Rudi van Niekerk of Desert Lion Capital presented his in-depth investment thesis on Cartrack (South Africa: CTK) at Best Ideas 2019.
Cartrack is a leading global provider of telematics solutions delivered as Software-as-a-Service with best-in-industry returns on capital, strong growth trajectory operating in a large and growing addressable market, and high insider ownership — trading at a below-average valuation.
The company is listed in South Africa on the Johannesburg Stock Exchange, which is fairly inefficient in price discovery outside the universe of the largest stocks.
Cartrack has a footprint in 24 countries and with 850,000+ subscribers it is positioned as a top ten global player. The company has been investing aggressively in R&D and capacity for growth ahead of the curve and is about to break through and capitalize on economies of scale in many markets.
Excellent financial characteristics: 93% annuity/recurring revenue with earnings clarity, 34% ROCE, 44% ROE, 100+% cash conversion.
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About the instructor:
Rudi van Niekerk manages the Desert Lion Capital Fund. He is South African and resides in Cape Town. Desert Lion Capital specializes in small- and mid-cap opportunities in overlooked segments of the South African market. The investment strategy is opportunistic and follows a fundamental, value-oriented approach. The fund is US domiciled and formed specifically to serve US and other non-South African investors. Rudi is also the manager of Guscora Investments, a permanent capital vehicle incorporated for South African investors with a similar investment approach. Previously he founded and managed Magnum Opus, an investment partnership for mostly family and friends which delivered impressive returns during its lifetime. He has extensive experience in private equity and serves on the boards of several unlisted companies. Rudi holds a Bachelor of Commerce and MBA degrees from the University of Stellenbosch and is a CFA Charterholder.