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Ideas Edition: $AZPN $META $TQQQ

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Idea #1: Buy $AZPN

In the book “The Art of Execution” by Lee Freeman-Shor (which I’m almost done with), Freeman-Shor goes through thousands of trades and dozens of fund managers who worked under him and looks at the statistical performance of each.

One thing that sticks out: all of his best performers had one or two big winners in their portfolio and they let their winners ride. We’ve spoken previously about how I had made the mistake of cutting winners early in my journey to try to turn $10,000 into a million dollars.

I need to find big winners. Like Emmett Peppers (who we had on the podcast) and Tesla, I need to find something I believe in deeply and which can be a huge winner, and I need to hold on for dear life.

I’ve recently been considering how AI might be that thing. And last week I bought some $AI. While sorting through the various AI stocks I passed by $AZPN, but when our Hard Money friend Alex told me to take a second look, I went back to it.

Basically, it’s an enterprise AI play that is actually profitable. Check out their quarterly income statements:

That’s a pretty incredible “revenue” vs “cost of revenue.” Not a ton of growth quarter over quarter but that could be because the tech is so new and the enterprise customers are still figuring out why and how to buy it.

If you look into what Aspen Technology “does”, like many other AI companies you’ll see a variety of things:

But simply put: they help businesses become more efficient and optimized.

Now I actually have a little experience selling technology that makes businesses more efficient: OutVoice, my start-up, helps publishers automate and streamline the way they onboard, manage, and pay freelancers directly into their bank accounts anywhere in the world. 

Something I’ve learned: Selling efficiency to enterprise customers is a long game. 

My dad is also a salesman. He sells air conditioners. When I first started selling stuff I went to him for advice. He gave some simple advice: “People buy things to get out of pain.”

In the start-up books I read, I heard the insight expressed “Build a painkiller, not a vitamin.”

Efficiency is often a vitamin. It’s something that’s good for you but might not get you out of immediate pain. So getting an enterprise customer to buy a new and improved process has a long cycle (unless you’re savvy enough to position a vitamin as a painkiller). Especially on new tech like AI.

But what I’ve learned about complicated enterprise sales: Once you’re in, you’re in. That means you have an incredible Lifetime Value for your customers once you get them (one deal is worth a lot over the next 10 years).

I like businesses like that because they can become steady money machines. If you’ve got a great product (like hopefully, Aspen does) then your customers will be very sticky. Who would want to replace a system that collects all of your data all over your org and makes insights and optimizations for you via AI? And as employees leave to join other companies they will say “why don’t we use Aspen?” You can become a standard.

I’m going to dig more into $AZPN. I’m going to learn more about their product, customer churn rate, and AI in general.

But first I’m going to buy some shares. More updates on my research into this company in the newsletters to come – also open to feedback here.

 

Idea #2: $META Leaps

I have a simple thought: Facebook ($META) is a fucking money machine. They are going to monetize WhatsApp, Instagram reels, etc., and continue to print cash. They are also building a corporate metaverse that will have nothing to do with decentralization (which most users don’t actually care about) and sell a bunch of skins like Fortnite. Soon you’ll see friends on Instagram wearing virtual clothes they bought that get transformed onto their pictures. I like that business. Let’s sell people digital goods for 100% profit and never have to actually make them, ship them, size them, etc. 

Their stock is down today on a big up day. I say let’s buy some 2024 call options for a $200 strike.

 

Idea #3: Bear Market Rally Play

Bear market rallies are fierce. They can be 20-40% and make everyone believe they missed the bottom before the trend continues. Today is a big day up. Is this the start of a sustained bear market rally? What indicators should I be looking for? My idea: Learn a bit about bear market rally indicators and if appropriate buy call options on TQQQ for 2 months out.

Podcast questions for the experts:

What’s this I’m hearing about a big bond move? Something about Japan? Can I make a play there?

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Hint: This company was founded as “Metro Sportswear” and made wool vests, raincoats, and snowsuits. Today they are mostly owned by Bain capital and have become incredibly trendy with their coyote fur trim winter jackets.

 

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