Rick Fujimoto of Silverado Investment Partners presented his in-depth investment thesis on Tech Data Corporation (US: TECD) at Best Ideas 2019.

Thesis summary:

Tech Data Corporation is one of the world’s largest wholesale distributors of technology products. It distributes PC systems, mobile phones, printers, consumer electronics, data storage, networking, servers, and more. TECD connects 1,000+ hardware and software vendors like Apple, Cisco, HP, and Microsoft to 125,000+ value-added resellers that serve end users.

Tech Data serves as a key link in the technology ecosystem because it allows resellers (IT companies serving small businesses) fast and efficient access to any technology product without having to maintain or negotiate pricing for their inventory. With revenue of $38 billion and customers in 100+ countries, Tech Data has built a strong and geographically diverse network.

While the company appointed a new CEO in 2018, Richard Hume was promoted from within. The company has a good capital allocation record, with large buybacks and accretive acquisitions. Net income for the year ended January 31, 2019 should approach $315 million, but Rick estimates the company actually earns more, making it attractive at the recent market price.

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About the instructor:

Rick Fujimoto is managing partner of Silverado Investment Partners LP, a value-based investment partnership started in 2009 in Irvine, CA. Silverado was founded on the value investing principles made famous by Warren Buffett. Its objective is to produce market-beating returns by investing in undervalued companies. Through its 10-year existence, Silverado has returned more than 12% per year to investors after all fees and expenses. Rick holds a Bachelor of Science Degree in Business Administration from Pepperdine University and an MBA from Azusa Pacific University. He lives in La Verne, CA with his wife and two children.