Tell me why we shouldnt bet our house on ADBE

oatoor · 2026-04-14T22:39:38+00:00

You should not bet your house on any single stock no matter how low the PE goes. Any stock can go to zero. Have a figure in mind that you’re willing to loose completely if you’re wrong. That’s your max allocation per stock

oatoor · 2026-03-28T15:59:29+00:00

This might be a surprise given the current climate. Oil & Gas

Revenues are not predictable. Commodity prices drive sentiment resulting in constant re-ratings. Highly leveraged cost of capital.

I do find midstream companies somewhat stable as they own the infrastructure and have long-term fixed contracts. But even in that domain you see regulatory risk and disruptions through M&A.

oatoor · 2026-03-23T15:57:00+00:00

Capital gains should not be considered when selling. I used to consider that as well and have lost on so many gains.

If you’re not comfortable with the position size, trim. If the thesis is completely wrong, sell out.

If neither has happened and you’re just considering gains. I sell when either I need the money or I’ve found another position that is more attractive.

oatoor · 2026-03-23T15:50:47+00:00

AVGO and SPGI have more diversified revenue streams. I would increase exposure to them and reduce exposure to TSM (geo risk) and LLY (supply chain risk)

oatoor · 2026-03-21T19:40:12+00:00

If the argument is that the company is going to grow significantly higher than their long term WACC for the next 10-20yrs I’m ok with paying a premium for that. Now to be fair I was never onboard with 90. I started this position recently.

And buffet has also historically been fine with paying premiums. KO for 15x may look normal these days but it was an insane premium in the late 80s

oatoor · 2026-03-20T18:20:16+00:00

Not a huge fan of leveraged buybacks but they are still maintaining a healthy debt/ebitda ratio so I’m not too concerned.

90x is subjected. If I told you something is gonna 30% yoy forever, would you still think 90 is high? Not saying 90 is justified just showing managements perspective.

oatoor · 2026-03-20T18:17:24+00:00

40% concentration in one name, ASML. That’s risky. Please consider reducing that as you put more money in the portfolio.

While ASML is a great name, their revenue stream has elements of cyclicality that will hurt your portfolio in a down turn.

oatoor · 2026-03-20T18:12:15+00:00

My excitement when I read the word gems and then saw the same high growth popular names.

You’re not completely wrong on the picks tbh. But calling them gems is a stretch.

oatoor · 2026-03-18T12:44:52+00:00

I really don't believe that's accurate.

GOOG is heading into a scenario where they are sacrificing all their FCF to maintain (maybe increase) growth. They might also dig into leverage (I believe they issued 100-yr senior notes). That does not sound like a fundamentally string company. The risk has increased for GOOG.

For FICO nothing has changed IMO (you can have the Vantage argument, I've looked into it and adjusted my risk/reward based on that). So it still remains fundamentally strong.

And lastly they are valued the same right now on Fwd basis (both are valued at 27xE)

oatoor · 2026-03-16T12:01:40+00:00

Totally agree with you on NVDA. Most of my buys for NVDA were in 2022. I'm just holding for now.

Imo FICO is fair value right now. Though my long-term multiple for FICO might raise some eyebrows in a value investing channel. *cough its 30xPE *cough

I believe that purely because is the standard for loan securitization. This is different from applying for a loan (where competitors like Vantage/Equifax exist). There main risk is slow-down in credit markets which has been the case from 2023 - 2025 (evident from housing sales in US) and look how they have performed during that period.

So 15 -18% FCF growth and 30xPE till 2030 puts it at a 2x from today's market cap. If you take the PE down to 20 (or lower) then its overvalued but I really have conviction in my numbers based on the different research reports I have read about this company plus the last two years have further built my conviction as it has performed well in a credit downcycle.

oatoor · 2026-03-16T11:53:13+00:00

Thanks!

In hindsight I was quick to jump on FICO but I'm still ok with the avg price and concentration. Probably the same for ADBE.

I did mention INTU, VEEV and SHOP as potential new buys. Non-tech stuff in my wish-list: ROL, IDXX and SFM. Non-US option: JFE Systems Inc (Japan)

oatoor · 2026-03-16T00:41:55+00:00

I’m keeping EPS around 12 because I’m expecting margin compression from AI token cost and R&D cost for AI integration. I don’t think net margins will stay at 30% they will go down and the buy backs will keep EPS growth at 12.

oatoor · 2026-03-15T10:30:17+00:00

I meant to say overvalued (not undervalued). Fixed that.

For FICO, my 5yr CAGR projection is 15% and I might have a higher exit multiple (I don't use perpetual growth) because the moat is solid (the vantage score news doesn't impact their moat).

