Ellie Mae (NYSE:ELLI)

Great growth potential

ELLI software has the network effect. They appear to make the mortgage origination process more seamless. It saves time, energy and errors. It's not just a piece of software, but a cloud based infrastructure with integration across various participants in the process.

A competitor can create a better looking more efficient software, but unless they can integrate the various participants and convince everyone to come under one platform, they would be missing the cirtical piece required to make their technology efficient.

My guess is, their software is like a toll booth. You need to pay your toll if you want to use their highway which is essentially the only way fast way to get from A to B. The other way is a lot more primitive.

**That's how I understand it, I could be slightly wrong.

moat from network effect; ongoing need for their products

More specific data

I have looked into this one quite a bit, and the numbers look great. I like the concept as well. Big potential risk in the equation would be a weakening housing market.

Rather than head directly into home builders, I think the opportunity offered by infrastructure providers is a solid way to find exposure to increase in housing sector generally. That said, I believe this is probably a 2 year prospect before it hits full stride.

Encompass is taking over the mortgage industry with its application software. Growth, revenue, and margins increasing for ELLI as it automates the process of originating and funding mortgage loans, and allows up to date regulatory compliance, plus reduces errors. It is extremely user friendly, and I expect Excompass to take over the entire mortgage industry as its cutting edge software is implemented everywhere. Encompass saves mortgage companies big money and a lot of headaches. Strong buy at these levels, as I would expect its share price does not come close to reflecting its cutting edge software taking the mortgage industry by storm. This could easily break out above $30 in the near term.

HG

long term bet. The mortgage process is out of date.

I will submit it here in caps to keep an eye on it. Will consider a real position soon.

- Rapidly growing user base (+40% yr/yr) that is adopting the Encompass software solution.
- As users become more comfortable/familiar with Encompass, switching costs rise and # of transactions/user increases (revenues to ELLI).
- Asset-light business model that is easily scalable.
- Huge addressable market that is in flux due to increased regulations. Increased regulation is good for ELLI business.
- Network Effect: The Ellie Mae Network becomes more valuable as more users subscribe.

Full Overview of my bullish thesis:
http://beta.fool.com/txinvestor82/2013/03/06/why-ellie-mae-needs-be-your-radar/24624/

Growth Stock finding a base

housing market activity continues to improve and ELLI offers the market an efficient way to conduct business.

Housing recovery and new mortgage applications bode well for ELLI.

Huge upside.

Looks like its software is set to become the de facto standard for the mortgage industry. That's a strong position to have.

Cheap with multiple catalysts in the years ahead. Interesting way to plan the housing recovery.

Another perfect model for SaaS.

Long and accumulating

Growing fast, and has approximately 1/3 of the available market. Lots of room to grow yet..