First 2016 IPO Candy Folio Updates

As we start 2016 it’s a good time to review and update all our positions in the folio. We’re eliminating quite a few and adding some new names. Generally we are hanging on to many of our best performers.

First some new additions:

Pure Storage (PSTG) is gaining share rapidly in the enterprise storage market. Even though there are multiple enterprise storage vendors hawking FLASH-based solutions there is only one, well… Pure solution. The rest are hybrids. It doesn’t help that players like EMC and Dell are in disarray with M&A activities. Revenue growth is stunning and management (in our view) is the best in the business. There are some risks tied to very rapid growth but this is one new company we want to own.

Press Ganey (PGND) is in the healthcare space and specializes on patient experience measurement. This is already a big area and Press Ganey has a leading position. We expect this space to expand dramatically over the next few years as the continued focus on healthcare spending efficiency *and* patient outcomes takes center stage.

Adesto (IOTS) is speculative but we think they have a shot at being an emerging specialty semiconductor provider for applications that demand extremely low power memory subsystems. They had a weak IPO but the stock has managed to gain 35% since October which isn’t bad in this market. Sales are $42M and the market cap is just $101M. If they continue their strong momentum in design wins their growth will continue to drive the stock higher.

Apigee (APIC) is a software infrastructure company that helps companies manage the interfaces between their applications, usually with the outside world. Imagine how a large manufacturer might want to interlace their systems with online retailers like Amazon.com. This is already a challenge based on the need for scalability and security. Over time we think that *intelligence* and *automation* will become more important and there will be a need to make capabilities work right at the edge of systems and networks – in other words at the interface level. APIC is also down sharply from their $17 IPO price at $8.31/share.