John Lewis is a Founder and Managing Partner of Osmium Partners, which is in its 10th year of operation. Osmium invests in high quality small cap businesses with a long term time horizon. The investment process is driven by eight key variables known as the Osmium.
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John Lewis spoke at the 9th Annual Value Investing Congress, also see NAFTA: Canada, Mexico And The United States, And The Future. Below are notes from his presentation.
Highlights from John Lewis’s presentation
Osmium partners focus on small cap
2002 launch 100m to 1000m market cap focus
2-4 year holding period
Idea 1: Tucows Inc. (NASDAQ:TCX) (TSE:TC)
Elliot Noss CEO is Henry Singleton of small caps
Bought back 40% of shares
7 dutch tenders
Stock $12. Average buyback at $4. Worth $21-22
Domain wholesale business: $105M revenue, 11% ebitda margin, 14M domains managed.
Worth $11-16 a share
Wireless business. Mvno called ting. Low customer acquisition cost. Low cost mobile service. No contract. Churn is 7%. $10 a share value for this
Catalyst: IPO of Go Daddy. Demand media spinoff. Throws light on relative valuation
2) Rst today $11. Presented last year already
Moving from CD sales to SAAS
Enterprise and education is 100 percent saas with 80 percent renewal
With 135m sales. Ebitda double in 2 years. Excluding growth R&D spend 15% ebitda margins.
Stock at 0.5x sales.
Peer group 4-6x sales. M/a at 3-6x sales. At 3x sales 100 percent upside. Made few acquisitions in past couple of years.
Share repurchase authorized. Funded with cash. Bought 5% shares at current prices.
Enterprise business, $21.8 at 3x sales
Consumer CD business: $3.8 at 0.5x sales
$28.9, 150% upside.
Idea 2: Intersections Inc. (NASDAQ:INTX)
ID theft protection
Board and management owns 50%
$21M cash on balance sheet
Core is dependent on Boa. Valued at 2x ocf
Id Guard is a new product, no litigation
Valued at 15x ebitda or 2.2x sales
Voyce paid 11M for IP. Tracks pets.
Soto. 2.5 plus 6.5 plus 1.7 plus 1 cash 11.75