Nothing on here is investment advice. Do your own due dilligence.
As always, a highlight, Constellation Software paid out its phenomenal CAD 1 dividend. But for now, it will be the last time for me. I used to have a symbolic small position as I work for TSS (part of Topicus/CSI) but while I believe that CSI/Topicus will do well over time I prefer owning businesses that are less richly valued. I also sold my shares in the recent spin-off Lumine Group.
Zoomd was interesting. At one point, it was a profitable business growing high double digits that one could buy for a low single digit PE. However, I have not paid enough attention to their lack of resilience once things got a little worse. Zoomd is a marketing platform. A large chunk of their customers were in the crypto and fintech space. I simply did not pay enough attention to this industry risk. Over the last year, Zoomd turned from a super cheap, profitable fast-grower to an “expensive”, unprofitable and slightly shrinking business. So far, there have been no indication that management is cuttting expenses to adjust to the new reality. As there are many other interesting opportunities out there, I have decided to sell my shares at a significant loss. I believe the saying goes something like: You don’t have to make your money back the same way you lost it.
I also trimmed Sygnity slightly further as they have continued to run up and are now trading at a quite significant multiple. However, it is still my largest position.
Furthermore, I sold the tiny Glencore position that I had to over time move completely out of my commodity investments. Now only PetroTal is left. For anyone interested in the history of commodity trading, I can really recommend “The World for Sale” by Javier Blas. It is a great read - gripping like a thriller.
APi Group is also no longer part of the portfolio. I still think it will do very well over time but there are other more interesting opportunities. It will stay on the watchlist.
I bought a position in Seachange International. Seachange offers TV, streaming and advertising services mainly for cable operators, telecoms, etc. End of 2021 an activist family (Singer, not Paul Singer) took control of the company and put in a new CEO. As of now, the family is still under water with their investment. Operationally, the company is developing well with nice growth and should finally become profitable very soon. Looks like a very attractive valuation / setup to me.
I also bought a tiny observation position in itim plc, an owner-lead UK retail software company. Compensation seems a bit high and they are not quite profitable yet. However, valuation seems attractive and they are growing. Have to do more research here. As so often in the past, I will probably end up burning my fingers investing in the UK…
Lastly, I increased my position in SUTL Enterprise for which I recently jotted down some notes, which I thought I would share here:
SUTL Enterprise
Marina developer, operator and technical service/consulting provider (some owned but some also operated as contractor) in SE Asia and the US under the ONE° 15 brand. Locations e.g. Indonesia, Singapore, Malaysia, China, Brooklyn New York. Also own a yacht chartering company with 42 luxury yachts.
Founded 1968, diversified into several different businesses over the years (like e.g. franchise owner for KFC in Singapore) but only the marina part is listed on the SGX since 2015
Arthur Tay (CEO since 2010)
Peter Tay (Director and shareholder for +20 years)
Respected, well-known family of entrepreneurs in Singapore
Own 55%, all directors are shareholders
Willing to do tough decisions. Recently decided to cease operations in Malaysia due to sluggish demand.
Yachting market growing around 10% p.a. and especially in SE Asia a ton of new yachts are being build with the rise of a class of newly rich. Hit during COVID but recovered strongly and still remained significantly profitable
But now the most interesting part, the business is extremely attractively valued:
Share price 0.56 SGD or 48m market cap
86m shares, 3.6m outstanding share options (but exercise prices not much below current share price)
2022: 0.09 SGD EPS (vs 0.05 in 2021)
38m revenues, 14m EBITDA, 8m EBT, 12m OpCF
60m SGD cash, basically no financial debt (600k)
Nice working capital due to prepaid membership fees
Capital allocation:
Ordinary dividend currently 9% div yield, last year significant special dividend, hopefully another one soon. Opportunistically developing new marina locations.
In July 2023, they will open their new marina on Nirup Island in Singapore. It is a prime location, small island just off Singapore with a nice with of the skyline. I think this should lead to some nice growth in the coming years.
I will probably send a mail to management in the coming weeks and see if I can get commentary on some of the points like pricing, new buildouts, capital allocation etc.
Current portfolio overview (in order of size):
Sygnity SA
Tiny
RCS MediaGroup
Neurosoft Software Production
NZME
SUTL Enterprise
Petrotal
Opera
Datalab Tehnologije
Seachange
Mediqon Group
itim Group
RCI Hospitality
Onlineformapro
PSI Software
Radcom
4Mass