The Makings of a Multibagger An Analysis of the Best Performing Stocks over the Past 5 Years

The Alta Fox 2020 Summer Intern Class Project: Owen Stimpson - [email protected] Max Schieferdecker - [email protected] Elizabeth DeSouza - [email protected] Disclaimer

Alta Fox Capital Management, LLC (“Alta Fox”) is an investment adviser to funds that are in the business of buying and selling securities and other financial instruments. The Makings of a Multibagger (“report”) is provided for informational purposes only and does not constitute investment advice or an offer or solicitation to buy or sell an interest in a private fund or any other security. An offer or solicitation of an investment in a private fund will only be made to accredited investors pursuant to a private placement memorandum and associated documents. The information and opinions expressed in this report are based on publicly available information. The report includes forward-looking statements, estimates, projections, and opinions on various securities, as well as more general conclusions about future operating performance. Such statements, estimates, projections, opinions, and conclusions may prove to be substantially inaccurate and are inherently subject to significant risks and uncertainties beyond Alta Fox’s control. Although Alta Fox believes the report is substantially accurate in all material respects, Alta Fox makes no representation or warranty, express or implied, as to the accuracy or completeness of this report or any other written or oral communication it makes with respect to any company in this report, and Alta Fox expressly disclaims any liability relating to the report or such communications (or any inaccuracies or omissions therein). Thus, shareholders and others should conduct their own independent investigation and analysis of the report and any securities mentioned. Except where otherwise indicated, the report speaks as of the date hereof, and Alta Fox undertakes no obligation to correct, update, or revise the report or to otherwise provide any additional materials. Furthermore, the report was created by interns who are not full-time employees of Alta Fox. It is possible their views are not consistent with the views and beliefs of Alta Fox Capital Management, LLC. Alta Fox also undertakes no commitment to take or refrain from taking any action with respect to any company listed in the report. Additional information about Alta Fox can be found on its website, www. altafoxcapital.com, the use of which is subject to a User Agreement, which can be found at www. altafoxcapital.com/disclaimer.

2 Table of Contents

Section Page Numbers Sub-Section Page Numbers • Project Overview 4 0 • Our Approach 5 - 6 0 o Criteria for Company Selection 5 o Our Process 6 • Overview of Companies Analyzed 7 - 9 o Industry Representation 7 o Geographic Representation 8 o Stock Exchange Representation 9 • Company Metrics 10 - 11 o Size of the Companies 10 o Financial Metrics 11 • What Led to their Outperformance 12 - 17 o TSR Drivers 13 o EBITDA and Revenue Growth 14 - 16 o Valuation Multiples 17 • Concluding Thoughts 18 – 19 o High-Level Takeaways 18 o Specific Takeaways 19 • Individual Company Analysis 20 - 645 o Table of Contents 20 – 21 o Analysis 22 - 645

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Project Overview

• Analyzed the highest performing stocks over the last five years and identified their common characteristics, trends, and What We Did catalysts

Why We Did It • To identify strategies to find the next set of high performing stocks

• Researched the business of each company individually using a standardized 6-page slide deck format How We Did It • Compiled quantitative and qualitative data from all companies, analyzed it, and then drew conclusions based on it

What We • Drew 5 high-level takeaways and a framework to screen for future multibaggers Concluded

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Criteria for Selection

We used Bloomberg to screen for stocks that met the following criteria:

1. Only stocks domiciled in North America, Western Europe , and Australia.

2. All sectors excluding energy, materials, and financials.

3. Total Shareholder Return (TSR) from 6/8/2015 to 6/8/2020 greater that 350%. 4. Positive trailing 12-month EBITDA. 104 5. Market Cap at 6/8/2020 was greater than 150M USD and less than 10B USD. We analyzed the 104 smallest stocks (market cap below 10B) of 6. Average daily value traded over 200,000 USD. the 130 returned from the screen because of our small and micro- 7. The latest fiscal year y/y revenue growth was positive. cap focus.

8. The stock is actively being traded and it is the primary security of the given company.

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Our Process

For each stock we did the following:

Business and Industry Why the stock was Takeaways Overview overlooked five years • Stock price, market cap, enterprise value, and ago Financial shares outstanding today and five years ago Snapshot • NTM revenue, EBITDA, and earnings multiples five years ago and today We surmised a bear case and/or • The company’s product or service why the company was overlooked For each company we Company • The “essence of the business” five years ago – i.e. minimal room determined what the key Overview • Sales breakdown by segment and geography for growth, poor competitive takeaways were and our position, high valuation, lack of thoughts on the stock’s future. • Industry in which the company competes coverage, etc. – and outlined why • Industry structure it turned out be wrong. • Low-single digits (LSD), mid-single Industry digits (MSD), high-single digits (HSD), We also calculated what drove Overview or > 10% industry growth rate TSR: EBITDA growth, dividends, • Barriers to entry and competitive advantages and/or multiple expansion. • How the industry has evolved over the last five years

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Over-Represented Industry Representation Under-Represented

We looked at companies in six broad industries based on Bloomberg’s BICS industry classifications: Consumer Discretionary, Consumer Staples, Healthcare, Technology, Communications, and Industrials. Our search excluded companies in Energy, FIG, and Materials. Industry Breakdown Relative to Investable Universe1 Consumer Staples and Unsurprisingly, Tech was the most % of IU % of Set common industry. Common traits Communications tended to not Technology 17.57% 33.65% outperform as often. such as high margins, high 4% operating leverage, and scalable Healthcare 13.96% 23.08% 5% business models enabled this high frequency. Consumer Discretionary 26.54% 21.15% A range of industrial companies 13% Industrials 21.54% 13.46% outperformed. 34% Technology Consumer Staples 9.43% 4.81% Healthcare Communications 7.17% 3.85% Consumer Discretionary Industrials The consumer industry2 is under-represented 21% Consumer Staples with 25.96% of the set while making up 35.97% of the total universe. Communications A decent amount of Consumer 23% The technology and healthcare industries are Discretionary companies did as a result of both notably over-represented. being innovative and high quality within Healthcare companies were common, their field. specifically medical device companies. The only industry that was part of the universe but was not represented in the set was Utilities.

1. All stocks which meet screen criteria not including minimum TSR of 350% 7 2. Includes Consumer Discretionary and Consumer Staples Back to ToC

Over-Represented Geographic Representation Under-Represented

We looked at companies headquartered in North America, Western Europe, and Australia.

Continental Breakdown Country Breakdown Relative to Investable Universe1 % of Total % of Set 11.54% US 44.1% 28.8% 32.69% UK 10.0% 15.4% 11.5% Sweden 8.7% 12.5% 7.7% Australia 5.1% 11.5% Germany 4.8% 9.6% Norway 2.7% 7.7% 55.77% 15.4% Canada 5.3% 3.8% 12.5% France 4.1% 2.9% Denmark 1.7% 5.2% North America Ireland 0.8% 1% Western Europe 9.6% Austria 0.4% 1% Australia Luxembourg 0.3% 1% 1 28.8% Relative to Investable Universe The US is actually under-represented with 29% of the % of Total % of Set set but making up 44% of the total universe. North America 49.56% 32.69% Western Europe 45.31% 55.77% Australia UK US Australia, UK, Sweden, Germany, and Norway are notably Australia 5.13% 11.54% Canada Germany Sweden over-represented. France Norway Ireland While many great opportunities are found in NA, Italy, Switzerland, and Spain are notably excluded with Denmark Austria Switzerland investors seeking the best opportunities will no top performers but are apart of the universe need to be open to intercontinental companies. Luxembourg

1All stocks which meet screen criteria not including minimum TSR of 350% 8 Back to ToC

Stock Exchange Representation

The best performers were found on 15 different stock exchanges across North America, Europe, and Australia.

The majority of companies were found on But there were 12 other exchanges represented on these three exchanges: the list as well: 21.15%1 11.54% 2.88% 9.62% 1.92%5

7.69% 1.92% 13.46% 6.73%3 0.96%

3.85% 0.96% 2 12.50% 3.85%4 0.96%

1Accounts for NASDAQCM, NASDAQGM, and NASDAQGS 3Accounts for both normal NYSE and AMEX stocks 4Accounts for both normal TSX and TSXV 9 2 NASDAQ Stockholm 5NASDAQ Copenhagen Back to ToC

Size of the Companies

While some large companies were included in the set, smaller companies were represented more often and returned larger TSRs on average. Company Sizes Investors need to be willing to look at small, 60 51 50 44 under looked, and under covered stocks to find 36 36 40 some of the biggest winners: 27 30 24 17 17 20 4 10 0 0 Number of Stocks of Number Nano-Cap Micro-Cap Small-Cap Mid-Cap Large-Cap (< $50M) ($50M - $300M) ($300M - $2B) ($2B - $10B) (> $10B)

Stock Category TSR Breakdown But with that said, many companies with >1B 2000% market caps outperformed as well: 1500% 1000%

TSR % TSR 500% 0% Nano-Cap Micro-Cap Small-Cap Mid-Cap Large-Cap (< $50M) ($50M - $300M) ($300M - $2B) ($2B - $10B) (> $10B) Average 1855% 682% 590% 459% 413% Median 1114% 508% 431% 414% 403%

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Financial Metrics

Revenue Breakdown 40 Gross Margin 35 35 FY 2015 FY 2019 Change 30 26 25 th 25 25 Percentile 30.42% 31.69% 127 bps 20 21 20 16 th 14 15 50 Percentile 46.40% 49.19% 279 bps 15 11 11 9 th 10 75 Percentile 61.39% 66.68% 529 bps 5

5 Number of Companies of Number 0 < $50M $50M - $100M $100M - $250M $250M - $500M $500M - $1B > $1B SG&A Percentage Revenue FY 2015 FY 2019 Change 25th Percentile 53.57% 45.11% -846 bps EBITDA Breakdown 50th Percentile 34.43% 30.27% -416 bps 45 42 39 th 40 75 Percentile 16.30% 14.35% -195 bps 35 30 25 25 20 EBITDA Margin 20 15 16 15 15 13 FY 2015 FY 2019 Change 9 10 6 7 25th Percentile 4.75% 11.43% 668 bps 5 1

Number of Companies of Number th 0 50 Percentile 10.22% 17.75% 753 bps < $0M $0M - $5M $5M - $10M $10M - $15M $15M - $50M > $50M 75th Percentile 17.88% 27.16% 928 bps EBITDA

11 Back to ToC What Caused This Set of Companies to Outperform So Much?

The S&P 500 returned 55.45% from June 2015 to June 2020 while the average return of the set was 922% and the highest performer returned 9,199%. 1200% 922% Top 3 Stocks of the Set

1000% 9,199% 800%

600% 8,217% 400%

200% 55.45% 4,712% 0%

S&P 500 Avg of Set

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What Drove the Returns

We broke down what drove TSR for each stock – EBITDA growth1, dividends, and multiple expansion.

TSR Drivers (as % of TSR) 70.00% 65.71% On average, EBITDA growth contributed 59.82% of TSR 59.82% and multiple expansion contributed 44.78% of TSR. 60.00%

50.00% 44.78% However, the medians tell a different story: EBITDA growth contributed 33.65% of TSR and multiple 40.00% 33.65% expansion contributed 65.71% of TSR. 30.00% 20.00% In general, multiple expansion and EBITDA growth 10.00% played a roughly even role in driving TSR. 1.63% 0.00% 0.00% EBITDA Growth Dividends Multiple Expansion Dividends seldom made a major impact and only drove Avg Median >10% of TSR for 2 companies.

80% of companies had more shares outstanding in Multiples contracted for 11 companies which muted TSR. 2020 than in 2015. 23% of companies diluted by more than 50%, and 11% diluted by more than 100%.

1. Revenue was used when EBITDA was negative 13 Back to ToC

Revenue and EBITDA Growth

Median revenue grew from 113% and median EBITDA grew 137% from FY15 to FY19.

Revenue Growth % Breakdown Revenue CAGR Quartiles 35 45% 30 40% 25 35% 38.30% 20 30% 33 15 29 25% 10 CAGR% 20% 19 20.88% 5 13 15% 6 4 0 10% 13.81% Number of Companies of Number < 50% 50% - 100% 100% - 250% 250% - 500% 500% - 1,000% > 1,000% 5% Revenue Growth % 0% 25 Percentile 50 Percentile 75 Percentile EBITDA Growth % Breakdown EBITDA CAGR Quartiles 40 50% 35 30 40% 44.53% 25 20 30% 15 34 CAGR% 28.19% 10 23 20% 15 14 5 9 9 17.96% 0 10% Number of Companies of Number < 0% 0% - 100% 100% - 250% 250% - 500% 500% - 1,000% > 1,000% EBITDA Growth % 0% 25 Percentile 50 Percentile 75 Percentile

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What Drove EBITDA / Revenue Growth 1/2

Acquisitions, new products, and new contracts were often central to the growth algorithms of the companies in the set.

Companies often made Transformative New products Major New Contracts acquisitions 27% 17% 56% Percentage of companies which launched Percentage of companies which won 2 2 Percentage of companies where EVI and JD used acquisitions to transformative new products major new contracts acquisitions were key to their grow from 2015-2020. growth1

EOS launched new Remote Weapon System’s product which enabled the IVU landed major new contracts in company to become profitable. Germany for its rail software. 19% Companies Benefited from COVID-19 Related Demand ERI’s acquisition of Caesars Percentage of companies who not Entertainment was a 17% only made acquisitions but made at transformative acquisition. SLP saw its demand jump least one transformative Percentage of companies whose stock considerably as companies began acquisition2 was positively impacted by the racing to develop a COVID-19 coronavirus pandemic2 vaccine. 1. Based on our subjective analysis of whether acquisitions were key to driving their growth and TSR; does not include all companies which made acquisitions 15 2. Based on our own subjective analysis Back to ToC

What Drove EBITDA / Revenue Growth 2/2

Companies leveraged barriers to entry and competitive advantages to grow margins and profit.

Companies leveraged barriers to entry which Companies leveraged their competitive impeded new competitors. advantages.

42% Example Barriers To Entry: Example Competitive Advantages: 1. Regulatory barriers (i.e. FDA 1. Network effects Percentage of companies where approval) barriers to entry were assessed to be high 91% 2. Technological complexity of industry / start-up costs Percentage of companies 2. Cost Advantages assessed to have at least 38% moderate competitive 3. Human capital requirements advantages relative to their 3. Intangible Advantages Percentage of companies where competitors barriers to entry were assessed to be medium 4. Patents 4. Switching Costs

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Valuation Multiples

NTM Revenue Multiple1 NTM EBITDA Multiple1 NTM P/E Multiple1 38 40 40 35 35 29 30 28 24 30 30 24 25 22 21 19 20 20 16 16 20 13 13 15 12 1211 12 11 9 9 7 7 10 6 10 7 10 6 4 5 4 5 3 4 3 2 Number of Stocks 3 3 3 Number Number of Stocks 5 1 1 Number of Stocks 0 0 0 0 0 < 1x 1x - 2x 2x - 3x 3x - 4x 4x - 5x 5x - 10x > 10x < 5x 5x - 10x 10x - 20x 20x - 30x 30x - 40x > 40x < 10x 10x - 20x 20x - 30x 30x - 40x 40x - 50x 50x - 60x > 60x 2015 2020 Change 2015 2020 Change 2015 2020 Change 25th Percentile 0.94x 2.88x 208.02% 25th Percentile 7.58x 16.52x 117.91% 25th Percentile 14.05x 30.49x 116.94% 50th Percentile 1.68x 5.53x 229.17% 50th Percentile 10.26x 24.79x 141.62% 50th Percentile 17.57x 42.90x 144.13% 75th Percentile 3.09x 8.64x 179.45% 75th Percentile 13.77x 32.52x 136.18% 75th Percentile 27.12x 55.75x 105.55%

Along with revenue, EBITDA, and net income growth (and better outlook) multiples expanded for a variety of reasons – including better management, better investor relations, and mitigating financial crises. Better investor relations 6% efforts was often a source of 12% multiple expansion due to Percentage of times new an increased awareness of Percentage of times management was noted NLAB improved IR by mitigating a crisis was ETSY’s new CEO turned the company; this often CCX divested from releasing English as a key event and helped the helped make the took the form of attending noted as a key event and multiple unprofitable financial reports, among expand the company’s company profitable. conferences and providing helped expand the business units. other improvements. multiple more detailed financials company’s multiple

1. Does not include LTM multiples (not all companies had forward multiples five years ago) 17 Back to ToC

High-Level Takeaways

1) Look for businesses with advantageous positioning: 80% of businesses had moderate-to-high barriers to entry and 91% had moderate-to-high competitive advantages.

2) Spend time on financially healthy companies: 88% of outperformers came from a position of financial health in June 2015 and grew faster than the market might have anticipated. Looking for financially healthy companies, rather than turnarounds, is also less risky.

3) Acquisitions can create value: While many acquisitions fail to create value1, the highest performing stocks often leverage acquisitions to bolster their returns. If you are looking for phenomenal returns, finding companies that make strong acquisitions will increase your odds of success.

4) Don’t rely on multiples: While it is always better to buy a great business at a low multiple rather than a high one, many of the top performing stocks began with already healthy multiples – those multiples often expanded even further.

5) Be open to international companies: Many of the best performing were American (32%); however, the USA was under- represented in the set2, meaning it is less likely that a company in America would achieve > 350% returns compared to some other countries such as Sweden, Australia, and Germany.

1https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/where-mergers-go-wrong 18 2All stocks which meet screen criteria not including minimum TSR of 350% Back to ToC

Specific Takeaways

If we were to screen for future multibaggers, we believe the following criteria would return the highest percentage of success.

• Companies in the UK, Sweden, Germany, Norway, and Australia • These countries were over-represented in the set likely because of their strong rule of law, quality educational institutions, Country and favorable economic conditions • There also tends to be less initial coverage of smaller stocks in these countries than in the U.S., which may be due to lower populations of small-cap focused analysts and investors

• Companies in technology and healthcare industries • The industries were over-represented in the set likely because of often low unit costs, high gross margins, high operational Industry leverage, and growth opportunities • The aging population and an increased reliance on tech/software for everyday life have and will continue to be strong tailwinds for the growth of these industries

• Companies with market caps below $2B • Companies below $2B market caps represented 84% of the set, often because of low analyst coverage and institutional Size ownership • Smaller companies often have more room to increase their share of their target markets relative to larger companies, which often have larger market penetration

• Companies trading below 3x NTM Sales, 20x NTM EBITDA, and 30x NTM PE and/or those without forward multiples Multiples • 82% of companies from the set traded below these multiples or without forward multiples five years ago • These leave room for multiple expansion, which drove a substantial amount of the TSRs

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Table of Contents – Individual Stock Slides (In Order from Highest to Lowest TSR)

1) ZYXI 22 14) BOO 100 27) SLP 178 40) CHGG 256 2) E2N 28 15) PET 106 28) FDEV 184 41) BOUVET 262 3) XBC 34 16) CLV 112 29) ALU 190 42) DATA 268 4) APX 40 17) VOW 118 30) BIOT 196 43) EUZ 274 5) FNOX 46 18) BACTI B 124 31) AQZ 202 44) FEVR 280 6) KRMD 52 19) PME 130 32) DTL 208 45) QDEL 286 7) CHEMM 58 20) INS 136 33) SKY 214 46) EXEL 292 8) GAW 64 21) SMLR 142 34) MUM 220 47) BLFS 298 9) GENO 70 22) KWS 148 35) SSM 226 48) MRCY 304 10) XIL 76 23) HUB 154 36) ABDP 232 49) VITR 310 11) FIVN 82 24) YSN 160 37) SOI 238 50) EVI 316 12) JIN 88 25) FUTR 166 38) YOU 244 51) EOS 322 13) HYQ 94 26) CWST 172 39) NOVT 250 52) BVXP 328

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Table of Contents – Individual Stock Slides (In Order from Highest to Lowest TSR)

53) TSTL 334 66) XPEL 412 79) ILM1 490 92) GAMA 568 54) MCAP 340 67) JD. 418 80) AMED 496 93) NRC 574 55) NLAB 346 68) IVSO 424 81) IGR 502 94) TROAX 580 56) S30 352 69) KXS 430 82) IDEA 508 95) NEO 586 57) LUNA 358 70) RWS 436 83) SECT B 514 96) SANT 592 58) MEDI 364 71) ERI 442 84) TOM 520 97) SALM 598 59) AMBU B 370 72) FOXF 448 85) AOF 526 98) VITB 604 60) LTG 376 73) BEIJ B 454 86) ALESK 532 99) IVU 610 61) NOTE 382 74) BANB 460 87) BC8 538 100) IPHI 616 62) DDR 388 75) ETSY 466 88) LGIH 544 101) ENTG 622 63) APHA 394 76) BEAT 472 89) GSB 550 102) NRS 628 64) CJT 400 77) HTRO 478 90) D6H 556 103) ALSN 634 65) KIT 406 78) ARWR 484 91) CCX 562 104) GSF 640

21 Owen Stimpson

9,119% 5 Year TSR NasdaqCM:ZYXI Rank: 1/104

22 Zynex Overview

Zynex Medical is a medical device manufacturer that produces EV / LTM Revenue and markets electrotherapy devices for use in pain management, physical rehabilitation, neurological diagnosis and cardiac 2019 monitoring.

Statistic 06/08/2015 06/08/2020 2015 Stock Price $0.22 $21.26

Market Cap $6.88M $705.67M 0.00x 5.00x 10.00x 15.00x Enterprise Value $11.37M $696.81M

Shares Outstanding 31.27M 33.19

EV / LTM Revenue 0.62x 13.46x

EV / NTM EBITDA NA 28.50x

PE NA 49.07x

Statistic FY 2015 FY 2019

Revenue 11.6M 45.5M

EBITDA (2.1M) 11.8M

23 Zynex Business Model

Primary Product Context Sales by Division Non-invasive electrotherapy ZYXI is a pain management Zynex pain management devices that product company. Medical require a prescription and are generally billed to insurance. • Products to treat chronic and 100% acute pain through elecotrotherapy.

• Products designed for home- Zynex Medical use and are easy to use. Sales by Geography • Market products to physicians and therapists who then prescribe use of ZYXI products to patients who bill their insurance. 100%

Zynex’s NeuroMove that is primarily used for • Help reduce reliance on stroke, spinal cord and traumatic brain injury medication, particularly NA rehabilitation. opioids. ZYXI is a capital light business as they outsource much of their manufacturing.

24 Low Threat Medium Threat Zynex Competitive Analysis High Threat

Competitive What’s Changed in Risks Competitive Landscape Barriers To Entry Advantages the Industry

• Regulatory barriers: • Relationships FDA approval can Market Monopolistic with physicians Global take years. • Higher prevalence of Structure Competition and therapists Electrotherapy • Start up costs: it can are key to neurological Market Size ≈964M1 Market require significant getting disorders anticipated • Industry research and prescribed. Changes in to drive future MSD1 Manufacturing and Growth development to create reimbursement growth. distribution of a variety of a new product. policies / • ZYXI is one of the largest • Navigating electrotherapy treatments and • Sales force is needed regulations. • Opioid epidemic in devices for a variety of issues, American players but the reimbursement to communicate the US has worsened: such as spinal cord injuries industry remains fragmented. schemes can be product effectiveness • Other 128 people die each and neurological disorders. challenging. to physicians and treatments day in the US to • Getting FDA approval for novel therapists. prove to be opioid overdose. electrotherapy system devices • • However, there are Device more effective. • Catalyzed remains key point of many over-the- functionality: trend away competition. counter ZYXI from drug- electrotherapy NeuroWave has based devices, and many three modalities treatments. devices do not involve (one is new tech. standard).

1. Applied 4.6% growth to 2018 figures; https://www.prnewswire.com/news-releases/global-electrotherapy-system-market-to-surpass-us-1-3-billion-by-2027--coherent- market-insights-300926014.html 25 What Investors Missed The Actual Story of the Last Five Years The Bear Thesis Five Years Ago: • Heightened cash flow from operations ZYXI survived enabled ZYXI to repay its credit facility that • Existential concerns – uncertainty whether the company will was in default. remain a going concern. • ZYXI grew revenue by 292% from FY2015 to • Liquidity issues and default on credit facility means ZYXI FY2019 and maintained gross margins > 80%. will be forced to dilute existing shareholders and may go • Sales reps increased from 0 direct sales reps in under. ZYXI grew and FY2017, to 140 at the end of FY2019. maintained • • Skepticism over growth prospects for ZYXI. margins. NextWave is an alternative treatment for • And if there is opportunity, why invest in ZYXI when there opioids – which are the source of an epidemic are two larger players better suited to capture the growth. across the US. Orders increased 95% from FY2018 to FY2019. • Sales force will get more efficient over time – Return Breakdown: Consensus vs Results management projects each sales force member Created potential to generate 1M in annual revenue at maturity. runways for future • Razor and blade opportunity: ≈80% of growth revenue is recurring supplies sales, as more devices are sold recurring revenue possibilities increase dramatically. • Both of ZYXI’s main competitors - International Rehabilitative Sciences($150M annual revenue) and EMPI ($250M annual revenue) Competitors didn’t closed after failing audits from the OIG. capture growth – • However, both companies said they instead, they closed closed due to unprofitability; and neither could find a buyer for the business.

26 Back to List Zynex Takeaways ZYXI is a Decent Business - 2.5/5 Future Outlook • ZYXI’s two main competitors shut down after Can ZYXI Sustain its Market Position? prosecution from the inspector general. • ZYXI is the dominant player in the industry and the only ZYXI survived and now one with a significant sales force. has a moat • Regulatory restrictions and relationships with physicians and therapists (that have been bolstered by • There are many over-the-counter competitors. the salesforce) impede new entrants. • Supplies sales will likely come under scrutiny given their high reimbursement but low differentiation. ZYXI grew its topline • Expanded sales force increased sales capacity and helped while maintaining its grow revenue at a 35% CAGR from FY2015 – FY2019. Can ZYXI continue to grow faster than the industry? margins • Gross margins remained above 80%. • ZYXI’s sales force is the largest which will enable ZYXI to • The electrotherapy industry is under significant threat better market new products. from reimbursement changes: • Other than the NextWAve, ZYXI’s products have all been • One of the largest insurers for ZYXI, Tricare, is no failures – and has only spent an average of $330k on R&D longer covering their products. They even cited a since 2007. study that electrotherapy doesn’t work.1 Is ZYXI poised to continue to outperform the market? • ZYXI has mentioned that collections are down from • Under threat from doubts over product effectiveness and multiple insurance payors. insurance no longer covering their products. ZYXI runway for growth is • As ZYXI grows, it will come under heightened scrutiny from • Supplies sales are likely to be depressed as they entice less clear insurance: consumers to overbill their insurance with copay waivers. • Supplies sales are billed to insurance at high rates • Many supplies products are commodities. but many products are commodities (i.e. batteries and electrodes). • Operational leverage from sales force may move in the other direction. • ZYXI has been alleged to waive deductibles and copays to entice consumers to – a practice that is • The company trades at 42.9x NTM EPS, implying strong in a legal grey area and harms insurance growth and at a premium to the market but outlook is less companies.2 strong.

1. https://www.acpjournals.org/doi/10.7326/M16-2367 2. https://seekingalpha.com/article/4352747-zynex-deteriorating-fundamentals-and-signs-of-reimbursement-pressure 27 Max Schieferdecker 8,217% 5 Year TSR MUN:E2N Rank: 2/104

28 Endor Overview

Endor AG is a gaming accessory company based in Bavaria, LTM EV/Sales Multiple Germany that sells high-end sim racing gear under the brand name Fanatec. 2020 9.2x

Statistic 6/8/15 6/8/20 2015 0.4x Stock Price €1.04 €112.00 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x Market Cap €1.85M €208.44M

Enterprise Value €1.53M €208.49M

Shares Outstanding 1.78M 1.93M

EV / LTM Revenue 0.44x 9.21x

EV / LTM EBITDA 188.56x 102.20x LTM P/E 3.57x 226.58x Z

Statistic FY 2015 FY 20191

Revenue 10.97M 39.38M

EBITDA 2.28M 6.50M

1There is no FY19 annual report, so numbers are not exact 29 Endor Business Model

Primary Products Context • Wheels are used to steer E2N provides its customers with in-game high-quality sim racing Wheels and • Bases connect the experiences Bases wheels to the gaming • Their products are made to platform replicate as close as possible • Used to speed up and their real-world equivalents Pedals brake in-game • This means heavy-duty, metal parts and genuine • Includes shifters, Other leather paddles, handbrakes, No Revenue Breakdowns Provided Accessories and mounting materials • The steering wheels give the customer the same feeling they would have in a real racecar with the same wheel • All products are individual, so customers can mix-and-match wheels, bases, pedals, etc. • Popular games that Fanatec E2N is a capital light business as all devices are commonly used for manufacturing is outsourced to China CSL Elite racing wheel and base include the F1 series and Forza

12019 ROCE not included because there is no balance sheet data for FY19 30 Low Threat Medium Threat Endor Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry Gaming Simulators

The players in this industry offer • Extremely high-quality • Supplier and licensing hardware products that complement products with a well- and enhance video game software concentration respected reputation in the with the goal of making games more sim racing industry • Each product is realistic. • Licensing agreements with only manufactured • VR gaming has • Key partnerships and consoles by one or two become much licensing agreements with • Brand recognition plays a suppliers more prevalent many big brands big role in the gaming • The ability to create • Esports has Market • These include BMW, Oligopoly industry new products relies become much Structure Porsche, NASCAR, • No extremely material heavily on the more mainstream F1, and Forza, Market Size $8.25B1 barriers to entry are manufacturers of in recent years as among others present, however gaming platforms well Industry • Highly dedicated CEO who > 10%1 • Inability to fully capitalize Growth is very connected to the on large increases in broader sim racing demand community

1https://3wnews.org/uncategorised/2670177/gaming-simulators-market-2020-global-industry-size-share-explosive-factors-of- key-players-future-trends-and-industry-growth-rate-forecast-to-2024/ 31 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • Endor was (and still is) a micro-cap stock without any • In late 2015, the first CSL wheel was English financials that is listed on a small stock exchange launched • Not many investors were aware of the stock at the Expanded • The CSL series was designed to be a time Downmarket slightly cheaper, albeit still quite • There was not a lot of mainstream recognition and expensive, alternative to its acceptance of gaming, and sim racing in particular extremely high-end ClubSport series • All of Fanatec’s products were extremely high-priced, • Fanatec began investing into marketing meaning their target market was even more niche than the Implemented their products through partnerships with general nicheness of the industry as a whole Marketing big names in the auto industry and on Campaigns large Esports stages Return Breakdown: Consensus vs Results • No marketing had been run prior to 2015 • Due to coronavirus shutting down all sports for a couple months, many turned to Esports and video games as a means to quench their thirst for competition COVID-19 • There were large races with pro drivers put No Analyst Coverage Boosted Sales on by large racing companies such as Considerably NASCAR and F1 • Sim racing was exposed to a broader audience than ever before • Many people now had the time to invest heavily into a resource consuming hobby

32 Back to List Endor Takeaways E2N is a Good Business – 4/5 Future Outlook • The quality of Fanatec’s products compared to its Can E2N Sustain its Advantages? competitors has created a loyal customer base • Fanatec has established itself as the • A historically niche market is becoming more mainstream premier sim racing accessory brand in • At the high price-point that many Fanatec products the world are sold at, any sizable increase in interest in sim • Quality standards will likely be kept racing will lead to top and bottom line growth for given the passion that the CEO has for E2N has a Strong E2N the industry and his company Customer Base • One thing that is a cause for concern, however, is the displeasure that has been expressed on their forum Can E2N continue to grow? regarding the terrible customer service and communication • Given the extreme increase in demand in regarding huge backorders and delays in shipment dates the past few months, and the upcoming • This might cause E2N to lose a decent amount of new console releases, E2N will customers, as sooner or later everyone will be going undoubtedly continue to grow in the near back to their normal lives future • Historically, when new generations of consoles come out, sales for E2N have spiked Is E2N poised to continue to outperform? • Given the increased interest in sim racing recently, and • Although multiple expansion played a large Prime Position to the upcoming releases of the PS5 and Xbox Series X, role in prior outperformance, the increase Capitalize on Fanatec should see an extremely high level of growth in sales was also substantial Corona • Because of the massive backorders and new customer base, • Given recent sales numbers and the future Fanatec has also stated that they are looking to hiring more growth possibilities, E2N will absolutely employees in order to continue to grow and service the continue to outperform demand that is and will be present

33 Owen Stimpson 4,712% 5 Year TSR TSXV:XBC Rank: 3/104

34 Xebec Adsorption Overview In Canadian Dollars

Xebec Adsorption Inc designs, engineers and manufactures EV / LTM Revenue products to transform raw gases into marketable sources of clean energy. The company has three reportable segments: Systems, 2019 Infrastructure and Support.

Statistic 06/08/2015 06/08/2020

Stock Price $0.07 $4.08 2015

Market Cap $2.76M $367.49M 0x 1x 2x 3x 4x 5x 6x Enterprise Value $2.69M $349.33M

Shares Outstanding 39.36M 90.07M

EV / LTM Revenue 0.19x 5.63x

EV / NTM EBITDA NA 32.19x

PE NA 46.21x

Statistic FY 2015 FY 2019

Revenue 11.35M 49.32M

EBITDA (2.6M) 4.65M

35 Xebec Business Model

Primary Product Context Sales by Division XBC is a renewable gas Design, engineers, and systems and equipment 23% Cleantech manufactures equipment company. systems used in the production of renewable natural gas. • Renewable natural gas is a carbon neutral natural gas 77% made from decomposing organic matter. Systems Support Support and maintenance • Methane from landfills, services for customers farms, etc. can be Support Sales by Geography that are using Xebec converted to clean products. energy. 17% • Designs and makes equipment that helps 38% customers create renewable gasses. 26% • XBC buys small service Develop renewable gas 19% companies to expand service Infrastructure assets to produce and sell capabilities for existing US Canada China Other RNG.1 customers, and to create recurring revenue. XBC is a highly capital-intensive business.

1. Planned segment but XBC does not have any RNG assets yet. 36 Low Threat Medium Threat Xebec Competitive Analysis High Threat

Competitive What’s Changed in Risks Competitive Landscape Barriers To Entry Advantages the Industry Renewable Gas Market Monopolistic • Capital intensive – • Climate change has Equipment Structure Competition need the capital to • Proprietary become an Industry create and develop technology. Market Size ≈$10.9B1 increasingly necessary products. prominent political Industry This industry consists of HSD1 • Human capital (i.e. • Ability to offer issue. Growth equipment manufacturers, skilled engineers continued • Global engineers, and designers of required). service and pressure to • Most competitors in both • Technological renewable gas equipment, • Regulatory burdens, maintenance. move towards RNG and renewable obsolesce. including both renewable and many contracts carbon natural gas (RNG) and hydrogen have negative are large and with neutral renewable hydrogen. operating margins. • Relationships • governments (which Regulatory energy • Relatively new industry that and contracts present bureaucratic changes. sources. is growing fast – competitors with major challenges). are fighting to scale. customers (i.e. • Paris Agreement • Technology is new signed in 2016; many • XBC one of the only governments, countries legislated companies with exposure to and there is a waste clean energy both RNG and renewable heightened risk of management, hydrogen. technological etc.). mandates with obsolescence. varying timelines.

1. Xebec’s own estimates; https://investors.xebecinc.com/wp-content/uploads/2020/06/2020-06-03-Investor-Presentation-English-Distribution.pdf 37 What Investors Missed

The Bear Thesis Four Years Ago: TheThe Actual Actual Story Story of of the the Last Last Five Five Years Years • Management identified the opportunity in renewable natural gas and incurred short • Unprofitable company – and even revenue is decreasing. term losses to make the switch. Capitalized on new • Xebec has existed for 50 years, there's no reason to think that now • Revenue was decreasing in oil and gas opportunity in related revenues. is the time they will grow. renewable natural gas • Management cut the segment to • XBC is a small company that purports to have a huge opportunity, focus on new Cleantech. but its very speculative and not worth the time nor the risk. • Cleantech revenue grown at 70% CARGR from FY2016 to FY2019. • XBC leveraged its legacy air drying and compressed air product lines to develop Return Breakdown: ConsensusConsensus vs Results vs Results XBC developed proprietary, best-in class renewable natural strong technology gas adsorption products. and saw the • Demand continues to increase, and now XBC opportunity early has one of the best products – enabling them to participate in the upside of the industry growth. • Concern over climate change has only kept increasing and demand for renewable natural Opportunity is not gas demand has increased in tandem. pure speculation • Many companies have already made commitment to increasing their renewable natural gas use.1

1. https://investors.xebecinc.com/wp-content/uploads/2020/06/2020-06-03-Investor-Presentation-English-Distribution.pdf 38 Back to List Xebec Takeaways XBC is a Strong Business- 4/5 Future Outlook Can XBC Sustain its Market Position? • Existing business was fine but XBC used it to pivot • XBC’s technology is proprietary and they are a first mover into the more lucrative, higher growth renewable in the space. Renewable gas bet gas industry. • Unclear to me, however, how proprietary the worked out • Ultimately changed organization from focussing on technology is or whether the technology is still air drying and oil and gas services to a renewable gas evolving quickly (which could render XBC’s company. technology obsolete). Can XBC continue to grow faster than the industry? • Revenue grown at 34% CAGR from 11M in FY2015 to • If XBC can sustain its market position as the leader in the over 49M in FY2019. industry and the company with the best technology, it will continue to capture much of the industry’s growth. • Natural gas utilities continuing their push into • Acquisitions in service will increase recurring revenue Revenue grown due to renewable natural gas, which increases demand for stream. macro trends renewable gas and for XBC’s products. • New technology could be invented by a competitor – difficult • Climate change legislation that increases demand for to access this risk given how new the industry is. renewable energy continues to be enacted around the world. Is XBC poised to continue to outperform the market? • Macro trends likely will remain positive. • If XBC can maintain its positioning as the leader, they will • The trends that contributed to XBC’s success show no likely outperform. But there is the risk of potential new sign of slowing down. entrants. Runway for future growth • Strong backorder volume: 100M in order backlog. is clear • XBC needs to continue to show positive growth to avoid • Acquisition strategy to increase recurring service multiple contraction given its current 35x NTM EBITDA revenue. multiple.

