7/1/26 - $panw - a lil math if u fancyPalo Alto Networks, Inc.NASDAQ:PANWVROCKSTAR7/1/26 :: VROCKSTAR :: PANW a lil math if u fancy Just doing some math here if this continues and gives conviction on the valuation. A few points: 1/ valuation shorts are hardest, especially in smaller names i.e. sub $50B and especially in the single digit B's, but at nearly $300B this is squarely a very large cap and institutional flows matter a lot 2/ if you assume a very generous 15% growth (after this year's 20%) top line and only take slowly toward 10% for the next 5 years then to the terminal 3% by year 10 (which i think is a good middle ground given what we know about software these days) and despite the co only growing via M&A these days and likely already in the low teens... pack a 35% fcf multiple on it (forever!), in order to get today's valuation you'd need a Kc (cost of capital) of about 6.5%. 3/ so considering the Rf (risk free) is 4.5%, expected to head higher and where if it did go lower... you'd probably grab non 20x sales names... your margin of saftey here is basically down to calling BS on the consensus growth rates... which is FINE... but again, a. when will this be determined... b. the stock just indicated it was "software" until it was "immune" (narrative/ momo are strong "drugs")... 4/ and then you have insider selling like banchees in the mid $200s only in June! (which was... less than a month ago!). so while insiders aren't obviously crystal ballers... they aint adding up here 5/ finally if you're an institution and this thing got painted up 30% in the last week of the quarter... you're almost certainly not adding, and if anything trimming. then you take the momo crowd that will cry uncle when this thing does it's first down 1% day (nevermind -20 or -30% where it belongs and is likely headed in the next few months in my estimation and still a great outperformance!) ... and these bail, the ETFs bail, the institutional capital takes advantage sooner etc. and that's how you see a down 10 to 15% week, "all of a sudden and how could we have seen it coming" 6/ so while i'm certainly aware that shorting the ride up is frought with challenges, at the same time, the valuation math to back up the megacap nature of this animal gives me confidence that it's a good offset to my SBET (which the market also calls btc and eth software which is "right" but mostly wrong) and so far today that net hedge is working. i hold 150% gross and almost 0% net. let's see let's see. V