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Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. Speaking of which, we noticed some great changes in KnowBe4's (NASDAQ:KNBE) returns on capital, so let's have a look.

For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. The formula for this calculation on KnowBe4 is:

Return on Capital Employed = Earnings Before Interest and Tax (EBIT) (Total Assets - Current Liabilities)

0.034 = US$12m (US$606m - US$259m) (Based on the trailing twelve months to June 2022).

Thus, KnowBe4 has an ROCE of 3.4%. Ultimately, that's a low return and it under-performs the Software industry average of 10%.

View our latest analysis for KnowBe4

Above you can see how the current ROCE for KnowBe4 compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like, you can check out the forecasts from the analysts covering KnowBe4 here for free.

The fact that KnowBe4 is now generating some pre-tax profits from its prior investments is very encouraging. About three years ago the company was generating losses but things have turned around because it's now earning 3.4% on its capital. In addition to that, KnowBe4 is employing 581% more capital than previously which is expected of a company that's trying to break into profitability. This can tell us that the company has plenty of reinvestment opportunities that are able to generate higher returns.

On a related note, the company's ratio of current liabilities to total assets has decreased to 43%, which basically reduces it's funding from the likes of short-term creditors or suppliers. So this improvement in ROCE has come from the business' underlying economics, which is great to see. Nevertheless, there are some potential risks the company is bearing with current liabilities that high, so just keep that in mind.

In summary, it's great to see that KnowBe4 has managed to break into profitability and is continuing to reinvest in its business. Astute investors may have an opportunity here because the stock has declined 15% in the last year. That being the case, research into the company's current valuation metrics and future prospects seems fitting.

One more thing, we've spotted 1 warning sign facing KnowBe4 that you might find interesting.

While KnowBe4 isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. Its FREE.

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Returns At KnowBe4 (NASDAQ:KNBE) Are On The Way Up - Simply Wall St

Insiders at Open Text Corporation (NASDAQ:OTEX) sold US$7.9m worth of stock at an average price of US$53.22 a share over the past year, making the most of their investment. The company's market valuation decreased by US$423m after the stock price dropped 4.0% over the past week, but insiders were spared from painful losses.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for Open Text

The Vice Chairman, Mark Barrenechea, made the biggest insider sale in the last 12 months. That single transaction was for US$5.7m worth of shares at a price of US$54.89 each. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. The silver lining is that this sell-down took place above the latest price (US$38.23). So it may not tell us anything about how insiders feel about the current share price.

In total, Open Text insiders sold more than they bought over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Open Text insiders own about US$169m worth of shares (which is 1.7% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

It doesn't really mean much that no insider has traded Open Text shares in the last quarter. While we feel good about high insider ownership of Open Text, we can't say the same about the selling of shares. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Open Text. You'd be interested to know, that we found 2 warning signs for Open Text and we suggest you have a look.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. Its FREE.

The rest is here:
Open Text Corporation (NASDAQ:OTEX) insiders who sold US$7.9m worth of stock earlier this year are probably glad they did so as market cap slides to...

Earlier this month, posters started going up around Sydney advertising an event called In the Ops Room, with Palmer Luckey. Rather than an album launch or standup gig, this turned out to be a free talk given last week by the chief executive of a high-tech US defence company called Anduril.

The company has set up an Australian arm, and Luckey is in town to entice brilliant technologists in military engineering to sign on.

Anduril makes a software system called Lattice, an autonomous sensemaking and command & control platform with a strong surveillance focus which is used on the USMexico border. The company also produces flying drones and has a deal to produce three robotic submarines for Australia, with capabilities for surveillance, reconnaissance, and warfare.

The PR splash is unusual from the normally secretive world of military technology. But Luckeys talk opened a window onto the future as seen by a company transforming US & allied military capabilities with advanced technology.

Unlike most defence tech moguls, Luckey got his start in the world of immersive tech and gaming.

While at college, the Anduril founder had a brief stint at a military-affiliated mixed reality research lab at the University of Southern California, then set up his own virtual reality headset company called Oculus VR. In 2014, at the age of 21, Luckey sold Oculus to Facebook for US$2 billion.

In 2017 Luckey was fired by Facebook for reasons that were never made public. According to some reports, the issue was Luckeys support for the presidential campaign of Donald Trump.

Luckeys next move, with backing from right-wing venture capitalist Peter Thiels Founders Fund, was to set up Anduril.

Since Luckeys departure, Facebook (now known as Meta) has broadened its efforts beyond the virtual and augmented reality market. A forthcoming mixed reality headset plays a key role in its plans for a metaverse being pitched to business and industry as well as consumers.

We can see similar pivots from consumers to enterprise across the immersive tech industry. Magic Leap, makers of a much hyped mixed-reality headset, later imploded and re-emerged focusing on healthcare.

Read more: 'Potential for harm': Microsoft to make US$22 billion worth of augmented reality headsets for US Army

Microsofts mixed-reality headset, the HoloLens, was initially seen at international film festivals. However, the HoloLens 2, released in 2019, was marketed solely to businesses.

Then, in 2021, Microsoft won a ten-year, US$22 billion contract to provide the US Army with 120,000 head-mounted displays. Known as Integrated Visual Augmentation Systems, these headsets include a range of technologies such as thermal sensors, a heads-up display and machine learning for training situations.

Speaking to the Sydney audience on Thursday, Luckey framed his own shift to defence not as one of economic necessity, but of personal fulfilment. He described saying your job is worthless to new recruits in social media companies making games or augmented reality filters.

That kind of work is fun but ultimately meaningless, he says, whereas working for Anduril would be professionally fulfilling, spiritually fulfilling, fiscally fulfilling.