39 Max Schieferdecker 4,611% 5 Year TSR ASX:APX Rank: 4/104

40 Appen Overview

Appen is a data management company based in Chatswood, NTM EV/EBITDA Multiple NSW, Australia, that provides machine learning and artificial intelligence applications for technology companies, auto manufacturers, and government agencies. 2020 25.6x

Statistic 6/8/15 6/8/20 2015 6.8x Stock Price 0.67 AUD 28.34 AUD 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x 30.0x Market Cap 64.23M AUD 3.45B AUD

Enterprise Value 55.58M AUD 3.39B AUD

Shares Outstanding 95.87M 121.65M

EV / NTM Revenue 0.94x 4.59x

EV / NTM EBITDA 6.84x 23.79x NTM P/E 13.06x 40.57x Z

Statistic FY 2015 FY 2019

Revenue 82.72M 535.50M

EBITDA 13.87M 83.74M

41 Appen Business Model

Primary Products Context Sales by Category • Annotated data APX teaches machines (AI) how to 12.6% 0.1% Relevance used in search interpret real world actions technology • APX utilizes an online independent contractor model to collect and label • Annotated speech 87.3% and image data data used in recognizers, • Relevant applications include search machine engine, social media applications, and Relevance Speech & Image Other translations, e-commers Speech & machine Image • Speech & Image applications include Sales by Geography translation, speech the creation of more engaging and synthesizers, and fluent devices including internet- 11.1% 1.4% other machine– connected devices, in-car automotive learning systems, and speech-enabled technologies consumer electronics 87.5% • Provides a data set of words, accents, etc. for products like USA Australia Other Siri, Alexa, etc. • These applications constantly need to APX is a capital light business there as there are low be refreshed to maintain relevance to overhead costs and contractors are relatively cheap the time it is operating in

42 Low Threat Medium Threat Appen Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry Big Data Analytics

The players in this industry offer data analysis of large data sets to enable companies to make better business decisions. • Global workforce of over 1 • Regulation of the AI • Reputation and dominant million contractors industry could harm existing players can make • Represents 130 Appen’s customer base it hard for new players to countries and 180 • Larger presence • Changes in independent Market Monopolistic gain market share languages of AI in everyday contractor laws for tech Structure Competition • Highly advanced • life Broadest set of AI tools in companies who rely on technology is needed to be Market Size $47.1B1 the space as most them as a core part of their competitive competitors tend to business Industry specialize > 10%1 Growth

1https://www.prnewswire.com/news-releases/the-global-big-data-analytics-market-2027-a-105-billion-opportunity-assessment 43 What Investors Missed The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years

• In November 2017, Leapforce was • APX was a nano-cap stock when it IPOed in January, 2015 acquired for $80m, which • There was not a lot of time to nor knowledge of the substantially grew Appen’s “crowd” company for the market to effectively value it Key to over 1.2 million from 400,000 • The little data that was present since the IPO (H1 y/y growth) Acquisitions • In April 2019, Figure Eight was was not overwhelmingly impressive enough to warrant a large acquired for $300m, which greatly enhanced their annotation price increase capabilities

Return Breakdown: • Large players in the tech industry Consensus vs Results who utilize Appen’s services began developing more projects in the AI space Strong • Because of the large impact that economies of scale play in this business Increase in model due to the low overhead costs, Demand the incremental margins were substantial • Both of these factors contributed to a large overachievement of earnings estimates, particularly in 2018

44 Back to List Appen Takeaways APX is a Great Business – 5/5 Future Outlook • The value that Appen provides to the large tech Can APX Sustain its Advantages? companies is extremely high and not present • Appen has been operating in the space elsewhere for a long time (24 years), so it has • It has been trusted by Apple, Google, and the developed a reputation, “crowd”, and U.S. government set of tools that would be difficult for APX has a Moat • Without Appen, these companies would be spending a any competitors to overtake lot more money and resources to come up with a more Can APX continue to grow? inferior data set • The tailwinds behind the AI industry are • The collection and annotation of data is vital to extremely powerful the success of these businesses, so Appen has a lot of supplier power • Appen will undoubtedly grow in proportion to or faster than the industry • The Speech and Image segment of the business does not as a whole given how critical its value-add represent a large amount of revenues at the moment, is to the industry but there is a large market for those services Is APX poised to continue to outperform? • Expansion into the relatively untapped China market • Although there has been some multiple (2nd largest AI market after US) is being invested in Promising Future expansion, its current multiples are still • High cash balance and no debt puts it in a great position Opportunities to invest in future growth without as much stress on the below their ATHs cash flows of the business • The market can only account for so much • Recently started investing more heavily in their potential given the uncertainty of their sales and marketing operations in order to plans, and the S&I business and China increase their client base even more market represent huge growth potential

45 Owen Stimpson 2,406% 5 Year TSR NGM:FNOX Rank: 5/104

46 Fortnox Overview Currency in Swedish Krona

Fortnox AB operates as a cloud-based platform for financial EV / NTM EBITDA administration for small businesses, accounting firms, associations, and schools. It offers various programs and services 2019 for billing, bookkeeping, payroll, and expense management.

Statistic 04/01/2016 06/08/2020

Stock Price 16.1 Kr 272.00 Kr 2015

Market Cap 940.52M Kr 16.26B Kr 0x 10x 20x 30x 40x 50x 60x Enterprise Value 906.56M Kr 16.17B Kr

Shares Outstanding 58.42M 59.79M

EV / NTM Revenue 6.15x 22.16x

EV / NTM EBITDA 26.24x 51.91x

PE 39.51x 81.79x

Statistic FY 2015 FY 2019

Revenue 144.9M 555.7M

EBITDA 25.5M 177.4M

47 Fortnox Business Model

Primary Product Context

Variety of cloud-based SaaS administration services for FNOX is a cloud based administration All of FNOX’s revenue is in Sweden and Services small businesses and software company. all is generated through SaaS services. accounting firms. • Current expertise is in accounting The company does not have any other software used by accounting firms in reportable segment nor any substantial Sweden sales in another country. • 50% of the sector already uses FNOX software in Sweden. FNOX is a medium capital business solely because of the capital • Also leading supplier of ERP systems requirement to develop new software. for small businesses in Sweden.

• FNOX working to increase modules and features for existing products. • Also has network of partners that develop software that ports into FNOX software. FNOX software dashboard.

48 Low Threat Medium Threat Fortnox Competitive Analysis High Threat

Competitive What’s Changed in Risks Competitive Landscape Barriers To Entry Advantages the Industry

• Upselling more • Major Market • High switching costs: Oligopoly products to competitor Structure once a company ERP Systems customer base. (i.e. SAP or begins to use FNOX Market Size ≈402.68M Kr1 Oracle) make Market in software, they incur a major push • Increased digitization Industry costs if they want to • Wide ranging Sweden MSD2 into Swedish of small companies. Growth switch. customer base. Participants supply a variety of small • Especially in • Product offering: new different ERP systems to business finance and • Major international customers may want a companies operating in • Industry market. administration competitors, but few focused full suite of solutions – Sweden. standard: (FNOX’s on Swedish market. but its challenging to accounting firms • Technological industry): one in • Many competitors offer one start with a range of hesitant to use obsolesce. two small service, few with full suite of products. something else. business owners options. • FNOX has compiled believe those • Many competitors’ • Downturn in customer feedback • Ecosystem of areas are software ports into Swedish and is in tune of what software that greatest FNOX software so economy the market connects to opportunity for both can be used wants/needs. (bankruptcies digitization. simultaneously. FNOX software. • Low-start up capital already required; many major mentioned as • Churn is very international players. source of low. churn).

1. https://www.statista.com/forecasts/966871/erp-software-market-revenue-in-sweden 2. Based on historical growth rates 49 What Investors Missed

The Actual Story of the Last Five Years The Bear Thesis Four Years Ago: • World has become more digital every year • Niche company with some growth prospects – but not that many. Digitization has and business has digitized as well. • Major companies will prioritize digital transformation, but become increasingly small companies will not. • FNOX notes that digitization is especially important, and important for small business to remain popular • FNOX’s product offering is not that large and their growth will be competitive – they can’t afford to lose the stunted by the lack of breadth. digital edge to larger competitors. • And competitors will create the software that FNOX doesn’t • FNOX did not try and boil the ocean at the have, and crowd them out of the market. start – instead focusing on financial and • Products are also not particularly revolutionary – another FNOX product accounting administration software. counterpoint to their growth plan. offering was focused, • As FNOX’s customer base has grown they’ve enabling them to expanded their product offering each year. grow • ARPU grown to 160Kr in Q1 2020, 37% Return Breakdown: Consensus vs Results growth since 2016. • Revenue grown at 31% CAGR since FY2015. • FNOX has partnered with over 400 companies who have created software that ports into FNOX software. FNOX has created • FNOX can connect existing customers network effects with these companies for specific through its product products they do not offer. offering gap • The customer becomes more entrenched in FNOX’s ecosystem while the partner gets a new customer. • Churn rate is very low.

50 Back to List Fortnox Takeaways FNOX is a High Quality Business- 4.5/5 Future Outlook • High barriers to entry due to switching costs and Can FNOX Sustain its Market Position? network effects. • FNOX’s moat is strong. • FNOX’s customers use FNOX’s software for critical • FNOX benefits from network effect and switching costs. FNOX has a moat tasks – like accounting, and inventory management. • FNOX operates in the Swedish small business and • Become further entrenched in FNOX accounting industries, which is more niche and less ecosystem by using 3rd party software for competitive than other international markets. other tasks that ports into FNOX. • FNOX set out to capture new customers, increase product portfolio, and then upsell existing customers Can FNOX continue to grow faster than the industry? with further services. • FNOX can continue to increase its ARPU by creating new FNOX has laid out a simple • Customers grown from 155k in FY2016 to 313k in ancillary software products. plan and followed it FY2019. • FNOX is more likely to capture new market share given that • Multiple new products introduced and ARPU grown to their software’s value is continually bolstered by partner companies. 160Kr in Q1 2020, 37% growth since 2016. • FNOX can continue to incrementally expand its product line Is FNOX poised to continue to outperform the market? • Given market share, FNOX’s has best sense of • FNOX is in an industry that is minimally affected by Covid-19. needs of current Swedish small businesses due to • FNOX can likely sustain its market position and continue to FNOX has a clear runway feedback they receive. grow both its user base and ARPU. for growth • FNOX’s revenue is recurring, and at low incremental cost • At 21.5x NTM Revenue FNOX will need to continue its fast which has enabled gross margins >50%. growth and maintain margins – a new formidable competitor, • Can continue to benefit from network effects as more some form of technological obsolesce, or a major breach could partners develop software that works with FNOX make the company underperform. software.

51 Max Schieferdecker 2,226% 5 Year TSR NASDAQCM:KRMD Rank: 6/104

52 Repro-Med Systems Overview

1 Repro-Med Systems, which operates under the name Koru LTM EV/EBITDA Multiple Medical Systems, is a medical devices company that is focused on ambulatory infusion and is based in Chester, NY. 2020 89.9x

Statistic 6/8/15 6/8/20 2015 9.6x Stock Price $0.43 $11.02 0.0x 20.0x 40.0x 60.0x 80.0x 100.0x Market Cap $16.53M $437.44M

Enterprise Value $13.71M $431.85M

Shares Outstanding 38.04M 39.87M

EV / LTM Revenue 1.22x 17.61x

EV / LTM EBITDA 9.58x 89.94x LTM P/E 21.74x 110.20x Z

Statistic FY 2015 FY 2019

Revenue 12.25M 23.16M

EBITDA 1.45M 4.34M

1No sell-side coverage in 2015, so LTM multiples are used 53 Repro-Med Systems Business Model

Primary Products Context Sales by Category KRMD improves the lives of • Syringe infusion system patients around the world designed for the self- administration of • The Freedom Integrated Infusion 100.0% Freedom medicine System allows chronically-ill System • Tubing and needles are patients to self-administer single use and are a source subcutaneous infusion therapy in of recurring revenue their homes Freedom System • It’s comprised of a syringe driver, either the FREEDOM60 or Sales by Geography FreedomEdge, needles (HIgH-Flo Subcutaneous Safety Needle 16.0% Sets), and tubing (Precision Flow Rate Tubing) • The system is portable, easy to 84.0% operate, has an impeccable safety profile, and is effective U.S. International • The system is sold both directly and through distributors to pharmacies and other home KRMD is a capital intensive business as KRMD’s Freedom System with a Freedom60 driver infusion providers manufacturing is performed in-house

1 2017 figures were only for the 10 months ending 12/31/17 due to a change in the fiscal calendar of KRMD 54 Low Threat Medium Threat Repro-Med Systems Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry Medical Device Manufacturing • The industry is heavily • Heavily regulated industry, regulated by the FDA and which could in the future The players in this industry offer other government have margin compression • Being a smaller player in a support devices for a variety of agencies with the implementation of highly competitive medical needs and issues. • Many companies already new health car policy industry, KRMD had to and have large research teams • did find a profitable niche Use of the products relies working on the profitable and was the first to entirely on the demand and ideas supply for certain drugs, capitalize on the home • Ongoing shift • There are high initial such as Hizentra® and from institutional Market Monopolistic care market investment costs, a high Cuvitru® care to home and Structure Competition • The Freedom System is a level of competition, and a • alternate site care lot cheaper, simpler, and Heavy distributor Market Size $45.3B1 fast rate of technological convenient than its concentration, as 4 change in the industry distributors accounted for Industry competitors LSD1 • However, the Freedom 67% of FY19 sales Growth • Partnerships with several System is not an extremely • drug manufacturers Move to new office in the complicated product, and next couple years could it is possible for copycats slow production and/or to steal market share incur large transition costs

1 https://my-ibisworld.com/us/en/industry/33451b/industry-at-a-glance 55 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years

• KRMD used to be a microcap company with no sell-side • This is evident in the revenue coverage and has been considered a penny stock for its entire breakdown on this slide public life • This is likely due to the increased • Worries that management was not trying to maximize awareness of the stock and the shareholder value, as there was a long period of revenue promising potential for growth in growth but stagnant profit growth Large Multiple the future • KRMD is a one-product wonder with little ambition to expand Expansion • The initial large jump in their offerings and end market multiples/price can be directly correlated to the company’s first real investor relations Return Breakdown: Consensus vs Results presentation at the LD Mirco Invitational on 6/5/19 • A clear strategic plan for the near future was presented to investors for the Q2 2019 conference call Definitive • This laid out enticing financial goals such as a $50M run rate and a gross Growth Plan margin of 70%+ by the end of 2022 Laid Out and 20% y/y organic revenue growth • This plan instilled confidence into investors that creating shareholder value was important to them

56 Back to List Repro-Med Systems Takeaways KRMD is a Good Business – 4/5 Future Outlook

• It operates in a niche segment within the broader Can KRMD Sustain its Advantages? medical devices industry and has good relationships • KRMD is well liked by many in the with many drug manufacturers that KRMD’s products health care and drug manufacturing are designed to help administer world due to its easy-to-use KRMD has a Moat • It has been tangled up with lawsuits over the past characteristics several years with a major competitor over patent • With the high price of many issues, but most, if not all, of the decisions have gone competitors, KRMD stands out with its KRMD’s way simpler and more cost-effective solution • The medical world is onboard with subcutaneous over Can KRMD continue to grow? IV treatment, as it is cheaper for everyone involved • KRMD has a very promising future given • Soon, more medications will be able to be administered the low market penetration that it through subcu methods currently has • The current market is also not very penetrated • There is huge growth potential right now, as, according to KRMD’s investor internationally that has not been Strong Upside presentation, only 70,000 out of 270,000 (26%) conquered yet as well patients in the U.S. are receiving immunoglobulin Potential Is KRMD poised to continue to outperform? therapy to treat their Primary Immunodeficiency • Diseases (PIDD) Even though much of its high TSR over the past 5 years came from multiple expansion, • Those numbers also don’t take into account patients with Chronic Inflammatory its fast top-line growth will still allow it to Demyelinating Polyneuropathy (CIDP), which, outperform the market (both at current while being a smaller overall number relatively, multiples and even with some multiple can still be treated by the Freedom System contraction)

57 Elizabeth DeSouza 2079% 5 Year TSR CPH:CHEMM Rank: 7/104

58 ChemoMetec Overview

ChemoMetec A/S, headquarter in Allerod, Denmark, designs, LTM EV/EBITDA Multiple develops, and produces instruments for a range of applications in cell counting and evaluation. 2020 66.6x

Statistic 6/8/15 6/8/20 2015 61.0x Stock Price 17 kr 320 kr 58.0x 60.0x 62.0x 64.0x 66.0x 68.0x Market Cap 295.29M kr 5.04B kr

Enterprise Value 296.50M kr 4.75B kr

Shares Outstanding 17.37M 15.75M

EV / LTM Revenue1 5.84x 24.14x

EV / LTM EBITDA 61.01x 66.56x LTM P/E 97.39x 107.12x Z

Statistic FY 2015 FY 2019

Revenue 61.239M kr 175.513M kr

EBITDA 7.385M kr 61.155M kr

1NTM multiples not available 59 ChemoMetec Business Model

Primary Products Context 1 • Specially developed CHEMM specializes in microscope and development, production, and sale analytical technology or analytical equipment for cell Analytical • Instruments & counting Equipment disposable articles such • Products are aimed at simplifying as plastic cassettes and cell analytics by combining glass slides technology and components to create complete systems • Customers are in the fields of cell based immunotherapy, cancer, stem cell research, drug development, and quality control of products such as beer and milk • Long term relationships with some customers, but also make sales through their website • Main markets are addressed in house, but work with distributers CHEMM is a moderately capital intense business for other markets as it produces some products, but also receives ChemoMetec volume-calibrated single-use Via1-Cassette components from subcontractors

1Exact revenue breakdown not found, graphics taken from CHEMM 2018/2019 annual report extract 60 Low Threat Medium Threat ChemoMetec Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry Life Science Tools & Services

The players in this industry are involved in drug discovery, • High quality and precision • Development of development, and production by analytical instruments new therapies, providing analytical tools, provided by CHEMM give including cellular instruments, consumables, supplies, • Technology requires their customers a • Faulty equipment causing immunotherapy and contract research services significant R&D to develop competitive advantage imprecise measurements • Allocation of • Strict regulatory • CHEMM products help could damage brand more resources environment immunotherapy reputation and thus for cell counting Market • Relationships and companies achieve higher negatively impact current and cell analysis Oligopoly Structure reputation are very quality and precision, and future relationships within customer important and take time to ultimately aiding them in • Concentrated customer companies Market Size $461.97B1 build the regulatory process base in the life sciences • Push for Industry • Geographic proximity to field digitalization & > 10%2 Growth customers makes for automation of strong relationships and analytical good service processes

1 https://eresearch.fidelity.com/eresearch/markets_sectors/sectors/industries.jhtml?tab=learn&industry=352030 61 2YTD What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • In 2015, CHEMM was a small company with a limited geographic reach and product portfolio • Niche market with specific uses for CHEMM technology • Structural changes increasing • Unsure how the technology would be accepted by the demand for analytical industry equipment • Unsure if the need for cell analytic technology of this sort • Industries CHEMM serves are facing increasingly strict would be needed in the long run regulatory environments, • Some of the uses of CHEMM software were yet to exist increasing demand for CHEMM themselves products Increased 1 • Immuno-based cell therapy is a EPS vs Share Price Demand for key growth driver for CHEMM Return Breakdown: Products • To capitalize on this, CHEMM has worked to involve themselves with customers from the very beginning of the development process, making them an integral part of the end product and ultimately the customer’s operations

1EPS estimates not available 62 Back to List ChemoMetec Takeaways

CHEMM is a Great Business – 4.5/5 Future Outlook Can CHEMM Sustain its Advantages? • CHEMM technology has found its niche in cell • Patented technology analytics for immunotherapy • Strong relationships with customers • The demand for their technology in this space CHEMM has a Niche has increased over the last five years Can CHEMM continue to grow? • At the same time, CHEMM technology could • Growing into the immunotherapy product be applied to many other industries and fields space • Growing number of countries approving immunotherapies • Margin expansion and revenue growth over the • Launch of NC-202 product has CHEMM poised last five years show the success of CHEMM’s to continue growing revenue business • New and updated products in the pipeline • Very strong gross profit and EBITDA margins at will grow CHEMM revenue once released 90.38% and 34.84% respectively for FY 2019 Strong Financial (up from 85% and 12% respectively in 2015) Is CHEMM poised to continue to outperform? Growth • Consistent topline growth over the last five • Very high PE multiple could indicate CHEMM years, with revenue growing 55.7% in 2019 to is currently overvalued 175.51M DKK • CHEMM has not yet reached all its possible • With such strong financial results, the CEO customers and has continued to develop new proposed, for the first time in company history, and profitable products, making it seem likely to issue a DKK 3 per share dividend in 2019 that they can continue to outperform

63 Owen Stimpson

2,022% 5 Year TSR LSE:GAW Rank: 8/104

64 Games Workshop Overview

Games Workshop Group PLC (often abbreviated as GW) is a NTM EV/EBITDA Multiple vertically integrated British manufacturer of miniature wargames, based in Nottingham, England. Its best-known 2019 products are Warhammer Age of Sigmar and Warhammer 40,000.

Statistic 06/08/2015 06/08/2020 2015 Stock Price £5.02 £75.6

Market Cap £160.32M £2.47B 0x 5x 10x 15x 20x 25x 30x Enterprise Value £151.91M £2.47B

Shares Outstanding 32.06M 32.68M

EV / NTM Revenue 1.24x 9.39x

EV / NTM EBITDA 6.43x 25.31x

PE 12.28x 39.90x

Statistic FY 2015 FY 2019

Revenue 119.1M 256.6M

EBITDA 21.4M 90.1M

65 Games Workshop Business Model

Primary Product Context Sales by Division Customizable miniature figures based on fantasy GAW is a hobby company. 18% Miniature characters that can be Figures collected, painted, used in • GAW’s product appeal to a specific 47% games, and used as props in subset of the population (i.e. 34% 1 models. “middle class nerds”). • The endless collectability, painting, Trade Retail Online games, and models to be created give hobbyists continued entertainment. Sales by Geography • GAW’s retail stores serve as 38% community hubs for hobbyists to 25% come together and socialize over their miniature figures.

• GAW is vertically integrated and 25% 11% controls supply chain from Sample GAW miniatures manufacturing to retail. NA Rest UK Europe

1. https://www.theguardian.com/lifeandstyle/2019/jan/21/heroin-for-middle-class-nerds-how-warhammer-took-over-gaming-games-workshop 66 Low Threat Medium Threat Games Workshop Competitive Analysis High Threat

Competitive What’s Changed in Risks Competitive Landscape Barriers To Entry Advantages the Industry

• Fans of games are Market • Video games Oligopoly loyal –and dedicated. • Hobby and Structure have/are taking GAW has made the miniatures market Market Size ≈$1.49B1 market share. Games Market • • Strong network Scale enables more accessible: Industry GAW to innovate The industry consists of LSD1 effects: the more • Simpler game Growth • Does not appeal participants a game more than its rule format. collectible games, hobby board to youth due to games, non-collectible has the better it competitors. • popularity of Painting miniatures, hobby card and becomes as there are - GAW games are the top two video games; miniatures dice games, and roleplaying more players to play • games in the miniatures GAW’s vertical fanbase getting made easier. games. against. market. integration older. • Cosmetic allows them to overhaul of • High switching costs: control retail - Fantasy Games and WizKids • Designs are once a player has distribution. locations. have competing products stolen and/or invested time and • but none threaten GAW’s copied to some Widened grip on market share. money in one game, extent by a price point switching to another competitor. range of becomes less products. attractive.

1. Only North America ; https://icv2.com/articles/news/view/43024/hobby-game-sales-total-1-5-billion-2018 67 What Investors Missed

The Actual Story of the Last Five Years The Bear Thesis Five Years Ago: • Age of Sigmar has outperformed Fantasy • The discontinuation of GAW’s oldest game, Warhammer Fantasy Battle, and the simpler format has Battle, will alienate existing loyal fans. And the replacement, Age of attracted new fans. Sigmar, will fail to attract new fans. New products have • Miniature releases across product lines 1 • GAW is disconnected from its fanbase – resulting in poor new been a success have been “stellar.” product releases. • Age of Sigmar’s best changes have been incorporated into Warhammer 40k which • Transition to “one-man” store model will make the stores less has improved the game. profitable and destroy the community atmosphere. GAW engaged with • GAW has become far more engaged with its the fanbase fanbase through social media. Return Breakdown: Consensus vs Results • GAW’s focus on quality rather than quantity of employees proved successful. • Focus on cutting costs by minimizing Store model helped expenses on salaries, rent (on offices and GAW cut costs stores), and mass advertising has worked: EBIT margins have increased from 13.8% in FY 2015 to 31.7% in FY 2019. • GAW has begun licensing its IP which has provided GAW with a runway for growth, and Licensing IP almost unlimited potential upside. • Licensing IP flows almost entirely to the bottom line.

1. https://www.miniaturemarket.com/reviewcorner/the-games-workshop-renaissance-editorial/ 68 Back to List Games Workshop Takeaways GAW is a High Quality Business- 4.5/5 Future Outlook • High barriers to entry have given GAW a wide Can GAW Sustain its Market Position? moat – and essentially no direct competition. • GAW’s moat is strong. • GAW has loyal fans, benefits from network effects, • The niche nature of the industry discourages potential GAW has a wide moat and players are prevented from trying other games new entrants. due to high switching costs. • GAW has been the leader in fantasy miniature figures and • Stores act as “community hubs” – fans that stop related games for 20+ years. playing the game suffer social consequences as well. Can GAW continue to grow faster than the industry? • GAW has cut store costs by having less employees, • GAW’s moat impedes new competitors from competing with GAW has become more shutdown underperforming stores, and minimized rent. them. cost efficient • EBIT margins have increased from 13.8% in FY 2015 to • Prospective players will likely buy GAW because few 31.7% in FY 2019. alternatives are available. • GAW’s scale enables them to innovate more than their • New Age of Sigmar game a major success – attracting new competitors and capture more network effects. fans, and enabling GAW to improve its core “40k” game. • Existing players will continue to purchase GAW games • GAW has begun to leverage royalties: and products. • Royalty income increased from £1.7 million to Is GAW poised to continue to outperform the market? £11.4 million from FY2018 to FY2019. GAW has created a • GAW’s moat and efficient cost structure protects the company • Video games remain a major avenue for potential runway for growth from downside. growth. • Significant runway for growth in licensing GAW’s IP. • GAW is a high quality business with a strong moat, • Licensing has already rapidly scaled rapidly, flows efficient business operations, and a strong runway almost entirely to the bottom line, and strengthens for future growth. GAW’s brand which helps its core miniature business – justifies their premium multiple.

69 Max Schieferdecker 1,715% 5 Year TSR STO:GENO Rank: 9/104

70 Genovis Overview

Genovis is an international biotech company based in Lund, NTM EV/Sales Multiple Sweden that develops, produces, and sells tools for developing drugs for customers in the medical device and pharmaceutical industries. 2020 25.4x

Statistic 6/8/15 6/8/20 2015 2.9x Stock Price SEK 2.00 SEK 31.80 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x 30.0x Market Cap SEK 43.69M SEK 2.08B

Enterprise Value SEK 42.15M SEK 2.02B

Shares Outstanding 21.85M 65.84M

EV / NTM Revenue 2.85x 25.39x

EV / NTM EBITDA N/A 91.91x NTM P/E N/A 213.71x Z

Statistic FY 2015 FY 2019

Revenue 13.27M 60.55M

EBITDA -23.55M 17.09M

71 Genovis Business Model Primary Products Context Sales by Category • Enzymes with unique GENO helps bring safe and effective medicine to the market properties that can be 16.0% used as biological • GENO talks to drug developers tools to support the SmartEnzymes and discovers new needs for 84.0% research and enzymes, which they then development of develop complex pharmaceuticals • Genovis enzymes are used in Parent Company Subsidiaries many applications throughout the drug manufacturers path to Sales by Geography market, including: • Initial screening process 23.5% for clone selection • Sample preparation for analysis of antibody 76.5% binding capacity • Monitoring and Sweden Other Countries development of the manufacturing process GENO is a capital intensive business as A couple of GENO’s flagship products, FabRICATOR and • Quality control during production is done in house GlycINATOR production

72 Low Threat Medium Threat Genovis Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry Life Science Tools

The players in this industry offer analytical tools, instruments, • High-quality products and a consumables and supplies that are robust patent portfolio • High currency risk due to used in drug discovery, development, • No true competitors most sales taking place and production. that offer comparable outside of Sweden technology • Many members of the • Increased need • High levels of expertise • Great customer relationships Board and senior for quality within the biotech field allow for close collaboration management, including analyses earlier Market Monopolistic are required to break in and insights into new needs the chair, do not own in the Structure Competition • High up-front R&D costs and trends shares of GENO development of Market Size $51.5B1 • More precise results in a • Incentives may not biological drugs shorter period of time be aligned with Industry HSD1 those of Growth • Strong supply chain that allows for one-day delivery shareholders of enzymes

1https://www.grandviewresearch.com/industry-analysis/life-science-tools-market 73 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • GENO added more staff to their S&M • Extreme micro-cap company ($5.27M) that is based in and team around the world traded in Sweden Increased Sales • There was a large increase in • Not a lot of awareness about what the company does and Marketing technical marketing materials for and its upside potential due to little to no marketing Presence conferences and customer meetings done by the company, both to investors and • Lead to increased knowledge of potential customers the firm from outsiders • Stagnating path to profitability in the past couple of years • In Q3 2019, GENO received an order for SEK 13M from a global pharmaceutical company Very Large Consensus vs Results • The enzymes are to be used in Return Breakdown: Customer in the manufacturing process of Engaged a biological drug • This order helped catapult GENO’s growth rate • In April 2020, GENO acquired San Diego based QED Bioscience for SEK 20M in cash Timely • QED has a variety of Coronavirus Acquisition research tools, which are currently in very high demand, in its product portfolio

74 Back to List Genovis Takeaways GENO is a Very Good Business – 4.5/5 Future Outlook Can GENO Sustain its Advantages? • GENO’s products mainly compete with older • Given the high barriers to entry of the technology industry, GENO likely can sustain its • Higher quality results in a shorter amount of advantages time • If, however, competitive, similar GENO has a Moat • A partnership was formed in 2019 with one of the products do enter the market, the largest players in the industry, Thermo Fisher advantages may not be sustained Scientific (TMO) • Focus on improving quality analyses Can GENO continue to grow? • Potentially a target for an acquisition by TMO • GENO is still in its infancy when it comes to growth • There is a lot of upside potential given the increased need for high-quality analysis • In 2019, GENO expanded their premises and built a early in the development process brand-new production lab • Provides GENO with the ability to have better Is GENO poised to continue to outperform? quality control throughout the supply chain Substantial Capacity • Although multiple expansion has played a • Allows for an even more agile response to the for Future Growth large role in the past, the high growth needs of their customers figures will continue to be present • These facilities are key for accomplishing their goals of organic sales growth > 25% and 3 new product launches • These high figures will be due to both annually organic growth and inorganic growth from acquisitions (QED)

75 Owen Stimpson

1,678% 5 Year TSR ENXTPA:XIL Rank: 10/104

76 Xilam Overview

Xilam is a French production company that specializes in LTM EV/EBITDA Multiple animated television series and feature films. It creates, produces, and distributes children’s and family entertainment content in 2D 2019 and 3D formats for TV, film, and digital media platforms.

Statistic 06/08/2015 06/08/2020 2015 Stock Price €2.21 €38.30

Market Cap €9.31M €189.17M 0x 5x 10x 15x 20x 25x Enterprise Value €21.63M €200.85M

Shares Outstanding 4.23M 4.85M

EV / LTM Revenue 1.66x 6.56x

EV / LTM EBITDA 8.61x 20.71x

PE 6.54x 27.66x

Statistic FY 2015 FY 2019

Revenue 11.3M 22.3M

EBITDA 10.7M 26.7M

77 Xilam Business Model

Primary Product Context XIL is a fully integrated Sales by Division New Creating new and original animation studio Production animated productions. 22% • Creates original content and Licensing distribution uses few third-party rights rights of past productions agreements. Catalogue • XIL prices to cover the that are in the company 77% catalogue. majority of production costs, and then realizes extra profit New Productions Catalogue through licenses the rights. • Controls the entire Sales by Geography production process giving 5% them a tight grip on costs. 29% • Distributes the content to television and major SvoD 39% platforms. • Continues to distribute past 27% productions from the

catalogue and uses presale France Europe Americas Asia-East-Africa agreements to finance new Sample Xilam 2019 productions. productions. High capital required for creating new productions; XIL is a capital-intensive business.

78 Low Threat Medium Threat Xilam Competitive Analysis High Threat

Competitive What’s Changed in Risks Competitive Landscape Barriers To Entry Advantages the Industry

• A major • Long production production Market • Scale enables Movie & TV Oligopoly cycles means high flop can Structure XIL to continue • Leverage increasingly Production start up capital is damage to innovate. lies with content Market Size 60.8B1 required. reputation. • XIL has retained creators, not Industry • Human capital MSD2 top talent. distributors. Operators in this industry Growth requirements are • Distributors, • • Rise of produce and distribute movies high; getting talent Strong such as and television content that is production streaming has can be difficult in Netflix, move begun to sold/licensed to distributors, • In the US, five companies many markets. history (i.e. all production such as streaming networks or hold 77% of market share Oscar commoditize • Brand matters: can’t in house. cable networks. for all movie production. nominated distribution. secure contracts films). without production • Industry • XIL does not have the • XIL has • Content is becoming history and brand but trends away immense scale of the biggest relationships globalized in tandem can’t create from studios but is large for a with major with distribution. production history animation / niche player distributors (i.e. and build brand long-form • Less than 1% market Netflix). without contracts. video. share.

1. Only USA; IBIS World 2. Average of TV and Movie Production industry growth rates of 6.0% and 2.4%, respectively. 79 What Investors Missed

The Actual Story of the Last Five Years The Bear Thesis Five Years Ago: • Original content revenue has increased • XIL is a niche animation studio but has, and will not, land consistent 125% from 6.9M in FY2014 to 15.5M in major new production contracts. FY2019. • In 2015, XIL secured contracts with • Long-form tv is dying out and being replaced by short-form content XIL has landed Nickelodeon, Disney, Cartoon Network; such as YouTube; demand for XIL’s films will stagnate or decrease. major contracts in 2019, with Netflix and Amazon. • XIL’s 13m FY 2014 revenue is 26% lower than FY 2001. • I Lost My Body Netflix film won critical • XIL will be squeezed out by major movie and animation studios, acclaim: first animated Grand Prix winner and distributors will integrate vertically to control the production at Cannes Film Festival. process. • Rise of streaming has begun to commoditize distribution and made content more Return Breakdown: Consensus vs Results Demand for content valuable, as it is the differentiating factor. is greater than ever • Content is being used by major players (i.e. Apple) to minimize churn.

• Demand for content, especially for streaming, has outpaced ability to create it – solidifying consistent demand for XIL’s work. New content • Industry has globalized giving XIL more distribution industry access to international markets which structure benefits XIL represented 73% of total sales in FY2019 (up from 56% in FY2017). • YouTube is a new catalogue revenue stream which grew 17% from FY2018-FY2019.

