We are posting ValueX Vail presentations, lots of great ideas and not all of them are up yet so make sure to check back (or even better sign up for our newsletter to ensure you do not miss any).
First four presentations below.
ValueX Vail: Motiwala Capital
Motiwala Capital’s presentation on Blucora Inc (NASDAQ:BCOR) at ValueX Vail.
- Founded in Dec 2010
- Registered investment advisor managing separate accounts
- AUM $4.9 million ( 6/21/2014)
- Implements a long only, concentrated value strategy
- Prefers to buy companies with strong balance sheets, solid FCF and high ROIC at attractive prices
- Invests in generals and special situations
- Performance
- 2011: 4.9%, 2012: 20.3%, 2013: 33.2%
Blucora – 3 businesses
Blucora: Strong Financial Performance
TaxAct
- Acquired Jan 31, 2012 for $288 million
- Provides online tax prep for individuals and tax preparers
- Tax preparation market : $18b
- Value player in the digital DIY market
- 2013 e-file growth of 8% (6.5 million filers for 2013 tax season)
- Basic federal tax prep is free for everyone.
- PC Magazine award – Best Tax Software for 2014
- Revenue from upselling state filing and upgrades
- Growing revenues at 8-10% with 50% segment margins.
- 2013: $91m in revenue, $40m in Operating Income
- Intuit Inc. (NASDAQ:INTU) trades at 14x EBITDA ($4.4b in Revenue, $1.5b EBITDA)
TaxAct- Attractive dynamics
- US individual federal tax returns : 145 million, growing at 1%-1.5% annually
- Digital DIY (DDIY) grew 3% in 2012 and expected to grow 4-6% in 2014.
- DDIY is at 38% of total IRS returns.
Full presentation Blucora-Valuex-2014-1
via Motiwala Capital
ValueX Vail: Black Diamond
Van Wombwell, CFA of Western Tanager presentation on Black Diamond Inc (NASDAQ:BDE) at Value x Vail.
Black Diamond: Looking for growth, not portfolio rotation…
Common Problem
In Mature Industries:
- One segment grows, one declines
- Total = slow growth at best
- Profit trajectory is result of change in:
- Tax rate
- Foreign exchange
- Structural changes
Examples
- Launch Simply Orange to offset decline in Minute Maid.
- Spirits: more brown, less white.
- Beer: one region up, one down
- Beer: less total beer, but more craft
- Non-alc: more still, less carbonated
Why not look for a more compelling opportunity, a high probability pure play? Growing business at a value/fair price.
Full presentation: Black-Diamond-BDE-ValueX-Vail-2014
Van Wombwell: Black Diamond BDE ValueX Vail 2014
ValueX Vail: QR Energy – Value Play Or Value Trap?
Thomas A. “Tomas” Stone of Newstone Investments, L.L.C. presentation on QR Energy LP (NYSE:QRE) at ValueX Vail.
Why QR Energy?
- Upstream MLP with 11% current distribution yield that is tax advantaged
- Oil weighted production profile: 59% of production but 82% of revenue
- Strong sponsor in Quantum Energy (36.4% owner); CoB Don Wolf has history of value creation
- Buyout of GP (and its incentive payments) eliminates non-pro rata returns, lowers cost of capital
- Production hedged: >90% in ’14, >75% in ’15, >70% in 16, 50% in ‘17: Cash Flow well protected
- Assets exclusively very mature fields with low and predictable production declines (8-10% baseline)
- Company has grown reserves at >10% CAGR and production at >7% CAGR since IPO, overcoming natural decline
- Horizontal drilling, downspacing & waterflood opportunities offer reserve and production upside
- Recent incremental $80 million increase in 2014 CAPEX will lead to increased production/FCF in 2015
- Distribution has increased from $1.65/year at 2010 IPO to current $1.95, 6% CAGR
- Distribution coverage ratio is 1.0x; increase in CAPEX likely leads to stronger coverage and increased distribution
QR Energy Qre Valuex Vail 2014
ValueX Vail: Lancashire Holdings Limited
Greg Porter of 5280 Capital presentation on Lancashire Holdings Limited (LON:LRE) at ValueX Vail.
What is Lancashire?
- Property insurance and reinsurance company
- Formed in 2005
- Based in London
- Insures risk worldwide
- Stock trades on the London Stock Exchange
- Symbol – LRE
- Stock Price as of 6/17/14 – 649 pence, $11.00
- Current market capitalization – about $2 billion
Investment Thesis
- Lancashire is dirt cheap
- Stock trades at a little over 9X 2013 earnings and about 8.5X my estimate of normalized earnings without considering any of the upside opportunities
- Lancashire is a much higher quality company than the typical property and casualty insurance company
- Several different avenues for Lancashire to meaningfully increase earnings over the next couple of years
Full presentation: Greg Porter Lancashire Holdings Limited – ValueX 2014 Presentation Final
Greg Porter Lancashire Holdings Limited – ValueX 2014 Presentation Final
