Scott Miller presented his in-depth investment theses on EnviroStar (NYSE: EVI) and Limbach (Nasdaq: LMB) at Best Ideas 2017.
EnviroStar and Limbach: These are two sub-$200 million market capitalization companies. Investor’s typically underestimate the power of compounding and overestimate the value of “sexy”. These two “boring” companies provide the opportunity for significant capital appreciation despite not “screening well”. EnviroStar is a commercial laundry equipment distributor engaged in a buy-and-build strategy led by a highly aligned CEO with experience at an incredibly successful buy and build company, Watsco. The industry has attractive geographic monopoly dynamics with opportunity for expansion. With the stock trading at 12x EBITDA and an acquisition pipeline at 4-6x EBITDA, the company can potentially double earnings with minimal share dilution through the combination of share issuance and debt. Limbach is one of the largest commercial air conditioning contractors in the U.S. It is a fundamentally healthy business that is growing revenue and backlog by 30%. The company has the opportunity to grow organically, expand margins through increased service offerings, and opportunistic acquisitions. Both the common stock and long-dated warrants provide an interesting risk-reward proposition.
About the instructor:
Scott Miller is the Founder of Greenhaven Road Capital, a boutique investment partnership that seeks out off the beaten path investments, modeled after the early Buffett partnerships. The firm is built on the belief that a focused investment manager can outperform an index by limiting fund capacity and by concentrating exposure on a few great ideas over a long time horizon. Experience as an owner-operator of businesses influence Greenhaven’s approach towards partially-owning companies rather than merely picking stocks. Prior to founding Greenhaven Road, Scott co-founded Acelero Learning, serving in a variety of roles over a decade from CFO to CTO, to Chief Strategy Officer to his current role of Board Member. Acelero Learning has grown from three people in an office “cube” in New York City to 1,100 employees serving 5,000 children across four states. Additionally, Scott managed a manufacturing business, with responsibility for hiring, firing, planning inventory, negotiating with suppliers and acquiring customers at a reasonable cost. Scott holds an MBA and a Masters in Education from Stanford University.
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