7/9/24 - $payc - Starting small position ~$140

7/9/24 :: VROCKSTAR :: PAYC
Starting small position ~$140

- thanks for the DM, my friend
- re-evaluating my prior views (go read 5/1 if interested)
- B2B has been a chitty factor YTD owing to 1) biz cut back on spending/ trough year for a lot of names or slower growth lower guides in 1H and 2) fear that AI will further hamper growth prospects
- these fears aren't irrational
- but a name like PAYC still has flat growth in tough 2020 and in tough 2024 too, accelerating out and good track record
- not exactly 3.5% fcf yield unless i get a bit more optimistic about 2H, but with mid teens 2Y cagr on revenue, that's better than cash
- 18x PE not excellent unless we can hold for 12-mo, 15x is more obvious and that's a $120 stock price
- concerned that the low bid stuff gets rekt quickly if we get risk off on index and THAT'S the spot where you want to deploy quickly
- genuinely think we've gone too far too fast on a lot of quality B2B names (not all!) and this is an example of one that will recover and is good quality, generates cash, can do some buyback
- instead of swinging 1-2% size at $140, i'd like to own this one - so i'm only going to start w/ 50 bps. this will allow me to add another 50-100 bps at low $130s and if we do enter the $120s i could take it to a 2-3% position with conviction.
- comfortable that my drawdown here is 15-20% max (in my estimation) with good multi-year compounding potential, but i'm just mindful of the macro/ other beta-related risk off events that keep me from getting too big too fast