Issue No. 13: A Note on Amazon and Fair Isaac Corporation
Earning's Season is Upon Us
Commitments in my personal life have conspired to keep me away from writing, back we’re firmly back in saddle friends.
Once again we find ourselves in the throes of earning’s season which while exciting, reminds me of a fabulous quote I heard once upon a time: ‘if you’re nervous about a particular quarterly earnings report, you probably shouldn’t own that name’. While the long term is simply a collection of short term account-abilities (another stolen phrase), it’s important to remember that if your conviction in a holding can be shaken by a single industry event, or a change in the macroeconomic environment, you’re not investing. If we hope (and pray) for low portfolio turnover, that’s because we have got into the right businesses ex-ante - not because fortune conspired to take the stock price ever higher.
With all that said, a couple of portfolio companies reported yesterday, and it’s important to update the story, in line with the original investment thesis. I have compared these two companies together before, and my understanding of them has changed very, very little. If anything my adoration, and admittedly frustrations, have been exacerbated. As I have mentioned many times before, imposing one’s own sense of right and wrong on a management team and expecting them to comply is a long shot, even for activists. Note Chris Hohn’s efforts with Alphabet. Despite very well being the largest non-institutional holder of shares, his open letter to the company has got him the sum total of a token headcount reduction, some cost discipline around staplers and remedial masseuses, and an underwhelming response to OpenAI question. I digress…