80 Back to List Xilam Takeaways Xilam is a Good Business – 4/5 Future Outlook • Strong barriers to entry impede new animation Can XIL Sustain its Market Position? studios from opening. • XIL’s moat is strong. • Immense capital and experience is required to open a XIL has a moat • The capital requirements and the challenge to secure new studio – impeding new entrants. contracts without production history impedes new • Content quality reputation must be built over time – but entrants. without it , it’s difficult to secure new contracts. • XIL has greatly improved its reputation with the • XIL has secured major new contracts as streaming critical and commercial success of recent productions. companies fight to offer the highest quality of content. Can XIL continue to grow faster than the industry? • XIL has capitalized on the globalization of content XIL has benefited from • Legal changes made by the EU will enable XIS to grow consumption; international sales now represent 73% of industry structure faster than the industry: total sales. changes • By Jan 2021, all platforms in France must spend at • Animation is also particularly well suited for global least 25% in French production, of which 50% must consumption given the ease to “redub” the be independent production, like XIS. voiceover in animation. • 30% of content on platforms in the EU must be • As more major contracts are signed, XIL’s catalogue European origin. increases in size and value. Is XIL poised to continue to outperform the market? • YouTube is a new revenue stream for XIL’s catalogue. • Streaming wars show no sign of slowing down as new • The critical acclaim of XIL’s recent content will increase platforms continue to launch (i.e. HBO Max). XIL has created a both demand and value for their content going forward. • XIL content library will also become more valuable, runway for growth • Demand increase also magnified by “streaming increasing catalogue revenue. wars.” • Aforementioned legal changes, enhanced reputation, and • Will likely offset some of the high capital required to contacts will drive original production revenue. produce content which has historically depressed • 40x FCF valuation means multiple may contract if growth cash flow not fully realized.

81 Max Schieferdecker 1,646% 5 Year TSR NASDAQGM:FIVN Rank: 11/104

82 Five9 Overview

Five9 is a leading provider of intelligent cloud software for NTM EV/Sales Multiple virtual contact centers based in San Ramon, CA. 2020 15.0x

Statistic 6/8/15 6/8/20 2015 2.1x Stock Price $5.74 $96.99 0.0x 5.0x 10.0x 15.0x 20.0x Market Cap $286.06M $6.28B

Enterprise Value $262.17M $6.18B

Shares Outstanding 49.43M 61.70M

EV / NTM Revenue 2.07x 15.69x

EV / NTM EBITDA N/A 96.11x NTM P/E N/A 126.12x Z

Statistic FY 2015 FY 2019

Revenue 128.87M 328.01M

EBITDA -13.76M 17.2M

83 Lululemon Business Model

Context Primary Product Sales by Geography Five9 helps organizations 8.1% maintain customer • Comprehensive, end-to- relationships more effectively Cloud CRM end cloud software Solution solution for virtual • A contact center is a central contact centers point from which all customer interactions across various channels are managed • FIVN’s virtual contact centers allow companies to perform all the actions that legacy contact centers perform and more, while 91.9% allowing its employees to work remotely United States International • This greatly reduces the costs that come along with having a FIVN is a capital light business as software large, physical center Visual showing how Five9 operates companies do not require large CapEx

84 Low Threat Medium Threat Five9 Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry Contact Center Software

Players in this industry offer software that empowers organizations to build and enhance relationship with their • Rapid deployment and • Adherence to FCC customers and prospects by providing support of their effective communication across regulations is mandatory as comprehensive solution • Customers have various channels, such as voice, video, FIVN is technically a • Extensive partner telecommunications service grown to expect web, chat, mobile applications, and • Low barriers to entry as a seamless social media ecosystem that includes provider result of little customer service Oracle, Salesforce, and • Security breaches could specialization required to across many Microsoft, among others result in a reputation hit as Market Pure enter the market channels due to • Established market well as litigation Structure Competition • Relatively low switching the rapid presence and a large, • costs FIVN does not control the adoption of Market Size $23.4B1 diverse customer base of operations of the 4 data mobile devices over 2,000 organizations centers where the servers Industry and social media > 10%1 that run their solution are Growth • The platform is reliable, secure, and highly scalable housed

1 https://www.marketsandmarkets.com/Market-Reports/contact-center-software-market-257044641 85 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • Top line growth rate had peaked in 2011, and since then it has been declining rapidly, despite increased sales and marketing • Revenue growth never rebounded to its 2011 peak, but it did stay spend relatively constant over the past 5 • There were no signs that the growth it was once years at around 25% achieving when its technology was considered • EBITDA margins have been Steady Path to innovative was coming back anytime soon increasing, however, as it is now • Future growth plans and business expenditures seemed Success positive, though still low at 5% extremely unrealistic, EBITDA margins were negative and • This is due to more long-term FIVN was predicting 20+% margins without a clear plan contracts which bring in revenue but require less Return Breakdown: Consensus vs Results SG&A expenses • As the channels that that are used prevalently in customer service have expanded tremendously as the social media world has expanded, the need Digitization of to manage these channels efficiently the Customer has also emerged Relations • FIVN was ahead of its time in its Industry early days, and that allowed the company to capitalize on this general industry shift that has become much more prevalent in the past 5 years

86 Back to List Five9 Takeaways

FIVN is a Good Business – 4/5 Future Outlook • Despite not operating in a very high barrier to Can FIVN Sustain its Advantages? entry business, FIVN has established itself as a • FIVN is one of the early players in the comprehensive and reliable platform in an industry, and thus has built a great extremely competitive industry reputation that it can capitalize on in the • It is also the only pure-play public cloud contact future FIVN has a Moat in a provider Can FIVN continue to grow? Growing Industry • As more companies look to move to the cloud for • FIVN operates in a relatively untapped their contact center solutions, FIVN is always going to market that offers great value to its be in the conversation for many customers • FIVN already has many large and recognizable • Top-line will continue to grow as the customers and partners that it boasts to cement its industry becomes the standard rather than credibility in an ever-expanding industry the exception • Despite having never recorded a profit, FIVN is on the Is FIVN poised to continue to outperform? verge of breaking that cycle • Given the extreme role multiple expansion • Revenue has shown tremendous organic growth played in its prior outperformance, FIVN will figures which has resulted in its first (although low) likely not be able to sustain its current operating profits in FY18 and FY19 Promising Financial valuation of a high-teens EV/sales in the long • Plenty of room for margin expansion as well Profile given the low incremental costs that comes with run (comps are high single digits) additional clients • Revenue growth and margin expansions will • There is $209M of convertible senior notes on the likely counteract that multiple contraction in balance sheet, but that is manageable given that may the short-run, however, and FIVN can and not even need to be paid back likely will continue to outperform

87 Owen Stimpson 1,442% 5 Year TSR

ASX:JIN Rank: 12/104

88 Jumbo Interactive Overview In Australian (AUD) Dollars

Jumbo Interactive sells lotteries tickets on behalf of lotteries NTM EV/EBITDA Multiple through its website. The company is involved in the sale of official government and charity lotteries through digital 2019 platforms; and sale of its SaaS digital lottery platform.

Statistic 06/08/2015 06/08/2020 2015 Stock Price $0.97 $12.07

Market Cap $42.66M $753.54M 0x 5x 10x 15x 20x 25x Enterprise Value $18.90M $687.84M

Shares Outstanding 44.20M 62.42M

EV / NTM Revenue 0.14x 9.21x

EV / NTM EBITDA 3.15x 15.92x

PE 47.78x 26.98x

Statistic FY 2015 FY 2019

Revenue 29.2M 65.21M

EBITDA 1.98M 36.55M

89 Jumbo Interactive Business Model

Primary Product Context Sales by Geography Operates OzLotteries.com, Online an online lottery platform Lottery JIN enables lotteries to sell online. that connects lotteries Ticket Selling with buyers. • OzLotteries.com is a platform for Online SaaS software that Australian lotteries to sell tickets digitally. Lottery enables lotteries to sell 100% Software tickets online. • JIN has best in class-software and millions of customers Australia already on the site – allowing partner lotteries to grow and sell more tickets. Sales by Division • ≈20% take rate. 2%

• JIN’s SaaS business will enable lotteries - from around the world - to build their digital business. • Revenue not expected until FY2021. 98% Internet Lotteries Other Sample OzLotteries.com page JIN is a digital, capital light business

90 Low Threat Medium Threat Jumbo Interactive Competitive Analysis High Threat

Competitive What’s Changed in Risks Competitive Landscape Barriers To Entry Advantages the Industry

• Industry is • Losing a Market concentrated – Oligopoly getting market share contract with a Structure • in the online ticket major lottery. Australian lottery Australian 1 • JIN’s scale gives Market Size 7B reselling segment • Lottery Industry has Lottery Industry superior data which become more Industry requires a contract decides LSD1 enables: consolidated: Two Growth with a major lottery. to start Industry firms primarily • Lower of the four biggest operate lotteries and sell • Regulations their marketing lotteries - Tabcorp lottery tickets. A lottery is a impede new own spend. and Tatts Group – prize draw that players pay to lotteries from digital • Two biggest Australian • More effective merged in 2017. enter, with winners drawn starting. platform. lotteries estimated to have innovation. • Online gambling randomly by lot. Firms that 70% market share. • JIN has multi- • New regulations operate lotto-style games and has become year being enacted. football pools are also included - JIN has contracts with increasingly contracts • Cash on balance sheet • Other forms of in the industry. both (Tabcorp and legalized: Lotterywest). with both allows JIN to gambling (i.e. innovate/invest when • Represents a • JIN competes with the digital major sports betting) an opportunity arises. growth apps of the major lotteries: lotteries. become more opportunity Lotterywest.com and • Many firms do not popular. for JIN. thelott.com. want to enter given the perceived negative PR.

1. https://www.ibisworld.com/au/industry/lotteries/661/ 91 What Investors Missed In Australian (AUD) Dollars The Actual Story of the Last Five Years The Bear Thesis Five Years Ago: • New software has created a better • Skeptical of changes to core OzLotteries.com website and app. customer experience and more customers: • Took high development expenses to make “major upgrade to • 761,863 active customers in FY software.” from 437,540 in FY 2018. • Jackpot sizes, a key driver of revenue, are going down. • Higher transactional capacity. • Lottery players are older which is another headwind to • Syndicates feature a success – growing growth. from 17% to 31% of sales. Software upgrades • Syndicate customers also have a have been a major • Expansion efforts so far have not been promising 27% higher average lifetime value. • Expansion to German market lacks clear thesis. success • New Jumbopets.com website (sells pet food) demonstrated • Essentially outsources CAC and lack of focus. outperformed due to social nature. • Software platform captures more data: Return Breakdown: Consensus vs Results • Helped lower CAC from $17.28 to $13.81 and increase customer spend from $371.13 to $385.44. • Created SaaS opportunity. • Jackpots do drive sales but revenue has Jackpot Sizes grown at a 17.4% CAGR from FY2015 to fluctuate – FY2019 – absorbing jackpot size fluctuations. • There is a clear opportunity: only 7% of the SaaS expansion world’s lottery tickets are sold online. strategy makes sense • It’s directly related to JIN’s core business.

92 Back to List

Jumbo Interactive Takeaways In Australian (AUD) Dollars Jumbo Interactive is a High Quality Business – 5/5 Future Outlook • JIN has contracts with both major Australian Can JIN Sustain its Market Position? lotteries – and has maintained strong and • JIN’s moat is strong. successful relationships with them. • Regulations and market concentration impede new JIN has a wide moat • Tatts Group owns 13% of JIN, underscoring entrants. their commitment. • Many companies hesitant about entering the gambling • Government regulations and licensing restricts new space for perceived PR issues. entrants. • New software has lowered marketing expenses, Can JIN continue to grow faster than the industry? increased customer spend, and increased total • JIN, due to its contracts with both major lotteries, rd JIN has made important customers. essentially has a monopoly on 3 party online Australian investments in its core • Enabled more transactional capacity so JIN can better lottery tickets (lotteries have their own digital platforms). business exploit large jackpots when they happen. • JIN’s scale enables data advantages that will continue to lower their marketing costs, attract new users, and increase user • Created a new SaaS opportunity - potential major spend. stream of revenue (but has not yet been implemented) • JIN’s SaaS business provides a clear runway for growth. • Major potential opportunity: size of global lottery ticket market is $445B but only 7% of tickets are Is JIN poised to continue to outperform the market? sold online. • JIN’s core business is extremely consistent: • Data collected from customers can help JIN improve its • Lottery ticket sales are actually slightly countercyclical. JIN’s SaaS business has core OzLotteries website and lower its marketing spend. • Despite jackpot sizes fluctuating each year, JIN has only created a runway for • Very little incremental costs. had 3 years of revenue decline since 2000. growth • Gambling regulations are generally becoming less • IN’s SaaS business provides a runway for growth which will restrictive which can bolster the opportunity: also improve its core business by increasing data collection. • Just six states allow online lotteries, but all six • At 25x PE, JIN trades at ≈ market multiples despite lower risk have legalized the practice in the last six years. and a strong growth profile.

93 Max Schieferdecker 1,433% 5 Year TSR XTRA:HYQ Rank: 13/104

94 Hypoport Overview

Hypoport is a holding company based in Lübeck, Germany, that NTM EV/EBITDA Multiple has a portfolio of technology companies that focus on the credit, real estate, and insurance industries. 2020 43.3x

Statistic 6/8/15 6/8/20 2015 9.9x Stock Price €25.50 €398.00 0.0x 10.0x 20.0x 30.0x 40.0x 50.0x Market Cap €155.29M €2.51B

Enterprise Value €158.17M €2.65B

Shares Outstanding 6.09M 6.30M

EV / NTM Revenue 1.21x 6.13x

EV / NTM EBITDA 9.92x 43.28x NTM P/E 19.65x 82.08x Z

Statistic FY 2015 FY 2019

Revenue 138.98M 337.24M

EBITDA 20.35M 37.62M

95 Hypoport Business Model

Sales by Category Primary Products Context 0.3% • B2B web-based credit HYQ digitalizes the financial platform, EUROPACE institution industry 12.5% 41.4% Credit • Sub-marketplaces and • It specializes as a property financing 14.9% Platform distribution companies intermediary and is expanding its that are tailored to value chain more into the insurance individual target groups and real estate sectors 30.9% Credit Platform Private Clients Real Estate Platform • Companies focused on the • The 2 major subsidiaries that Insurance Platform Holding Private brokerage of residential account for a lot of HYQ’s revenues Clients mortgage finance products are EUROPACE in the credit platform Sales by Geography for customers segment and Dr. Klein in the private clients segment 1.7% • Companies that offer • EUROPACE is Germany’s Real services related to the leading transaction platform Estate sale, valuation, financing, for mortgage finance, building Platform and management of finance and personal loans residential properties 98.3% • Dr. Klein distributes mortgage Germany Other • Companies that provide finance and other financial Insurance sales and administrative products to consumers Platform platforms and distribution • Revenue is derived differently by HYQ is a capital light business as FinTech support services each subsidiary businesses are not manufacturing heavy

96 Low Threat Medium Threat Hypoport Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry FinTech

The players in this industry offer technological solutions to common financial necessities such as payments, • Not overly concentrated in loan issuance, and insurance. one area • The heavy reliance on the • Able to offer mortgage industry makes • Existing players have a multiple services HYQ susceptible to sizable amount of under the same • macroeconomic downturns More people are Market Perfect affiliated vendors on their company buying homes in • Potential conflict of interest Structure Competition platforms that are difficult • Strong reputation for Germany between subsidiaries could to replicate quality Market Size $200B1 have a negative affect on • First mover in a lot of the the business as a whole Industry > 10%1 areas it operates in (like Growth credit platforms)

1https://www.prnewswire.com/news-releases/global-fintech-market-value 97 What Investors Missed The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • In December 2015, HYQ was added to Included in an the German Small-Cap-Index (SDAX) Index • This increased volume and • Micro cap stock with not a lot investor awareness increased investor interest • Those analysts that were following the business were • Throughout the past 5 years, HYQ has not predicting extremely high growth made 7 acquisitions which have expanded offerings and grown revenue substantially • In June 2016, NKK Programm Services was acquired, which Return Breakdown: Consensus vs Results greatly expanded the insurance segment Several • In 2017, 3 more acquisitions were Accretive made with the intention of Acquisitions bolstering the insurance segment • In 2018, FIO Systems and Value were acquired, which resulted in the launch of the Real Estate Platform segment • In June 2018, ASC Assekuranz- Service center was acquired, which helped bolster insurance revenues

98 Back to List Hypoport Takeaways HYQ is a Good Business – 4/5 Future Outlook Can HYQ Sustain its Advantages? • Hypoport is a key player in digitalizing the • Although HYQ’s competitive advantages financial services industry in Germany, especially are not particularly strong, it should be in the real estate subvertical able to sustain them • EUROPACE is the leader in its space and Dr. • In particular the first mover advantage HYQ has a Moat Klein is still expanding its already large is key due to the established platforms it footprint already has • So many financial players already use HYQ’s platforms, and further acquisitions are only bolstering the offering as a whole Can HYQ continue to grow? • HYQ is in the process of scaling its acquired businesses and there are also strong industry tailwinds that will likely • Net inward migration, increased life expectancy, propel future growth and more one-person households are all driving up • However, this is somewhat limited given demand for homes, property prices, and mortgage the impression that HYQ is confined to financing business Strong Real Estate Germany indefinitely • In addition to those in the past (which will also Industry Tailwinds in likely continue into the future), lower interest Is HYQ poised to continue to outperform? Germany rates due to COVID-19 macro adjustments are seeing more people surging to buy • Given the large multiple expansion that has • More home sales leads to more volume on HYQ’s taken place in the past, it is unlikely that financing marketplaces HYQ will continue to outperform despite the tailwinds

99 Elizabeth DeSouza 1320% 5 Year TSR AIM:BOO Rank: 14/104

100 Boohoo group plc Overview

Boohoo group , through its subsidiaries, is an online fashion NTM EV/EBITDA Multiple retailer that designs, sources, markets, and sells clothing, shoes, accessories, and beauty products, based in Manchester, England. 2020 30.6x

Statistic 6/8/15 6/8/20 2015 13.9x Stock Price £0.27 £3.68 0.0x 10.0x 20.0x 30.0x 40.0x Market Cap £303.25M £4.27B

Enterprise Value £249.10M £4.06B

Shares Outstanding 1.12B 1.16B

EV / NTM Revenue 1.42x 2.78x

EV / NTM EBITDA 13.94x 30.56x P/E 25.45x 55.42x Z

Statistic FY 2015 FY 2019

Revenue £195.4M £1234.9M

EBITDA £16.6M £107.6M

101 Boohoo Business Model

Primary Products Context Sales by Brand BOO brands target 16-40 year • Clothing, primarily for 8.0% old “fashion-conscious” 1.5% women, but some consumers brands carry a men's Apparel • BOO has 7 brands that are 48.6% line differentiated by message, • Shoes & accessories appeal, price-point, and 41.8% • Beauty products target age-group boohoo PrettyLittleThing • Women’s wear options in a Nasty Gal Other variety of styles and sizes • BOO designs, sources, Sales by Geography markets and sells its 8.4% products 21.3% 55.0% • Sales are made directly to consumers via brand websites 15.3% • Major marketing focus on UK Rest of Europe USA Rest of world social media and the use of Boohoo brands are known for their fashion- social media “influencers” to BOO is a capital light business, as manufacturing forward, low-cost clothing items increase sales and brand awareness is outsourced.

102 Low Threat Medium Threat Boohoo Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry Internet & Direct Marketing Retail

The players in this industry offer retail • BOO brands have services, primarily on the internet. reasonably priced clothing, • Retail is shifting making it accessible to a • Failure to keep up with the away from fast wide customer base latest trends and styles can • There are no material fashion toward • adversely impact BOO sales barriers to entry in this BOO brands, especially more sustainable industry boohoo, Nasty Gal, and • Failure to respond to practices Market Perfect PrettyLittleThing have sustainability concerns, and • Brand recognition is • Increased Structure Competition brand recognition and environmental and labor important, but not concern for the following abuse in the supply chain Market Size $2.86T1 imperative impacts of fast • could damage BOO Customer base resilient to fashion on the Industry economic changes, giving reputation and sales > 10%2 environment Growth BOO some cushioning from economic cycles

1 https://eresearch.fidelity.com/eresearch/markets_sectors/sectors/industries.jhtml?tab=learn&industry=255020 103 2 FY 2019 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • In 2015, BOO made a number of expensive investments for • Major acquisitions of Nasty Gal and future growth and did not stand out significantly from PrettyLittleThing in 2017, which competitors now combine for about 50% of BOO • BOO brands operate exclusively online, while many of revenue their competitors had physical storefronts in addition to Key Acquisitions • In 2019 acquired three new brands: online retail MissPap, Karen Millen, and Coast • Made investments in their website and warehouse • Increased market share and extensions, as well as developed an app portfolio diversification with these • BOO had just recently gone public in 2014 and was brand acquisitions founded in 2006, making it relatively new to its peers • BOO sees the importance of social Return Breakdown: Consensus vs Results media in marketing, so they invested using influencers as brand reps, which increases brand awareness and sales • Investment in BOO websites and Good apps has aligned with the shift from Investments in person shopping to online & increased their sales • Warehouse investments have also proven themselves, as they have allowed BOO to keep pace with customer demand

104 Back to List Boohoo Takeaways BOO is a Okay Business – 3.5/5 Future Outlook Can BOO Sustain its Advantages? • Despite the shift toward sustainability, BOO’s target • BOO has little differentiation from its market is more focused on new fashion items than their competitors, offering similar clothing, at impact on the environment similar prices and similar quality • BOO’s main type of customer is resilient to economic • Brand loyalty doesn’t benefit retailers like cycles and will continuously and somewhat regularly BOO, but customer service is key Strong Customer make purchases from their brands Base & Marketing Can BOO continue to grow? • BOO brands appeal to a wide range of people outside of • BOO launched BooMan and can continue to their target audience for more sporadic purchases expand into the men’s wear market • BOO knows how to market to its most profitable type of • Also launched a “sustainable” line to try to customer by using social media and social media appeal to those concerned for the influencers to showcase their offerings environment • Different sizing options have yet to be fully targeted (plus sized, petite) • BOO has had consistent topline growth over the last 5 Is BOO poised to continue to outperform? years, but it is expected to slow over the next three years • BOO has better margins than competitors and a • Gross margins have been around 55% over the last 5 large customer base that will continue to grow Growth & Industry years and EBITDA margins have stayed at around 9%, their revenue Success which is about industry average and higher than some of its main competitors such as ASOS • Outperformance in the long run depends on if • EPS has generally outperformed analyst estimates over consumers move away from fast fashion in the last 5 years favor of sustainable brands & if environmental regulation will be increased in the industry

105 Elizabeth DeSouza 1282% 5 Year TSR ASX:PET Rank: 15/104

106 Phoslock Environmental Technologies Overview

Phoslock Environmental Technologies, based out of Melbourne, LTM EV/Revenue Multiple2 Australia, designs, engineers, and implements solutions for water treatment related projects. 2020 12.4x

Statistic 6/8/15 6/8/20 2015 12.3x Stock Price 0.03 AUD 0.51 AUD 12.2x 12.3x 12.3x 12.4x 12.4x 12.5x Market Cap 8.68M AUD 318.75M AUD

Enterprise Value 10.91M AUD 304.47M AUD

Shares Outstanding 249.25M 625.00M

EV / LTM Revenue1 12.29x 12.41x

EV / LTM EBITDA2 N/A 72.38x P/E3 N/A 96.24x Z

Statistic FY 2015 FY 2019

Revenue 839K AUD 24.536M AUD

EBITDA (1.327)M AUD 3.894M AUD

1NTM multiples not available 2EBITDA was negative for FY2015 107 3EPS was negative for FY2015 and 0 for FY2019 PET Business Model

Primary Products Context Sales by Geography 10.6% • Phoslock binds free PET offers chemical and 3.2% phosphate into an inert engineering solutions for water 8.7% Phoslock mineral that becomes bodies with excess nutrients and part of the water’s other pollutants natural sediments • Phoslock and Zeolite 88.9% respectively bind with Canada, Brazil, U.S. Europe/ UK • Zeolite binds nitrogen Zeolite & phosphate and nitrogen, Australia/ NZ China • Bacteria improves the Bacteria compounds that cause toxic quality of water algae growth in water, and neutralize them Sales by Category 1.0% • In addition to supplying the 3.6% product, PET engineers its implementation • PET licenses technology to Brazilian company HidroScience 95.4% and American company SePRO, External Sales Inter-segment Sales Other each accounting for 35% of international sales • Sales and licensees agents in 8 PET is a capital intensive business with two large Diagram showing how Phoslock works countries and offices in 4 manufacturing centers for their products

108 Low Threat Medium Threat PET Competitive Analysis High Threat

What’s Changed in Competitive Advantages Risks Barriers To Entry the Industry Environmental & Facilities Services

The players in this industry produce • Increased goods and services to measure, awareness and prevent, limit and minimize or correct concern for the environmental damage to water, air • Significant investment • Phoslock, PET’s leading • Bigger companies environment and soil, as well as problems related to in R&D needed in this product, is a patented could develop a better • Increased waste, noise, and eco-systems space technology solution to phosphate governmental • There are some very • Strong relationship with the remediation and efforts to combat large companies in the Chinese government has eclipse Phoslock and slow the effects given PET better corporate of climate change Market Monopolistic industry who have more • PET relies heavily on tax rates, special allowances, Structure Competition resources and reach, but the Chinese • Concerted effort by smaller companies still and long term contracts government for their companies to be Market Size ~$640B1 enter by specializing in • PET provides both the revenues, which may more certain environmental product and the engineering back them into a environmentally Industry MSD2 services corner Growth solutions to deploy it conscientious, driven by consumer concerns over climate change

1 http://www.tradeforum.org/The-Environmental-Services-Business-Big-and-Growing/ 109 2 https://www.capitaliq.com/CIQDotNet/Lists/KeyStats.aspx?listObjectId=100885225 (Total Revenue 1 year growth) What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • Chairman of the Board, Laurence • In 2015, PET was a very small company operating at a loss Freedman pioneered relationship with internationally China after Xi Jinping took office, by • Total revenue in 2015 was about 839 thousand AUD and creating a relationship with Chinese they operated at a loss of about 3 million AUD company BHZQ • Small segments of revenue in Australia, Europe, and • BHZQ is privately owned by two larger North America, but no major customers Relationship companies, which are ultimately owned • Poor conversion of bids to sales, raising uncertainty with China by the Chinese government about whether PET can grow and become profitable • The managing director of BHZQ now serves on the PET board and has invested personal money in the company2 EPS Results Return Breakdown1: • PET also integrated Chinese engineers into their business, further strengthening their relationship • In 2019, China was PET’s largest customer, generating almost 90% of their revenue • China has massive amounts of money to spend on environmental remediation as Xi Jinping has “declared war” on pollution • Investing heavily in this relationship, seems to indicate that PET sees great opportunity in China alone

1Revenue used because EBITDA was negative in 2015 2Interview where Mr. Freedman speaks on relationship with China https://www.skynews.com.au/details/_5741615894001 110 Back to List PET Takeaways PET is an Okay Business – 3/5 Future Outlook Can PET Sustain its Advantages? • PET’s Phoslock technology is patented • The Phoslock product has proven its • Relationship with the Chinese government, which makes effectiveness and is very relevant to current up almost 90% of their revenue, remains strong with environmental concerns future contracts and projects Niche Product • There is a market for the product globally Can PET continue to grow? • PET engineers solutions to apply their • Water scarcity and the importance of clean water will drive products and tailors them to the needs of the the need for PET technologies specific body of water • Many bodies of water PET could target for contracts • Growth plan not entirely clear, but PET very recently won contracts in WA and NJ

• Laurence Freedman has set his sights on fully Is PET poised to continue to outperform? infiltrating the Chinese market • P/E is currently at 51.9x, way above the market • China has the second largest GDP in the world • High topline growth and high gross margins in the last three and major water pollution issues, making it an years Concentrated ideal target for PET • Downgraded its revenue guidance for FY 2020, causing stock Geographic Focus • Depending on one market carries high risk price to plummet • PET has slow growth in other countries • Big opportunity for growth, if they take advantage of geographical expansion • EBITDA has been negative every year until FY • Phoslock technology, small size, and lack of debt make it a 2019 good acquisition target

111 Max Schieferdecker 1,281% 5 Year TSR ASX:CLV Rank: 16/104

112 Clover Overview

Clover Corporation is a nutrients manufacturer based in NTM EV/EBITDA Multiple Altona1, Victoria, Australia, that focuses on refining and encapsulating bioactives2 and operates in the market under the brand of its subsidiary, Nu-Mega. 2020 20.9x

Statistic 6/8/15 6/8/20 2015 6.2x Stock Price 0.18 AUD 2.24 AUD 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x Market Cap 29.73M AUD 372.53M AUD

Enterprise Value 23.91M AUD 388.56M AUD

Shares Outstanding 165.18M 166.31M

EV / NTM Revenue 0.65x 4.13x

EV / NTM EBITDA 6.18x 20.88x NTM P/E 10.47x 28.90x Z

Statistic FY 20153 FY 20193

Revenue 29.92M 76.68M

EBITDA 574K 13.67M

1Just outside of Melbourne 2Definition: chemicals, chemical molecules and microbes (microscopic organisms) that have some biological effect on our bodies 113 3FY ends 7/31 Clover Corp Business Model Primary Products Context Sales by Category • Powdered forms of CLV optimizes the health and development of adults, infants, nutritional liquids that 34.0% Encapsulated are designed to be and children Powders incorporated into the • Takes high-value oils, like Omega- 66.0% food and beverages of 3s and Omega-6s found in Tuna, other companies and turn them into powders • Those powders enables the oils Tuna Powder Other to be included into different food and beverage products, such as Sales by Geography drinks, gummies, and infant 5.1% formula • This is done without 7.8% including any of the bad 50.5% smell and taste • This allows consumers to take 36.6% their daily dose of those high- Australia / New Zealand Asia Europe Americas value oils in one sitting

• The most common means CLV is a capital light business as manufacturing is of consumption in all done in house A couple of applications that CLV powders can included in markets is infant formula

114 Low Threat Medium Threat Clover Corp Competitive Analysis High Threat

What’s Changed Barriers To Entry Competitive Advantages Risks Functional Food in the Industry Ingredients

The players in this industry offer bioactive compounds that can be used • CLV has the only vegan in the manufacturing of functional product and the only organic food products. product on the marketplace • Very difficult product to • Much business comes • Cheap access to a new state- make internationally, so of-the-art manufacturing • Unique product currency risk is present facility • Increased that requires quite • The inability to serve all Market • Mainly competing against awareness about Oligopoly specific production of the demand that they Structure smaller, more fragmented dietary issues technology and are experiencing could players Market Size $77.77B1 processes harm their reputation • • High up-front costs Very few offer and stunt their growth Industry MSD1 powdered oils, and Growth CLV is the only publicly traded player

1https://www.marketsandmarkets.com/Market-Reports/functional-food-ingredients-market-9242020.html 115 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years

• In March 2018, a critical review, driven by the Nu-Mega Ingredients • Nano-cap company located in Australia R&D team, describing the benefits of • Unimpressive margins with inconsistent earnings and an high DHA1 fish oil was published in extreme underperformance of expectations in FY14 the globally prestigious journal of (A$0.01 vs. A$0.04 EPS) Scientifically Food Science and Nutrition Supported • It was the first major review of DHA Study was research studies in nearly 20 years Published • It focused on 113 studies on the effects of high DHA published since 2000 Consensus vs Results • The studies showed positive Return Breakdown: DHA outcomes for the heart, brain, and other parts of the body

• High sales growth in higher population countries outside of their Strong base ANZ market, especially in China Expansion into • There was also significant growth in New Markets their U.S. sales mainly caused by product line expansion into nutritional food and beverages

1Docosahexaenoic acid - an essential fatty acid that cannot be manufactured in the body and must be obtained through the diet, but only a few foods contain a significant amount naturally 116 Back to List Clover Corp Takeaways CLV is a Great Business – 5/5 Future Outlook

• Impressive continued top-line growth at a CAGR of 20% Can CLV Sustain its Advantages? over the past 5 years • CLV is in a great position to sustain its • Margins have also continued to increase as CLV takes advantages given the high barriers to advantage of their economies of scale capabilities entry of the industry and the highly Great Financial • Gross is up to 31.20% from 23.04% 5 years ago fragmented nutritional powdered ingredients industry Profile • EBITDA is up to 17.53% from 3.95% 5 years ago • Solid investment (42% stake) in Melody Dairies (NZ) Can CLV continue to grow? • They have just recently finished the production of • CLV has a strong product pipeline and is a new spray dryer1, which will double CLV’s continuing to work on development to production capacity as well as reduce COGS expand their market • Already experiencing high demand, and • The EU recently passed a new regulation mandating a the recent doubling of their production minimum 20mg/100Kcal of DHA in infant formula capacity will allow them to realize that • This regulation took place in February 2020 and will demand result in a large increase in EU sales Is CLV poised to continue to outperform? • China is also in the process of making a draft legislation Promising requiring a minimum of 15mg/100Kcal (up from • While there has been multiple expansion, Legislation 5mg/100Kcal) of DHA in infant formula most of the price increase has resulted from • If this comes into fruition, this will greatly the extremely high EBITDA growth increase sales both in China and the entire world • With such a high upside (doubling capacity), • China is the largest market for infant formula, so and being currently traded at 21x NTM every can manufactured outside of China has a very EV/EBITDA (ATH is 31x), it is very likely high likelihood of ending up in China CLV will continue to outperform

1Spray drying is a method of producing a dry powder from a liquid or slurry by rapidly drying with a hot gas 117 Elizabeth DeSouza 1244% 5 Year TSR OB:VOW Rank: 17/104

118 VOW ASA Overview

VOW ASA, headquartered in Lysakar, Norway, manufactures NTM EV/EBITDA Multiple and supplies systems for processing and purifying wastewater, food waste, solid waste, and bio sludge. 2020 51.5x

Statistic 6/8/15 6/8/20 2015 11.4x Stock Price 1.77 NOK 24.85 NOK 0.0x 10.0x 20.0x 30.0x 40.0x 50.0x 60.0x Market Cap 169.04M NOK 2.65B NOK

Enterprise Value 184.30M NOK 2.78B NOK

Shares Outstanding 95.51M 106.56M

EV / NTM Revenue 0.93x 5.05x

EV / NTM EBITDA 11.37x 51.49x P/E 12.42x 108.04x Z

Statistic FY 2015 FY 2019

Revenue 200.300M NOK 380.800M NOK

EBITDA 10.60M NOK 38.200M NOK

119 VOW ASA Business Model

Primary Products Context Sales by Geography 9.0% • Sea based solutions VOW solutions aim to mitigate 24.9% Projects provided by the climate change and prevent Scanship subsidiary pollution by giving “waste value” • Scanship subsidiary provides • Land based solutions systems and technologies for 66.1% Landbased provided by the ETIA processing waste and purifying Norway Europe Outside of Europe subsidiary wastewater for cruise ships and Sales by Category aquaculture 4.1% • Systems are either sold to 14.5% Aftersales • Spare parts and services shipyards for newbuild 0.9% 14.4% constructions or to ships in 53.3% operation as retrofits. 1.7% • Aftersales focuses on sales of 2.4% 7.6% spare parts, consumables, and 1.0% services to shipowners Newbuilding cruise Retrofit Aquaculture Biogreen • Landbased solutions deal Safe steril Robotics primarily with the conversion of Spareparts Chemicals waste to energy, as well as Work Orders sterilization of food and VOW is a capital light as production of products The Scanship sector of VOW provides solutions to pharmaceutical ingredients is mainly outsourced cruise ships

120 Low Threat Medium Threat VOW ASA Competitive Analysis High Threat

What’s Changed in Competitive Advantages Risks Barriers To Entry the Industry Environmental & Facilities Services

The players in this industry produce goods and services to measure, • Increased prevent, limit and minimize or correct • Many of the solutions • High dependency on the environmental damage to water, air awareness and • Significant investment in provided by VOW are cruise ship market for and soil, as well as problems related to concern for the patented and are the waste, noise, and eco-systems R&D needed in this space revenue environment • There are some very large unique results of extensive • Both Scanship sector and • Concerted effort by R&D companies in the industry aftersales sector rely companies to be who have more resources • Strong relationships with heavily on the success more Market Monopolistic and reach, but smaller cruise companies have and growth of cruise ship Structure Competition environmentally companies still enter by allowed VOW to win new industry conscientious, Market Size ~$640B1 specializing in certain contracts and employ new • New build cruise driven by consumer environmental services technology operations account for concerns over Industry MSD2 over 50% of VOW climate change and Growth revenue new regulatory environments

1 http://www.tradeforum.org/The-Environmental-Services-Business-Big-and-Growing/ 121 2 https://www.capitaliq.com/CIQDotNet/Lists/KeyStats.aspx?listObjectId=100885225 (Total Revenue 1 year growth) What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years

