Bucket Capital

@Investmentideen Key question is if the platform is really as sticky as it seems, and if customers really are staying if R&D is phased out and price increases follow. Amadeus spends >20% of revenue of R&D and Sabre currently <10%... but im sure the CSI guys did their work here.

@PatiencePays_hs Why are the rebates higher in first place? Why isn’t managing lowering them themselves? Agree on the rest.

Some quick thoughts on $SABR / $CSU that I wrote up yesterday: SABR is effectively bankrupt unless it can materially improve profitability. The company carries a very high debt load that wipes out its roughly 10% EBITDA margin once interest expense is included. Realistically, their only viable path is a partnership with Constellation Software; the alternative is chapter 11. At around 2.7bn in revenue, the business could potentially reach a 30% EBITDA margin, implying about 810m in EBITDA. After roughly 440m of interest expense, that would leave about 370m in EBT and, assuming a 21% tax rate, around 292m in free cash flow. With a current market cap of roughly 460m, the stock is trading at about 1.6x this potential free cash flow. Given the amount of debt in the capital structure, any improvement in profitability would translate into significant operating leverage for equity holders. Constellation has also not given up on installing one of its own directors on SABR’s board. The candidate is Damian McKay, CEO of Vela, which owns Juniper, the travel platform within Constellation; as the former CEO of Datamine, he brings substantial operational experience.

@Investmentideen (2) so now is also the phase Sabre can start milking out the installed base as new customer wins (that require higher rebates) are not a major part of the investment case anymore.

@Investmentideen Most likely in these contract renewals management will lower rebates and estumate that most OTAs wont switch anyway. Also most of the customer harvesting and platform buildout phase appears to be over now and the market is largely divided between any of three major GDS's. (1)

@Investmentideen Once an OTA is connected to Sabr thought there is a minimum contracted order share amount that they must sent through Sabre, otherwise they get fined. And they are very hesitant to switch as integration is complex and employees learned the Sabre prompts.

@Investmentideen The rebates are kind of a must do in order to win OTA's. OTA's usually choose one GDS and rebates is direct revenue for them so plays an important role in the GDS decision process, in addition to offering, geography, etc.

@Investmentideen Increases in the GDS segment are rare. But they could lower the rebate from e.g. $2.50 per booking to $2. OTA's, especially small ones, will i think be hesitant to switch because their personell is used to Sabre prompts and especially in America's, you need to have Sabre.

@Investmentideen Price increases is possible in the airline software segment but this makes up about 20% of revenue. How i think they will create operating leverage is by lowering the cost of revenue. As I understand these are primarily rebates to OTA's as a reward for sourcing bookings via Sabre

@Investmentideen Long term im not sure if im comfortable to hold it as Amadeus is the superior name in the space, R&D budget of >50% Sabre's revenue and winning market share. But the set-up and inflection point of bankrupt shitco to a very moaty cash managed company appears attractive.

Right now, you can buy $SABR at almost the same price $CSU.TO paid — around US$1.71. „the modeling in terms of the weighting of worst case versus winter case are going to be being much more dispersed, and so will probably result in a lower price, but the hurdle rate is the same." – conference call In other words, if everything goes according to plan, the IRR could end up significantly higher than what they originally expected.

@Investmentideen I do think it is a very asymmetric opportunity skewed to multibagger upside. Priced as going bankrupt. How do you see them going forward if they survive? Refinance against lower interest rates, pay down some debt and re-rate to ~$5 billion market cap over 3-5 year timeframe?

@Investmentideen Form 4 says they bought at 1.17 but that is only the last tranche. Where can you see their average purchase price?

@PatiencePays_hs No, they did average at about 1.71. And I own a material position in SABR.

@CJ0pp3l One might argue the setup for Signity is more attractive than Topicus itself!

$SGN.WA at current 81 PLN -> EV/NTM EBITDA (my estimate) = 11x

@hainc94 @valuehurts Yeah i hear you, thanks! I think a double is also more than doable. And valuation multiple then deserves an uplift as well. Going to contact Gavin with some questions and will let you know, many thanks! Strong signal also that they bought shares a few times.

@hainc94 @valuehurts Makes sense and thanks for you reply! Do you have a position as well?

Reviewing my position in Software circle $SFT.L and topped up the position. Everything seems to be going fine, company is growing organically and through acquisitions. Company is valued at £60m and is now a group of eleven VMS businesses, with annualised run rate revenues of approximately £24m at an aEBITDA margin of 25% so £6m. This seems a very fair valuation for something that could grow earning 15-20% over the long term. Still no real analyst coverage. No real listed competitor in the U.K. softwarecircle.com/investor-relat…

@ReneSellmann I love the setup for $MTX. Check the Kerrisdale writeup on them. These guys also called out Aixtron. High quality aerospace name at depressed cashflows that is not permanent but the market thinks it is. 30%+ EBIT margins in the engine segment trading at a large discount to peers.

What’s the most interesting decent/strong growth, artificially depressed margin, emerging moat company right now? (Ideally <$20B market cap)

I love this so much

Seen a lot of posts claiming that Adobe's $ADBE buyback is not something a dying business would do. While one can debate if Adobe is a "dying" business or not, I don't think that's the correct way to view this. Many companies that ended up being in secular decline (again, not saying it's Adobe's case) repurchased shares. Maybe because mgmt can't see the future and are biased like everyone else, or because it's "easy" to spend shareholder's excess capital. Now, there's no denying that if there's a time to repurchase stock and show confidence, that time is probably now. In fact, I'd go as far as to say that this buyback is not actually a sign of management's confidence, why? Because there has not been a single insider purchase throughout all this period. Imho insiders buying would be a much stronger signal of mgmt confidence than using shareholder's money to repurchase shares Evidently the buyback is indeed a signal that Adobe remains a very cash generative business, and Dan Durn (CFO) does have a track record of opportunistic capital deployment. $ADBE

@valuehurts I agree. Its a small position for me compared to $CSU and $TOI but im considering buying more. Performance has been great so far and i have faith in management and BoD. Valuation is very, very compelling.