Posted in Investment Idea, Small Cap, US

Investment Thesis: LONG TransAct Technologies (TACT LN Equity)
TACT is a hidden growing company inside a stable company situation rebounding from the COVID impact. The casino segment provides printers for slot machines and is a cash machine in a duopoly with high switching costs. The product is critical to the slot machine’s operations while being a small fraction of the overall cost. This business in combination with some change from other small segments is worth ~80% of the current market cap (excluding cash) in a normalised environment. This means you can buy the back-office restaurant and c-store software and labelling business with 60%+ GM for 0.5x FY23 ARR. Most of this ARR is already in the backlog. Moreover, the company has one of the best products on the market, operates in the industry with secular tailwinds and recently signed a partnership with Apple, which will allow it to penetrate mostly greenfield opportunities.
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Posted in Idea Update, Mid Cap, UK

Update for CSP – Activist Built 9.4% Position – Spin-Off of the Housebuilding – New Chairman – New Mandate
Browning West, the third-largest shareholder in Countryside Properties PLC, with a 9.4% stake started to take activist actions in CSP. The activist wrote letters to the board, demanding to immediately appoint Browning West's CIO, Usman Nabi, to the Board, replace Countryside's Chairman and task the New Chairman with a mandate to "Let Partnerships Prosper".
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Posted in Investment Idea, Small Cap, US

Investment Thesis: LONG Intellicheck (IDN LN Equity)
Intellicheck is an offline and online identity authentication software company. It is the only company that can authenticate the documents with close to 99% accuracy rates at a price substantially cheaper than other identity verification competitors. This advantage is protected by its long-standing relationships with government entities, structurally cheaper product and its knowledge of information encoded in barcodes on driving licenses. The company has signed 5 out of 10 big banks and can grow its revenue 11 times just by continuing penetrating these banks’ retail customers with only one of the use cases. The opportunity is multiples of that, considering upselling of new use cases, signing new banks and expanding into new verticals. I expect the company to grow revenue at around 40% CAGR over the next 5 years. Intellicheck has very a scalable product with gross margins of ~90%. The company has strong operating leverage and is at an inflexion point to become profitable. Intellicheck can get to 52% EBITDA margin by 2025. A new CEO has skin in the game and has shown excellent execution over the last couple of years. At 20x EV/EBITDA or 10x EV/Sales exit, this is at least a 25% IRR opportunity over the next 5 years.
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Posted in Europe, Investment Idea, Small Cap

Investment Thesis: LONG Kambi (KAMBI.ST LN Equity)
Kambi is a leading B2B odds and risk management provider for online and retail sports betting to B2C gaming operators, who is well-positioned to capitalise on the legalisation of the US sports betting market. The US sports betting has been legalised in 2018, which created a new market for Kambi with a potential TAM of at least €1.1bn at maturity. The company already has ~14% market share in the US (excluding DraftKings), based on Q1 2020 LTM revenue. Even if Kambi’s market share remains stable, this implies at least 2.5x revenue increase. Furthermore, Kambi will be able to capture more market share, as it has recently secured major operators, such as Penn National and BetAmerica, who are together expected to exceed the current market share of Kambi. At the same time, Kambi will benefit from operating leverage with ~30% EBITDA margin and ~70% incremental margin. Kambi almost does not have any competitors, and its leadership in the industry is protected by high barriers to entry, high switching costs and benefits from economies of scale. The company should be worth at least double in 5 years’ time.
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Posted in Idea Update, Mid Cap, UK

Update for CSP 3Q 2020 – Equity Placing – Partnerships Growth – Shares Went Down ~20%
CSP decided to make an Equity Placing to raise £250m. The number of issued shares amounted to 16.6% of ordinary shares. The market took this negatively, and the stock went down 20%. Price decline should be considered in the context that the housebuilding industry went down as well, but not as significantly. This post will address what capital raise and Q3 update mean and how it impacts my thesis.
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Posted in Investment Idea, Mid Cap, UK

Investment Thesis: LONG Countryside Properties (CSP LN Equity)
CSP is a compelling long (~2.4x return / ~18.5% IRR over a 5-year period) due to a strong combination of macro tailwinds (undersupply of housing) and company-specific factors. The company has two businesses with very different financial profiles (ROIC, margins, asset turnover), and Mr Market does not see outstanding unit economics of the better business … yet. This, in combination with COVID and Brexit uncertainties, created a fantastic buying opportunity. The first business is a traditional housebuilder with 25% ROIC and modest growth. The second business is a true gem: capital-light urban regeneration business that develops houses for local authorities with 50%+ ROIC, 8+ years revenue visibility and a multi-year growth runway. The Housebuilding business should be valued at ~5x EV/EBITA 2021 in line with public peers. Then, the gem business is available for purchase at ~9.3x EV/EBITA 2021, which is just far too low for a 50%+ ROIC business with a long growth runway.
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