• VOW was a relatively new company in 2015 surrounded by • In 2019, VOW acquired French company ETIA that uncertainty specializes in products and technologies that give • VOW ASA, formerly Scanship Holding ASA, was originally incorporated value to waste and contribute to sustainable in 2011 and listed on the Oslo Axess, a marketplace suitable for newer, Growth & development smaller companies, in 2014 Expansion • This acquisition strengthens VOW’s land based • Being a newly listed company in 2015, there was little proven track market access & broadens its technology portfolio record for investors to go off of, making VOW an uncertain investment • VOW solutions are scalable and are increasingly • The entirety of VOW’s business in 2015 depended on the cruise attractive to industries other than cruise ships (land industry, which had suffered from a series of disasters in the years prior based sewage and food waste & aquaculture) (Costa Concordia, Carnival Triumph, Carnival Splendor) • Cruise ship industry grown over the last 10 years, with the number of cruise ship passengers growing at Return Breakdown: EPS Results1 an annual rate of 5.4% • Generation Z is coming of age an prioritizes experiences, such as cruises, over material items Cruise • The success of the cruise industry is closely tied to the Industry success of VOW, and the cruise industry is very Success2 committed to reducing their environmental footprint, the area VOW specializes in • Even with Covid-19 impacts on cruise industry, VOW remains largely unaffected because of the nature of their newbuild contracts, which are signed years in advance

1 EPS negative in FY2019 due to ETIA acquisition 122 2https://www.forbes.com/sites/joemicallef/2020/01/20/state-of-the-cruise-industry-smooth-sailing-into-the-2020s/#2ea0867465fa Back to List VOW ASA Takeaways VOW is a Great Business – 5/5 Future Outlook Can VOW Sustain its Advantages? • VOW’s initial business (Scanship) provides • VOW’s technology is protected by patents solutions to a very specific customer: cruise ships • Relationships with cruise lines take time to build, making VOW’s valuable and difficult to compete • Cruise ship industry is very stable, even in the with face of Covid-19, and it is increasingly Niche Products environmentally conscious Can VOW continue to grow? • The need for VOW solutions will continue to • As Scanship systems grows, the Aftersales segment increase as climate change intensifies will grow in tandem, as it services these installations • Strong core values and mission guiding the • The acquisition of ETIA allows VOW access to a new business source of revenue • Even with Covid-19, VOW has signed a number of major contracts this spring for boats as far out at • VOW technology and solutions can be applied 2027, protecting their revenue growth while the to a number industries other than cruise ships cruise industry recovers • The acquisition of ETIA expands VOW’s access to technology and to land based markets Is VOW poised to continue to outperform? Room for Growth • VOW solutions aim to mitigate climate change, • VOW has had strong topline growth for the last 5 years an issue that will be increasingly prevalent in • EPS is expected to increase in the NTM, as it has for the the long term last 3 years • Concern for the climate and need for • VOW has had multiple expansion over the last 5 years technologies, like those produced by VOW, will (with room for more), and its growth prospects make it only increase as Gen Z comes of age seem likely that this trend will continue

123 Max Schieferdecker 1,169% 5 Year TSR OM:BACTI B Rank: 18/104

124 Bactiguard Overview

Bactiguard is a medical device company based just outside of LTM EV/Sales Multiple Stockholm, Sweden, that focuses on developing and manufacturing infection protection coating for catheters. 2020 26.8x

Statistic 6/8/15 6/8/20 2015 4.7x Stock Price 11.90 SEK 150.50 SEK 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x 30.0x Market Cap 396.30M SEK 5.05B SEK

Enterprise Value 487.97M SEK 5.29B SEK

Shares Outstanding 33.30M 33.54M

EV / LTM Revenue 4.73x 26.80x

EV / LTM EBITDA N/A 82.84x NTM P/E N/A 235.28x Z

Statistic FY 2015 FY 2019

Revenue 134.75M 184.99M

EBITDA 26.37M 46.80M

125 Bactiguard Business Model

Primary Products Context Sales by Category Bactiguard saves lives by reducing • Direct sales of the 3 8.6% the amount of healthcare associated BIP Bactiguard Infection infections that are present globally Portfolio Protection products and the 57.7% product portfolio of Vigilenz • According to the U.S. HHS department, at any given time, 33.7% • License agreements for about 1 in 25 inpatients have an License various applications through infection related to hospital care License BIP Products Other longstanding partnerships • This leads to tens of thousands of deaths a year Sales by Geography and costs the healthcare 3.0% system billions of dollars 1.0% • Bactiguard provides a metal alloy 5.0% coating that goes on medical devices (mainly catheters) that repels the 14.0% microbes that cause infections 77.0% • BD has exclusive rights to Bactiguard products in the U.S. and America Asia MEA Europe Latin America Japan • Products are sold to the rest of BACTI B is a capital intensive business as the world through manufacturing is done in-house The BIP product portfolio distributors

126 Low Threat Medium Threat Bactiguard Competitive Analysis High Threat

What’s Changed in Competitive Advantages Risks Barriers To Entry the Industry Medical Coatings • Most other coating The players in this industry offer technologies release substances that enhance the substances the kill both • High level of expertise and maneuverability, safety, and good and bad microbes, in performance of different medical know-how is required to • COVID-19 has shed a addition to affecting the devices, such as cardiovascular, break in light on the surrounding tissue • Regulatory risk is tremendous problems neurovascular, gynecological, and • There are patent • Bactiguard coating extremely prevalent in healthcare around others. protections for is unique as it is the world many existing • If a product tissue friendly due players, so effective doesn’t make it • One of those Market Pure to its non-releasing innovation is through the major problems Structure Competition technology mandatory regulatory happens to be 1 • Product quality is backed process, much the amount of Market Size $14.15B • High levels of government by clinical research time and money preventable Industry regulation are present MSD1 • This science-backed will be lost infections that Growth • Abbot operates in the reputation also kill people industry, but other makes the every year competitors are smaller regulatory approval process move quicker for BACTIB

1https://www.marketsandmarkets.com/Market-Reports/medical-coatings-market-76047356.html 127 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • BACTI B IPOed on 6/19/14 at 38 SEK, and in the first year of being public, the stock price dropped to 11 SEK • On 3/2/2020, BACTI B acquired • The initial CEO had to step away for personal Vigilenz, a Malaysian manufacturer and supplier of medical devices reasons soon after the IPO, which led to a cycle of Completed bad CEO recruitments in the first year (3 CEOs in 3 focused on wound management and First infection control quarters) Acquisition • Products are complementary to • Net income also decreased dramatically in FY ‘14 to -95m SEK Bactiguard’s existing product portfolio from -3.4m SEK which presents synergy opportunities

Return Breakdown: Consensus vs Results • Through recently acquired Vigilenz, HYDROCYN aqua was launched in Sweden on 3/12/2020 • It is a water-based antimicrobial A COVID-19 solution that has been proven to Product was inactivate 100% of previous strains of Launched corona virus within 15 seconds • In the first few days after the launch, orders totaling around 20m SEK were received (in the Swedish market alone)

128 Back to List Bactiguard Takeaways BACTI B is a Good Business – 4/5 Future Outlook • Bactiguard has a very strong value add in its products Can BACTI B Sustain its Advantages? • They save lives, reduce costs, and reduce the use of • Most of the innovating development that antibiotics set up the base of BACTIB’s business BACTI B has a • They have proven to reduce the rate of UTIs be a model has already taken place, so the Moat minimum average of 35% quality and research of the coating is not • Since the beginning of the company in 1995, there has been going anywhere zero documented cases of side-effects from the coating after over 200M patients experienced it Can BACTI B continue to grow? • Currently building up production line in Sweden in order • With its recent acquisition and openness to to increase capacity to meet future and present demand do more strategic M&A in the future, in in Sweden, and Europe more broadly addition to their clearly laid out strategic Strong Demand in • Elective surgery customers have been hit hard, but demand growth initiatives, it is highly likely that COVID Times for protective equipment, ICU equipment, and basic medical BACTIB will continue to grow supplies have increased substantially, which is good for the customers that operate in those segments Is BACTI B poised to continue to outperform? • Ultimately, a net benefit for BACTIB however • Given the tremendous amount of multiple • All members of senior management and board members are expansion that has taken place over the last shareholders in the company year, it seems like the market has taken into Promising • 85% of all U.S. hospitals already use Bactiguard products account most, if not all, future growth Features on a daily basis prospects, and thus it is unlikely to continue • Very large potential markets to break into and penetrate to outperform • These include orthopedic, trauma, and dental implants

129 Owen Stimpson 1,167% 5 Year TSR ASX:PME Rank: 19/104

130 Pro Medicus Overview In Australian Dollars (AUD)

Pro Medicus Limited is a leading imaging IT provider. Founded in EV / NTM EBITDA 1983, the company provides a full range of radiology IT software and services to hospitals, imaging centers and health care groups 2019 worldwide.

Statistic 06/08/2015 06/08/2020 2015 Stock Price $2.18 $26.59

Market Cap $218.57M $2.76B 0x 10x 20x 30x 40x 50x 60x 70x Enterprise Value $205.64M $2.72B

Shares Outstanding 100.26M 103.62M

EV / NTM Revenue 7.58x 39.86x

EV / NTM EBITDA 13.51x 60.07x

PE 67.58x 115.06x

Statistic FY 2015 FY 2019

Revenue 17.49M 50.11M

EBITDA 3.53M 25.66M

131 Pro Medicus Business Model

Primary Product Context Sales by Division 2% Provides range of PME develops a range of health Health software and hardware imaging IT products. Imaging for health imaging to IT hospitals, imaging centers, • Product range covers radiology and health care groups. information systems (RIS), Picture Archiving and Communication 98% Systems (PACS) and advanced visualization solutions. Hardware Software • Specializes in RIS.

• Products help improve radiologist Sales by Geography productivity and diagnostic accuracy. 46% 39% • PME offers training and implementation for their products.

• Contracts based on transaction license model (PME charges clients 15% Images taken using PME Visage product. each time they use their products). Australia EU NA • 87% of revenue is recurring. PME is a low capital intensity business.

132 Low Threat Medium Threat Pro Medicus Competitive Analysis High Threat

Competitive What’s Changed in Risks Competitive Landscape Barriers To Entry Advantages the Industry

• US mandated Market Monopolistic electronic health Global Medical Structure Competition records in 2018. 1 Imaging Market Market Size ≈$34B • Contracts are multi- • First mover in • Images Industry year long. radiology became more MSD1 Growth digitization • Data breach. important Participants in this industry market. part of • Regulatory burdens. develop medical imaging patient’s hardware and software for use • Critical software • Industry definition overly • Reputation: PME digital health in MRIs, X-Rays, etc. • Capital requirements failure or glitch. broad: industry definition has a top-tier record. includes hardware, which is to develop new products and large portion of overall industry technology. counts some of • Technological • Emergence of AI to size. • Some PME tech the best obsolescence. diagnose health covered by hospitals as issues. • Key competitors include patents. Siemens, Fuji, and Cannon. customers. • PME has a market lead. • Increasing openness to cloud solutions for digital health records.

1. https://www.globenewswire.com/news-release/2019/05/20/1827196/0/en/Global-Medical-Imaging-Market-Will-Reach-USD-48-6-Billion-By-2025-Zion-Market- Research.html 133 What Investors Missed

The Actual Story of the Last Five Years The Bear Thesis Five Years Ago: • PME moved towards a transaction license model – less upfront costs for customers Pricing model but more recurring revenue for PME. • Many hospitals simply cannot afford to buy PME’s products. change • PME products are also not a priority nor will they become a • Made product more accessible to priority for hospitals. customers. • US mandated electronic health records (EHR) • PME is not growing – FY2010 revenue and EBITDA substantially in 2018. higher than FY2015. • 90% of EHRs are images. • Margins have not improved since 2010. • File size data increased exponentially – PME products making cloud solutions like PME’s more became a priority attractive. Return Breakdown: Consensus vs Results • PME products enable hospitals to save on IT infrastructure, improve radiologist turn- around time (by 34%), and improve clinical accuracy. • PME signed major contracts with Partners Healthcare and Carle Foundation which grew revenue from 17M in FY2015 to 50M in FY0219. Revenue, EBITDA, • Revenue recurring increases as PME product and margins grew uses increase. • High operating leverage enabled EBITDA margins to increase from 20% in FY2015 to 50% in FY2019.

134 Back to List Pro Medicus Takeaways PME is a High Quality Business- 4.5/5 Future Outlook Can PME Sustain its Market Position? • PME has a moat due to the length of their contracts, their technological advantage and sunk R&D, and • PME has long-term contracts with top-tier hospitals. PME has a wide moat the regulatory burdens in the space. • And there is very little incentive for them to switch • PME’s contracts with top-tier hospitals gives them a given their strong technology and the switching reputational advantage relative to competitors. costs they would incur. • PME benefits from regulatory barriers. • Industry trends helped drive demand: mandated EHRs in the US, importance of images to EHRs (and their Can PME continue to grow faster than the industry? growing file sizes), future importance of AI. PME grew • PME has been at the forefront of the industry and was a • In 2019, PME signed multiple major contracts: 27M deal pioneer in radiology digitization – no evidence they will not with Partner Healthcare (largest contract to date), 14M continue to be so. contract with Duke, and others. • PME can leverage its operational leverage and benefit from • PME’s products help improve radiologist productivity by scale advantages. increasing their turn around time, and improve clinical • Reputation gives them an upper hand in winning new accuracy. contracts. • Also radiology digitization will be crucial to leverage power of AI going forward. Is PME poised to continue to outperform the market? PME has a runway for • Recurring revenue will continue to grow as use of • PME will likely benefit from advantageous industry trends growth PME software continues, and PME signs new and sign new major contracts, and continue to benefit from contracts. transaction license recurring revenue. • Industry trends towards AI, digitization of health • Major opportunity outside US. records, improving clinical efficiency see no sign • At 115x earnings everything will need to go right for PME to slowing. justify its multiple – there is no margin for error.

135 Max Schieferdecker 1,114% 5 Year TSR NYSE:INS Rank: 20/104

136 Intelligent Systems Overview

Intelligent Systems Corporation is a fintech company that develops software and offers services to aid businesses in the LTM P/Sales Multiple management and processing of payment cards. These products are offered through its subsidiary, CoreCard. 2020 9.1x

Statistic 6/8/15 6/8/20 2015 1.8x Stock Price $2.69 $35.95

Market Cap $28.87M $320.85M 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x

Enterprise Value $3.25M $293.58M

Shares Outstanding 8.81M 9.00M

EV / NTM Revenue N/A 7.44x

EV / NTM EBITDA N/A 15.67x NTM P/E N/A 24.29x Z

Statistic FY 2015 FY 2019

Revenue 4.78M 34.30M

EBITDA -2.60M 14.39M

137 Intelligent Systems Business Model

Primary Products Context Sales by Product 5% CoreCard helps process 17% • Software licenses are Products payments (moving money 22% sold to businesses from customers to businesses) • Software licenses are provided to businesses after • Outsourced processing they are fitted for that the 56% services unique requirements of each Services • Professional services License Professional Services Processing and Maintenance Third Party individual client for software modification • CoreCard also offers to run a Sales by Geography business’s processing in 11% house through its processing services • For a more specialized approach, CoreCard offers professional services 89% through which the software is enhanced and modified for USA EU each individual business strategy and operational INS is a capital light business as software companies do INS is Focused on Processing Payments requirements not require heavy investments in fixed assets

138 Low Threat Medium Threat Intelligent Systems Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry Payments and Processing

The players in this industry process credit and debit card transactions and connect merchants, merchant banks, • INS has a real advantage card networks and others to make over its competition in their • INS has high customer • Online and card payments possible. speed to market, and they concentration, with 2 touchless • There are high switching won the Goldman Sachs – customers accounting for purchasing are costs for businesses using Apple Card deal because of it 71% of revenue in FY19, becoming more these products prevalent in • Superior customer service one 60% and one 11% Market • Reputation is important in today’s society, Oligopoly • Currently operating at Structure this industry, which may • Customers are given a businesses must capacity could greatly make is hard for new unique product adapt their Market Size $44B1 restrict the ability of INS players to break in compared to the processing mass-produced to capitalize on the inflow Industry technology to > 10%1 services of its of potential business Growth adapt competitors

1https://www.marketsandmarkets.com/Market-Reports/payment-processing-solutions-market-751866.html 139 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years - Micro-cap Company with no sell-side coverage and a long history of inconsistent and unimpressive earnings • INS got rid of their industrial washer business (ChemFree), which - INS was operating two totally different businesses, allowed them to focus their capital CoreCard and ChemFree, unsuccessfully and efforts on the Fintech industry - There was little hope in management’s ability to operate Focused their and their payment business. Efforts on the business successfully, as their focuses are greatly • This greatly reduced SG&A split between two very different business models Fintech expenses and allowed them to invest the $19M they received from the sale into expanding their CoreCard operations. Consensus vs Results Return Breakdown: • In 2018, INS secured Goldman Sachs as a client that ended up accounting for 40% and 60% of total revenue in 2018 and 2019 respectively. Secured 1 Large • This resulted in YoY increases in Client revenue of 116% and 71% in 2018 and 2019 respectively. • CoreCard was brought in to help Goldman with the implementation of the Apple credit card.

140 Back to List Intelligent Systems Takeaways

INS is a Good Business – 4/5 Future Outlook • INS is a small business that has a lot of upside for growth. Can INS Sustain its Moat? • HOWEVER, management has stated that they • Provided INS doesn’t grow faster than it would not have the capacity for another large can handle, which it doesn’t seem to be High Upside Potential customer for quite some time doing currently, INS prides itself on that • INS is now solely focused on the FinTech industry, speed and uniqueness compared to its allowing them to reinvest their high cash balance in competitors. the sector • Within the FinTech space, INS is looking to shift its Can INS continue to grow? revenue model to invest more heavily into the • It seems like so far the Apple card has expansion of their services business rolled out successfully, so other companies • Services provide a more consistent source of will likely see this success with Goldman Focused Future revenue than one-off large licensing deals and the fast implementation relative to its • They have also historically accounted for 85% of competitors. The Goldman deal seems to their revenue, so it makes sense to focus on be the catalyst to much more growth in the growing the cash cow of the business future. • “If you can’t find us, you’re probably not a good Is INS poised to continue to outperform? prospect, and we don’t need to be knocking on your • Given the extremely high demand and the doors.” – Leland Strange (CEO) Strong Industry fact that INS has to turn away customers, a • Customers seek out INS for their unique ability to solve Reputation complex problems and their speed to market. The simple expansion plan should allow the customers come knocking and INS incurs almost zero stock to continue to outperform rather marketing expense and have no sales staff. comfortably

141 Owen Stimpson

1,036% 5 Year TSR OTCPK:SMLR Rank: 21/104

142 Semler Scientific Overview

Semler Scientific, Inc. is an emerging medical risk-assessment EV / NTM Revenue company. It develops, manufacturers, and markets products that assist customers in evaluating and treating chronic diseases. Its 2019 current product is the QuantaFlo, which tests for PAD.

Statistic 06/08/2015 06/08/2020 2015 Stock Price $3.45 $46.57

Market Cap $17.17M $305.41M 0x 2x 4x 6x 8x 10x Enterprise Value $16.11M $294.20M

Shares Outstanding 4.98M 6.56M

EV / NTM Revenue 2.85x 7.97x

EV / NTM EBITDA NA 25.09x

PE NA 44.94x

Statistic FY 2015 FY 2019

Revenue 6.87M 32.77M

EBITDA (8.10M) 10.86M

143 Semler Scientific Business Model

Primary Product Context SMLR only sells the QuantFlo product in the United 5-minute PAD test that can SMLR is a PAD test company. States. be done by a range of • SMLR aims to ensure more health professionals, not people with PAD are QuantaFlo SMLR is a capital light business as they outsource just vascular doctors. It is diagnosed. their manufacturing. licensed or rented to health • PAD, or Peripheral professionals. artery disease, is when narrowed arteries reduce blood flow to limbs. • PAD diagnosis is good indicator of elevated risk for heart-attack, strokes, etc. • QuantaFlo seeks to give non- vascular doctors an easy way to screen for PAD. QuantaFlo test steps. • Issue is many patients with PAD do not get symptoms, and current testing often requires A QuantaFlo in use. going to an expert.

144 Low Threat Medium Threat Semler Scientific Competitive Analysis High Threat

Competitive What’s Changed in Risks Competitive Landscape Barriers To Entry Advantages the Industry

• ACA began Medicare Advantage plans to Market • Relationships Oligopoly transition away from US Medical Structure with health care fee-for-service to • Patent issued to SMLR professionals Market Size 45.3B1 • One customer capitation model. Device Market for the QuantaFlo. and insurers. nearly 50% of • Insurers are Industry Manufacturing and selling of LSD1 revenue. paid per Growth medical device products, such • FDA approval needed, • Scientific testing • The QuantaFlo client, not per as pacemakers, ABI machines, which can take years. and study may stop being service. MRIs, etc. • Top four companies: results that covered for • Payment for Medtronic, GE, Abott Labs, • Many major players demonstrate reimbursement. heathy clients and Danaher hold roughly that create similar product • Another PAD by CMS is less 70% market share. tests. effectiveness. test could be than for • There are many large • Uncertain how invented, or unhealthy companies that manufacture proprietary • Speed and ease existing ones ones. Creating the ABI machine (the SMLR tech is. at which the test may be an incentive competitor device to can be improved. to diagnose QauntaFlo). administered. PAD as it would increase their revenue.

1. Only US; Ibis World 145 What Investors Missed The Actual Story of the Last Five Years The Bear Thesis Five Years Ago: Raised enough • Burns cash and will need to raise more to survive. money and then • SMLR raised equity, stayed afloat, kept stared making growing, and now is cash flow generative. • Insurers could be hesitant to reimburse such a quick procedure – money especially because little expertise is enquired to administer it. • Physicians are generally charging for use under Reimbursement general reimbursement policies. • Sure there may be upside, but it is very speculative right now. concerns continue • QuantaFlo has likely been denied for to exist but didn’t reimbursement in some cases but it has not • ACA may be repealed and fee-for-service will, for better or worse, impede growth been a major impediment so far, nor does remain the norm. SMLR track these denials.

• SMLR has the quickest and easiest PAD test Return Breakdown: Consensus vs Results available; and it does not need a vascular doctor to be administered. Model was proven • Recurring revenue from license model keeps gross margins very high – 88% in FY2019. • Revenue grown at 37% CAGR since FY2015.

• The ACA was not repealed. ACA was not • Medicare Advantage plans use a capitation repealed; model. healthcare • 232B market in 2018.1 payment models • Medicare Advantage becoming more are changing possible and could penetrate 50% of all Medicare plans by 2025. 2

1. https://www.kff.org/medicare/issue-brief/the-facts-on-medicare-spending-and-financing/ 2. https://www.lek.com/sites/default/files/insights/pdf-attachments/1969_Medicare_AdvantageLEK_Executive_Insights_1.pdf 146 Back to List Semler Scientific Takeaways SMLR is a Strong Business- 4/5 Future Outlook Can SMLR Sustain its Market Position? • PAD is a major disease that affects 20M Americans but ~75% are undiagnosed. • SMLR is currently the leader in the space and has the SMLR identified a market best product. opportunity • Diagnosing PAD earlier would enable preventative care to start earlier – bettering patient outcomes and • SMLR’s competitors who make ABI devices are major lowering medical costs by preventing further issues. players, and if the PAD test market proves to be lucrative, could likely enter. • Existing PAD tests (i.e. the ABI) took too long (upwards • Not clear how proprietary SMLR’s product actually is. of 15 minutes) and often could only be administered by vascular health specialists. Can SMLR continue to grow faster than the industry? SMLR developed the best • This stopped many primary care doctors from • If they can maintain their market position and fend off product doing them, and many cases of PAD going potential new entrants their license model will enable them undiagnosed. to outperform. • SMLR’s QuantaFlo test takes 4 minutes and can be done • SMLR does not have major R&D spend, nor any key new by essentially any health professional. products in the pipeline and future performance will depend • SMLR capitalized on Medicare Advantage providers who on QuantaFlo’s success. got paid by the CMS based on the health of their clients. • If they could use SMLR’s product to determine Is SMLR poised to continue to outperform the market? their clients had PAD, they could charge CMS • SMLR has identified a major opportunity in PAD testing and SMLR grew revenue and more. margins has benefited from the shift in payment models for Medicare • Marks a change away from fee-for-service. Advantage Plans. • License model lowered upfront costs for customers but • New competitors could enter and undercut SMLR’s growth; created a recurring revenue stream for SMLR – enabling and if they lose their biggest customer, 50% of sales would their high gross margins. be eliminated.

147 Max Schieferdecker 1,007% 5 Year TSR AIM:KWS Rank: 22/104

148 Keywords Studios Overview

Keywords Studios is a software consultant based in Dublin, NTM EV/EBITDA Multiple Ireland, that provides integrated, outsourced creative and technical services to video game companies. 2020 28.3x

Statistic 6/8/15 6/8/20 2015 13.2x Stock Price £1.67 £17.21 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x 30.0x Market Cap £78.69M £1.25B

Enterprise Value £69.94M £1.28B

Shares Outstanding 47.26M 72.47M

EV / NTM Revenue 1.77x 4.13x

EV / NTM EBITDA 13.21x 28.33x NTM P/E 16.93x 42.90x Z

Statistic FY 2015 FY 2019

Revenue 57.95M 326.46M

EBITDA 9.07M 40.50M

149 Keywords Studios Business Model

Primary Products Context Sales by Category 11.1% • Creation of video game 13.4% graphical art, game KWS is a one-stop-shop for all 6.9% Art Creation trailers, and marketing video game development needs 20.3% materials 14.9% • KWS allows companies to • Outsourced software 21.1% Game increase their performance 12.4% creation for any part of the Development capabilities by offering development process Art Creation Game Development Audio Functional Testing outsourcing services Localisation Localisation Testing Player Support • Voiceover recording, voice • A variety of services for production, music Sales by Geography Audio every stage in the management, and sound development cycle are 20.3% effect services included in their 36.2% product portfolio • Quality assurance services 12.8% Functional pertained to hardware • KWS’ 950+ clients include Testing compliance and market small developers as well as 14.7% 16.0% reception the large, blue-chip, global • Translation of in-game video game companies Ireland USA Canada UK Others text, audio scripts, cultural • 23 of the top 25 video Localization adaptation, and marketing game companies by KWS is a capital light business as there is not materials in over 50 revenue are customers material production involved in the business languages

150 Low Threat Medium Threat Keywords Studios Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry Video Game

The players in this industry develop video games. • Many locations allows them • No material barriers to to be close to their clients entry • No other player in • Many players in the • Currency risk is present • Video games have the industry that Market Pure market due to the global nature of become much operates on a global Structure Competition the business more mainstream • Only sizable advantage for scale the larger players is the Market Size $170.55B1 • Strong reputation as a marketing budget provider of high-quality aid Industry > 10%1 Growth

1https://www.grandviewresearch.com/industry-analysis/video-game-market 151 What Investors Missed The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • In July 2016, CEO Andrew Day presented at the ShareSoc Richmond • Small micro cap company listed on the lower volume AIM conference exchange Increased their • This was the first time KWS • Received little to no analyst coverage which resulted in Investor had made a large effort to actively get in front of many investors not knowing about the stock Relations Efforts investors • The change in the slope of the share price from flat to steep can be traced to this event Return Breakdown: Consensus vs Results • KWS ramped up their acquisition efforts to complete around 5 – 10 per year • These helped expand both their High Amount geographic reach and their service of Accretive capabilities Acquisitions • Being near their clients around the world increased the quality and amount of work that they could complete, which increased revenues substantially

152 Back to List Keywords Studios Takeaways KWS is a Good Business – 4/5 Future Outlook

• KWS offers a substantial value add to its clients that cannot Can KWS Sustain it’ Advantages? be found in very many other companies • KWS has established itself as a reliable KWS has a Moat • It is cheaper for many companies to hire KWS partner in the video game development than to do many of these operations in-house process • There are no other companies that have the same global reach and quality • Launch of the new generations of consoles later in 2020 thresholds that KWS has • A fast-growing industry drives more demand for Can KWS continue to grow? outsourcing services Strong Tailwinds • The video game industry is continuing to • High innovation in both the actual games and the for the Video expand as more competition leads to more distribution of those games drives competition and Game Industry innovation and the new consoles arrive increases output • KWS is a key part of the development • Rejuvenation of the industry both through new players and process for many companies, so they will “retired” players having more free time during COVID-19 undoubtedly continue to grow at a minimum in line with the industry • Strong M&A pipeline of high-quality, attractive Is KWS poised to continue to outperform? companies • Although multiple expansion did take place Strong • High cash balance fueled by strong cash generation in the past, the potential growth of the Positioning for and a recent £100m raise allows KWS to capitalize on company could negate some slight Future Growth these opportunities efficiently and effectively contraction • Growth will continue to happen at similar rates as in the past • KWS will likely continue to outperform as because of their increased resources and capabilities not all future growth is calculated in yet

153 Owen Stimpson 866% 5 Year TSR ASX:HUB Rank: 23/104

154 HUB24 Overview In Australian Dollars

HUB24 Limited is a financial service company that provides Price / LTM Revenue investment and superannuation portfolio administration services, and licensee services. It operates the HUB24 investment 2019 and superannuation platform.

Statistic 06/08/2015 06/08/2020 2015 Stock Price $1.16 $11.4

Market Cap $60.39M $715.99M 0x 2x 4x 6x 8x

Shares Outstanding 52.06M 62.81M

Price / LTM Revenue 4.32x 6.92x

PE NA 50.44x

Statistic FY 2015 FY 2019

Revenue 29.3M 97.5M

EBITDA NA NA

155 HUB24 Business Model

Primary Product Context Sales by Division Provides financial 7% Investment and advisors capability to superannuation offer their clients HUB24 provides services for 37% platform access to a wide range independent financial advisors. 56% of investments. • HUB24 investment platform helps independent financial advisors with range of activities: making License Platform IT Financial advice investments, monitoring fees, licensee. Provides managing portfolios, etc. Paragem compliance, software, Sales by Geography education and support • HUB also offers business solutions to financial advisors. for financial advisors to help build their brand and win clients. 100%

IT services for the • Paragem is a community for Agility financial services financial advisors that help advisors industry. maintain compliance standards, gives access to research, etc. Australia

HUB is a low capital intensity business.

156 Low Threat Medium Threat HUB24 Competitive Analysis High Threat

Competitive What’s Changed in Risks Competitive Landscape Barriers To Entry Advantages the Industry

Market Monopolistic • Regulatory barriers. • Scale enables • Switching Financial Advisor Structure Competition data advantages platforms (which features relatively Platform Industry ≈$858.5B of • Need strong security Market Size are most useful, common: 29% • Specialty platforms FUA1 cybersecurity etc.). of financial gained market share Industry measures. advisers Participants in this industry > 10%1 as banks lost it. Growth switched in provide platforms upon which • Reputation as • Switching costs: 2019. financial advisors can build • Traditionally market was good platform. • Government report hassle to transfer their practice. dominated by major bank (Royal Commission) client funds / data platforms, such as • Data breach. changed industry across platforms. • Feedback from Macquarie and BT. customer base. regulations and led • HUB24 and Netwealth are • New fintech to financial advisors two fintech disruptors who • Industry is evolving entrants or switching away from • Paragem are capturing the most quickly and there is a major bank major bank benefits from market share. race to win market makes large platforms. network effects. • Non-institutional platforms share: likelihood of investment to now represent 60% of new fintech entrants protect market financial advisors. is high. share.

1. https://yourir.info/resources/3929695d306a6404/announcements/nwl.asx/3A521585/NWL_NWL_2019_Results_Presentation.pdf 157 What Investors Missed

The Actual Story of the Last Five Years The Bear Thesis Five Years Ago: • Stale, mature industry – not much room for HUB to capture market • Royal Commission report essentially found share and grow. widespread conflicts of interest and poor service in Australian financial industry: • Unprofitable company that has consistently negative operational • Those recommending investments cash flow since 2008. (financial advisors) worked for • With 12M in cash on the balance sheet HUB may go under Industry evolved banks that sold these products. soon. • Led to financial advisors moving towards • HUB’s product, given their scale, will always be inferior to those of independent platforms, like HUB. the major institutions. • Regulatory changed that eliminates of grandfathered commissions likely to open FUA from incumbent platforms. Return Breakdown: Consensus vs Results HUB is now • Cash flow positive since FY2016; profitable profitable and cash since FY2017. flow positive • Issued dividend in FY2018. • Independent, non-bank nature of product attractive post Royal Commission report. • Strength in managed account segment: added HUB has a strong, 129 new managed portfolios to platform in Q1 competitive product 2020, for example. • 89% of customers believe HUB is best platform; consistent industry recognition as having top product.

158 Back to List HUB24 Takeaways HUB is a Good Business- 3.5/5 Future Outlook • The Royal Commission report released in 2017 Can HUB Sustain its Market Position? dramatically altered the industry. • HUB does have some advantages: switching costs, strong • Report shined light on conflicts of interests and abuse product, reputation, etc. HUB’s industry changed in major banks and led to advisors fleeing to • But 29% of advisors switched platforms in 2019. dramatically independent platforms, like HUB. • Industry is evolving quickly and new entrants threaten • Regulation changes catalyzed by report, such as positioning. removal of grandfathered commissions, freed up FUA • Banks may be unwilling to lose market share for from incumbent institutions (mainly major banks). much longer and make major new investments. • HUB is the fastest growing platform in the industry. Can HUB continue to grow faster than the industry? • Grew adviser customer base from 484 in FY2015 to • HUB has proven they can grow faster than the industry – in 1,625 in FY2019. fact, the fastest over the last three years. HUB capitalized on this • FUA grown at 72% CAGR over same period. • HUB needs to stay on top of trends to continue growth these changes • Revenue grew from 29M to 97.5M in same trajectory. period. • Potential new entrants, more competition from banks, and • Market leading position in managed accounts space changing industry means growth trajectory is more uncertain. undergirded growth. Is HUB poised to continue to outperform the market? • Specialist platforms continue to win market share from • HUB has capitalized on an evolving industry and captured institutional incumbents. market share. • HUB has invested in its products and has industry • But customers are not particularly sticky and many have HUB has a runway for leading features, which has enabled HUB to achieve changed products; there is also the threat of banks and new growth industry leading growth over the last three years – and competitors entering. potentially going forward. • At 50x earnings, HUB will likely struggle to continue to • Potential of further disruption from new entrants. outperform.

