Book Review: Nothing but Net

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

In Nothing however Internet, the well-known US expertise analyst Mark Mahaney has encapsulated his life’s work in 300-plus pages. The book offers 10 invaluable classes that traders can use to choose tech shares in years to return. These classes are imparted by means of case research on corporations, which makes the book enjoyable to learn. 

The book provides an informative historical past of some outstanding tech shares that thrived and others that failed. It covers Amazon, Fb, Google, Netflix, and Uber intimately, exploring their product innovation, buyer centricity, income progress, and administration power. The narrative additionally examines such corporations as Yahoo, eBay, Priceline, Spotify, Blue Apron, Zulily, Groupon, and Snap to derive intriguing insights.   

Mahaney demonstrates analytical rigor as he lays out his key factors in a structured method. As an illustration, he offers three motion inquiries to cope with excessive valuations of web corporations, 4 logical assessments to gauge corporations’ profitability potential, and a number of other key traits by which to judge administration high quality.

The writer attracts on his 23 years of analysis expertise to produce concrete guiding rules to be adopted earlier than investing in a tech inventory. Firms which are buyer centric fairly than investor centric, he says, win in the long run. Analysts ought to study a minimal of three to 5 years of public markets expertise earlier than drawing conclusions on the standard of administration. Mahaney additionally advises readers to make use of an organization’s app earlier than investing choice.  

At a number of factors within the ebook, the writer provides particular person traders substitutes for data sources to which solely institutional traders have entry. The one which stands out for me is utilizing a Netflix subscription as a proxy for an intensive shopper survey obtainable to establishments. Acquiring a subscription permits a person to guage high quality of content material and ease of use.

Sure phrases that Mahaney makes use of, similar to DHQs (dislocated high-quality shares), DAM (direct addressable market), and step-fixed prices, will probably be etched within the thoughts endlessly. Extra importantly, he has managed to reply a number of questions that hassle traders about new age companies:

  • How does one establish optimistic and damaging turning factors for corporations?
  • What metrics ought to be monitored frequently?
  • Is profitability essential for high-growth tech corporations?
  • When ought to these shares be offered?

There are just a few different subjects I might have appreciated to see lined within the ebook. First is the way in which that markets expanded tech corporations’ multiples as rates of interest slid. (Extra pertinent at current is what occurs to the multiples when rates of interest go up.) Second is the function of exchange-traded funds (ETFs) in bringing devoted flows to those shares and whether or not that has had an affect on valuations. Third is the expertise curves of worldwide shares, particularly in Europe and Asia. Fourth is the ways in which US tech corporations have tailored to the atmosphere outdoors the USA and why some failed. Lastly, is it essential for tech corporations to decide on traders on their cap desk properly? This query arises as a result of the trail to optimistic free money move is lengthy, so subsequent funding will probably be required.

Nothing however Internet describes the experiences of expertise shares by means of the writer’s US lens, however the highly effective methodologies the writer offers are legitimate for brand new age companies world wide. Expertise curves of tech shares elsewhere could show related to those who performed out in the USA. By the identical token, market contributors who’re already aware of US web shares by means of years of monitoring them could take pleasure in Mahaney’s narration and draw some priceless classes for his or her evaluation. Because the quantity and energy of expertise corporations develop each inside and outdoors the USA, this ebook deserves a spot on traders’ ebook cabinets for years to return.

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

Picture courtesy of Paul McCaffrey

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Shravan Kumar Sreenivasula, CFA

Shravan Kumar Sreenivasula, CFA, heads the Funding Advisory and Options Group at Avendus Wealth Administration, in Mumbai. He offers funding steering to the UHNIs, household places of work, and company treasuries throughout asset lessons. He brings over a decade and a half of expertise in multi-asset and multi-manager merchandise to his function as fund supervisor in main asset administration corporations.

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