Best Ideas 2019 Preview: Why We Are Short Bond ETFs
We are short bond ETFs encompassing high-yield, investment grade, emerging market (high-yield), and bank debt. Structures with daily liquidity were not created for illiquid securities such as bonds and bank debt.
While there are countless variables in the banking business, a few have an outsized impact on long term value creation: deposits, scale, reach and diversity. We discuss the sea change in capital and liquidity throughout the banking system, which provide a strong foundation.
One of the biggest mistakes we made in 2017 was under-allocating to Shopify, Alibaba, and Arista. We knew they were bargains due to their growth prospects but were just not ready to pay high multiples.
There is strong demand for software development, but relatively few people who can develop software. Appian’s platform can accelerate developers’ speed by up to 20x, producing custom software in far less time.
Aimia: A Low-Ball Bid, Cash and NOLs, and Capable Capital Allocators
Aimia is a collection of assets in the loyalty space, which I became familiar with last year when researching Points.com (PCOM). Aimia’s main asset is Air Canada’s frequent flyer program, known as Aeroplan.
Hill International: Activists, Forced Selling, and Low-Hanging Fruit
Hill International provides asset light construction management and consulting services, with 47% of 2017 revenue from the U.S., 35% from the Middle East, and the balance from EMEA, LatAm, APAC, and Africa.
EZCorp: Mr. Market Shortsighted in Convert Issuance-related Selloff
EZCorp continues to frustrate following the May 2018 issuance of convertible debt. To be clear there are other things not to like here, but as far as the sell off following the convert, the market is being shortsighted.
Rimini Street: Special Situation with Compounder Potential
Rimini provides 3rd party maintenance for enterprise software. Their basic sales pitch to customers is, “we will save you 50% on your maintenance costs, while providing better service,” which is clearly attractive.
On September 21, the day after Latticework London 2018, a group of eight investors from the MOI Global membership community participated in a series of company visits. These were kindly arranged by MOI Global members.