159 Max Schieferdecker 855% 5 Year TSR XTRA:YSN Rank: 24/104

160 secunet Overview

secunet is an IT security company based in Essen, Germany, NTM EV/EBITDA Multiple that operates as a subsidiary of their parent company Giesecke+Devrient, who owns 78.96% of the shares. 2020 28.0x

Statistic 6/8/15 6/8/20 2015 12.5x Stock Price €20.25 €178.50 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x 30.0x Market Cap €131.01M €1.15B

Enterprise Value €103.67M €1.11B

Shares Outstanding 6.47M 6.47M

EV / NTM Revenue 1.26x 5.04x

EV / NTM EBITDA 12.49x 27.99x NTM P/E 29.35x 52.35x Z

Statistic FY 2015 FY 2019

Revenue 91.09M 226.90M

EBITDA 9.60M 35.40M

161 secunet Business Model

Primary Products Context Sales by Category

• Specialist consulting on IT YSN secures IT systems and 25.2% security, software optimizes IT processes development, and the • YSN specializes in IT high Services development and security, complex solutions, 74.8% implementation of and demanding projects in comprehensive security which technologies and solutions processes are combines Public Sector Private Sector • A variety of hardware and • The range of solutions software solutions ranging is mainly geared Sales by Geography Product from tablets, to crypto- towards large-scale IT 7.7% Portfolio gateways and servers, to infrastructures inter-country registration • YSN provides tailored kiosks in airports solutions matching the individual requirements of 92.3% each client

• Consulting and development Domestic (Germany) Abroad A secunet easygate kiosk that projects are handled in close is used in many EU airports collaboration with the clients at 11 locations around YSN is a capital intensive business as it is an R&D Germany heavy business and production is done in house

162 Low Threat Medium Threat secunet Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry Cyber Security

The players in this industry offer technologies, processes, and practices • Shortage of high-quality designed to protect networks, devices, talent interested in the IT programs, and data from attack, security business damage, or unauthorized access. • Many potential customers • Strong relationships with already have established the EU, NATO, and the • Increased • The parent company owns a relationships with IT German government reliance on the majority stake and has Market Monopolistic security providers • internet and YSN has been in business different incentives than Structure Competition software in • Reputation is for over 20 years and thus the common shareholders has a lot of experience in everyday life Market Size $172.15B1 critical in winning business when the space Industry dealing with critical > 10%1 Growth components on client’s business

1 https://www.grandviewresearch.com/industry-analysis/cyber-security-market 163 What Investors Missed The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • In the private sector, shifting technological advances in the business world required • Micro-cap stock with very little trading volume that trades on Strong new IT security measures a minor exchange Industry • In the public sector, worries about the • Actual amount of free float only about 10% of total Tailwinds security of critical infrastructure and the shares outstanding complexity of network scenarios (5G) have • Order book was down y/y which did not indicate an extremely increased demand as well promising future • Germany has been officially undergoing a digitization of their health care system since it passed an ehealth law in 2016 • YSN decided to capitalize on this opportunity Return Breakdown: Consensus vs Results given their expertise in IT infrastructure and security Expanded • In 2018, the “konnektor,” securely into the integrates the information on the Healthcare management systems of hospitals, Industry doctor’s offices, and pharmacies into the broader national Telematics Infrastructure (TI) • In April 2020, the organization in charge of the project, gematic, approved the product for field testing and then commercialization

164 Back to List secunet Takeaways YSN is a Good Business – 4/5 Future Outlook • YSN has excellent relationships with some major Can YSN Sustain its Advantages? customers, specifically the government bodies • The reputation that YSN has developed YSN has a Moat • In a world that is becoming more and more digitized over its long tenure in the IT business as everyday, people want to feel protected, and YSN a high quality provider is hard to lose provides that security • Its strong relationships with its key clients are likely to stay intact in the • With the dive into the healthcare industry yet to be future fully commercialized, there is a lot of upside potential for the company that is not known at this Can YSN continue to grow? point Strong Future • The strong potential to break into new Potential • The table is also set for the company to launch more markets (healthcare) and the broader products related to IT in other industries as well industry and cultural tailwinds behind • Also a lot of room to continue to grow their them will undoubtedly continue to drive existing private company client base the growth of YSN

• With Giesecke+Devrient owning 78.96% of the shares, Is YSN poised to continue to outperform? with regards to voting rights, YSN is essentially a private • Given the reasonable multiples (22x company EV/NTM EBITDA) the stock is currently Worrisome • The ~10% of free float shares really have no trading at as well as the huge upside Ownership Structure power • If things end up going badly for either the parent potential that it has, it is very likely that YSN or YSN, the interests of the free float shareholders will continue to outperform into the near would not be considered at all future

165 Owen Stimpson

850% 5 Year TSR LSE:FUTR Rank: 25/104

166 Future Overview EV / NTM EBITDA Future plc is a British media company founded in 1985. It publishes more than 50 magazines in fields such as video games, technology, films, music, photography, home and knowledge. 2019

Statistic 06/08/2015 06/08/2020 2015 Stock Price £1.67 £12.78

Market Cap £37.05M £1.25B 0x 2x 4x 6x 8x 10x 12x 14x Enterprise Value £32.35M £1.29B

Shares Outstanding 22.20M 97.90M

EV / NTM Revenue 0.57x 3.62x

EV / NTM EBITDA 8.19x 13.19x

PE 51.66x 19.93x

Statistic FY 2015 FY 2019

Revenue 59.8M 221.5M

EBITDA 1.4M 44.1 M

167 Future Business Model

Primary Product Context Sales by Division Operates online websites and 30% FUTR is a specialty media runs events. Revenue from Media company. advertising, ecommerce, ticket sales, and email newsletters. • Operates niche websites and magazines on a variety of 70% Operates 78 specialty topics. magazines on a variety of Magazines topics (i.e. guitars, pc gaming, Media Magazine • FUTR creates communities etc.). around niche topics through Sales by Geography its media platforms (both websites and magazines) and 46% its events. 54% • FUTR sells variety of services to brands such as content creation, advertising,

audience data insights, print UK US licensing, and digital licensing. Sample FUTR websites and magazines FUTR is a low/medium capital business due to the capital intensity required to create new, original content.

168 Low Threat Medium Threat Future Competitive Analysis High Threat

Competitive What’s Changed in Risks Competitive Landscape Barriers To Entry Advantages the Industry

Monopolistic • Competitors can Market Competition / steal market Structure • Oligopoly • Network effects: Understanding share in even sites have self- and experience: more niche ends • Each specific website / FUTR knows • Social media has FUTR operates in many niche published content (i.e. electric magazine operates in a what content become even more markets online and in feature which means guitar focused different sub-industry with works and how prevalent, especially magazines from home more users which site competes varying competitive dynamics. for news and create more content, to monetize it. with FUTR renovations, to photography, content. to music. It would be which attracts more • Diversified end- guitar • FUTR has leading psotions in misleading to say that FUTR markets: FUTR many of the sub-industries: users. magazine). competes in one industry / can lose • Print magazines • #1 UK/US consumer • Low-startup costs. • Changes to market – it competes in many. positioning continue long-term technology publisher. • Search engine google search without decline. • #1 PC gaming website. optimization. algorithm. destroying • #1 online space • Publisher • Social media publisher. bottom line. relationships for groups (i.e. FB • #1 consumer music • Relationships magazines. groups) steal making magazine. with advertisers. market share. • #1 homebuilding show in UK.

1. Only North America ; https://icv2.com/articles/news/view/43024/hobby-game-sales-total-1-5-billion-2018 169 What Investors Missed The Actual Story of the Last Five Years The Bear Thesis Five Years Ago: • Strengthened balance sheet and protected the company from credit risk. • FUTR “transformation” program is not a signal of future success – but rather a sign of a company in decay. • Made tough decisions to cut costs • Good companies with strong management do not need to Transformation was (employees) and sell segments that were sell £24.8m worth of assets and restructure debt. a success diluting the company’s focus. • Magazines are dying out – makes no sense to invest in a magazine • Focus on media segment and fast growing company. digital segment. • FUTR even projects revenue declines for magazines. • Added to FTSE 250 index in June 2019. • Revenue is decreasing, EBITDA has been negative, and the company • Management acknowledges that print is in is unprofitable. steady long-term decline. • Niche nature of magazines has insulated FUTR Magazines not over from some of the decline – subscribers flat Return Breakdown: Consensus vs Results from 2018 to 2019 and circulation increased 15%. • FUTR identified new revenue streams and exploited them: ecommerce, events, and advertising. • Ecommerce revenues virtually non- existent in FY2015 to ≈30% of revenue New revenue streams in HY2020. • Consistent growth in digital advertising revenue. • Consistently launched new events. • Revenue grown at 40% CAGR from 60M in FY2015 to 221.5M in FY2019.

170 Back to List Future Takeaways FUTR is a Good Business- 3.5/5 Future Outlook Can FUTR Sustain its Market Position? • FUTR addressed its balance sheet issues by • FUTR is a market leader in the majority of its segments restructuring debt, selling non-core assets, laying (i.e. TechRadar in personal tech sites). FUTR made necessary off workers, and closing offices. changes • FUTR could lose positioning in any segment – but very • Simplified the business to focus on digital segment unlikely to lose it in many segments. where it saw most growth potential. • Social media continues to threaten original content • FUTR optimized the back-end for websites, which made producers as people search for “posted” articles rather launching new websites easier. than seek them out through Google search. • Grew revenue streams by expanding ecommerce, Can FUTR continue to grow faster than the industry? optimizing advertising capabilities, and launching new Digital media did grow • FUTR understands its core business and has an executions events. strategy that works. • Made many acquisitions and captured synergies on the • Exemplified by the many successful acquisitions. back-end, while using their SEO and other capabilities • Continues to be opportunities for further acquisitions. to grow users. • Low incremental costs for digital media revenue, and network • Trends that FUTR utilized to grow can continue to drive effect from sites as users post and interact with content. growth: Is FUTR poised to continue to outperform the market? • Ecommerce continues to grow. • FUTR can continue to grow events, advertising, and • Digital media increasingly popular and can make ecommerce revenue. FUTR has a runway for further acquisitions. • Demonstrated they will remain focused on core growth • Low incremental costs and high gross margins in digital business and not deviate. segment means growth will flow through to bottom line. • FUTR’s 13x NTM EBITDA does not price in significant growth • Magazine segment in long-term decline, but FUTR has outperformance relative to the market. nevertheless maintained its revenue contribution and • Persistent threat of social media boxing out FUTR from its even grown circulation. demographics and decreasing ad revenue.

171 Owen Stimpson 819% 5 Year TSR NasdaqGS:CWST Rank: 26/104

172 Casella Waste Systems Overview

Casella Waste Systems provides resource management expertise EV / NTM EBITDA and services to residential, commercial, municipal and industrial customers in the areas of solid waste resource collection, 2019 recycling, organics, energy recovery and disposal.

Statistic 06/08/2015 06/08/2020 2015 Stock Price $5.65 $52.55

Market Cap $231.29M $2.54B 0.00x 5.00x 10.00x 15.00x 20.00x 25.00x Enterprise Value $775.18M $3.16B

Shares Outstanding 40.58M 48.31M

EV / NTM Revenue 1.45x 4.13x

EV / NTM EBITDA 7.18x 20.82x

PE NA 98.82x

Statistic FY 2015 FY 2019

Revenue 546.5 743.3

EBITDA 91.0 138.3

173 Casella Waste Systems Business Model

Primary Product Context 11% Sales by Division Includes the collection, 6% CWST is a full service, Solid Waste processing, and disposal of vertically integrated solid Solid solid waste. This segment also waste management company. Organics Waste includes revenue from the 8% Operations power generated by • One-stop shop for customers Customer converting landfill gas to and their solid waste Solutions energy. Recyling management. 76% • Customer solutions Leveraging organic portion of segment enables CWST waste stream to create Organics to tailor specific products, such as fertilizers solutions for large Sales by Geography and mulch. clients. • CWST tries to earn revenue 100% Work with large-scale from the actual waste itself Customer customers to develop custom through selling organic Solutions solid waste solutions. products and recycled commodities. Processing of recyclable • Range of customers: Recycling materials and sale of recycled residential, commercial, USA municipal, industrial. materials. Heavy machinery needed to transport / process waste; high-capital intensity business.

174 Low Threat Medium Threat Casella Waste Systems Competitive Analysis High Threat

Competitive What’s Changed in the Risks Competitive Landscape Barriers To Entry Advantages Industry

Waste Collection • Scale enables • The industry has gotten Market Services Industry Oligopoly economies of more consolidated due Structure • Losing a • Regulations can be to major M&A: Operators in this industry scale. major Market Size 51.7B1 complex, are subject rd th collect waste and recyclable • Integration of contract. • 3 and 4 to change, and are materials. Nonhazardous Industry different largest players LSD1 different across waste includes municipal solid Growth segments allows merged in 4.1B municipalities, states, • Changes in waste, or household waste, for more 2016 merger. etc. fuel prices. and industrial and commercial • Top 3 competitors – Waste competitive • The three major waste. This industry also Connections, Republic contract bids as players made • New, more includes transfer stations in Services, and Waste • Start up capital is high full-suite many which waste is relocated from Management Inc - have given the capital solutions can be stringent acquisitions local vehicles to long-distance 45.5% market share. intensive nature of the offered. regulation. over last five automobiles for transport to business. • Vertical years. disposal facilities. • CWST is a significant regional integration • Changes in • Recycling is now ≈35% player but does not compete on prevents price for a national level with the largest • Contracts generally of municipal waste; companies from recycled competitors. last over a year. recycling rates have paying “tipping commodities. risen steadily for 30 fees” to landfills. years.

1. Only US; Ibis World 175 What Investors Missed

The Bear Thesis Five Years Ago1: The Actual Story of the Last Five Years • Poor capital allocation: • Increased capex hurdle rate and focused on • tuck-in acquisitions. Doesn’t paid dividends while peers do. Capital allocation • Capex of $770M over 10 years with no resulting increase improved • 5 year average Capex as a % of revenue of earnings power. dropped from 12.17% from FY2010-2014 to • High leverage: 6x Debt/EBITDA while peers at 2.9x. 10.91% in FY2015-2019. • Poor historical performance: up 11% over five years while peers up • CWST refinanced various tranches of debt Leverage went between 38% and 54%; guidance missed multiple times. and sold non-core assets; Leverage reduced down • Poor, and potentially corrupt, management. to 3.8x over 5 year period. • Over 10 years, the Company has paid more than $80 • Management outlined 5 goals for 2021 in Aug million to Casella Construction, Inc. a company of which CEO 2017 to drive growth and increase value. John Casella is both a director and executive officer and his brother is President. • Landfill price increased above inflation each year since FY2015 – demand currently Return Breakdown: Consensus vs Results Clear goals were exceeds supply for landfill capacity. outlined - and • Cost of Operations as a % of collection revenues achieved down 6.2% since FY 2014. • Recycling commodity prices down 18% from FY2018 to FY2019 (shrunk topline) but segment EBITDA up 0.7M due to operational improvements. • Activist investor JCP Investment Management Governance catalyzed the appointment of two new improved, which kept independent directors. management on • JCP was satisfied with the governance track changes and confident that CWST would no longer award contracts improperly.

1. https://www.sec.gov/Archives/edgar/data/911177/000141588915003029/ex992prec14a08569015_091015.pdf 176 Back to List Casella Waste Systems Takeaways CWST is a Strong Business- 4/5 Future Outlook

Activist involvement • Governance was improved through new independent Can CWST Sustain its Market Position? board members. catalyzed CWST to fix key • CWST is a dominant regional player in the waste issues • Leverage was refinanced and reduced. management industry. • Landfill pricing increased above inflation each year; • Scale, strategically located landfill sites, long-term and landfill capacity increased by 9.5% since contracts, and regulations impede new entrants. FY2014. • Route and fleet optimization, and fuel hedging lowered Can CWST continue to grow faster than the industry? CWST improved its collection operation expenses. operations • Landfill supply / demand imbalance will CWST to increase • Improved recycling model to reduce commodity risk by prices and subsequently increase their margin faster than passing increased cost to customers. non-vertically integrated competitors. • Investments in back-end technology, such as CRM and • Tuck-in acquisitions provide an avenue to realize top-line ERM systems. growth and operational synergies. • CWST is in an essential, non-cyclical industry of waste management. Is CWST poised to continue to outperform the market? • Closing disposal sites (landfills) have led to a shortfall in • Waste management is a mature industry with minimal growth disposal capacity in key CWST markets of NY, VT, MA, ME, prospects. CWST can capitalize on and NH – creating a supply / demand imbalance that favorable trends, and will give CWST pricing leverage. • Much of the operational efficiencies that have led to CWST’s leverage its scale outperformance have been realized. • Tuck-in acquisitions give CWST an avenue for future growth. • And CWST is trading at its highest NTM EBITDA multiple ever. • Scale enables operational efficiencies that will allow CWST to outcompete other regional players. • Recyclable commodity prices (pulp paper and carboard) trending downwards.

177 Max Schieferdecker 816% 5 Year TSR NASDAQCM:SLP Rank: 27/104

178 Simulations Plus Overview

Simulations Plus is a pharmaceutical focused software LTM1 EV/EBITDA Multiple company based out of Lancaster, CA that provides software programs and consulting services to guide early drug discovery, preclinical, and clinical development programs. 2020 68.2x

Statistic 6/8/15 6/8/20 2015 16.1x Stock Price $5.56 $49.73 0.0x 20.0x 40.0x 60.0x 80.0x Market Cap $97.40M $883.60M

Enterprise Value $91.30M $871.99M

Shares Outstanding 17.07M 18.32M

EV / NTM Revenue 4.97x 19.84x

EV / NTM EBITDA N/A 51.99x NTM P/E 23.12x 113.02x Z

Statistic FY 2015 FY 2019

Revenue 19.66M 37.71M

EBITDA 7.48M 12.49M

1There was no sell-side coverage in 2015, so LTM EBITDA were used for the sake of comparison 179 Simulations Plus Business Model

Primary Products Context Sales by Product

• Software licenses, Simulations Plus helps usually in terms of 1 companies develop drugs Software year or less, and a set 45.6% • SLP currently offers 10 54.4% amount of customer software products, each for support different purposes and for different parts of the process • Conduct contracted Software Licenses Consulting Services consulting studies for • Their most popular product, Consulting companies who are GastroPlus, is the most Sales by Geography looking to outsource widely used commercial software of its type by pharmaceutical companies 15.3% • If a small company doesn’t have the resources to run the 16.3% tests it wants to, or if large 68.4% companies have a difficult problem, SLP is brought in on the consulting side to run North and South America Europe Asia studies or solve problems through the consulting SLP is a capital light business as software companies do Simulations Plus Interface Example product not require heavy investments in fixed assets

180 Low Threat Medium Threat Simulations Plus Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry Biosimulation Software

The players in this industry offer mathematical models of biological • For a majority of SLP’s processes which can provide • The switching cost for software products, information about dose precision and existing customers is including the flagship drug-drug interaction at a molecular extremely high due to the GastroPlus, there are 1 or • If healthcare reform on a level. complexity of the 0 major competitors • Use of national level results in software, thus, new • This is due to the simulations has cheaper healthcare prices, entrants will have a hard high barriers to become more the profits of SLP’s clients Market time gaining market share entry and initial widespread in the Oligopoly may drop, which could Structure • Relationships with startup costs drug result in less R&D expenses national and international • Most products each offer a development Market Size $2.1B1 which means less business health and regulatory process unique combination of for SLP Industry bodies are key to fund capabilities within the > 10%1 Growth R&D and grow a strong software relative to their client base competitors

1 https://www.databridgemarketresearch.com/reports/global-biosimulation-market 181 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • SLP recently acquired a contract research organization • SLP took advantage of an increase (CRO), Cognigen, with the intent of expanding its Investments in in adoption of modeling and consulting revenues, but this was not appealing to simulation in the pharmaceutical Sales and investors as it was a lower margin business compared to market by increasing their sales Marketing its software business presence at conventions and • It used to be micro-cap company with little trading volume and industry events around the world no sell-side coverage, so many investors were not aware of the • company SLP has made more acquisitions in addition to Cognigen that have helped steadily grow the top line Return Breakdown: Consensus vs Results Accretive • DILIsym has allowed SLP to grow Acquisitions their consulting product faster • Lixoft will provide SLP with the ability to expand their European reach as well as grow their software

• In May 2019, the Pharmaceuticals and Medical Devices Agency in Japan added licenses Several Big Deals • In July 2019, a 5-year, potentially revolutionary research collaboration with the FDA’s Center for Veterinary Medicine

182 Back to List Simulations Plus Takeaways SLP is a Great Business – 5/5 Future Outlook Can SLP Sustain its Advantages? • SLP is in a niche sector that is extremely specialized with only one main competitor (Certara) • SLP has been the leader in its field for a over 20 years, so it has established • There are high switching costs and a network is SLP has a Moat itself in an industry with few players extremely important to be successful in their industry • As long as competitors don’t just copy • Their customers are in the healthcare industry, which the software, their advantage should be will likely never slow down unless everyone dies sustainable Can SLP continue to grow? • Both cash on the balance sheet and operating cash flows are about 34% of revenue for FY19 • The simulation industry is just starting to grow, and being an established player in SLP is in Great • The gross margin is very high for a company that brings the industry, SLP will no doubt continue to Financial Shape in nearly half of its revenues from consulting, at 73% grow as it expands into new markets and • SLP has no debt and pays out a quarterly dividend of adds more products $0.06 per share Is SLP poised to continue to outperform? • SLP recently rolled out their StrategiesPlus COVID-19 • Even if SLP just grows at the projected 5- ACT Program year CAGR of 15%, which is a conservative • The world needs vaccines and drugs to fight COVID as estimate, the stock will outperform the COVID-19 Presents a soon as possible, and modeling and simulation are the market comfortably Great Opportunity to means to enhance the forecasts of clinical trials before • As long as SLP continues to grow at a high Show Off they happen so less time is wasted • With this tech on display for the world to see, there will rate, slight multiple contraction from its likely be a surge in the demand for their product in the ATH will not be detrimental to its future outperformance

183 Owen Stimpson 780% 5 Year TSR AIM:FDEV Rank: 28/104

184 Frontier Developments Overview EV / LTM Revenue Frontier Developments plc develops and publishes video games for the interactive entertainment sector in the United Kingdom and internationally. It develops games across various platforms using its cross-platform technology. 2019 Statistic 06/08/2015 06/08/2020

Stock Price £2.21 £19.04 2015 Market Cap £74.39M £731.31M 0x 1x 2x 3x 4x 5x 6x Enterprise Value £64.43 £726.57M

Shares Outstanding 33.74M 38.41M

EV / LTM Revenue 5.47x 12.75x

EV / NTM EBITDA NA 26.72x

PE NA 55.58x

Statistic FY 2015 FY 2019

Revenue 22.8M 89.7M

EBITDA 1.8M 20.3M

185 Frontier Business Model

Primary Product Context

FDEV makes and sells their own Creating and Frontier develops and self- video games. Self- publishes video games for a Publishing variety of platforms. • Historically, FDEV was a “work- Video Games for-hire” developer. Sales by Division

• Now, FDEV develops their own games and publishes them 100% themselves.

• FDEV aims to create high quality game franchises, which they can Self-Published Video Games continue to update through new versions or in-game expansion packs. FDEV is a medium capital intensity business due Sample Frontier Games to the cost of developing new games • FDEV seeks to partner with Frontier publishes video Frontier developers to help them publish games made by other Publishing their games and bring them to developers. market.

186 Low Threat Medium Threat Frontier Competitive Analysis High Threat

Competitive What’s Changed in Risks Competitive Landscape Barriers To Entry Advantages the Industry

• A poor game release can Video Games Market Monopolistic • Developer talent tarnish a Industry in the US Structure Competition • Game franchises franchise and is necessary to • Shift towards digital 1 develop loyal harm its Market Size $63.4B make high- rather than physical Includes all video game related fanbases who solidify associated industries in the US. Game Industry quality games. distribution of games. > 10%1 the game’s community. development, publishing, and Growth • Enabled FDEV community and are • A major cyber retail sales make up the • Games can take to focus on self- repeat customers. breach can majority of the industry along years to develop publishing tarnish a with the development and sale • In 2019, top four competitors and so significant games. • brand and of gaming consoles. earn 29.9% of total industry start up capital is Network effects: the revenue. stop players • Games have longer required. more players a game has the better from playing. lifespans and are often played longer than • Publishers of games capture it is. • New • Technology is one-year but significant portion of profits • Especially technologies required to port continually updated with low incremental costs online can eclipse (given that most games are now games to through expansion multiplayer existing purchased digitally). multiple packs, updates ,etc. experience. technologies platforms. forcing companies to adapt quickly.

1. Only USA; Ibis World 187 What Investors Missed

The Actual Story of the Last Five Years The Bear Thesis Five Years Ago: • Transition made almost entirely in two • FDEV will not be able to make the transition from being a years. “developer for hire” to a self publisher. • Shift to self-publishing has increased Self-publishing has gross margins from 30% in FY2013 to • The quality of FDEV’s game IP is low and will be outcompeted by been a success major players. 60% in FY2019. • “Elite Dangerous” will not be a franchise quality game. • FDEV has successfully developed and launched multiple game franchises. • Game platforms are shifting rapidly – publishers with significant scale, like EA and not FDEV, are best suited to adapt. • Focus on games where it has unique • Trends seem to indicate a greater importance of mobile, competency, such as “Tycoon games.” which is not a focus of FDEV. • Jurassic World Evolution sold 1M units in 5 Game IP weeks. development has Return Breakdown: Consensus vs Results • Elite Dangerous continues to be popular since been a success its 2014 launch, crossing 3M unit sales in 2019. • Planet Coaster is a leader in the tycoon genre.

• PC and console games still 53% of global video game market revenue; mobile is 35%. • Mobile game market less of a focus on quality FDEV capitalized on and has low barriers to entry – less attractive, the right platforms therefore, for FDEV. • Proprietary COBRA software enables FDEV to port its games quickly and easily across various platforms.

188 Back to List Frontier Takeaways FDEV is a Solid Business- 4/5 Future Outlook • FDEV is no longer reliant on securing contracts with Can FDEV Sustain its Market Position? major publishers. • FDEV has two proven franchises which have FDEV’s transition to self- publishing worked • FDEV can capture higher margins associated with demonstrated longevity, have continued to grow, and publishing games, evidenced by the 100% gross continued to be monetized. margin increase from FY2013 to FY2019. • FDEV’s games are leaders in their receptive niches with • Elite Dangerous sustained popularity since 2014 strong communities: Elite Dangerous in space flight release; four major updates made since; 3M units sold; simulation genre; Planet Coaster in tycoon genre. FDEV has created games strong critical acclaim. with long-term franchise Can FDEV continue to grow faster than the industry? • Planet Coaster sustained popularity since 2016; 11 potential • FDEV has new self-published games in the pipeline and has a separate theme packs; 2M units sold; leader in tycoon strong track record of success so far. genre. • Frontier publishing anticipated to be material contributor to • FDEV seeks to continue to build on existing franchises future growth. through new releases. • Core games have remained popular: Elite Dangerous’ highest • Views games as a “service” to be continually avg steam players achieved in May 2020 despite 2015 launch. updated and monetized. Is FDEV poised to continue to outperform the market? • Launched new Planet Zoo game recently; secured “major • Core games poised to continue to succeed given sustained FDEV has identified global IP license for a future game release in 2021.” success. avenues for future growth • Frontier publishing initiative has secured 3 clients as of • Multiple avenues for future growth: new self-published November 2019. FDEV has essentially transitioned from games, frontier publishing initiative, potential licensing of being a developer for hire and relying on publishers to Cobra. vice versa. • FDEV trades at a reasonable 26x NTM EBITDA, which is at a • Enables FDEV to capture higher margins. substantial discount to FDEV’s peak multiples in 2017 which • Potential possibility to license COBRA software. were as high as 53x.

189 Max Schieferdecker 768% 5 Year TSR ASX:ALU Rank: 29/104

190 Altium Overview

Altium is a tech company based in La Jolla, California, that NTM EV/EBITDA Multiple develops and sells computer software for the design of electronic products. 2020 33.6x

Statistic 6/8/15 6/8/20 2015 13.9x Stock Price 4.43 AUD 33.96 AUD 0.0x 10.0x 20.0x 30.0x 40.0x Market Cap 572.68M AUD 4.45B AUD

Enterprise Value 500.65 AUD 4.35B AUD

Shares Outstanding 129.27M 130.91M

EV / NTM Revenue 4.46x 13.01x

EV / NTM EBITDA 13.89x 33.62x NTM P/E 23.27x 56.75x Z

Statistic CY 2015 CY 2019

Revenue 85.21M USD 186.55M USD

EBITDA 28.64M USD 71.14M USD

191 Altium Business Model

Primary Products Context Sales by Category

• Software that is used ALU helps electrical engineers 9.7% to design printed design circuitry boards circuit boards 9.9% • Printed circuit boards (PCBs) Boards and • Operates under the are key to the development of Systems Altium Designer, 80.3% electronics and smart Circuit Studio, and connected products Solidworks PCB Boards and Systems Microcontrollers and Embedded Systems brands • Every laptop, Electronic Parts, Search and Discovery smartphone, etc. has a • Tools for embedded PCB in it Sales by Geography Microcontrollers software • The design of PCBs for 8.8% and Embedded development complex devices requires Systems • Operates under the sophisticated electronic 16.1% 40.6% TASKING brand design automation software • • Delivery of part-level Several high profile 34.5% intelligence to the companies use ALU’s products, including Tesla, Electronic Parts, electric design Americas EMEA China Rest of World Search and engineering Apple, and Google Discovery community • ~60% of revenue is recurring ALU is a capital light business due to the lack of • Operates under the as most of ALU’s products are manufacturing need to produce products Octopart brand sold as a subscription

192 Low Threat Medium Threat Altium Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry Printed Circuit Boards

The players in this industry design, manufacture, and sell printed circuit boards for a variety of applications. • High levels of technical know how are required to • Great management team enter and be competitive who is able to execute • More and more of • Existing players already • Low individual risks plans successfully everyday life is have good relationships • Only the general business Market Monopolistic • Great relationships with revolving around with many of the high- Structure Competition existing customers risks such as execution and the use of profile customers macroeconomic risks • Market-leading product in electronic devices Market Size $61.34B1 • High up-front R&D costs terms of quality and ability are needed to develop a Industry MSD1 high-quality product Growth

1https://www.mordorintelligence.com/industry-reports/printed-circuit-board-market 193 What Investors Missed The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years

• Altium was relatively well known at the time for a small-cap • In 2016 ALU set a goal to be the Australian stock and had been performing very well going into market leader in PCB design software June 2015 • These goals (more • There was just not enough hard evidence to justify quantitatively) were $150m in an extremely high jump in price at the time given PCB revenue and $200m in total high growth targets were just speculation at the time revenue by 2020 • There was also the concern that it was trading at high • They also aimed for EBITDA multiples historically margins to be at least 35% • Although those figures were quite Execution of aggressive (doubling revenue in 4 Return Breakdown: Consensus vs Results Clear Growth years), throughout the process, ALU had continually performed Plan well above the minimum growth rates to achieve those goals • They would have achieved those goals if it weren’t for COVID • ALU focused a lot of its efforts on decreasing costs, as EBITDA margins did hit its goals and grew from 28.3% in 2015 to 39.98% in 2020 (CAGR of 7.2%)

194 Back to List Altium Takeaways ALU is a Very Good Business – 4.5/5 Future Outlook

• Low churn – once customers use the product, its hard Can ALU Sustain its Advantages? to go back to not using it • ALU is the leader in its segment and • Short-term economic hit can be a long-term benefit competes mainly against other ALU is in a Good as a result of looking out for their clients in difficult fragmented players with lower quality Financial times products Position Despite • ALU has no debt and a robust cash balance that puts it in a • Will likely be able to retain its existing Lower Sales fantastic position to back up their high growth potential large customers and its products are • The solid management team has driven their past well liked success and has put them in a strong position for Can ALU continue to grow? future growth • ALU is in the process of revamping its business model which includes expanding • Altium 365 was released early in May 2020 due to the need into the other areas of the PCB supply for the product because of the coronavirus pandemic chain, which will no doubt catapult further • It is a platform that digitally connects electronic design growth to the supply chain through to the manufacturing floor Strong launch in • It allows customers to continue their business Is ALU poised to continue to outperform? from anywhere while still being able to connect • Because COVID did slightly hurt ALU, its the Midst of with anyone COVID-19 • Over 2,600 companies and 5,000 active users have already numbers are down and its not trading at joined the platform since its launch ATH multiples • This goal of this platform is to change Altium from a • However, the mid-to-long-term outlook for maintenance-based perpetual company into a capability- ALU is still very positive and will likely based SaaS company continue to outperform

195 Owen Stimpson 752% 5 Year TSR OM:BIOT Rank: 30/104

196 Biotage Overview In Swedish Krona (Kr)

BIOT provides technologies and solutions for separating EV / NTM EBITDA molecules and synthesizing chemical substances. BIOT’s customers include pharmaceutical companies, biotech 2019 companies, and academic institutes.

Statistic 06/08/2015 06/08/2020 2015 Stock Price 17.2 Kr 137 Kr

Market Cap 1.1B Kr 8.93B Kr 0x 10x 20x 30x 40x Enterprise Value 997.39M Kr 8.87B Kr

Shares Outstanding 64.71M 65.20M

EV / NTM Revenue 1.66x 7.72x

EV / NTM EBITDA 10.26x 33.52x

PE 17.55x 58.61x

Statistic FY 2015 FY 2019

Revenue 610.5M 1.10B

EBITDA 89.4M 243.3M

197 Biotage Business Model

Primary Product Context Sales by Division BIOT creates full BIOT offers solutions for separating solutions for 35% molecules and synthesizing chemical separating substances. 50% molecules and 3% • Enables customer to speed up drug synthesizing development (saves chemists from 12% Full chemical laborious work), improve diagnostics, and solutions substances. Organic Chem Scale-Up streamline research. Solutions include • Customers include pharmaceutical Biomolecules Analytical Chem equipment, companies, hospital labs, universities, and support, software, government agencies. consumables, and Sales by Geography • 4 distinct end markets: service. • Organic chemistry (primarily for 30% design of new drugs). • Scale-up (industrial scale solutions 44% for production of pharmaceutical/food products). • Biomolecules (primarily for design 26% of new drugs). Americas EMEA APAC • Analytical chemistry (food safety testing and patient sample preparation). Sample BIOT products. BIOT is a medium capital intensity business.

198 Low Threat Medium Threat Biotage Competitive Analysis High Threat

Competitive What’s Changed in Risks Competitive Landscape Barriers To Entry Advantages the Industry

Oligopoly / Market • Direct sales Laboratory Supply Monopolistic Structure team: 95% of • Need to remain Competition Wholesaling BIOT sales are at the forefront Industry Market Size ≈$10B1 • BIOT seeks patents for direct. of science to be applicable products. competitive. Industry LSD1 Operators in the Laboratory Growth • Diversified Supply Wholesaling industry • Technological • Product failure • Industry definition overly customer base: engage in the wholesale expertise required to no customer or distribution of laboratory, broad: BIOT’s products help develop products. >5% of sales. manufacturing • Increased research scientific and school only with separating molecules • High startup issues. in biomolecules and equipment and supplies. This and synthesizing chemical capital (BIOT cannabis. industry excludes wholesalers substances. • Global reach. has over 300M that predominantly distribute • BIOT is one of the largest • Exposure to players in the flash purification in R&D spend politically risky medical, hospital and dental • 52% sales are equipment and supplies. subset of the industry and a since 2015). international aftermarket and leader in other subsets of the markets (i.e. recurring. industry (such as automated • Regulatory barriers. China which is separation of wastewater). key end • BIOT pioneered automation • Reputation and market). tech for various stages of drug clout. R&D.

1. US only; IBIS World. 199 What Investors Missed The Actual Story of the Last Five Years The Bear Thesis Five Years Ago: • BIOT expanded to new geographies through new sales offices: Seoul in 2016, Italy and India in 2017, Belgium, • BIOT has been successful recently and grown both topline and EPS Netherlands and Luxembourg in 2018. – but its growth is bound to taper off soon. • Sales outside NA grew at 15.8% • New competitors will enter and begin to capture share from CAGR from 343M in FY2015 to BIOT, or at least prevent them from growing. 617M in FY2019. BIOT grew • BIOT expanded penetration into new end • Gross margin down 4% from 2015 to 56%. markets: • Analytical chemistry (food production) through 2018 Horizon acquisition. Return Breakdown: Consensus vs Results • Biomolecules through 2019 PhyNexus acquisition. • BIOT consistently invested >7% of sales into R&D each year. • Largest launch in company history in 2018 BIOT protecting its with launch of new tech platform, flash positioning purification system, and consumable line. • Continued to invest in software (a competitive advantage relative to competitor products). • BIOT invested in fine tuning manufacturing Gross Margin processes and making them more automated. expanded • Gross margin rose to 62.2% in FY2019 from 56.1% in FY2015.

200 Back to List Biotage Takeaways BIOT is a High Quality Business- 4.5/5 Future Outlook • BIOT operates in a highly specialized industry in Can BIOT Sustain its Market Position? which it has experience and capabilities. • BIOT has a wide moat created by strong barriers: • BIOT has patents which insulates its products from patents, regulations, and technological advantages. competitors. • BIOT operates in a specialized industry. BIOT has a moat • Regulatory barriers. • BIOT has direct customer relationships and low • BIOT sells 95% of its product directly meaning it has customer concentration (losing one customer will not direct relationships with its customers. have a major impact on its position). • Also provides BIOT with valuable feedback • BIOT has a strong reputation. which it uses to develop new products. Can BIOT continue to grow faster than the industry? • BIOT leveraged its strong products and grew in core • BIOT has industry leading tech (enabled through R&D end markets internationally and in new markets. spend) that will enable them to continue to capture • Expanded international presence, especially in Asia (i.e. market share. China and South Korea) by establishing sales teams. • Opportunities to expand direct sales presence in EMEA (BIOT still uses many distributors in this region). • Expanded into new end markets: BIOT grew • Biomolecule segment and new acquisitions could catalyze • Expanded to biomolecule end market which is growth,. just 3% of current sales but represents avenue Is BIOT poised to continue to outperform the market? for future growth. • Strong market position, moat, and avenues for growth. • Expanded presence in food safety. • Industry standard multiple is roughly 20x earnings, at • Identified Cannabis market as area for growth. nearly 50x earnings BIOT will need to continue to greatly • BIOT can continue to grow internationally and increase outperform peers to justify its premium valuation. BIOT has a runway for penetration in core end market of organic chemistry. • Currently no major competitors, but if BIOT growth • Biomolecule segment could be major contributor to continues its growth trajectory it is likely to attract future growth. new entrants.

