Telsys: Global Leader in Growing Niche Market With High Margins

Omri Velvart of Legacy Value Partners presented his in-depth investment thesis on Telsys Ltd. (Israel: TLSY) at Best Ideas 2022.

Thesis summary:

Telsys Ltd. controls Variscite Ltd., the global leader in niche ARM-based Systems-on-Modules (SOMs), an addressable market of $1 billion, growing by 15% annually.

Founded in 2003 and evolving methodically with a unique focus over the years, Variscite has managed to establish an wide economic moat around its business. As a highly profitable company with software-like margins (operating margin of 40-45%), Variscite has built an impressive track record of reinvestment in growth capex and R&D, which has allowed the company to grab market share steadily, growing twice as fast as the market over the past decade.

The recent valuation is reasonable, and there are growing signs that the global chip shortage has created large pent-up demand for the company’s products.

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About the instructor:

Omri Velvart is the Founder & Chief Investments Officer of Legacy Value Partners. He elevates expertise in Software and Services ecosystems, global and local Category Winners and the Digital Economy. Established in 2016, LVP explores unmatched Quality, looks for Wide Economic Moats and partners with Great Management Teams in publicly listed equities in Israel and the U.S.

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