Jim Roumell of Roumell Asset Management presented his investment thesis on Opera (US: OPRA) at Best Ideas 2022. Bryce Fetter joined Jim for the session.
Thesis summary:
Opera, based in Norway, is one of the world’s leading browser providers and an influential player in the field of integrated AI-driven digital content discovery and recommendation platforms. Founded in 1996, Opera is the everyday browser of choice for more than 380 million people and generates revenue roughly 50/50 between search and advertising.
The company owns stakes in non-core joint investments with significant unrecognized value, one of which was recently partially monetized at a valuation significantly above the carrying value (+175%).
According to the company, significant EBITDA margin expansion is on the horizon, as major capital investment initiatives in fintech, gaming, and news increase the functionality of the Opera browser. Its specialty gaming browser – Opera GX – is particularly suited to the gaming community. Opera News, rebranded as Apex in North America, was recently ranked third in news app downloads on Android.
The shares effectively trade at ~1x the management-endorsed EBITDA margin target of 35% (two-year goal), after backing out investments and cash. Opera has no debt, a cash-rich balance sheet, and “many shots on goal”.
Listen to this session:
slide presentation audio recording
About the instructor:
Jim Roumell entered the securities industry in 1986. Before founding the firm in 1998, he was a Registered Principal at Raymond James Financial Services, Inc. Jim is a frequent contributor to MOI Global and has been featured in such publications as Barron’s, Kiplinger’s, Value Investor Insight, Financial Planning Magazine, and The Washington Post. He is listed and quoted in “The Art of Value Investing: How the World’s Best Investors Beat the Market.” Jim was selected to participate in, and won, two consecutive Wall Street Journal stock picking contests in 2001 and 2002. He is a Board Member and serves on the Investment Committee of Amalgamated Casualty Insurance Company. Jim is a graduate of Wayne State University in Detroit, Michigan.
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