201 Max Schieferdecker 732% 5 Year TSR ASX:AQZ Rank: 31/104

202 Alliance Overview

Alliance Aviation Services is a small airline based in Brisbane, NTM EV/EBITDA Multiple Queensland, Australia, that flies a variety under-served routes as group charter flights and as normally scheduled flights. 2020 6.1x

Statistic 6/8/15 6/8/20 2015 3.0x Stock Price 0.42 AUD 3.11 AUD 0.0x 2.0x 4.0x 6.0x 8.0x Market Cap 44.70M AUD 396.43M AUD

Enterprise Value 136.67M AUD 468.78M AUD

Shares Outstanding 106.43M 127.47M

EV / NTM Revenue 0.70x 1.51x

EV / NTM EBITDA 3.04x 6.14x NTM P/E 7.37x 14.92x Z

Statistic CY1 2015 CY1 2019

Revenue 189.0M 290.65M

EBITDA 40.15M 69.25M

1HY ends on 12/31, so CY numbers are easily available for comparison 203 Alliance Business Model

Primary Products Context Sales by Category

Contract Air • Group flights on a routine AQZ transports passengers 4.5% 0.4% Charter schedule set in advance around all parts of Australia 6.7% Services by their clients • Most of their revenue comes • Providing aircraft, crew, from the transportation of Wet Leasing maintenance, and workers and contractors to 14.3% Services insurance to third-party and from remote project sites airline operators of major mining and energy companies Regular • Normal consumers 61.7% Passenger purchasing tickets to • In addition to the products Transport travel on one of AQZ’s already mentioned AQZ also (RPT) pre-determined routes offers 12.5% • ad-hoc charter flights primarily through their surplus capacity • aviation services, such Contract Charter Wet Lease RPT Ad-hoc Charter Aviation Services Other as selling or leasing aircraft and aircraft parts as well as line and AQZ is a capital intensive business due to the large heavy maintenance amount of facilities and equipment needed to operate An Alliance Airlines Fokker 100 service to other airlines an airline.

204 Low Threat Medium Threat Alliance Competitive Analysis High Threat

What’s Changed in Barriers To Entry Competitive Advantages Risks Non-Scheduled Air the Industry Transport in Australia

The players in this industry offer a range of services, including chartered • Strong repeat customer air transport for passengers and base • freight, air training for pilots, private • Relatively low debt The major players in air transport for individuals and • Extremely high up-front balance compared to other the Australian businesses, and aerial works services costs airline companies domestic aviation such as skywriting. • The coronavirus market are facing • Must take on a lot • Very little to no load factor precautions could go financial struggles of debt in order to risk for many of AQZ’s on for a lot longer than • Virgin Australia Market finance operations operating segments due to Oligopoly expected, making safe, Structure and equipment contractual agreements entered close-quarter flight administration purchases early on • Market Size $1B1 Fleet simplicity allows for very hard in April and • High regulatory barriers more flexibility across the Qantas isn’t Industry set by the government organization as all pilots LSD1 doing too well Growth know how to fly every either plane • Only Fokker aircraft

1https://www.ibisworld.com/au/industry/non-scheduled-air-transport/473/ 205 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • Very large statutory loss in H1 2015 (CH 2 2014) due to the impairment of their fleet • In late 2015, AQZ purchased 21 • This was mainly caused by a downturn in Fly-In-Fly-Out additional Fokker aircraft from Austrian Airlines activities in the coal seam gas industry, which AQZ was Expanded Fleet • Austrian was in the process of overly exposed to retiring the planes, so it was a • Stock price dropped 50% when H1 results came out and great deal for both parties the EPS was -0.24 AUD compared to 0.06 AUD in H1 2014 • Half of the engineering force was laid off in 2015 and began • In 2016, AQZ began flying the outsourcing their maintenance to Austrian Technik in Brisbane to Emerald route through a Bratislava, Slovakia wet lease agreement Virgin Australia • In 2017, more routes to Return Breakdown: Consensus vs Results underserved Queensland cities Partnership were added to that partnership, which greatly expanded AQZ’s reach of the greater Australian population • In addition to the expansion caused by the VA partnership, AQZ Entered More also expanded its presence Markets throughout all parts of Australia • This was done both through contracts as well as RPT

206 Back to List Alliance Takeaways AQZ is a Solid Business – 3/5 Future Outlook Can AQZ Sustain its Advantages? • AQZ operates in a niche within the broader • So long as AQZ doesn’t expand too Australian aviation market in the sense that they quickly and forget the fundamentals operate primarily as a FIFO charter service for that got them to where they are today, it mining companies is highly unlikely any competitors will • The companies are loyal to AQZ because they be able to take market share away from have historically had excellent on time them given the strong relationships performance, which is valued highly AQZ has a Moat with their customers and their • According to one of their clients, every simplistic fleet hour late the incoming flight is, A$50k Can AQZ continue to grow? is lost • With the administration of Virgin, it is • They have a good balance of products so they are not likely that AQZ will be able to capture only reliant on one revenue stream, and future some of their route network that Virgin growth will likely come from those other categories, gives up as AQZ brings on more planes such as RPT and wet leasing Is AQZ poised to continue to outperform? • AQZ has grown top-line at a CAGR of 11.4%, but, • Given the large amount of multiple while EBITDA margins have increased since 2015 expansion that has taken place (now (their statutory loss year), there has been a trading at ATHs), it is unlikely that any Decent Financial downward trend since 2010 (30.63% vs. 24.13%) normal rate of EDITDA growth will allow Profile • A decent cash balance is present on the balance sheet, AQZ to continue to outperform and, for an airline company, the debt level isn’t too bad, • Some multiple contraction will likely be as it can easily be covered by the current asset balance seen as well

207 Owen Stimpson 731% 5 Year TSR ASX:DTL Rank: 32/104

208 Data#3 Overview In Australian Dollars (AUD)

Data#3 is an Australian IT services and solutions provider. DTL EV / NTM EBITDA has vendor technologies that span across cloud, mobility, security, data & analytics and IT lifecycle management. DTL also 2019 supplies consulting, project services and managed services.

Statistic 06/08/2015 06/08/2020 2015 Stock Price $0.82 $5.20

Market Cap $126.26M $800.67M 0x 5x 10x 15x 20x 25x Enterprise Value $120.99M $792.25M

Shares Outstanding 153.98M 153.97M

EV / NTM Revenue 0.13x 0.52x

EV / NTM EBITDA 7.58x 23.08x

PE 14.24x 37.87x

Statistic FY 2015 FY 2019

Revenue 869.4M 1.49B

EBITDA 15.8M 29.2M

209 Data#3 Business Model

Primary Product Context Supply/management of DTL is a value-added software Sales by Segment customer software vendor. Software licenses, deployment of 19% Solutions software, and consulting • DTL provides entire range of for effective software enterprise IT solutions: use. procurement, 81% implementation, and Help customers maintenance. Software / Hardware Services maximize value from Infrastructure technology • DTL is a software vendor for Solutions infrastructure: servers, range of software products Sales by Geography storage, networks from Microsoft, Adobe, Palo and devices. Alto Networks, etc. 1%

Project services for the • DTL helps customers design and deployment (companies and of technology solutions; governments) complete 99% support services Services digital transformations to Australia Other for annuity-based adapt to cloud, improve contracts; and people cybersecurity, leverage data , solutions for the etc. provision of staff. DTL is a low capital-intensive business.

210 Low Threat Medium Threat Data#3 Competitive Analysis High Threat

Competitive What’s Changed Risks Competitive Landscape Barriers To Entry Advantages in the Industry

Market Monopolistic • Brand Australia Software Structure Competition reputation and • Erosion of major Market Size 13B1 Suppliers Industry scale. supplier Industry relationship. Industry operators primarily > 10%1 Growth wholesale computer software • Product selection: DTL and provide services related to • Data breach / • Data analytics, • DTL is the largest enterprise • 60% of DTL revenue has computer software. The major technical cybersecurity, and software supplier in Asia is under contract. relationships industry includes distribution failure. digital Pacific. with many of physical software, digital transformation major suppliers. downloads and related after- • Range of software / more of a focus for sales service, but excludes • Competes with other Software • Loss of major services provided. companies. consulting services. vendors such as FirstFocus and customer. DSC-IT. • Experience: DTL has completed • Customers go • Also competes against many digital direct to software customers going directly to projects and creators. software creators (i.e. understands Microsoft). process well.

1. https://www.ibisworld.com/au/industry/software-suppliers/5463/ 211 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • Concerns were valid: • Margins remain low at 2.3% • Product reselling not that attractive of a business: low margin and EBITDA margin. barriers to entry are not that high. • Barriers to entry are still not high. • DTL has been around since the 70s – market trends may represent • DTL made the best of its industry by an opportunity, but DTL is and old company not suited to capture it. growing service revenue from 168M in DTL capitalized on the business model FY2015 to 262M in FY2019, which is • EPS has fluctuated each year but is down 30% from FY2011. higher margin. • EBITDA margins rose from 1.8% to 2.3%. • Strong relationships with software EPS Results Return Breakdown: creators (i.e. Microsoft) and value-added services created a moat.

• DTL capitalized on industry trends, specifically the cloud. DTL did not lose • Cloud revenue increased at 66% CAGR positioning from 47M to 362M from FY2015 to FY2019. • Revenue grew at 14% CAGR to 1.48B.

• While EPS did fluctuate each year (especially EPS grew in 2018 due to one-time events) 2019 EPS was a record $0.12 and a sign of the future.

212 Back to List Data#3 Takeaways DTL is a Good Business- 3.5/5 Future Outlook • DTL is the largest largest enterprise software Can DTL Sustain its Market Position? supplier in Asia Pacific. • DTL is the leading company in its industry and home • DTL has strong relationships with key software market of Australia and Fiji. providers: • DTL has strong partner relationships that it continues to DTL has a strong position • On various partner advisory councils (I.E. build upon. Microsoft and HP). • DTL has a strong reputation and service business. • One of Microsoft’s 10 biggest partners worldwide. Can DTL continue to grow faster than the industry? • Technological trends - such as emphasis on • DTL has benefited from Microsoft’s major investments in cybersecurity, data analytics, and leveraging the cloud - cloud which enabled it to grow its cloud business through drove demand. being a vendor of Azure products. • DTL utilized its position to capture market share • DTL is not guaranteed to be partnered with DTL capitalized on growth and grow top and bottom line. industry trends company who invests in leading tech going • Specifically relationship with Microsoft Azure forward (whether that is AI, virtual reality, etc.). enabled DTL to grow cloud revenue to 362M. • Expanded service offerings which are higher margin Is DTL poised to continue to outperform the market? and a differentiator with competitors. • DTL is in an industry that is growing due to secular trends towards digital transformation, but it is not a high • Industry trends mentioned above likely to continue barrier to entry business. and/or accelerate. DTL has a runway for • DTL is likely to grow because of its market position and • DTL has a strong position in Australia market and can growth relationships, but at 38x forward earnings I think its likely likely continue what its doing – growing by capturing it’s future growth will not justify its multiple, especially market share as the market expands. with past hiccups that depressed EPS.

213 Max Schieferdecker 716% 5 Year TSR NYSE:SKY Rank: 33/104

214 Skyline Champion Overview

1 Skyline Champion is a designer and builder of manufactured LTM EV/Sales Multiple and modular homes and factory-built, commercial solutions and is headquartered in Troy, MI. 2020 1.0x

Statistic 6/8/15 6/8/20 2015 0.1x Stock Price $3.31 $22.40 0.0x 0.2x 0.4x 0.6x 0.8x 1.0x 1.2x Market Cap $27.77M $1.45B

Enterprise Value $29.17M $1.37B 2.00x 40.00 Shares Outstanding 8.39M 56.78M 1.80x 35.00 1.60x 30.00 EV / NTM Revenue N/A 1.24x 1.40x 1.20x 25.00 EV / NTM EBITDA N/A 24.49x 1.00x 20.00 0.80x 15.00 NTM P/E N/A 50.73x 0.60x Z 10.00 0.40x 0.20x 5.00 Statistic FY 2015 FY 2019 0.00x 0.00

Revenue 186.99M 1.37B

EBITDA -2.78M 108.83M Skyline Champion Corporation (NYSE:SKY) - TEV/Total Revenues

215 Skyline Champion Business Model

Primary Products Context Sales by Category

• Broad range of manufactured SKY mass produces and sells 4.3% Factory- and modular homes, as well affordable homes 6.1% Built as park model RVs, ADUs, and Housing commercial modular • Through its assembly line structures production system, SKY can 89.5% manufacture homes at a fraction of the cost of an on-site home • Transportation of homes and U.S. Manufacturing and Retail Canadian Manufacturing and Retail recreational vehicles from • SKY has 38 manufacturing facilities, Corporate/Other Logistics manufacturing facilities to many of which are located in states Sales by Geography retailers with high numbers and growth of manufactured home sales 12.0% • Average price of homes were $61k in the U.S. and $84K in Canada, with 16.3% prices ranging from $20k - $300k 71.7% • Targeting lower-income, millennial, first-time home- buyers U.S. Canada Outside of NA • Owns 21 direct retail sales centers operated under the Titan Factory SKY is a capital intensive business due to high Direct brand manufacturing costs Examples of SKY’s factory-built housing products

216 Low Threat Medium Threat Skyline Champion Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry U.S. Manufactured Housing

The players in this industry offer • Economies of scale play a • Due to many codes and single-family homes that are large role in the regulations on the state, constructed entirely in a factory and manufactured housing local, and national levels, then transported to the site and market • SKY offers a diverse set of the risks of government installed. • It is not easy for high-quality products to interference are large • new players to Greater access to capture a large amount of • jump into the The housing market is cheaper financing the alternative housing industry and be heavily influenced by the that is Market market larger economic comparable to Oligopoly profitable in the Structure short run • No other substantial environment (e.g. financing other forms of differentiating factors costs, employment rates, housing than in Market Size $5.00B1 • 3 largest manufacturers of from other manufactured etc. ) of the countries it the past HUD code homes had a Industry home companies however operates in LSD1 combined market share of Growth • 76% (SKY is the second External distributors are largest at 17%) relied on heavily for 90% of their sales

1 https://www.ibisworld.com/united-states/market-research-reports/manufactured-home-dealers-industry/ 217 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • There were questions among investors about whether or not SKY was a competent manufacturing organization • Prior to June 2018, Skyline and • In late 2014, SKY sold its RV business for a very little ($981k) because of decreasing revenues and persistent operating losses Champion were 2 separate • SKY was experiencing these negative trends despite a large companies with separate tickers recovery in the RV industry which pushed was pushing it to peak • Champion was the larger sales company, with 14% market • Large player Cavco attempted to buy SKY in 2014 at a 50% share, while Skyline had 3% premium, but SKY did not want to sell, signaling a lack of market share desire to do what is best for their shareholders • When the two companies merged, the combined market share jumped to 17%, and Consensus vs Results Extremely Return Breakdown: Skyline’s ticker was adopted for Accretive Merger the combined entity • Thus, SKY, which was representing a smaller company in the market, was now representing the 2nd largest (overtaking Cavco) and the No EPS Estimates until 2019 largest publicly traded company • This merger also allowed for a large amount of synergies, as its adjusted EBITDA margin improved from 6.7% to 9.2%

218 Back to List Skyline Champion Takeaways

SKY is an Average Business – 2.5/5 Future Outlook

• Improved financing programs for manufactured Can SKY Sustain its Advantages? homes from financial and government institutions • Given SKY’s only real advantages over • Strong tailwinds are present from the eased its competitors are its value proposition regulations by the Trump administration relative to its competitors, it is not • However, large, industry-wide growth still does sustainable long term not seem extremely promising Interesting Industry • Because of SKY’s large market share, anything good Can SKY continue to grow? that happens to the demand of manufactured housing • SKY will continue to grow, although it will be very beneficial for SKY doesn’t seem like the organic CAGR will be • At the same time, any discovery of market very high penetration would greatly impact SKY in a • The most likely path to high growth would negative way as well be acquisitions of the fragmented bottom 20% of the market • While top-line growth was high right after the merger, FY19 Y/Y growth was much lower at <1% Is SKY poised to continue to outperform? despite strong economic conditions • Much of the outperformance from the past 5 • EBITDA margins have expanded due to synergies, and Mediocre Financials years came directly from the addition of are decent for being a capital-intensive industry revenue and synergies from the large • Cash flows are strong, as spend on PPE is small relative merger, which will not likely happen again to net income and the only sizable debt is a revolving at that scale in the future given possible credit facility that is manageable market penetration issues

219 Owen Stimpson 704% 5 Year TSR XTRA:MUM Rank: 34/104

220 Mensch und Maschine Overview

Mensch und Maschine Software is a leading supplier of EV / NTM EBITDA engineering software, such as Computer Aided Design, Manufacturing and Engineering, Product Data Management and 2019 Building Information Modelling/Management solutions.

Statistic 06/08/2015 06/08/2020 2015 Stock Price €6.40 €51.00

Market Cap €102.46M €855.78M 0.00x 5.00x 10.00x 15.00x 20.00x 25.00x Enterprise Value €133.28M €870.88M

Shares Outstanding 16.01M 16.78M

EV / NTM Revenue 0.85x 3.18x

EV / NTM EBITDA 11.41x 20.92x

PE 21.41 43.59x

Statistic FY 2015 FY 2019

Revenue 160.4M 245.9M

EBITDA 12.4M 30.1M

221 Mensch und Maschine Business Model

Primary Product Context Sales by Segment

Develops proprietary MUM is a B2B engineering software for engineering software company. purposes: CAD/CAM/CE • MUM develops software for a (computer aided design, M+M variety of engineering 28.16% manufacturing & 71.84% proprietary purposes. engineering), PDM Software • And at a variety of price (product data points ( from >€1000, to management) and BIM <€100,000 per seat). M+M VAR (building information • MUM has customers in many Sales by Geography modelling). industries, including aerospace, architecture, automotive, etc. Custom versions of M+M • MUM also helps customers in software offerings and Germany, Austria, and Value Added Autodesk software with Switzerland with custom Reselling 49.65% custom modifications. solutions (i.e. adding additional (VAR) MUM also offers training functionality to one of their 50.35% services for their software. products). • MUM resells Autodesk software Germany Rest but adds value by creating customer specific modifications MUM is a medium capital intensity business because to the software. of the capital requirement to develop new software.

222 Low Threat Medium Threat Mensch und Maschine Competitive Analysis High Threat

Competitive What’s Changed in Risks Competitive Landscape Barriers To Entry Advantages the Industry

• Reputation: • Security • Software has become Market Monopolistic MUM has been breach. more of a competitive Engineering Structure Competition in the industry advantage and Software 1 since the 1980s companies are Market Size 25.6B • Major and has built a spending more on it. Market international Industry 1 reputation of HSD • High start up costs to player makes • Accessing the software Participants develop, modify, Growth quality and develop new software. large push through mobile phones distribute, and sell software reliability. into German increasingly important. for a variety of engineering • MUM is a leading player in • Starting in 2012, MUM tasks. the German speaking • Customers are sticky market. • MUM can markets (Germany, due to how embedded stopped distributing Switzerland, Austria). customize its standard Autodesk their operations are • software – and Customers • Market still largely with the software. software. has experience begin to fragmented; MUM develop • Acquired some has about 4.5% doing so. reselling • Highly specialized end- software in- market share. partners, and markets and uses. house. • MUM’s now directly • Globally there are many experience and sells value- • Reliance on big players in the space, customer base added custom Autodesk such as Dell, BenQ, and enables them to versions of Casio. see trends in software. Autodesk the industry. software.

1. https://www.theinsightpartners.com/reports/engineering-software-market 223 What Investors Missed

The Actual Story of the Last Five Years The Bear Thesis Four Years Ago: • Following the transition away from distribution in FY2011, gross margins • Any margin expansion from switching from distribution to reselling increased from 36.5% to 53% and stayed Autodesk software has already been realized. Gross margins flat since. • VAR segment will not be a major, material contributor to neither stayed flat – but • EBITDA margins have risen from 7.7% in the bottom nor top line. EBITDA margins did FY2015 to 12.2% in FY2019. not • Management has a “relentless focus • Selling the distribution business was a mistake – and 2014 was the on costs” and has cut SG&A as a % final year MUM will see any revenue from it. of revenue from 36.5% in FY0215 to 32% in FY2019. • As companies view software more so as a competitive advantage, demand for custom Return Breakdown: Consensus vs Results solutions has increased. • Autodesk switch to subscription initially VAR has been a reduced revenues, but increased long-term success cash flow due to recurring nature of future revenue. • VAR Segment EBITDA increased at 25% from 4.6M in FY2015 to 14.3M in FY2019. • MUM now focuses on the higher margin, more competitively insulated proprietary software. Business model • Acquiring reselling partners enabled MUM to change worked capture higher margin and get a better understanding of their customers.

224 Back to List Mensch und Maschine Takeaways MUM is a High Quality Business- 4.5/5 Future Outlook

• Exiting the distribution business enabled MUM to Can MUM Sustain its Market Position? capture higher margin, and focus on developing • MUM’s moat is strong.: MUM’s business model proprietary software. • High start up costs switch worked • Also made MUM more in tune with the market • Sticky customers and the needs of its customers. • Proprietary nature of software and niche nature of • MUM’s investment in its proprietary software paid off industry. as it grew software EBITDA at 28% CAGR from 8.2M in FY2015 to 22.3M in FY2019. Can MUM continue to grow faster than the industry? • Also made smart acquisition of majority of • MUM has top quality software and a strong reputation that SOFiSTiK, which expanded offering. MUM grew its top and will enable it to capture industry growth. bottom line • Management’s focus on cutting costs grew MUM’s • MUM’s pivot to customization of their software and Autodesk EBITDA margin each year to now 12.8% from 7.7% in software is in line with industry trends towards software as a FY2015. competitive advantage. • Transition away from distribution business model enabled MUM to continue to capture higher gross margins. Is MUM poised to continue to outperform the market? • Likely to maintain industry position and likely to continue to • MUM has a moat given the proprietary and niche nature see growth; however, engineering software space is a mature of their software, the stickiness of customers, and its industry and unlikely to grow extremely quickly. customization ability. • At 44x NTM earnings, MUM will need to grow much MUM has a potential • Autodesk reselling revenue now recurring. runway for future growth faster than the industry. • Can capture more market share in Europe and • Another new competitor or some other impediment to growth internationally and has low incremental unit costs. will cause MUM to underperform given its valuation. • MUM has increased its dividend each year since FY2015.

225 Max Schieferdecker 700% 5 Year TSR ASX:SSM Rank: 35/104

226 Service Stream Overview

Service Stream is a contracting company based in Melbourne, LTM EV/EBITDA Multiple Australia, that provides end-to-end asset life-cycle services across essential infrastructure networks within the telecommunications and utilities sectors. 2020 8.2x

Statistic 6/8/15 6/8/20 2015 8.1x Stock Price 0.32 AUD 1.98 AUD 6.0x 6.5x 7.0x 7.5x 8.0x 8.5x 9.0x Market Cap 115.91M AUD 804.78M AUD

Enterprise Value 126.62M AUD 842.95M AUD

Shares Outstanding 360.12M 407.48M

EV / NTM Revenue 0.27x 0.87

EV / NTM EBITDA 4.18x 7.83x NTM P/E 8.51x 13.11 Z

Statistic CY 2015 CY 2019

Revenue 430.18M 1.00B

EBITDA 28.18M 102.81M

227 Service Stream Business Model

Primary Products Context Sales by Division

• Network operations, SSM ensures Australia’s telco Fixed maintenance, and and utilities are functional 31.7% Communications minor works across • The operating segments are the TelCo sector 68.3% split into two main divisions • Engineering, design, • Fixed communications and construction of and network Network Telecommunications Utilities both fixed and construction are part Construction wireless network of the Sales by Geography infrastructure telecommunications division • Utility asset • Energy & water and installation, 100.0% Energy and Comdain inspection, and Water Infrastructure are part maintenance of the Utilities division services • They provide contracted Australia • Network services to major Australian Comdain engineering, design, companies in the Infrastructure and construction telecommunications and SSM is a capital light business as services don’t operations utilities industries require a lot of machinery and raw materials.

228 Low Threat Medium Threat Service Stream Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry Australian Infrastructure Maintenance Services • SSM is exposed to a small The players in this industry conduct number of key clients that preventive and reactive maintenance account for a substantial and alterations to existing • SSM has a large pool of portion of revenue infrastructure as well as major plants employees and • and capital works. subcontractors (~5k in 54% of FY19 total) revenue came from • No material barriers to the Australian • This allows them to entry government’s nbn • Increased operate many Market Monopolistic • Although the work is project which will presence of 5G projects at the same Structure Competition somewhat technical, it is end at some point technology time not difficult to learn • Revenue generation relies Market Size $25B1 • It also provides a entirely on the needs of familiarity factor Industry customers LSD1 because of their Growth • size Operating as a contractor means that there is little guaranteed long-term stability

1https://www.ibisworld.com/au/industry/infrastructure-maintenance-services/5330/ 229 What Investors Missed The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • A couple contracts in relation to • There had been a very steep decline in revenues and margins the large Australian government in the 5 years leading up to 2015 nbn (national broadband • This was due to substantial losses it incurred as a result network) project of an unsuccessful joint venture Multiple Large • SSM was contracted with both • SSM requested a trading halt in 2013 in order to reassess construction and operations Contracts were their joint venture (JV), and the stock price had not & management jobs over a 5- Secured recovered from that yet year period in FY 16 • These projects, in addition to many others, set the path for steady and continued growth from 2016 to Return Breakdown: Consensus vs Results 2019

• In December 2018, SSM acquired Comdain Infrastructure for 161.7M AUD • This acquisition played a big role in Successful the diversification of SSM more into Acquisition utilities, as before ~80% of revenues came from TelCo (it’s now ~55%) • The acquisition resulted in an increase in utility revenue of~310K AUD in its first year

230 Back to List Service Stream Takeaways SSM is an Average Business – 2.5/5 Future Outlook Can SSM Sustain its Advantages? • While SSM does provide the necessary resources to • SSM should be able to keep its size, do the job, namely manpower and equipment, there is which is its only real advantage over its nothing otherwise special about them that makes competitors them a better contractor • Most contracts are derived from relationships Can SSM continue to grow? SSM Lacks a Strong within the industry and track record of success, Moat • Given the high fragmentation of the not unique characteristics broader infrastructure services industry • However, the industry is quite stable in Australia, there are sufficient • Telecommunications and utilities have acquisition targets to manufacture become vital to everyday life, so maintenance artificial growth of that infrastructure will always be in demand • Unlikely to continue to grow organically Is SSM poised to continue to outperform? • Strong cash balance that substantially covers debt • Although there wasn’t a high level of • Organic revenue has returned to its pre-JV days multiple expansion, the 2015 EBITDA while EBITDA margins have also doubled since the numbers were artificially low due to the Decent Financial same time unsuccessful JV Profile • ROCE has decreased since it took on the high levels of PPE that came with its acquisition of Comdain • There is not a high amount of organic upside growth potential, and more • Contract pipeline is not guaranteed and relies heavily on the demands of a few clients acquisitions are seemingly already priced in

231 Max Schieferdecker 683% 5 Year TSR AIM:ABDP Rank: 36/104

232 AB Dynamics Overview

AB Dynamics is a machine manufacturing company based in NTM EV/EBITDA Multiple Bradford-on-Avon, UK that specializes in supplying automotive testing equipment in addition to verification products and solutions. 2020 24.5x

Statistic 6/8/15 6/8/20 2015 10.6x Stock Price ₤2.40 ₤19.30 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x 30.0x Market Cap ₤40.32M ₤435.51M

Enterprise Value ₤33.29M ₤401.29M

Shares Outstanding 16.84M 22.57M

EV / NTM Revenue 2.23x 5.82x

EV / NTM EBITDA 10.57x 24.46x NTM P/E 18.86x 34.47x Z

Statistic FY 2015 FY 2019

Revenue 19.07M 66.82M

EBITDA 4.64M 12.60M

233 AB Dynamics Business Model

Primary Products Context Sales by Category

• Products used for the test ABDP tests vehicles before 14.7% and evaluation of ADAS1, they make it on the road Track autonomous systems, and Testing • Track testing allows vehicle dynamics in real customers (car 85.3% life manufacturers) to conduct • Systems used to gain complex, multi-object Laboratory precise measurement of scenarios with a simple to Track Testing Laboratory Testing and Simulation Testing vehicle body and use software interface Sales by Geography component movements • These tests must be performed in order to satisfy 1.7% • Products used to evaluate internal or external 21.3% dynamic characteristics of Simulation regulatory test requirements 47.6% vehicles in a virtual environment • The regulatory process can take a very long 29.4% time for new features • ABDP reduces the cost Asia Pacific UK/Europe North America Rest of the World and time of developing vehicles with their ABDP is a capital intensive business as design products and services and manufacturing is done in-house An AB Dynamics vehicle testing simulator

1Advanced Driver Assistance System 234 Low Threat Medium Threat AB Dynamics Competitive Analysis High Threat

What’s Changed Automotive Testing, Barriers To Entry Competitive Advantages Risks Inspection, Certification in the Industry (TIC)

The players in this industry provide services ranging from auditing and • Existing players already inspection, to testing, verification, have strong relationships • Strong relationships with quality assurance and certification. built with customers all major original • A high level of equipment (car) • Foreign currency risk as a technological expertise is manufacturers (OEMs) and • result of significant Drivers have required in order to be test facilities amounts of international become more competitive • Effective and rapid Market Monopolistic transactions reliant on cars Structure Competition • No strong material deployment of IP with “smart” • Limited control of pricing barriers to entry other • Maintains top engineering features Market Size $16.5B1 with resellers than those however minds on its staff Industry MSD1 • Switching costs are high • No direct competitors that Growth given the price tag of the offer the same products products in the industry

1https://www.marketsandmarkets.com/Market-Reports/automotive-tic-market-175873215.html 235 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • In October of 2017, the CEO at the time, Tim Rogers, presented at • Recently IPOed in 2013 so the market was still in the early the ShareSoc growth seminar stages of identifying longer-term growth trends • There were many investors • Nanocap company listed on the AIM exchange with a small present and the presentation amount of quality investor resources was posted online through piworld, which raised Increased awareness about the Publicity company and where their opportunities were Return Breakdown: • In February of 2018, Tim did a sit- Consensus vs Results down interview with piworld at their new offices • Favorable insight was provided into the current and future financial results • Corporate development M&A was the next step in growth and Tim Rogers New CEO was was not comfortable in that area Brought in to • In the first half year as CEO, James Take ABDP to Routh increased gross margins to the Next Level 50.1% from 35.6% y/y by cutting indirect employment costs

236 Back to List AB Dynamics Takeaways ABDP is a Good Business – 4/5 Future Outlook • After their acquisition of rFpro, a simulation software Can ABDP Sustain its Advantages? company, ABDP offers products for every stage of the • ABDP has very strong relationships with vehicle R&D process its customers that are unlikely to be ABDP has a Moat • These products are present in every major auto diminished in the future given the manufacturer’s R&D facilities, thus giving them an success that many of them have had advantage as they are already established in these with ABDP’s products so far companies Can ABDP continue to grow? • Automotive industry spends more on R&D than any other industry in the world1 • There are many industry trends that bode well for future demand growth of ABDP’s • China is looking to become a fully autonomous products economy which means a lot of R&D spend within Promising Industry their over 100 car companies • It is likely that ABDP will continue to develop new products as well as look for • As self-driving cars become more of a reality, the more M&A opportunities in order to both testing capacity needed for those new features organically and inorganically grow becomes much larger • High cash balance with no debt, despite recent Is ABDP poised to continue to outperform? acquisitions, provides stability in uncertain times • COVID-19 has caused a large multiple • Strong 5-year revenue CAGR of 35.6%, with a gross contraction and it the price has not margin CAGR of 14.2% Strong Financial rebounded to pre-COVID levels yet • However, EBITDA margins have actually • There is no evidence of a long-term Profile decreased over the same time frame detriment to ABDP’s strong growth figures, • ROCE has also decreased since 2015, but this is mainly due to high CAPEX as a result of new facilities being built, which means it is likely the stock will which increase their production capacity greatly outperform given the relatively cheap price

1https://www.businessinsider.in/slideshows/miscellaneous/here-are-the-industries-that-are-spending-the-most-on-rampd 237 Owen Stimpson 650% 5 Year TSR ENXTPA:SOI Rank: 39/104

238 Soitec Overview EV / NTM EBITDA Soitec is a France-based international industrial company specialized in generating and manufacturing high performance semiconductor materials. 2020

Statistic 06/08/2015 06/08/2020 2015 Stock Price €15.60 €95.50

Market Cap €180.33M €3.17B 0x 5x 10x 15x 20x 25x Enterprise Value €329.11M €3.22B

Shares Outstanding 11.56M 33.18M

EV / NTM Revenue 1.41x 5.18x

EV / NTM EBITDA 15.13x 19.75x

PE NA 30.71x

Statistic FY 2015 FY 2020

Revenue 171.6M 597.5M

EBITDA 4.4M 164.2M

239 Soitec Business Model

Primary Product Context Sales by Division SOI is a semi-conductor 4% SOI transforms bulk wafers material company. Semi- into engineered wafers • SOI designs and 46% Conductor (substrates) – which are the manufactures a variety of 50% Substrates base upon which micro- substrates upon which electronic chips are built. integrated circuit chips are built. • Substrates are the 200mm 300mm SOI Royalties / Other main element in these chips. • Six distinct substrate Sales by Geography product lines; flagship 19% product is SOI wafer. 37% • SOI innovates to help make chips smaller, increase performance, and reduce 44% energy consumption. Demonstration of SOI’s value addition in the • SOI substrates are used in a US Europe Asia wafer manufacturing process. variety of chips found in phones, cars, cloud infrastructure, IoT, etc. SOI is a high capital intensity business.

240 Low Threat Medium Threat Soitec Competitive Analysis High Threat

Competitive What’s Changed in Risks Competitive Landscape Barriers To Entry Advantages the Industry Global Semiconductor & • Capital intensive and Market • Rise of 5G, which Electronic Parts Oligopoly highly specialized • SOI has Structure business – not requires significantly Manufacturing Partnerships • Customer 1 everyone can do more RF SOI Market Size 755.1B with labs and concentration – atomic level work. universities products (SOI is the Industry top five customers This industry manufactures LSD1 across the largest manufacturer electronic components, which Growth 56% of FY2019 of these products). • Because of the high world that revenue. are typically packaged in a enable better • Supply discrete form with two or degree of • Top ten • In the SOI subset of the R&D. shortfall of more connecting leads or specialization, high customers market, SOI has 65%-70% these metallic pads. Connecting level of human capital 84%. market share (based on their products due these parts by soldering them is required (and not • 3500 patents estimations). to elevated to a printed circuit board available in every gives SOI a • Technologies can demand. creates an electronic circuit. A city). technological change quickly. semiconductor device is an • Major players dominate advantage. electronic component made different segments of the • Rise of IoT and sue of • Since the customer with semiconductor material, value chain (i.e. Intel and • semiconductors in base is concentrated, • SOI has built Limited number of such as silicon. AMD for integrated chip cars – increasing securing the first suppliers. manufacturing). a strong demand for SOI’s contract can be reputation. products. challenging.

1. Ibis World 241 What Investors Missed

The Actual Story of the Last Five Years The Bear Thesis Five Years Ago: • SOI divested from its solar business in • Negative gross profit in FY2014 – not a good indicator of future 2015 to focus on solely semiconductor profitability. substrates. Returned to • SOI increased its capacity utilization and • Skeptical of the growth in the semi-conductor substrate industry profitability found operational improvements which and whether SOI could capture it. increased gross margins. • Lost focus on core business with foray into solar systems. Now it does neither substrates nor solar panels very well. • Gross margin up from 15.5% in FY2015 to 37.2% in FY2019. • Weak balance sheet: over levered and low cash balance. • Demand for SOI’s product increased rapidly. • Rise of 5G and 4G LTE increased demand for RF SOI substrates, of which SOI has 70% Return Breakdown: Consensus vs Results market share. • Increasing prevalence of semiconductors in Industry grew fast household items (IoT) and cars, and the rise of cloud infrastructure contributed to demand increases across SOI’s product lines. • Revenue grew at 28% CAGR from FY2015 to FY2020.

• SOI recapitalized by raising equity to pay Balance sheet was down debt; reducing Debt / EBITDA from strengthened 39.8x in FY2015 to 1.7x in FY2019.

242 Back to List Soitec Takeaways SOI is a High Quality Business- 4.5/5 Future Outlook Can SOI Sustain its Market Position? • SOI divested from its solar systems business to • SOI’s moat is strong and it has built a strong reputation SOI regained its focus focus on electronics. for excellence in the industry. and footing • SOI issued new equity to pay down its unsustainable • SOI has invested an average 7% of revenue on R&D since debt balance. 2015, and has partnerships with various universities and labs. • 5G, 4GLTE, rise in electronic cars, popularity of IoT, • One of SOI’s customer could vertically integrate -which growth of cloud infrastructure, etc. – all increased means they could lose a major customer. SOI capitalized on the demand for SOI products. industry’s growth Can SOI continue to grow faster than the industry? • SOI’s RF SOI and FD SOI substrates particularly strong growth – with SOI holding commanding market share. • If SOI maintains its market position it will capture a disproportionate amount of growth driven by 5G and other • Trends that increased demand, such as IoT, cloud trends since they are the undisputed leader for the RF SOI and infrastructure, 5G, and electronic cars, show no sign of FD SOI substrates. slowing down. • SOI believes electronic cars will go from 2M Is SOI poised to continue to outperform the market? demanded to >20M by 2030. • SOI has a strong reputation and moat in an industry that is • SOI anticipates 5G to have 55% global coverage poised to continue to grow. SOI believes there is a by 2025. • SOI has demonstrated that they can capture growth and strong runway for growth • If SOI can sustain is market position their growth market share over the last five years, it is not a stretch to will likely be sustained solely by their capacity to believe they can continue. produce their substrates – not by demand. • However, continued similar growth is largely • However, SOI’s historical EBITDA is considerably lower predicated on macro growth – not SOI’s execution. than their FCFE – SOI is a very capital intensive business • 5G does seem like it will be a major boost to which depresses their cash flow relative to earnings. demand.

