Rimmy Malhotra of Nicoya Capital presented his in-depth investment thesis on Crossroads Systems (US: CRSS) at Best Ideas 2019.

Thesis summary:

Crossroads is a post-bankruptcy NOL shell merged with a profitable specialty finance company traded on the Pink Sheets. Information disclosure and liquidity is limited, but Rimmy believes the shares could be worth materially more than the recent $7 share price, with downside protection.

Insiders own 77% of the shares and are astute long-term business builders.

Crossroads builds and finances affordable housing focused on the Hispanic market. The homes, sales and financing processes are tailored to this demographic. Crossroads refurbishes blighted homes it sells and finances with a traditional 30-year qualifying mortgage.

The company finances the homes using funds obtained through U.S. government-sponsored programs designed to promote home ownership in low- and moderate-income census tracts. Over the last two decades, Crossroads has originated and profitably held $250 million of mortgages.

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About the instructor:

Rimmy Malhotra is Portfolio Manager at Nicoya Capital. The Nicoya Fund is an investment partnership with limited investing constraints. Coupled with a stable of very long-term oriented partners we invest in a concentrated and deliberate fashion across a wide variety of industries, and company sizes. Currently, Rimmy serves on the board of Command Center International (ticker: CCNI), and previously served on the board of Peerless Systems. Rimmy served for three years as a United States Peace Corps Volunteer in Central America. He earned an MBA in Finance from The Wharton School and a master’s degree in International Affairs from The School of Arts & Sciences at the University of Pennsylvania where he is a Lauder Fellow. Mr. Malhotra holds undergraduate degrees in Computer Science and Economics from Johns Hopkins University.