I reluctantly bailed out of NEA at $2.10 at a small profit, so I no longer hold NEA. This would typically incline me not to post any comment on HC, but the enormity of the wrong-doing by Management compels me to voice my opinion.
Shareholders have been encouraged to invest in NEA for a dozen years or so, when the company made no profit, but the management team and the employees were well remunerated and cosseted with free victuals, massages, psychology services and harbours views from one of Sydney's most expensive office-rental premises. I have often posted on this profligacy, but to a great degree, my view was not supported, and some posters even opined that I did not understand NEA, and that I should focus my attention on the ACV trajectory.
I did understand the advantage of rapid growth, and the significance of being the top dog in a business that by its nature tends to be a natural monopoly. I majored in economics, took great interest in pricing theory, and later I consulted (negotiated rail tariis) in this natural-monopoly setting. I could write book on the topic. I later switched into IT, and I became familiar with GIS and AI, so NEA was in a field that I did not have to expend time and effort understanding the underlying basics of its business. However valid it is to hurl funds at rapidly dominating the game in North America, that is no excuse to be profligate in other areas, even if relatively small, and I took that profligacy to reflect the mentality of Management. I would have invested a great deal more in NEA, were I not concerned about the ethics and style of its management.
A few years ago I created a model based on the history of NEA since 2015, or 2016, and it proved to be quite good at predicting future losses for 2021 and 2022. The model suggested break even in 2023, and a good profit in 2024. I'll look at it again, and extend it to say 2025. When I have done that, I'll post it, or at least a text reflection of it, because I do not know if one can attach a spreadsheet to a HC post, and I assume it cannot be done. Speaking of models, I am surprised not to have heard comment from Roy2U on this acquisition matter.
Giving away NEA at $2.10 a share reminds me of when Esau swapped his birthright to Jacob for a mess of pottage. A "mess of pottage" is something immediately attractive but of little value taken foolishly and carelessly in exchange for something more distant and perhaps less tangible but immensely more valuable. It connotes shortsightedness and misplaced priorities.
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