243 Max Schieferdecker 652% 5 Year TSR AIM:YOU Rank: 38/104

244 YouGov Overview

YouGov is an international research and data analytics group NTM EV/EBITDA Multiple based in London, UK, that helps companies, governments, and news outlets gather actionable data for decision making. 2020 25.3x

Statistic 6/8/15 6/8/20 2015 10.8x Stock Price £1.08 £8.00 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x 30.0x Market Cap £111.01M £861.67M

Enterprise Value £107.30M £843.41M

Shares Outstanding 102.78M 107.71M

EV / NTM Revenue 1.37x 5.61x

EV / NTM EBITDA 10.76x 25.28x NTM P/E 14.94x 49.50x Z

Statistic CY 2015 CY 2019

Revenue 81.42M 146.87M

EBITDA 7.37M 28.78M

245 YouGov Business Model

Primary Products Context Sales by Category

• Consistent surveys that YOU aids clients in developing 23.7% Brand measure a client’s brand effective marketing strategies Index image across 40 markets 43.9% • YouGov provides companies worldwide with data and insights to help them plan, develop, and evaluate 32.4% • Audience planning and the impact of their marketing segmentation tool that and communication activities Profiles Custom Research Data Products Data Services covers 19 markets • YouGov sends out a weekly set worldwide Sales by Geography of surveys tailored to certain 7.5% members to its “panel” (people who sign up to take their 7.4% 29.8% • Fast turnaround, custom surveys for cash) survey facilitation service Omnibus 14.7% across 40 markets • They then apply their worldwide answers to those surveys to their profile more 40.5% generally to find • Quantitative and similarities in order to UK USA Mainland Europe Middle East Asia Pacific Custom qualitative research perform high-quality data Research directed by sector analysis and make YOU is a capital light business there is no specialists accurate predictions manufacturing involved

246 Low Threat Medium Threat YouGov Competitive Analysis High Threat

What’s Changed Barriers To Entry Competitive Advantages Risks Big Data and Business in the Industry Analytics

The players in this industry offer data • High quality data as a result collection and analysis tools for of a broad, worldwide panel companies looking to make educated of over 9.5 million business decisions. • Pew research • No key barriers to entry conducted a study • Anyone can send out a which proved so • Failure to maintain the • Increased survey and analyze the • Well known brand as a quality of their panel reliance on data Market Pure results result of the public data • Failure to achieve the for decision Structure Competition • Few can do it publications growth goals laid out making • Market Size $225.88B1 effectively, This is done through however Ratings and Daily Industry > 10%1 • YOU is consistently Growth referenced by major news outlets around the world

1https://www.prnewswire.com/in/news-releases/big-data-and-business-analytics-market-size-is-projected-to-reach-usd 247 What Investors Missed The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • New markets in 7 countries were • In H1 2015, the low margin Custom Research division penetrated through organic accounted for ~2/3 of YOU’s revenues Expanded into operations and affiliate partnerships • This business was not very scalable due to the New Markets • 4 key bolt-on acquisitions took place uniqueness of each client’s needs and Sectors which allowed YOU to expand the presence of and enhance their previous • The board had just come out with a very aggressive five year offerings growth plan, and there was little evidence at that point to show that YOU would be able to meet those goals • YOU’s big goal in their first 5-year plan was to build a connected, systematic approach to data research Rolled out • In order to accomplish that goal, many many New Return Breakdown: Consensus vs Results new developments were made Features and • These included a new mobile Offerings app, analytics platform (Crunch), and reports that are issued on a freemium basis • Management successfully facilitated the growth of the higher margin data Shifted Focus products and services divisions while to Higher cutting back on the custom research Margin • The custom research offering was also Business revamped in order to increase margins and focus on YOU’s unique value add

248 Back to List YouGov Takeaways YOU is a Very Good Business – 4.5/5 Future Outlook • In a business world that has increasingly relied on Can YOU Sustain its Advantages? data analytics to make important business decisions, YouGov provides quality resources to aid in making • YouGov has a track record of quality and those decisions accuracy that it will likely retain until it proves otherwise YOU has a Moat • YouGov has a reputation for being extremely accurate in their results (only pollster to get the • Even if other companies do reach YOU’s 2017 UK elections correct) quality, YOU has the legacy and was the first to reach that level • They are consistently used by many large media, and global more generally, companies Can YOU continue to grow? • After FY 14, the board set up an extremely lucrative • The demand for high quality data analysis five-year incentive plan for the executive team in the business world is not going to be • This plan required that, in order to vest 100% of slowing down anytime soon the options available, the EPS CAGR over the • Because of the great reputation that period had to exceed 25% YouGov possesses, they will likely get a lot • The final CAGR ended up being 34% of that business Clear Plan for the • This prior success lends investors to believe that their Future next five-year plan also has some merit Is YOU poised to continue to outperform? • The 3 main goals are to double the revenue, • While there will likely continue to be double EBIT margin, and achieve a EPS CAGR impressive numbers coming from YOU, the over 30% stock is trading at ATH multiples and the • YOU is also in the process of combining their divisions’ explicitly laid out growth plan has likely PnL in order to align incentives and increase cross- selling already been priced in

249 Elizabeth DeSouza 650% 5 Year TSR NASDAQGS:NOVT Rank: 39/104

250 Novanta Inc. Overview

Novanta Inc., headquartered in Bedford, MA, designs, manufactures, and sells photonics, vision, and precision motion components and sub- NTM EV/EBITDA Multiple systems to original equipment manufacturers in the medical and industrial markets worldwide. 2020 39.2x

Statistic 6/8/15 6/8/20 2015 9.9x Stock Price $15.4 $111.83 0.0x 10.0x 20.0x 30.0x 40.0x 50.0x Market Cap $529.85M $3.93B

Enterprise Value $615.32M $4.12B

Shares Outstanding 34.41M 35.12M

EV / NTM Revenue 1.65x 6.98x

EV / NTM EBITDA 9.89x 39.24x P/E 17.02x 72.38x Z

Statistic FY 2015 FY 2019

Revenue $373.6M $626.1

EBITDA $56.5M $111.1M

251 Novanta Inc. Business Model

Primary Products Context Sales by Geography NOVT supplies technologies to 14.3% 1.8% 40.6% • Photonics medical and advanced industrial solutions OEMs 9.5% Technology • Vision solutions • Photonics segment designs & Solutions manufactures solutions including • Precision motion 13.1% solutions laser scanning, laser beam delivery, 20.7% and a variety of lasers U.S. Germany Rest of Europe China • Vision segment designs & Rest of Asia-Pacific Other manufactures medical grade technologies such as pumps and Sales by Category disposables, visualization solutions, 36.8% wireless imaging & radio frequency identification technologies 19.8% • Precision Motion deals with optical & inductive encoders, precision 43.3% motors, and precision machined Photonics Vision Precision Motion components • Sales are mainly made to OEM NOVT creates high performance laser photonics customers, both directly & through NOVT is capital intensive business, as it solutions like that shown above distributers manufactures its own products.

252 Low Threat Medium Threat Novanta Inc. Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry Electronic Equipment & Instruments

The players in this industry produce electronic equipment, instruments, • Certain segments served by electronic components and electronic NOVT are cyclical and equipment mainly for the OEM experience downturns in • Increased • Proprietary motion, vision, (Original Equipment Manufacturers) • High start-up costs demand for capital regulation and and photonics capabilities market. because of the capital equipment, which focus on the necessary for • Use of their technology negatively impacts NOVT medical device givers their customers a Market manufacturing sales industry Oligopoly competitive advantage Structure • Expertise in advanced • NOVT is subject to medical • Manufacturing technology necessary • Breadth of technologies device regulation, which operations have Market Size $350B1 • Continuous investment in offered and knowledge of could hinder the approval been negatively Industry R&D different market or sale of their products impacted by > 10%1 applications distinguishes Growth • NOVT sales could be Covid-19 NOVT from competitors impacted by healthcare Market characterized as an oligopoly industry cost containment because of barriers to entry and and reform differentiation of goods, however, market concentration is low

1 https://eresearch.fidelity.com/eresearch/markets_sectors/sectors/industries.jhtml?tab=learn&industry=452030 253 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • In 2015, Novanta was called GSI Group and was entering a • Current CEO appointed in 2016 and has transformational period managed the rebranding well • The company saw its future opportunities as “so distinctly • Emphasis on growth in medical markets different from the past” that they re-branded as Novanta and use of NOVT technology in precision Successful • NOVT had already undergone one rebranding in 2005 when industrial robotics have created a platform it changed from GSI Lumonics Inc. to GSI Group, but this did Rebranding for growth not spur major success for the company • In 2019, NOVT saw double-digit growth in • Part of the rebranding plan was to invest in new their medical market sales (now accounts technologies and shift toward medical end markets, which for over half of NOVT’s revenue) put NOVT in mostly uncharted water as a company • Part of the rebranding plan was to use Return Breakdown: Consensus vs Results acquisitions as a way to expand technology portfolio • 3 acquisitions in 2017, which outperformed strengthened positioning in Successful medical markets Acquisitions • 2017 EBITDA margins reached 20%, a & profitability goal NOVT initially set for Innovation 2020 • 2018-2019 closed 5 acquisitions • Expanded engineering capabilities, creating the strongest innovation pipeline in company history

254 Back to List Novanta Inc. Takeaways

NOVT is a Okay Business – 3/5 Future Outlook Can NOVT Sustain its Advantages? • NOVT manufactures very specific products that help • Proprietary technology portfolio that customer’s manufacture better goods and give has been developed through R&D and customers a competitive advantage acquisitions • Barriers to entry are high NOVT has a Niche • Breadth of knowledge developed • NOVT products do not seem like a crucial part of the through years of experience and manufacturing process, but rather something that acquisitions would be one of the first things to go, should costs Can NOVT continue to grow? need to be cut • NOVT is investing heavily in innovation to enhance their proprietary technology position and long term growth • Opportunity for applications in robotic surgery, minimally invasive surgery, DNA • Revenue growth seems to do mainly with acquisitions sequencing, and precision automation • In years where no acquisition was made growth is around 2.5% Is NOVT poised to continue to outperform? Unsustainable Growth • Ok gross and EBITDA margins as 42.1% and 17.7% • NOVT outperformance seems to be driven respectively for FY 2019 by acquisitions thus far • EBITDA margin goal of 20% was reached in 2017, but has not been sustained, decreasing every year since • Future outperformance will be driven by ability to generate organic growth or to continue to make strategic acquisitions

255 Max Schieferdecker 643% 5 Year TSR NYSE:CHGG Rank: 40/104

256 Chegg Overview

Chegg is an online learning platform based out of Santa Clara, NTM EV/Sales Multiple California that helps students do their homework, study for tests, and write papers. 2020 12.6x

Statistic 6/8/15 6/8/20 2015 2.0x Stock Price $7.75 $57.74 0.0x 5.0x 10.0x 15.0x Market Cap $666.89M $7.14B

Enterprise Value $587.99M $7.31B

Shares Outstanding 86.74M 122.43M

EV / NTM Revenue 1.97x 12.57x

EV / NTM EBITDA 124.16x 39.08x NTM P/E 188.60x 49.92x Z

Statistic FY 2015 FY 2019

Revenue 301.37M 410.93M

EBITDA 3.2M 49.16M

257 Chegg Business Model

Primary Product Context Sales by Product • Monthly subscription Chegg service that gives full 19.2% Services access to Chegg’s Chegg is a student’s best friend resources • Chegg’s most popular service • Print textbooks and Required is Chegg Study, through eTextbooks for rent or Materials which students can get sale answers to a most textbook questions in existence • Chegg also offer writing tools, live tutors, a math solver, flashcards, and internships 80.8% • In FY19, 5.8 million individual people paid for Chegg’s products and Chegg Services Required Materials services CHGG is a capital light business as most of their revenue Chegg textbook shipping comes from the software side of the business

258 Low Threat Medium Threat Chegg Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry Online Tutoring Services

The players in this industry offer • Not very hard to get into • Chegg has already tutoring services and resources via the the industry established itself as the go- internet. • Shift to online • Services are not very to website for high school learning and capital intensive and and college textbook technology in the theoretically anyone could problems classroom and at offer them if they put in • • Chegg is the only platform Missing out on sales due to home has given Market the effort to that offers all the services multiple people using the Oligopoly students more Structure • The main critical that is does under one same account opportunities to characteristic that is vital subscription Market Size $630M1 go online for to be successful is being a • Chegg’s data collection far homework help Industry reputable and trustworthy exceeds its competitors MSD1 Growth source of information because they are involved in all aspects of education

1 https://my-ibisworld-com.libproxy.wustl.edu/us/en/industry-specialized/od6038/industry-at-a-glance#key-statistics-snapshot 259 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • CHGG was first listed on the NYSE on 3/13/13, and it was • CHGG leveraged their client base using a lot of the cash from the IPO to acquire unprofitable Shifted Focus to from the low margin print textbook companies, such as Internships.com and InstaEDU, which Digital service to grow their online services resulted in a lot of goodwill and intangibles on the balance revenue by 150% sheet • In October 2017, CHGG acquired Math • CHGG was burning a lot of cash to operate their low 42, a trusted math learning app, margin textbook rental business, through which they which has allowed students to see the didn’t even offer competitive pricing relative to the Key Acquisitions correct steps to solve math problems competition to Expand using AI Offerings • In May 2018, CHGG acquired WriteLab, an AI-enhanced writing Consensus vs Results Return Breakdown: platform, which has strengthened their writing service tremendously • During the month of May 2020, CHGG jumped 49% due to all college students taking finals online • Many exam questions and COVID-19 Pushed answers can be found on Chegg Finals Online • This opened the door for many students to pay for the subscription just for one month to use while taking finals

260 Back to List Chegg Takeaways CHGG is an Okay Business – 3/5 Future Outlook • With online finals likely being present for many Can CHGG Sustain its Advantages? schools in Fall 2020, there will likely be another spike • There are no true competitors that CHGG is in a Prime in subscriptions threaten CHGG’s one stop shop model, Position to Capitalize • CHGG reels these students in with Study through SEO, as many competitors just operate in one on Virtual School and then these students become aware of the other segment features that a subscription offers them • As long as no new player comes along • The gross margins are actually quite good (77%), and severely undercuts CHGG, they however, the operating expenses are extremely high, as should be fine a lot of R&D is required to continuously expand their Can CHGG continue to grow? product offerings as well as improve their current CHGG has too Many • CHGG is making moves to expand the products market they operate in, as they recently Expenses • Interest expense is also quite high currently due to acquired Thinkful, a professional learning $900M of convertible notes platform that helps students get jobs • However, in the long run, this debt will likely not • Thus, CHGG is attempting to keep students be an issue once they are able to scale on their service even after graduation, • The actual total addressable market is smaller than which will lead to more customers overall management indicates Is CHGG poised to continue to outperform? • Not all students are in a financial position to pay • CHGG will likely continue to outperform, $15 a month for the service The Target Market is despite the high multiples that it currently • For the most part, wealthier students are Jobless disproportionately more likely to be Chegg customers trades at (44x NTM EBITDA) due to their possession of discretionary income • This is because of the high growth potential • Approximately 86% of U.S. college students still available as well as the impending first receive some form of financial aid1 ever fiscal year of profitability

1https://nces.ed.gov/programs/coe/indicator_cuc.asp#:~:text=Over%20a%20more%20recent%20time,and%20private%20nonp rofit%20(90%20vs. 261 Max Schieferdecker 622% 5 Year TSR OB:BOUVET Rank: 41/104

262 Bouvet Overview

Bouvet is a consulting group based in Oslo, Norway, that LTM EV/EBITDA Multiple operates through six subsidiaries which cover development and consultancy related to IT, communication, and enterprise management. 2020 17.0x

Statistic 6/8/15 6/8/20 2015 7.7x Stock Price 84 NOK 500 NOK 0.0x 5.0x 10.0x 15.0x 20.0x Market Cap 859.35M NOK 5.12B NOK

Enterprise Value 747.05M NOK 4.98B NOK

Shares Outstanding 10.23M 10.25M

EV / LTM Revenue 0.64x 2.25x

EV / LTM EBITDA 7.68x 17.04x LTM P/E 14.31x 26.99x Z

Statistic FY 2015 FY 2019

Revenue 1.23B 2.13B

EBITDA 111.19M 250.66M

263 Bouvet Business Model

Primary Products Context Sales by Sector

IT • Expert advice on IT BOUVET helps businesses Consulting problems within grow by increasing their IT Services companies capabilities 50.8% • Provides a cross-disciplinary 49.2% • A unique Datahub approach to solving complex approach for collecting, Software business problems in connecting, and sharing important Scandinavian Public Private data within companies industries • Bouvet operates locally with Sales by Customer Business 10 offices in Norway and 3 in 27.9% Sweden 34.7% • It operates its software product through its subsidiary, Sesam, which is 27.6% an Integration Platform 9.8%

• Bouvet also operates courses Oil & Gas Public Admin Power Supply Other and breakfast seminars to share basic knowledge about BOUVET is a capital light business as most costs IT specifics in consulting companies are personnel The concept behind the Sesam Integration Platform

264 Low Threat Medium Threat Bouvet Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry IT Consulting

• Because the business model The players in this industry offer revolves heavily around the services aimed at helping clients on abilities of their employees, • how they can utilize information Good reputation in the talent risk is extremely technology (IT) and digital to Scandinavian region prevalent optimally achieve their business goals. • Able to attract good • Companies can keep employees because of the working with a positive reputation it has consultant without • Increased • Little barriers to entry in relation to how it treats presence of Market Pure working with the besides know-how employees technology in Structure Competition consulting company • business Strong repeat customer • Overexposure to 2 Market Size $51.66B1 numbers industries – oil & gas and • Industry 95% of revenue public admin MSD1 Growth comes from existing • Customer concentration customers • 10 largest customers account for 42.8% of total revenues

1https://www.statista.com/forecasts/963889/it-consulting-implementationservices-revenue-in-the-world 265 What Investors Missed The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • Because Bouvet is a consulting business, their ability to grow revenue correlates almost entirely to the • BOUVET was a micro cap stock trading with a low trading capacity of work their employees can volume, so it was not very liquid handle • Inconsistent EPS growth history made it difficult to • Bouvet thus grew their employee at accurately forecast earnings with confidence a CAGR of 9.5% over the past 5 Increased the years in order to expand their top- Number of line Employees • This correlated to a 13.76% CAGR of revenue over the same Return Breakdown: Consensus vs Results period • This increase also resulted in a rise in margins, as they needed to hire external consultants, with higher fees, at a lower rate • Over the past 5 years, both billing ratios and hourly rates have increased Increased • This has led to outperformances Prices of consensus estimates, which has turned into continued stock price growth

266 Back to List Bouvet Takeaways BOUVET is an Okay Business – 3/5 Future Outlook • Bouvet has developed and is focused on Can BOUVET Sustain its Advantages? maintaining long-term client relationships • Due to the long-term business model that • This puts them in a stable position going BOUVET has a Moat Bouvet operates, it is very likely that they forward would be able to sustain their strong • It has a solid reputation in the Scandinavian region, relationships and reputation both from the employee and client point-of-views

• Bouvet is heavily exposed to the Oil & Gas industry, Can BOUVET continue to grow? and that industry is going through a rough time • Bouvet’s ability to grow revolves primarily currently with oil prices being extremely low around their willingness to hire more • Public admin is a promising industry for Bouvet going consultants Mediocre Industry forward, but there is increasing competition from the • As long as they keep doing that, their Positioning larger players capacity, and thus their top-line, will • Business relies heavily on the problems of their clients continue to grow • The needs of clients are difficult to time, but IT needs are definitely going to be present moving Is BOUVET poised to continue to outperform? forward • The stock is currently trading at historically • Low capital intensity means most cash earned can go high multiples that are well above the straight to shareholders industry norm and its historical average Decent Financial • High level of liquidity that substantially covers their debt • It is likely that there will be some multiple Profile balance contraction in the future, which will make it • ROCE was down Y/Y, mainly due to a large increase in difficult to outperform right-of-use assets ,however

267 Elizabeth DeSouza 606% 5 Year TSR AIM:DATA Rank: 42/104

268 GlobalData Overview

GlobalData Plc, based in London, England, provides proprietary NTM EV/EBITDA Multiple data, analytics, advertising, and insight services in Europe, the United States, and the Asia Pacific. 2020 35.7x

Statistic 6/8/15 6/8/20 2015 9.8x Stock Price £2.20 £14.50 0.0x 10.0x 20.0x 30.0x 40.0x Market Cap £167.79M £1.71B

Enterprise Value £176.46M £1.81B

Shares Outstanding 76.27M 117.98M

EV / NTM Revenue 2.36x 9.71x

EV / NTM EBITDA 9.83x 35.69x P/E 15.93x 47.74x Z

Statistic FY 2015 FY 2019

Revenue £60.5M £178.2M

EBITDA £8.7M £34.4M

269 GlobalData Business Model

Primary Products Context Sales by Category

• Proprietary data, DATA provides high quality 22.0% Data, analytics, and insights proprietary data, analytics, and Analytics, platform insights to clients 78.0% & Insight • Consulting • Subscription based access to Services • Single copy reports data & analytics platform Over a period of time • Events • Subscriptions are typically good Immediately on delivery for 12 months’ access and paid Sales by Geography for at the beginning of the 3.6% contract term 8.4% 15.5% • Solutions serve a very wide 9.9% range of industries, ranging from aerospace to foodservices to 34.8% 27.7% medical devices to tourism UK • Analytical tools allow the user to Europe Americas identify, sort, retrieve, and Asia Pacific analyze data by a range of Middle East & North Africa criteria, helping them maximize Other their data and furcating services DATA is a capital light business.

270 Low Threat Medium Threat GlobalData Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry Research & Consulting Services

• Proprietary technology The players in this industry offer • Barriers to entry in and unique / difficult to professional services, such as research • Social media is consulting services are replicate platforms • Cyber attacks put customer and consulting, to businesses. increasingly used less traditional than in • One of DATA’s main selling data at risk and would by businesses for product-oriented points is its breadth and negatively impact DATA marketing businesses depth of knowledge across reputation & sales • • Knowledge of data sectors • DATA competes in a highly Increased automation of Market Perfect analytics and • Strong client relationships competitive yet fragmented back-end services Structure Competition programming needed • Beginning to implement an market, so it must • Shift toward • Reputation is important “audience-first” approach, constantly adapt and Market Size $1.3B1 virtual firms to for attracting clients which consists of compete for market share reduce costs and Industry • Proprietary technology is establishing sales teams 5.4%2 increase Growth the most common barrier with specialist expertise in efficiency to entry a particular client segment

1 https://my-ibisworld-com.ezproxy.cul.columbia.edu/us/en/industry-specialized/od4753/industry-at-a-glance 271 2https://jsginc.com/2019/08/professional-services-industry-trends-2019-and-beyond/ What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • In 2015, DATA experienced some significant events • The companies acquired in 2015 including acquisitions and a new business strategy were successfully integrated into the company, increasing revenue • DATA exited from the more traditional B2B print sector and geographic reach of consulting services to refocus the business • More successful acquisitions in • Acquisitions of healthcare businesses cemented plan to 2017 and 2018, which expanded focus on the consumer, ICT, and healthcare verticals Key Acquisitions DATA industry coverage and • Along with these changes, DATA made changes to its capabilities board and senior management including the CEO, • Acquisitions have helped DATA creating uncertainty for investors successfully transition from the print sector to online by adding Consensus vs Results technologies and expertise Return Breakdown: • In addition to acquisitions, the CEO is focused on providing a great user experience to create repeatable organic growth • Integrated over 150 data assets from Operational different industry verticals into one Upgrades unified software platform • Working to create outstanding customer service in order to make long lasting relationships and recurring revenue

272 Back to List GlobalData Takeaways

DATA is a Good Business – 4/5 Future Outlook Can DATA Sustain its Advantages? • Businesses are increasingly seeing the benefits of DATA serves a analyzing data • Achieving the same breadth and depth of knowledge DATA brings to the table Diverse Customer • DATA offers services that add value to their would be difficult Base customers across a wide variety of industries • In addition to DATA’s services, they • DATA has had success globally invest a lot of time into building relationships with their customers • Over the past 5 years, DATA has made a number of Can DATA continue to grow? successful acquisitions, that have helped to grow the • DATA has a clear and proven plan for company quickly acquisitions, which will increase their Successful Mix of • Management has also focused on organic growth and offerings and customer base creating a business that customers want to continue Strategies • DATA also focusses on achieving organic working with growth through creating long lasting • This mix of M&A and organic growth have proved very relationships with customers successful for DATA Is DATA poised to continue to outperform? • 7% organic growth for FY 2019 • DATA is expected to trade at an all time • Gross and EBITDA margins of 41.5% and 21.8% high multiple of 38.5x in the NTM, Strong Financial respectively indicating it could be overvalued Profile • Gross and EBITDA margins are expected to grow over • DATA has a clear plan for growth, and there the next three years is an increasing demand for their services, • Consistent topline growth which could help continue outperformance

273 Elizabeth DeSouza 589% 5 Year TSR XTRA:EUZ Rank: 43/104

274 Eckert & Ziegler Strahlen Overview

Eckert & Ziegler Strahlen, headquartered in Berlin, Germany,, NTM EV/EBITDA Multiple provides, through its subsidiaries, isotope technology components for medical, scientific, and industrial use worldwide. 2020 15.6x

Statistic 6/8/15 6/8/20 2015 5.7x Stock Price €5.83 €35.63 0.0x 5.0x 10.0x 15.0x 20.0x Market Cap €123.27M €733.52M

Enterprise Value €125.48M €672.79M

Shares Outstanding 21.15M 20.59M

EV / NTM Revenue 0.93x 3.77x

EV / NTM EBITDA 5.71x 15.61x NTM P/E 13.26x 33.22x Z

Statistic FY 2015 FY 2019

Revenue €139.7M €178.5M

EBITDA €17.3M €39.6M

275 Eckert & Ziegler Strahlen Business Model

Primary Products Context Sales by Category • Medical segment EUZ provides isotope technology for produces radioactive medical, scientific, and industrial 24.0% 17.0% components for cancer use Isotope therapy • EUZ operates as a holding company Products • Industrial segment for its subsidiaries and does not 59.0% manufactures radiation conduct its own business sources for industrial Radiation Therapy Isotope Products gauging and control • Subsidiaries focus on isotope Radiopharma applications in cancer therapy, industrial radiometry, and nuclear Sales by Geography imaging 9.5% 7.5% • Isotope products, Radiation Therapy, and Radiopharma 46.7% segments • Handle and process isotope 36.4% technology materials in specially Europe North America equipped and approved production Asia/Pacific Other facilities • Plant engineering and isotope EUZ is a capital intensive business as it Modular-Lab PharmTracer for research and waste management from hospitals manufactures its products production of radiopharmaceuticals

276 Low Threat Medium Threat Eckert & Ziegler Strahlen Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry Health Care Equipment

• EUZ is exposed to risk in the • Increased The players in this industry design and Brazilian market because regulation and manufacture medical products that their political instability • EUZ has no direct changing policies diagnose, monitor, and treat humans makes currency losses competitors with the same • Federal funding • Considerable barriers to more likely entry due to very strict breadth of product range for healthcare • Radioactive materials and regulatory requirements (competitors operate in and related its use in medical products surrounding radioactive niches) programs involve liability risks expected to Market Monopolistic materials • Patent protected technology • High customer increase Structure Competition • Very sophisticated • Diverse portfolio; the concentration with 5 • technology that would technology in each segment Increase in Market Size $45.3B1 customers accounting for require massive R&D to is similar, but products vary terrorist activities 30% of operating revenue could lead to even Industry replicate in lifecycle and customer LSD1 more stringent Growth • High risk of disposal cost increases and cost increases regulations on associated with increased radioactive governmental regulations materials

1 https://www.ibisworld.com/united-states/market-research-reports/medical-device-manufacturing-industry/ 277 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years

• In 2015, EUZ was a smaller company with a more limited • The radiation therapy segment of product portfolio Eckert & Ziegler was managed by • EUZ products are a somewhat risky investment Eckert & Ziegler BEBIG SA, but in • They are subject to governmental regulations, and being 2018, the two companies merged such a small company, they do not have the same type of and became EUZ as it is today negotiating power a bigger company would • EUZ absorbed all of Eckert & Ziegler • Few products and technologies in their portfolio BEBIG SA technologies and subsidiaries, increasing their market share and expertise • Consensus vs Results Major Merger & Radiation Therapy segment now Return Breakdown: Acquisitions accounts for about 17% of sales • 2017 acquisition of Gamma-Service Group expanded EUZ’s isotope product portfolio to reach new markets • EUZ has seen 42% increase in sales of products rolled out in the past 5 years, attributing this largely to the companies from Gamma-Service Group acquisition

278 Back to List Eckert & Ziegler Strahlen Takeaways

EUZ is a Okay Business – 3.5/5 Future Outlook Can EUZ Sustain its Advantages? • EUZ operates in a space with very high • Very high barriers to entry for isotope barriers to entry production protect EUZ from competition • EUZ has patent protected technology • Isotope products are required in medical • No direct competitors EUZ has a Niche therapies, so there will always be a demand for them Can EUZ continue to grow? • Requires very specific expertise to operate as • Mid-term plan focuses on organic growth EUZ subsidiaries do through product development and entering new geographical markets • Open to acquisitions should the right kind of company present itself • Organic growth dependent mainly on product • Growth is mainly inorganic, with organic development revenue growth in 2019 of 3% • Strong gross profit and EBITDA margins at Is EUZ poised to continue to outperform? 48.8% and 22.2% respectively for FY 2019 • Outperformance will depend on ability to Mostly Inorganic • Consistent topline growth over the last few continue growing Growth years, but mainly due to the Gamma-Service • Without any direct competitors EUZ should be Group acquisition able to maintain their advantages and continue • Acquisitions seem to be EUZ’s most successful to acquire new customers avenue for growth • Still has room for multiple expansion

279 Owen Stimpson

558% 5 Year TSR

AIM:FEVR Rank: 44/104

280 Fever-Tree Overview

Fever-Tree is a producer of premium drink mixers. Based in NTM EV/NTM Revenue west London, Fever-Tree makes a variety of products, including tonic water, ginger beer, and lemonade. As of December 2019, 2019 their products were exported to 75 countries.

Statistic 06/08/2015 06/08/2020 2015 Stock Price £2.94 £18.72

Market Cap £338.52M £2.17B 5x 6x 7x 8x 9x 10x Enterprise Value £335.19M £2.05B

Shares Outstanding 115.24M 116.13M

EV / NTM Revenue 7.32x 8.59x

EV / NTM EBITDA 25.59x 34.40x

PE 36.00x 49.12x

Statistic FY 2015 FY 2019

Revenue 59.3M 260.5M

EBITDA 18.1M 74.5M

281 Fever-Tree Business Model

Primary Product Context Sales by Division Creates non-alcoholic Mixer Drinks drinks that are meant to FEVR is a premium drink mixer be mixed with alcohol. company.

• FEVR aims to create the highest quality drink mixers. • Sources ingredients from 100% all over the world. • “No compromise” on Mixer Drinks' quality approach. Sales by Geography • A focus on marketing and 6% branding with strong 25% promotional videos and materials. 51% • Key business aspects such as bottling, order 18% fulfilment, and distribution are UK USA EU Rest outsourced – FEVR has Sample Fever-Tree drinks low maintenance capex. FEVR’s outsourced model makes them a capital light business.

282 Low Threat Medium Threat Fever-Tree Competitive Analysis High Threat

Competitive What’s Changed in Risks Competitive Landscape Barriers To Entry Advantages the Industry

• Trends can Market • Relationships with change rapidly, Oligopoly • Brand and • Premium mixing Premium Soft Structure distributors and and new reputation drinks have Drinks and end-users (in both competitors can Market Size £517M1 increases become more off-trade and on- enter. Mixers demand. popular: Industry trade) are • Tariffs and other MSD1 • Product quality – Market that encompasses Growth paramount. export/import • The size of the premium soft drinks and developing and restrictions; FX premium • FEVR has the largest share premium mixers in both the tweaking the risk. market of the off-trade mixer market • Sourcing high- recipe takes time. increased by on-trade and off-trade nd • Ingredients in the UK at 39% (2 place quality ingredients • 81.3% in the segments. FEVR has pricing sourcing (since Schweppes at 31%). means relationships UK from April power given their FEVR sources • Schweppes is main with suppliers is key. perceived quality 2018-2019. from politically competitor in the tonic – enabling • Popularity in water segment with strong unstable • Brand awareness consistent >50% part due to market share in most regions, such as and customer gross profit general trend markets around the world. the DRC) loyalty. margins. towards • Commodity • premium Scale = lower pricing changes. ingredient costs. products. • Cyclical industry.

1. UK Only ; https://www.fentimans.com/resource/marketreport2019.pdf 283 What Investors Missed

The Actual Story of the Last Five Years The Bear Thesis Five Years Ago: • FEVR has great marketing: escapes rooms at London Cocktail week, launching a book, • FEVR’s marketing is overrated; major players, like Pepsi and Coca a cinematic “about us” video, etc. Cola, will eventually outcompete them. • Critical reception and perception: 6 Top quality years straight as Top Trending tonic water marketing, • Historical sales growth is because of trends towards premium mixers as rated by Drinks International. perception, and which is a fad – not a long term trend. reception. • FEVR is now larger than Schweppes in the UK; Pepsi and Coca-Cola overestimated • The high margins and outsourced model is not sustainable. the power of their existing brands and did not adapt their brands and products to cater to the premium segment. Return Breakdown: Consensus vs Results • Trends towards premium products across all categories – which catalyzed growth in Premium Mixer premium mixer market. Segment has grown, • Global premium mixer segment up 33% from and so has FEVR 2018-2019 to £517M. • FEVR’s revenue grown at a CAGR of 34.4% from FY2015 to FY2019. • Despite FX exposure and fluctuations, EBITDA margins remained steady at ≈30%. Margins were • FEVR’s brand and pricing power enabled them defensible to maintain >50% gross margins. • Largest bottler owns 4% of company which underscores their long-term commitment.

284 Back to List Fever-Tree Takeaways Fever-Tree is a Solid Business– 3/5 Future Outlook • FEVR is the No.1 global premium mixer brand. Can FEVR Sustain its Market Position? • Strong marketing efforts and reception have bolstered • FEVR’s brand is the strongest in the premium mixer FEVR has the FEVR’s brand globally. segment. strongest brand in the • But barriers to entry are not that high: major companies, • FEVR is getting squeezed on both ends: new competitors industry like Coca Cola, could start a premium mixer brand, and threaten FEVR’s premium appeal, and major competitors, management has noted that they “are seeing mixer like Schweppes, can undercut FEVR from below. 1 brands pop up all around the world.” Can FEVR continue to grow faster than the industry? • The outsourced model has kept margins high (28.6% • FEVR’s strong marketing has enabled to grow rapidly in EBITDA margin) and costs low (maintenance capex the UK, and in different markets. ≈1% of sales). • FEVR’s top-quality products and reception has undergirded • Marketing has led to strong growth in the UK, and in FEVR’s strategy has this growth as well. various markets around the world. worked so far • Now that FEVR has essentially proven that the premium mixer • FEVR has been credited with educating consumers on the industry is lasting and robust, competitors are entering to importance of quality mixers,” essentially growing the chip away at FEVR’s share in different markets and segments. premium mixer segment and then capturing the growth Is FEVR poised to continue to outperform the market? with their products. 2 • Macrotrends are not in FEVR’s favor: the premium mixer • Schweppes has increased their marketing efforts. market is slowing down as people buy less premium products • New brands are entering the market all over the world, due to a worsening economy. FEVR’s market position which can chip away at FEVR’s share in niche markets. • New competitors threaten FEVR at both ends of the market, in and growth is under • Economic growth is slowing. different drinks, and in different geographies. attack • FEVR is a solid business with a strong brand and great • Threat evidenced by slowing topline growth: just 9.7% product, but its growth is under threat from macro growth from FY2018 to FY2019, and anticipated threats and new competitors. contraction for FY2020. • FEVR needs a better growth runway to justify its multiple.