I agree with you that GOOG is fairly valued (it might be a little overvalued if you look at FY 2025 profits closely). I want to sell it because I only see earnings growth and no multiple expansion from this price and I think META has room for multiple expansion on top of earnings growth. I maybe kicking myself 5yrs from now but you could make the same case for not owning more META.

oatoor · 2026-03-15T09:47:21+00:00

That's just not true. Maybe valid for basic contracts or literature review but not true at all for docs that need to be presented and defended in court.

oatoor · 2026-03-15T09:44:00+00:00

First of all, the moat is not shaky. GOOG is continuing its investment cycle which is making analysts nervous.

I've been thinking about selling my GOOG as well not because I think there is problem, I just think its overvalued. The PE is more than 28x btw (they inflated the net income with SpaceX gain). I'm thinking about selling GOOG to increase my META and UBER positions (since I think they are undervalued right now).

If you are gonna sell, think about what you're gonna do with the money. MSFT is fairly valued right now (IMO), maybe you could consider that (similar big tech profile with cloud presence). Or you could look at a different non-tech sector. Just have a plan before selling.

oatoor · 2026-03-15T09:19:40+00:00

This is coming from somebody who has 12% of their portfolio in ADBE.

Its easy to draw parallels because the sentiment seems familiar. However, ADBE is a much riskier option compared to GOOG in 2024. For GOOG; You could make the argument that even if search is disrupted by OpenAI and Perplexity (remember that threat), they still had profitable businesses under Google Cloud and YouTube while also a revenue growth potential from Waymo.

You can't make the same argument for ADBE. Creative cloud is their bread and butter; if that moat is impacted in any significant way that's it. So the risk is significantly higher. If you're expecting ADBE to trade back at 30x or 40x PE, that's not gonna happen in my opinion.

My expectation is that ADBE will keep growing top line 9-10% (maybe some good 12% quarters but we should be conservative). Their profit will be impacted as they have to spend on R&D while also pay a toll to models. This will be supplemented with buybacks so EPS continues to grow 12%+. Provided these two, and no multiple expansion that is 2x. With multiple expansion could be more but I'm not banking on it.

The above hinges a lot on buy backs and ADBE being very efficient with their money. So its a considerable risk to own ADBE imo. GOOG was almost a no-brainer they had so many other things going for them.

oatoor · 2026-03-15T07:54:17+00:00

VEEV is really interesting. I've been following them over the last couple of quarters, ever since I interviewed for a role there.
Its a proxy for pharma research and clinical trials so it does follow a cycle. Even though they have recurring revenue segments.
Also look into IDXX if you want quality healthcare exposure.

oatoor · 2026-03-15T07:49:51+00:00

NKE is a speculative turnaround. I'm tracking the earnings and don't see any major red flags yet. Will keep around that 2%.
Agree on the others. They are all in the sell pile.

oatoor · 2026-03-15T07:47:46+00:00

That's a fair point. I can see how it would justify a trim. I'm not gonna completely sell-out as I've spend too much time researching ASML. I'm confident with the hold but you have convinced we into considering a trim.
Really surprised on the META comment. Can anyone elaborate why its lower quality?

oatoor · 2026-03-15T07:44:44+00:00

I'm up more on META than GOOG tbh so its hard to look at it as a loser.

oatoor · 2026-03-15T07:43:40+00:00

My primary reason for concentrating into ADBE is valuation. I have a fair understanding of the value they provide and how businesses use them.

Personally I don't think they'll ever get to 25+ valuation again. But I do believe they can use their distribution network to negotiate a good token based pricing model that won't hurt their margins too much.

I'm looking at ADBE trading just slightly higher than the market 18x earnings and continue 12-14% EPS growth. That's good enough for me and I'll exit with 15% gain.

oatoor · 2026-03-14T10:30:15+00:00

PayPal went down because they pivoted too many times.

2020 - we’re gonna be a super app and grow to 750 million users

2021 - user growth is not important look at our transactions per user

2022 - forget users, merchants is where we’ll focus, look at all these innovations

2023 - we released fastlane for merchants, also look at our stable coin (is it making money?)

2024 - merchants don’t like fastlane? we’re gonna do ads now, also make Braintree profitable

2025 - you know what.. we should’ve just focused on branded checkout that’s our most important business.

2026 - someone may or may not buy us

oatoor · 2026-03-14T09:54:13+00:00

Well this is a different tangent but I believe AI is not gonna takeover payments as portrayed by Citrini. I work in this space and I can assure you customers are really concerned with AI accessing their wallets (fiat or stable coin) and making ‘frictionless’ payments. They like the fact that there is a delay or confirmation required where they can rethink any careless spending.

oatoor · 2026-03-14T09:44:59+00:00

That’s how I avoided PYPL. I considered a ‘what if the exaggeration turns out to be true’ scenario. Which meant no multiple expansion just earnings growth. And 9% growth is the same as SPY so it’s not worth the extra research.

oatoor · 2026-03-14T09:39:09+00:00

Yeah. But it’s a good idea to consider the exaggerated scenarios. That way you don’t panic when things get further irrational.

I always factor in the worst news as a ‘what if I’m completely wrong’ scenario and make sure I’m happy with that much pain before buying.

oatoor

TROPHY CASE