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In March, we’ve already received two premium member contributions – one from Andrew Ing (@AndrewIng8) on a stock based in Australia, which is a first for our community, and another from Tim Heitman (@Investing501), who regularly published articles to GeoInvesting in 2021. We’d like to extend a thank you to them for choosing GeoInvesting as the platform to share their ideas for all of us to appreciate.
While we encourage you to read these well-thought out articles, below covers a little of each.
Andrew believes that Kelly Partners Group Holdings (ASX:KPG) is worth at least double its price of $5.13 at the time of his writing. The company provides chartered accounting and other professional services to private businesses and clients, owners, families, and high net worth individuals in Australia. He delves into the background of Brett Kelly, the founder and CEO of KPG, taking a personal approach to describing the man and his influences, particularly the individual whose own accomplishments inspired him to start a holding business, Warren Buffet.
Part of Andrew’s bullish thesis on KPG arises from his view of favorable macro trends, the large total addressable market that the company can tap, and upcoming retirements in the older age bracket. Furthermore, a very detailed analysis of KPG’s growth drivers, business model and company’s metrics build a complete picture of his understanding of the inner workings of the KPG. Near the end of his article, we particularly like the fact that he clearly laid out key reasons why he has invested in the company. It’s a pitch in and of itself that primes a basic understanding of the thesis, something that we encourage research authors to do, if just to quickly sort things out for readers.
Please read Andrew’s full write up here.
In Tim Heitman’s case, we received his contribution late Friday, so tonight’s wrap up serves as a great way to introduce you to his thesis on $DWP, a spinoff of IDT Corporation that operates as a diversified media company, engaged in the publishing and television entertainment businesses worldwide. He points out that some transformations in the company’s business model reduce the risks it faces going forward.
For example, Tim explains that its asset light fee-based model to which it transitioned after 2020 eliminates a lot of the financial burdens that are now passed along to distributors/streamers of entertainment content. Tim writes:
“Under the previous model the IDWE division produced and funded the cost of the show. This resulted in IDWE losing $36M over the previous three years. This is the reason the company has switched to a “cost plus” fee model. The company no longer needs to leverage its balance sheet and hope for a successful return on the investment. While the new model significantly reduces the upside from a blockbuster hit (i.e. once each season or show is sold, the company no longer retains the rights to that particular season or show), it also reduces the chances that an unsuccessful show will bankrupt the company. We view this as a significant positive change in the long-term prospects of the company.”
Part of the overhaul of the company’s business model also entailed hiring industry veterans to help run the show. You can check out the article to see the pedigree of these individuals, and you will learn that DWP is serious about its new path.
Tim believes that:
“the intrinsic value of the Company’s assets is far higher than the Company’s trading price would indicate. We believe the market is discounting the Company’s ability to financially monetize its IP portfolio given its lack of scale, operational resources, balance sheet, and/or willingness to monetize the Company through a sale.”
Please read Tim’s full write up here.
The above summaries by no means represent the full breadth of the research conducted by Andrew and Tim, and only serve as a rudimentary bird’s eye view of their pitches.
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