Philip Ordway presented his in-depth investment thesis on VeriSign (VRSN) and Rightside (NAME) at Best Ideas 2015.
Internet domain companies, including VeriSign and Rightside: These infrastructure providers for a large and growing portion of our economy and our lives are undergoing significant changes, and there may be attractive opportunities for investors. The legacy generic Top Level Domains (gTLDs) like .com and .net are facing competition for the first time as hundreds of new gTLDs are being launched. Is .com a brand, and will Verisign maintain its near-monopoly via .com? Verisign’s margins, cash flow and capital allocation are impressive, but where will the company be in five or 10 years? For three years running Verisign has had >50% operating margins and required very little capital, but will that last? Is a 7-8% FCF yield and 4-5% growth enough margin for error? Will new gTLDs ever move the needle, and if so who wins? Rightside’s registrar business and other assets would appear to cover the current enterprise value, so are you getting the new gTLD business for free? How much will Google’s entry into the business make a difference? This is an interesting industry with high margins and lots of free cash flow, so a well-managed company who can address those questions and challenges could make a for a great investment.
About the instructor:
Philip Ordway is Principal and Portfolio Manager of Anabatic Fund, L.P. Previously, Philip was a partner at Chicago Fundamental Investment Partners (CFIP). At CFIP, which he joined in 2007, Philip was responsible for investments across the capital structure in various industries. Prior to joining Chicago Fundamental Investment Partners, Philip was an analyst in structured corporate finance with Citigroup Global Markets, Inc. from 2002 to 2005, where he was part of a team responsible for identifying financing solutions for companies initially in the global power and utilities group and ultimately in the global autos and industrials group. Philip earned his M.B.A. from the Kellogg School of Management at Northwestern University in 2007 and his B.S. in Education & Social Policy and Economics from Northwestern University in 2002.
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