In this blog I look beyond the obvious and try to find out why people and companies do what they do - and what it means for the rest of us. 
18 months ago I told you that the two stocks to buy were Quantum and Isilon. Â You mocked me. Â Now it is I who mocks back.
Quantum is up about 500% or so. Â Isilon around 300% I think.
No, I didn’t buy. Â It’s not because I can’t by law, but by decree (my own). Â Our folks don’t buy stock in any public company we “know” things about, even though we don’t know things we shouldn’t.
Isilon was up 48% y/y, I believe making them the fastest growing public storage company on the planet. Â Last quarter they had 62% gross margins–which is NetApp‘esque. Â Quantum had their best run in many years.
Why, you ask? Â Because fundamentally they both have good businesses–and are being run soundly. Â They serve good markets where people have real problems and spend real money–and they are run responsibly. Â There are lessons to be learned from these two. Â Both have faced the brink, and both have come away better companies.
Plus, they are both loaded with really nice folk. Â I’m starting to put more credence into that as a metric as I get older.
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> Isilon around 300% I think.
Almost 5-fold, from below $3/sh to about $15,
http://www.google.com/finance?chdnp=0&chdd=0&chds=0&chdv=1&chvs=maximized&chdeh=1&chfdeh=0&chdet=1277385743743&chddm=138449&chls=IntervalBasedLine&q=NASDAQ:ISLN&ntsp=0. Nice development, and hard-earned one, agreed.
I should also have made the point that these two are perfect examples of how we let perception cloud reality. No company is perfect, even Apple. No company is as bad as you think either. We often over weight our perceptions to fit the common buzz, and rarely is it true. In the end, if you are in a legitimate market, with a legitimate product, with a rational management team, you have a shot.
On the other side, if you are a great team with a great product and a bullshit market, you’ll die. If you are in a legit market with a great product and have awful leadership, you can live and sometimes even succeed – but it’s only a matter of time.
Mistakes can be overcome, even egregious ones, if the team is honest with itself, it’s partners, it’s employees, the market, etc. Dealing with reality is hard – but legitimate leaders do just that. Hope is not a strategy. Both of these players deserve our admiration for doing what they have done while most of the world wrote them off.
Isilon + Nexsan = powerful combo for big inexpensive fast storage with nasty huge volumes. Beware though you can easily start pushing boundaries of OS and filesystems with them. Good stuff!
Steve, as of today what do you think of two stocks going forward? ISLN is currently trading at $16.27 (after another great quarter), while QTM is stuck at $1.95 (I guess some people still think QTM is going out of business)?
I refuse to make any financial prediction when it comes to stocks. All I can tell you is that I think both are being well run and both are attractive potential acquisitions. Whether they are cheap or expensive is your call!