Not all technology workers would agree that defence contracts are spiritually fulfilling. In 2018, Google employees revolted against Project Maven, an AI effort for the Pentagon. Staff at Microsoft and Unity have also expressed consternation over military involvement.

The first audience question on Thursday asked Luckey about the risks of autonomous AI weapons run by software that can make its own decisions.

Luckey said he was worried about the potential of autonomy to do really spooky things, but much more concerned about very evil people using very basic AI. He suggested there was no moral high ground in refusing to work on autonomous weapons, as the alternative was less principled people working on them.

Luckey did say Anduril will always have a human in the loop: [The software] is not making any life or death decisions without a person whos directly responsible for that happening.

This may be current policy, but it seems at odds with Luckeys vision of the future of war. Earlier in the evening, he painted a picture:

Youre going to see much larger numbers of systems [in conflicts] you cant have, lets say, billions of robots that are all acting together, if they all have to be individually piloted directly by a person, its just not going to work, so autonomy is going to be critical for that.

Read more: UN fails to agree on 'killer robot' ban as nations pour billions into autonomous weapons research

Not everyone is as sanguine about the autonomous weapons arms race as Luckey. Thousands of scientists have pledged not to develop lethal autonomous weapons.

Australian AI expert Toby Walsh, among others, has made the case that the best time to ban such weapons is before theyre available.

My own research has explored the potential of immersive media technologies to help us imagine pathways to a future we want to live in.

Luckey seems to argue he wants the same: a use for these incredible technologies beyond augmented reality cat filters and worthless games. Unfortunately his vision of that future is in the zero-sum framing of an arms race, with surveillance and AI weapons at the core (and perhaps even billions of robots acting together).

During Luckeys talk, he mentioned that Anduril Australia is working on other projects beyond the robotic subs, but he couldnt share what these were.

Read more: Australia's pursuit of 'killer robots' could put the trans-Tasman alliance with New Zealand on shaky ground

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Virtual reality, autonomous weapons and the future of war: military tech startup Anduril comes to Australia - The Conversation

Apple disclosed serious security vulnerabilities for iPhones, iPads and Macs that could potentially allow attackers to take complete control of these devices.

Apple released two securityreports about the issue on Wednesday, although they didnt receive wide attention outside of tech publications.

Apples explanation of the vulnerability means a hacker could get full admin access to the device. That would allow intruders to impersonate the devices owner and subsequently run any software in their name, said Rachel Tobac, CEO of SocialProof Security.

Security experts have advised users to update affected devices the iPhone6S and later models; several models of the iPad, including the 5th generation and later, all iPad Pro models and the iPad Air 2; and Mac computers running MacOS Monterey. The flaw also affects some iPod models.

Apple did not say in the reports how, where or by whom the vulnerabilities were discovered. In all cases, it cited an anonymous researcher.

Commercial spyware companies such as Israels NSO Group are known for identifying and taking advantage of such flaws, exploiting them in malware that surreptitiously infects targets smartphones, siphons their contents and surveils the targets in real time.

NSO Group has been blacklisted by the U.S. Commerce Department. Its spyware is known to have been used in Europe, the Middle East, Africa and Latin America against journalists, dissidents and human rights activists.

Security researcher Will Strafach said he had seen no technical analysis of the vulnerabilities that Apple has just patched. The company has previously acknowledged similarly serious flaws and, in what Strafach estimated to be perhaps a dozen occasions, has noted that it was aware of reports that such security holes had been exploited.

The Associated Press

Continue reading here:
Apple warns of security flaw for iPhones, iPads and Macs - The Free Press

If you want to know who really controls BigCommerce Holdings, Inc. (NASDAQ:BIGC), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are institutions with 57% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, institutional investors endured the highest losses last week after market cap fell by US$183m. Needless to say, the recent loss which further adds to the one-year loss to shareholders of 66% might not go down well especially with this category of shareholders. Often called market makers, institutions wield significant power in influencing the price dynamics of any stock. As a result, if the decline continues, institutional investors may be pressured to sell BigCommerce Holdings which might hurt individual investors.

Let's take a closer look to see what the different types of shareholders can tell us about BigCommerce Holdings.

See our latest analysis for BigCommerce Holdings

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

As you can see, institutional investors have a fair amount of stake in BigCommerce Holdings. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of BigCommerce Holdings, (below). Of course, keep in mind that there are other factors to consider, too.

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. It looks like hedge funds own 15% of BigCommerce Holdings shares. That's interesting, because hedge funds can be quite active and activist. Many look for medium term catalysts that will drive the share price higher. Our data shows that Darsana Capital Partners LP is the largest shareholder with 9.5% of shares outstanding. The Vanguard Group, Inc. is the second largest shareholder owning 7.3% of common stock, and Wadih Machaalani holds about 6.8% of the company stock. In addition, we found that Brent Bellm, the CEO has 3.0% of the shares allocated to their name.

We did some more digging and found that 10 of the top shareholders account for roughly 52% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders own a reasonable proportion of BigCommerce Holdings, Inc.. It is very interesting to see that insiders have a meaningful US$231m stake in this US$1.3b business. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

With a 10% ownership, the general public, mostly comprising of individual investors, have some degree of sway over BigCommerce Holdings. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

It's always worth thinking about the different groups who own shares in a company. But to understand BigCommerce Holdings better, we need to consider many other factors. Case in point: We've spotted 4 warning signs for BigCommerce Holdings you should be aware of.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. Its FREE.

Excerpt from:
In the wake of BigCommerce Holdings, Inc.'s (NASDAQ:BIGC) latest US$183m market cap drop, institutional owners may be forced to take severe actions -...