This post is excerpted from a letter by MOI Global instructor Jim Roumell, partner and portfolio manager of Roumell Asset Management, based in Chevy Chase, Maryland.
Sierra Wireless is an Internet of Things (IoT) provider empowering businesses to transform in the connected economy. The company offers a device to cloud solution, comprised of embedded and networking solutions integrated with its secure cloud and connectivity services. OEMs and enterprises rely on SWIR to deliver fully integrated solutions to reduce complexity, turn data into intelligence and get their connected products and services to market faster. SWIR has an estimated 30% of the market while competitors Telit and Gimalto are each estimated to have 20% market share.
SWIR operates under three reportable segments:
OEM Solutions — Wireless technologies and support of open source initiatives that enable OEMs and system integrators to get their IoT solutions to market faster. SWIR makes it simple to embed cellular, Wi-Fi, Bluetooth and Global Navigation Satellite System technologies, as well as manage devices, connectivity services, and data through its IoT cloud platform. Customers include automotive, transportation, energy, enterprise networking, sales and payment, mobile computing, security, healthcare and others.
Enterprise Solutions — Provides networking solutions comprised of cellular gateways and routers that are complemented by cloud-based services and on-premise software for secure device and network management.
IoT Services — Enables the digital transformation of enterprises through integrated IoT cloud and connectivity services. This segment is comprised of three main areas of operation: (i) cloud services, which provide a secure and scalable cloud platform for deploying and managing IoT subscriptions, over-the-air updates, devices and applications; (ii) global cellular connectivity services which are subscription-based and include flexible Smart SIM and core network platforms; and (iii) managed broadband cellular services, which include a combination of hardware, high speed connectivity and cloud services.
RAM has a history in investing in SWIR, as this is our third time in the stock. For many years, we spoke with recently retired CEO Jason Cohenour. After an extensive search, the company choose Kent Thexton to be President and CEO as of November 1, 2018. Mr. Thexton had been serving as interim President and CEO since May 31, 2018. He has extensive experience in the cellular wireless and IoT industries. We recently spoke with Jason Krause, COO, and David McClennan, CFO, and came away convinced that SWIR was continuing to move in the right direction.
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Disclosure: The specific securities identified and described do not represent all of the securities purchased, sold, or recommended for advisory clients, and the reader should not assume that investments in the securities identified and discussed were or will be profitable. The top three securities purchased in the quarter are based on the largest absolute dollar purchases made in the quarter.