Get Paid $3 Million to Own a Profitable Business Worth $30–50 Million

A Profitable, Growing Business Backed by Recurring Revenue and Long-Term Contracts - Yet Priced as Broken After Indiscriminate Selling.

This is one of those opportunities that’s simply too cheap to ignore - where you get to own a decent operating business after indiscriminate selling.

The pricing is frankly ridiculous. I just had to pick it up, just as I would as a private owner.

Summary

The market is currently pricing the company as if the business is broken, yet the fundamentals suggest otherwise. A large share of revenues comes from recurring service revenue, while another key segment has a long-term contract extension based on a long-standing relationship with high switching costs, providing strong visibility into future revenue as well as income.

At the same time, the stock trades below net cash, meaning investors are effectively being paid about $3 million to take ownership of a profitable business that has grown revenue at roughly a 6% annual rate over the past four years.

If the company were simply valued in line with a comparable, profitable and stable business, in relation to the free operating business, the business alone could be worth $30–40 million - implying roughly >100% upside from today’s market value.

I have followed the company and the story for some time, but a press release in November got me very interested. Recently, I also took a position.