excessive valuations of Web corporations, 4 logical checks for measuring the profitability potential of corporations, and several other key traits by which to evaluate the standard of administration.

The creator attracts on 23 years of analysis expertise to supply concrete pointers to observe earlier than investing in expertise shares. He says corporations which might be customer-centric relatively than investor-focused win in the long term. Analysts ought to study at the least three to 5 years of expertise in public markets earlier than drawing conclusions concerning the high quality of administration. Mahaney additionally advises readers to make use of the corporate’s app earlier than investing choice.

At a number of factors within the e book, the creator presents particular person traders options to sources of knowledge that may solely be accessed by institutional traders. One which stands out to me is the usage of the Netflix subscription as a proxy for a complete client survey obtainable to companies. Having a subscription permits one to evaluate the standard of the content material and the benefit of use.

A few of the phrases Mahaney makes use of, akin to DHQs (high-quality dislocated stock), DAM (direct addressable market), and stuck prices, will stay etched within the thoughts without end. Extra importantly, it succeeds in answering a number of questions that vex traders about younger corporations:

  • How can constructive and unfavourable turning factors for corporations be recognized?
  • What metrics ought to be monitored frequently?
  • Is profitability vital for high-growth expertise corporations?
  • When ought to these shares be bought?
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There are a number of different subjects I’d have appreciated to see lined within the e book. The primary is the best way markets have expanded multiples for expertise corporations as rates of interest fall. (Extra related in the mean time is what occurs to multiples when rates of interest rise.) The second is the position of exchange-traded funds (ETFs) in bringing within the inflows meant for these shares and whether or not that has an affect on valuations. Third, expertise curves for worldwide shares, particularly in Europe and Asia. Fourth is the methods during which American expertise corporations have tailored to the surroundings outdoors the USA and why some have failed. Lastly, is it vital for tech corporations to decide on the traders on their capital schedule properly? This query arises as a result of the trail to constructive free money circulation is lengthy, so subsequent financing will likely be required.

Nothing however a community He describes the experiences of expertise shares by means of the creator’s lens in the USA, however the highly effective methodologies the creator gives are legitimate for New Age corporations around the globe. Expertise curves for expertise shares elsewhere could also be much like these within the US. In the identical vein, market contributors who’re already aware of US web shares from years of observing them may get pleasure from Mahaney’s account and extract some precious classes for his or her evaluation. Because the quantity and energy of expertise corporations grows in the USA and overseas, this e book deserves a spot on traders’ bookshelves for years to return.

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All posts are the opinion of the creator. As such, it shouldn’t be construed as funding recommendation, nor do the opinions expressed essentially replicate the views of the CFA Institute or the creator’s employer.

Picture courtesy of Paul McCaffrey

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Shravan Kumar Sreenivasula, CFA, heads the funding advisory and options group at Avendus Wealth Administration in Mumbai. Gives funding steerage to Consolidated Monetary Establishments (UHNIs), household workplaces, and company treasuries throughout asset lessons. He brings over a decade and a half of expertise in multi-asset, multi-manager merchandise to his position as Fund Supervisor at main asset administration companies.

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