1. https://www.theguardian.com/business/2019/nov/20/fever-tree-mixes-revenue-warning-with-us-expansion-cheer-tonic-water-uk-sales 2. https://www.fentimans.com/resource/marketreport2019.pdf 285 Max Schieferdecker 572% 5 Year TSR NASDAQGS:QDEL Rank: 45/104

286 Quidel Overview

Quidel is a leader in the development, manufacturing, and NTM EV/EBITDA Multiple marketing of rapid diagnostic testing solutions based in San Diego, CA. 2020 30.4x

Statistic 6/8/15 6/8/20 2015 14.7x Stock Price $22.63 $156.32 0.0x 10.0x 20.0x 30.0x 40.0x Market Cap $780.58M $6.57B

Enterprise Value $695.43M $6.57B

Shares Outstanding 35.74M 43.40M

EV / NTM Revenue 3.34x 6.29x

EV / NTM EBITDA 14.71x 30.39x NTM P/E 50.98x 17.83x Z

Statistic FY 2015 FY 2019

Revenue 194.03M 534.89M

EBITDA 27.34M 156.84M

287 Quidel Business Model

Primary Products Context Sales by Category 4.1% 10.3% Diagnostic • Tests used to detect 35.8% Testing disease or monitoring QDEL provides testing for a Solutions its progression wide variety of diseases • QDEL’s products address 49.8%

issues such as infectious Rapid Immunoassay Cardiac Immunoassay diseases, cardiology, thyroid, Specialized Diagnostic Solutions Molecular Diagnostic Solutions women’s and general health, eye health, gastrointestinal Sales by Geography diseases, and toxicology 8.5% • Manufacturing is done in house at 3 locations in the U.S.

• Customers for these tests are 91.5% primarily centralized laboratories and U.S. Foreign decentralized point-of-care (POC) settings QDEL is a capital intensive business due to the Quidel’s ground-breaking COVID-19 test research and development and manufacturing costs

288 Low Threat Medium Threat Quidel Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry Medical Laboratories

The players in this industry offer tests • Products and processes are that provide information to healthcare subject to government professionals about the severity, onset • It is a highly regulated regulation, principally by and reason of patients' physical business, and the larger the FDA and other ailments players likely have better corresponding state and • Healthcare systems in place to work • Specialization of products government agencies decentralization with the government relative to big competitors' • Distributor concentration is • Payment models • High research and broader selection Market Pure a prevalent, as 3 are becoming development costs are • Structure Competition Ownership of specific distributors accounted for more outcome- present as well patents and IP that are 46% of total revenue if based Market Size $265B1 • Patents are more difficult critical to their business FY19 to get if you do not have Industry • Inability to execute their MSD1 the same amount of Growth business strategy due to resources as larger players patents owned by other parties

1 https://www.gminsights.com/industry-analysis/clinical-laboratory-services-market 289 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • QDEL was generating a low ROCE (3%) and there was a • In 2017, QDEL acquired 2 businesses, Triage and BNP, at a weak relationship between revenue and net income, discount from Alere calling into question the real value of the potential growth • Alere was being acquired by • There was also a fear that the company was extremely Abbott and had to divest the 2 overvalued, as multiples were too high business units Key Acquisitions • Given the uncertainty of the industry, there was little • These acquisitions provided value to be gained as the speculation of tremendous QDEL with revenue stabilization, growth had already been priced in diversification, and complementary customer bases in a high growth sector and have Consensus vs Results doubled revenues in 2018 Return Breakdown: • In May 2020, QDEL became the first company to receive emergency use authorization QDEL produced (EUA) from the FDA the first FDA • The test, Sofia 2 SARS Antigen FIA approved COVID- POC test, can provide positive results 19 antigen test in 15 minutes • This test is also easier to use and more economically efficient that prior testing processes

290 Back to List Quidel Takeaways QDEL is a Good Business – 4/5 Future Outlook Can QDEL Sustain its Advantages? • There is a lot of risk in this industry as many players QDEL Operates in an are fighting for the same patents • As QDEL’s patents expire and its larger Extremely competitors are able to produce a • It is possible, however, that QDEL comes out the higher quality, more cost efficient Competitive Industry pandemic with more market share in its other product, QDEL’s advantages will be products due to the familiarity with their COVID tests gone

• The CEO recently purchased over $800,000 worth of Can QDEL continue to grow? shares on the open market • QDEL had to rapidly expand their • Recently partnered with The Biomedical Advanced production capabilities due to COVID, so Research and Development Authority (BARDA) to they are in a good position to use those Promising Future develop a test that detects COVID-19 as well as two capabilities to capitalize on the upcoming other respiratory diseases flu season • High growth even before COVID suggests that the • In 2021, QDEL is planning to launch a new pandemic was just a jumpstart for the inevitable platform, Savannah, intended to be its next growth in the stock price flagship product as well Is QDEL poised to continue to outperform? • QDEL carries a high cash balance and has very little debt, which puts the company in a position to make another • Most of the TSR came from EBITDA growth, accretive acquisition if the opportunity arises suggesting that as long as revenue keeps Strong Financial • Gross, EBITDA, and profit margins of 60%, 29%, and growing at the rate it has been, the price Profile 14% respectively will grow at similar rates as well, because • Pre-acquisition legacy revenues have grown at a CAGR of multiple compression would not be very 8% over the past 5 years likely to happen

291 Owen Stimpson 568% 5 Year TSR NasdaqGS:EXEL Rank: 46/104

292 Exelixis Overview

Exelixis, Inc. is a genomics-based drug discovery company and EV / NTM Revenue the producer of cabozantinib (cabo), a treatment for various cancers approved by the U.S. Food and Drug Administration 2019 (FDA).

Statistic 06/08/2015 06/08/2020 2015 Stock Price $3.45 $23.13

Market Cap $676.29M $7.09B 0x 5x 10x 15x 20x 25x Enterprise Value $937.48M $6.19B

Shares Outstanding 196.03M 306.66M

EV / NTM Revenue 23.80x 6.54x

EV / NTM EBITDA NA 30.99x

PE NA 47.89x

Statistic FY 2015 FY 2019

Revenue 37.2M 967.8M

EBITDA (117.8M) 379.1M

293 Exelixis Business Model

Primary Product Context EXEL is a cancer treatment company. Discovery, development, and Sales by Geography commercialization of cancer • EXEL researches and develops Cancer medicines. Flagship molecule potential treatments for cancer. 4.63% Treatments is cabozantinib (cabo), which 15.79% is used to treat kidney and • Since 2010, EXEL has been “all-in” on liver cancer. cabo.

• Cabo has been approved to treat two 79.58% difficult to treat cancers: RCC (a type of kidney cancer) and liver cancer. US EU Japan • Cabo now approved in 52 countries and EXEL makes money through licensing the drug and by selling it EXEL is a medium capital intensity business directly. because of the capital requirement to develop / test drugs. • Success of cabo has enabled EXEL to EXEL’s two cabozantinib products: begin researching new drugs again, caboMETYX and COMETRIQ while continuing to search for new uses for cabo.

294 Low Threat Medium Threat Exelixis Competitive Analysis High Threat

Competitive What’s Changed in Risks Competitive Landscape Barriers To Entry Advantages the Industry

Oligopoly / • High start-up costs to Global Cancer Market Monopolistic research and create a Therapies Structure Competition new drug. • Regulatory Industry • Cabo has been Market Size ≈$98.9B1 • Clinical changes. approved for treating • Regulatory research Industry RCC (kidney cancer) Participants discover, develop, HSD1 requirements: need justifying Growth • New following the METEOR and produce therapies for FDA approval which effectiveness. cancer patients around the treatment trial. takes years. world. • For some cancers where the renders cabo • Also approved • Need different obsolete. standard of care treatment is • Product is for liver cancer. owned by one company, the approvals known / industry is consolidated, but internationally. understood by • Major issue often there are many • Cancer treatment doctors. with cabo competing drugs. trending towards • High human capital treatment targeted therapies. • NA is the largest market. requirements. uncovered. • For the cancers that EXEL’s cabo product treats, cabo is / is becoming the standard of • Element of luck in care. finding new drugs.

1. https://www.alliedmarketresearch.com/cancer-therapeutics-biotherapeutic- market#:~:text=The%20global%20cancer%20therapeutics%20market,oncology%20drugs%20to%20treat%20cancer 295 What Investors Missed

The Actual Story of the Last Five Years The Bear Thesis Four Years Ago: • Cabo is not a great drug and EXEL made a mistake betting its entire • Strong study results from METEOR and hand on its success. caboSUN trials. • The METEOR trial will not yield good results. • Cabometyx treatment approved in 2016. • Cabo has never been successful in a large scale trial. • If the drug fails, EXEL essentially has nothing left. • Approved as first line treatment in 2017. • EXEL has a high cash burn and unsustainable debt. Cabo became a • No major revenue source to support R&D expenses and to success • Secured agreement with Ipsen service debt. Pharma which sells drug outside of • EXEL will not be acquired, and the shares are unjustifiably pricing NA and Japan. in that possibility. • Represents 98% of revenue; revenue grown from 37M in FY2015 to 968M in Return Breakdown: Consensus vs Results FY2019.

• Success of cabo drugs enabled EXEL to reduce Debt was paid down its debt from 417.9M in FY2015 to 50.7M in and cash flow became FY2019. positive • Cash balance of 954.4M in March 2020; positive cash flow from operations.

EXEL was not • EXEL was not acquired by Roche but that did acquired not impede EXEL’s other accomplishments.

296 Back to List Exelixis Takeaways EXEL is a Strong Business- 4/5 Future Outlook Can EXEL Sustain its Market Position? • High barriers to entry due to start-up capital, • EXEL’s moat is strong.: EXEL made the right call regulatory burdens, and element of luck required • High startup costs on cabo, and now has a to develop new drugs. moat • Decision to go “all-in” on cabo paid off, given strong • Regulatory burdens test results. • Luck / time required to find new drugs. • EXEL’s treatments are becoming the standard of care. • EXEL’s flagship cabo product cabometyx used to treat Can EXEL continue to grow faster than the industry? two cancers: RCC and HCC. • If new studies show continue to show positive results, EXEL • Drug is approved as a first-line treatment and is will outperform. EXEL has benefited from already or becoming the standard of care for the • Cash on balance sheet enables EXEL to continue these its breakthrough cancers it treats. tests. • Sold across US and around the world through • No guarantee new tests will be successful; pharmaceutical partnership with Ipsen. companies can fizzle out after failing to replicate past success. • Revenue up to nearly 1B, 98% of which is cabometyx. Is EXEL poised to continue to outperform the market? • Continued outperformance similarly relies on results of new tests, and whether they expand EXEL’s TAM. • Now that EXEl has cash flow again, it has begun investing • EXEL trades at roughly 25x earnings, implying a valuation in in research looking at new ways cabo can be used and at line with the market – EXEL does not need to vastly EXEL has a potential new drugs altogether. runway for future growth outperform general expectations to outperform the market. • Nine ongoing potential label-enabling trials, and three 3 • If EXEL’s drugs become standard of care for currently three trials to test cabo for new uses. approved diseases, it may be enough to outperform on that basis alone. • No guarantees for new test results.

297 Owen Stimpson 560% 5 Year TSR NasdaqCM:BLFS Rank: 47/104

298 BioLife Solutions Overview

BLFS develops, manufactures, and markets bioproduction tools to EV / NTM Revenue the cell and gene therapy (regenerative medicine) industry, which are designed to improve quality and derisk biologic 2019 manufacturing and delivery.

Statistic 06/08/2015 06/08/2020 2015 Stock Price $2.22 $16.16

Market Cap $26.98M $420.05M 0x 2x 4x 6x 8x 10x Enterprise Value $20.42M $414.82M

Shares Outstanding 12.15M 25.99M

EV / NTM Revenue 2.86x 8.65x

EV / NTM EBITDA NA 58.75x

PE NA 298.06x

Statistic FY 2015 FY 2019

Revenue 6.45M 27.37M

EBITDA (4.67M) 2.86M

299 BioLife Solutions Business Model

Primary Product Context Various bioproduction tools that support BLFS makes bioproduction Bioproduction several steps in the tools for cell and gene therapy. tools biological Sales by Geography manufacturing and • BLFS has four product lines: delivery process. biopreservation media, 1% automated thawing devices, smart “cloud” shipping 14% containers, and freezer storage. 16% 69% • BLFS’s products aim to improve quality and de-risk cell and gene therapy. • Help customers US Canada EMEA Other commercialize new biologic-based therapies. BLFS is a medium capital intensity business.

BLFS’ products

300 Low Threat Medium Threat BioLife Solutions Competitive Analysis High Threat

Competitive What’s Changed Risks Competitive Landscape Barriers To Entry Advantages in the Industry

Market Monopolistic • Start-up capital Cell and Gene Therapy Structure Competition required to develop Industry Market Size 1B1 new products.

Participants develop cell and Industry 1 • Promise of curing > 10% • Technical expertise. • New competitor gene therapies and related Growth • Reputation rather than enters. products. and brand. ameliorating • Fast growing industry: • Regulatory approvals. • Or competitor symptoms has • 1000 ongoing trials. acquired by catalyzed large • Quality of • 9.8B in financing. major inflow of • Industry is young and products. • FDA predicts 5-10 new company. investment and there is likely to be therapies will be many new drugs new innovations / approved annually. • Relationships being tested by technological changes • Technological with companies, as industry matures. change. • BioLife is currently trusted customers. universities, and supplier but industry is young • Underscored non-profits. and there are many emerging by level of competitors. financing flowing into industry.

1. https://www2.deloitte.com/us/en/pages/life-sciences-and-health-care/articles/challenges-in-the-emerging-cell-therapy-industry.html 301 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • Raised new equity each year from FY2015 • Negative EBITDA and consistent cash burn. to FY2020. • And the company had to raise equity in FY2014 just to Cash flow positive • Cash flow positive since FY2017 and survive. • Skepticism over whether the regenerative medicine market will EBITDA positive since FY2018. grow like management thinks. • Market trends in regenerative medicine • And management’s plan to do contract manufacturing is not industry advantageous to BLFS: great since BLFS has already lost one of their major • 1000 companies in space in 2019 and customers in the space and margins are lower. 10B invested. • BLFS lacks focus: the biologistex Joint Venture is burning cash, and • Reimbursement based on patient unrelated to the core business. outcomes (makes buying premium media from BLFS more attractive). Regenerative market • Regenerative medicine customers grown to a EPS Results Return Breakdown: did grow majority of revenue (56% of revenue in FY2018). • Enabled revenue to grow to 33M in FY2020 from 6.5M in FY2015. • Helped expand gross margins from 27.5% in FY2015 to 55.6% in FY2020. • BLFS ceased contract manufacturing as core business begin to contribute. • Acquisitions share common theme of lowering risk in developing and Acquisitions panned manufacturing biologic therapies. out • JV bought out in FY2019 and is cashflow positive.

302 Back to List BioLife Solutions Takeaways BLFS is a Strong Business- 4/5 Future Outlook • BLFS maintained sufficient liquidity by raising equity Can BLFS Sustain its Market Position? and doing contract manufacturing. • There are barriers to entry: BLFS identified an • Start-up capital. opportunity • BLFS saw the opportunity in regenerative medicine and invested to position itself to capture the industry • Regulations. growth. • Technical expertise required. • BLFS’s high quality products enabled it to capture • Industry very young and minimal investment until market share as regenerative medicine industry grew. recently, dynamics could change given amount of investment. • Changes in reimbursement undergirded this BLFS has capitalized on growth, as it made it more logical for companies the industry growth and to invest in higher quality products like those Can BLFS continue to grow faster than the industry? trends offered by BLFS. • BLFS is poised to grow faster than the industry given that • BLFS made continual investments in adjacent niches, their products are top-end, which make more sense for such as shipping containers specialized for customers given reimbursement changes. regenerative medicine. Is BLFS poised to continue to outperform the market? • The industry is very young, and with the large influx of investment, competitive dynamics may change. • BLFS has a strong product and market position in an industry that is poised to grow - quickly. • But as of now, BLFS has the best biopreservation for BLFS has a runway for regenerative medicine which should enable the company • BLFS’s strategy and acquisitions have worked so far. growth to capture industry growth as more studies are done. • At nearly 60x NTM EBITDA any issue could cause BLFS’s • If drugs are brought to market, BLFS stands to multiple to contract, and given the level of investment and benefit as well given the potential scale of potential innovation, I think that it is likely. production.

303 Max Schieferdecker 541% 5 Year TSR NASDAQGS:MRCY Rank: 48/104

304 Mercury Systems Overview

Mercury Systems is a leading commercial provider of secure NTM EV/EBITDA Multiple sensor and safety-critical mission processing systems for aerospace and defense companies and is based in Andover, MA. 2020 25.7x

Statistic 6/8/15 6/8/20 2015 8.8x Stock Price $13.94 $89.65 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x 30.0x Market Cap $476.72M $4.98B

Enterprise Value $410.20M $4.85B

Shares Outstanding 33.23M 55.13M

EV / NTM Revenue 1.68x 5.71x

EV / NTM EBITDA 8.84x 25.74x NTM P/E 33.93x 39.20x Z

Statistic FY 2015 FY 2019

Revenue 242.52M 722.82M

EBITDA 40.43M 134.30M

305 Mercury Systems Business Model Context Primary Products Sales by Category MRCY operates at the • Elements that perform a intersection of high-tech and 28.2% Components single, discrete defense technological function • Builds very sophisticated 44.1% • Combinations of computer software systems that multiple components go onboard military platforms 27.6% Modules and that work together to • Customers are primarily the Subassemblies performs multiple major defense prime Components Modules and Sub-assemblies Integrated Subsystems functions contractors Sales by Geography • Multiple modules and/or • Serve their increased Integrated 11.3% subassemblies combined with a outsourcing needs on the Subsystems backplane and software most important programs and platforms • Outsourcing allows larger 88.7% companies to accomplish goals more quickly and

more affordably Domestic (U.S.) International • Focused for the longest time on sensor and effector mission MRCY is a capital intensive business systems market despite now manufacturing is done in house Examples of Mercury RF & Microwave Products having over 300 programs

306 Low Threat Medium Threat Mercury Systems Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry Aerospace and Defense Materials

• The players in this industry supply • Tight-knit relationship Customer consolidation materials and developed components with Raytheon and with Raytheon, on of the to final A&D manufacturing companies biggest Aerospace & Lockheed Martin • Very high barriers to entry Defense companies in the compromising 37% of FY19 due to the intense world revenue screening, background • • • Based out of the U.S. which Demand for MRCY’s A lot more checks, and it takes to products rely heavily on outsourcing Market Monopolistic is the biggest spender on work with the U.S. political issues such as the happening in the Structure Competition defense in the world government due to U.S. defense budget defense industry • Very trusted domestic Market Size $21.5B1 potential national security • supply chain With the amount of M&A threats the is being performed, Industry • MSD1 Possesses industry leading there is a chance that some Growth embedded security deals may end up being capabilities dilutive

1 https://www.grandviewresearch.com/industry-analysis/aerospace-defense-materials-market 307 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years

• Done 11 deals and deployed over $800M in capital over the past 5 • Uncertainty regarding future growth prospects after a years successful period of acquisitions and revenue growth • Focused on fully integrating its acquisitions • The ability to effectively extract synergies has resulted in an EBITDA CAGR of 46% Return Breakdown: despite revenues only growing at a CAGR of 26% Consensus vs Results Successful M&A Strategy • Their CFO, Mike Ruppert, who has been in charge of these operations since joining MRCY in 2018 has had a very successful A&D investment banking career before joining MRCY, having even started his own boutique M&A shop • A strict M&A philosophy has been presented to investors to give them confidence in their execution of future deals

308 Back to List Mercury Systems Takeaways

MRCY is a Good Business – 4/5 Future Outlook

• MRCY operates in a very high barrier to entry Can MRCY Sustain its Advantages? industry and boasts strong relationships with many industry leaders • Given the importance of strong relationships in this industry, as long as • Their value proposition to the large players in MRCY has a Moat MRCY doesn’t burn any bridges, it will A&D is very strong, and business will no doubt continue to benefit from a reliable keep showing up at MRCY’s door supply chain and strong partnerships • This is evident as there is a large backlog of orders mentioned in every annual report Can MRCY continue to grow? • Possesses a strong cash position (over $400M as of • MRCY is in a strong position to continue to 3/27/20) to capitalize on more opportunistic M&A grow, both organically and through further transactions in the future M&A activity • M&A has proven to be a big growth driver for MRCY in the past, so this position shows promise Strong Financial for more strong growth in the future Is MRCY poised to continue to outperform? Profile for Continued • Large focus on expanding EBITDA margins over time, Growth and MRCY has been successful in accomplishing that goal • Although there is a strong case for so far continued long-term growth , it seems like • High R&D costs and CapEx are present in order to the market has now priced that in, as NTM maintain the step ahead of competitors on the multiples are much higher (very high for an technology front, which has resulted in much success so A&D company) than they were 5 years ago far

309 Elizabeth DeSouza 538% 5 Year TSR OM:VITR Rank: 49/104

310 Vitrolife Overview In Swedish Krona (Kr)

Vitrolife AB is a medical device company, develops, produces, and markets products for assisted reproduction, such as sperm NTM EV/EBITDA Multiple processing, in vitro fertilization media and oil, and other products and services. 2020 41.2x

Statistic 06/10/2015 06/10/2020 2015 17.3x Stock Price 33.4 Kr 204 Kr

Market Cap 3.63B Kr 22.14B Kr 0.0x 10.0x 20.0x 30.0x 40.0x 50.0x

Enterprise Value 3.61B Kr 21.51B Kr

Shares Outstanding 108.55M 108.55M

EV / NTM Revenue 5.38x 14.73x

EV / NTM EBITDA 17.26x 41.23x

P/E 30.28x 61.10x Z

Statistic FY 2015 FY 2019

Revenue 722.4M 1.48B

EBITDA 241.2M 559.6M

311 VitroLife Business Model

Primary Product Context Sales by Geography 16% • Nutrient solutions (media) VITR develops, produces, and • Advanced disposable markets advanced products 24% 40% instruments (needles and and systems for in vitro pipettes) fertilization (IVF) Fertility • Disposable plastic products 19% Treatments • Technological aids (time- • VITR offers disposable EMEA lapse and microsurgical products and equipment for North and South America lasers) Asia IVF treatment, as well as Japan & Pacific • Kits for genetic analysis of accompanying support and Sales by Segment embryos service 8% • Primarily conducts product development in-house, 45% while research is done by 29% leading researchers in the field 12% • VITR has customers, 2% 4% primarily public and private Media ART Equipment clinics, in 110 countries Other Disposable Devices • Preimplantation genetic Time-lapse Genomics testing for aneuploidy and VITR is a capital intensive business. VITR’s EmbryoGlue is an implantation promoting medium. monogenic disorders

312 Low Threat Medium Threat VitroLife Competitive Analysis High Threat

Competitive What’s Changed in Risks Barriers To Entry Advantages the Industry

• Trend toward Biotechnology increased technology • Government regulations are • Although IVF content in treatments strict, and IVF products treatments are typically • Trend for IVF clinics to The players in this industry engage in require particularly lengthy high priority for merge and form the research, development, approvals before reaching • Market leader in time- patients, economic chains, creating manufacturing and/or marketing of market lapse systems, which downturns could result economies of scale products based on genetic analysis • Product approval is help monitor and select in a decline for • As countries develop, and genetic engineering. required in each individual embryos for privately financed more people are market in which the implantation treatments choosing to wait products will be sold • VITR covers the • Legislative changes and before having children, Market • Long start-up periods with complete value chain political decisions can leasing to reduced Oligopoly Structure high fixed costs and little from development and influence VITR’s ability fertility, which drives profit production to to conduct operations the fertility treatment Market Size $1.12T1 • Competitive landscape distribution and sales • VITR experienced a market Industry consists of hundreds of cyber attack in Q1 2019 • Covid-19 is expected > 10%1 Growth small companies and a few and is still vulnerable to to significantly industry giants them negatively impact IVF sales

1 https://eresearch.fidelity.com/eresearch/markets_sectors/sectors/industries.jhtml?tab=learn&industry=352010 313 What Investors Missed The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • In 2015, VITR rethought it strategy for becoming market leader in • Market leader in time-lapse systems fertility treatments and invested in time-lapse technology • In 2019, time-lapse technology was used in • Acquired Unisense FertliTech A/S, now Vitrolife A/S, in 2014 to about 15% of IVF treatments, up from 10% in expand time-lapse capabilities 2015 • Sales were weak for VITR’s stand alone time-lapse operations, so in 2015 it merged them with Vitrolife A/S Success of Time- • In 2019, the time-lapse segment accounted for • VITR rethought its growth strategy and reorganized its operations to lapse 29% of total revenue, up from 19% in 2015 focus on their media, disposal devices, and time lapse segments in the Technology • Growth of time-lapse in previously successful EMEA, Asia & Pacific, and Americas regions markets, such as Japan, and underdeveloped • VITR’s investment in time-lapse technology and their organizational markets like the U.S. changes brought uncertainty about their future performance • Time-lapse product range broadened by launch of two new products in 2019 Return Breakdown: Consensus vs Results • In 2018, VITR made a commercialization agreement with Illumina Inc., which gave them exclusive distribution, development, and commercialization rights for Ilumina’s IVF business for preimplantation genetic testing • This deal helped set up the new Genomics business New Business and unit, which now accounts for 8% of revenue and can Products continue to grow • VITR received market approval for EmbryoScope+ in China, resulting in the largest single order of systems so far • VITR also grew sales in all of its geographic regions in 2019

314 Back to List VitroLife Takeaways VITR is a Good Business- 4/5 Future Outlook Can VITR sustain its advantages? • VITR is a well established company with a • High barriers to entry discourage VITR has a History of history of success competition Success • VITR has clear goals for growth and • VITR has a very secure position in the time- development of their business lapse systems space • Ability to cover the entire value chain gives customers a sense of security and makes it • VITR has strong gross profit and EBITDA margins difficult for competitors of 63.4% and 37.8% respectively in 2019, and has been consistent with this performance over Can VITR continue to grow? the last five years Consistent Growth • VITR achieved 12% organic growth in 2019 • VITR has had consistent topline growth over the • VITR has invested in business segments such as last 5 years, growing 28.6% in 2019 time-lapse systems and genomics that have the • EPS has consistently grown and often opportunity for growth outperformed estimates over the last five years • Covid-19 could negatively impact VITR in the long-term Is VITR poised to continue to outperform? • IVF treatments are expensive, and the economic • VITR P/E and EBITDA multiples are high, Covid-19 Long-term downturn caused by Covid-19 could deter perhaps indicating it is currently overvalued Impact patients from seeking treatment • VITR has a plan for growth, which could allow it • In the medium-term, the effects of Covid-19 on to continue to outperform, but Covid-19 could a pregnancy are unknown and could deter also hinder outperformance women from pregnancy / using IVF

315 Max Schieferdecker 530% 5 Year TSR NYSE:EVI Rank: 50/104

316 EVI Industries Overview

1 EVI Industries is the parent company of many subsidiaries that LTM EV/EBITDA Multiple operate in the commercial laundry business. EVI is based out of Miami, FL. 2020 32.4x

Statistic 6/8/15 6/8/20 2015 8.4x Stock Price $3.73 $25.29 0.0x 10.0x 20.0x 30.0x 40.0x Market Cap $28.70M $301.32M

Enterprise Value $24.62M $333.01M

Shares Outstanding 7.03M 11.87M

EV / LTM Revenue 0.77x 1.35x

EV / LTM EBITDA 8.44x 32.43x LTM P/E 16.10x 168.90x Z

Statistic FY 2015 FY 2019

Revenue 29.61M 246.44M

EBITDA 2.08M 9.02M

1There is no sell-side coverage, so LTM EBITDA was used for the sake of comparison 317 EVI Industries Business Model

Primary Product Context

• Sells, rents, and leases EVI is a one-stop-shop for all commercial and things laundry Distribution industrial equipment, • Products that are distributed parts, and accessories through EVI’s subsidiaries include commercial and • Provides installation and industrial laundry and dry Services maintenance services to cleaning equipment as well as its customers steam and hot water boilers No Breakdowns of Revenue • These are mainly were Provided by EVI supplied by a few major manufacturers in the U.S. • EVI’s vast range of prices and a broad product line allow them to be the go-to place for every type of customer • Target customers range from multi-unit housing, to health care facilities, to laundromat investors EVI is a capital intensive business as a lot of cash is Dexter washer sold through a subsidiary needed to purchase, store, and deliver large machines • B2B business model

318 Low Threat Medium Threat EVI Industries Competitive Analysis High Threat

What’s Changed in the Competitive Advantages Risks Barriers To Entry Industry Industrial Distribution

• There is nothing special or The players in this industry receive unique about this • While much of the industry products from manufacturers and then business, as the is fragmented, EVI’s Buy- • The major distribution are responsible for distributing them distributor just acts as a and-Build growth strategy channels are becoming to the end customer. middleman between the has allowed them to increasingly digitalized distributor and the end penetrate more markets • as the value add from customer, as it is more and have a larger market Supplier power is the traditional players convenient for the share than many of its extremely high, as only 4 manufacturers are being questioned Market Pure manufacturers competitors accounted for 76% of • The business in Structure Competition • The industry is extremely • Their CEO used to be the the company’s getting fragmented because of the head of M&A at another Market Size $2.5T1 purchases disintermediated low barriers to entry, as industrial distributor, by the Industry the top publicly traded where he became an LSD1 capabilities of Growth distribution companies learned the strategy the internet only account for 5% of the behind acquiring US market companies for growth

1https://www.mckinsey.com/~/media/mckinsey/industries/advanced%20electronics/our%20insights/the%20coming%20shak eout%20in%20industrial%20distribution/the-coming-shakeout-in-industrial-distribution-report.pdf 319 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • There had been a history of unimpressive growth going into 2015, with 2014 revenues decreasing Y/Y from 2013 • Since becoming the CEO, Nahmad • The industrial distribution business is nothing ground has facilitated the acquisition of 13 breaking, as it’s a rather boring industry with low margins commercial laundry vendors, thus • The current majority shareholders of the company, the growing their market share by president and CEO and his brother, recently sold 40% of eliminating others • These acquisitions were of local their shares to a Florida LLC, from which the new Growth by distributors all around the United President, CEO, and Director of the Board, Henry Nahmad, Acquisitions came States, allowing EVI to reach markets that it never would have • Sign that maybe the future wasn’t too promising reached before Consensus vs Results • These acquisitions led to inorganic Return Breakdown: top line growth of 50% from 2015- 2020

No Analyst Coverage • Due to the inorganic growth figures Multiple that EVI was touting, the market Expansion assigned higher multiples to the stock as well

320 Back to List EVI Industries Takeaways

EVI is a Bad Business – 1/5 Future Outlook • Although EVI has a very capable acquirer at the helm, Can EVI Sustain its Advantages? the underlying quality of the business has not • Given that EVI’s only real advantage EVI has No Real Moat changed since he took over relative to its competitors is a head start to Protect Itself from • In a business that already has terrible margins, there on consolidation, it is unlikely that they the Competition are no barriers to entry that would stop more will be able to sustain that as other competition from coming into the picture and causing players start doing the same those margins to get even smaller Can EVI continue to grow? • Although the CAGR for revenue and EBITDA are high at • Given that the only way EVI can grow is 53% and 34%, respectively, the earnings potential was through acquisitions, their future growth never fully realized prospects do not look promising • The EPS CAGR for the same period was -7.4% • The value of their stock has gone down • In order to finance all of the acquisitions, a lot of debt from its peak, there is a lot of debt on the was taken out and more shares were issued balance sheet, and organic cash flow • This left the company highly levered with an generation is not easy for them, so financing these acquisitions in the future is Poor Financial Profile extremely small relative cash balance and also severely diluted their shareholders going to be quite difficult • EVI also takes on large contracts that have diminished Is EVI poised to continue to outperform? margins in the past few years because of the hope that • The stock was extremely overvalued they will have more higher margin accessory sales in compared to its peers at its peak, but the the future market has corrected the price • This is a losing business model in the long run, as other products account for a lower total value • It is unlikely that EVI will have multiples than the machine sales do that high again to cause an outperformance

321 Owen Stimpson 525% 5 Year TSR ASX:EOS Rank: 51/104

322 Electro Optic Systems Overview In Australian Dollars EV / LTM Revenue Electro Optic Systems Holdings Limited develops, manufactures, and sells telescopes and dome enclosures, laser satellite tracking systems, and electro-optic fire control systems. 2019

Statistic 06/08/2015 06/08/2020

Stock Price $1.00 $6.58 2015

Market Cap $56.85M $977.59M 0x 1x 2x 3x 4x 5x Enterprise Value $51.04M $913.17M

Shares Outstanding 56.85M 148.57M

EV / LTM Revenue 1.74x 3.93x

EV / LTM EBITDA NA 25.15x

PE NA 25.76x

Statistic FY 2015 FY 2019

Revenue 30.5M 166.0M

EBITDA 1.5M 23.8M

323 Electro Optic Systems Business Model

Primary Product Context Sales by Geography Develops, manufactures EOS sells high-tech weapons 1% and markets advanced 4% Defense and surveillance systems to fire control, surveillance, governments. and weapon systems. • EOS manufactures remotely Develops, manufactures operated weapon systems and markets laser-based 95% Space and laser-based surveillance space surveillance systems used by Space Defense Communications systems. governments for defense capabilities. Develops, manufactures Sales by Geography and markets optical, Communication microwave and • EOS has invested 800M in 14% Systems on-the-move radio and R&D over 20 years and now has some of the most lethal satellite products. 59% and accurate remote weapon system (RWS) products. 27% • EOS currently relies on RWS Australia Middle East North America sales but sees space and communication systems as EOS is a high capital-intensity business. Sample EOS products (weapons on trucks) frontiers for future growth.

324 Low Threat Medium Threat Electro Optic Systems Competitive Analysis High Threat

Competitive What’s Changed Risks Competitive Landscape Barriers To Entry Advantages in the Industry

Market Oligopoly Structure • Significant R&D spend • Remote Weapons • Product Major data / IP Market Size 12B1 required to create Systems Market quality: high breach. Industry working product. > 10%1 R&D has Participants develop, Growth enabled EOS to • Competition • Australian army manufacture and market has opted to invest • EOS is said to have one of the • Patents and IP. have a market (competitors could remote weapon systems, significantly more best/the best RWS technology leading also be state primarily to government in defense: on the market. • Contracts are long- product. funded). armies and defense services. • term. 270B • EOS is the largest defense • EOS has • Manufacturing / budget for exporter in the southern next decade • Regulatory burdens. navigated sourcing problems. hemisphere. government on tender hardware • Key competitors include Rafael • Less defense spend (like RWS). • Limited customer processes. (Israel based) and Kongsberg base: essentially just by governments. (Norway based) – market is sovereign • dominated by these players + governments. Reputation. EOS.

1. EOS 2019 10k 325 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • EOS won two 600M+ contracts in 2017 for • EOS needs to win major contracts and leverage its R&D – but it has its RWS. not shown its capable of doing that. • Had been developing RWS for 20 years and technology now • Historically unprofitable company that is generally cash flow EOS won major considered industry leading – negative or barely cash flow positive. contracts enabling them to win the contracts. • Very speculative and might need to dilute to stay alive. • Currently has 3.1B of active tenders and • EOS’ future depends on RWS – it does not have other segments. 500-600M backlog. • Revenue grown from 30.5M in FY2015 to 166M in FY2019. • EOS achieved profitability in FY2018 and has Return Breakdown: EPS Results been profitable each quarter since. EOS became • However, EOS is still consistently cash flow profitable negative – and has raised equity multiple times to maintain liquidity. • EOS has established a new communications division; and EOS’ space division is now profitable. • EOS’ space communication tech is far superior EOS expanded to incumbent tech but needs new infrastructure to be used – lots of future potential as infrastructure updates. • Space segment now focused on exports (large TAM) due to Australia’s lack of focus on space.

326 Back to List Electro Optic Systems Takeaways EOS is a Good Business- 3.5/5 Future Outlook Can EOS Sustain its Market Position? • EOS invested ~A$800m in R&D over the last 20 years on its technology. • EOS has industry leading RWS technology. EOS investments in R&D • Now has industry leading, best-in class • EOS has a moat due to the high-capital requirements, IP paid off RWS tech and IP. rights, and regulatory burdens. • EOS has a moat due to its technology, IP, and • There are only 2 other major significant competitors. regulatory burdens. Can EOS continue to grow faster than the industry? • EOS leading technology should enable them to win a high • EOS signed two major contracts worth roughly 600M in portion of active tenders. 2017 that contributed to high revenue growth. • Australia is investing significantly in its military, • EOS has 3B in active tenders and a 600M backlog. increasing likelihood of future tenders that EOS will be • Historical tender conversion rate ≈40% implies well positioned to win. EOS has grown 1.2B in future revenue. • Space and communication represent other potential • EOS has invested in growth potential: Australia RWS revenue streams. production capacity increased from 50M to 300M from Is EOS poised to continue to outperform the market? 2016 to 2019; plans to increase further to 900M. • EOS has demonstrated that it can be win major contracts, be profitable and cash flow positive. • EOS can likely continue to grow its core RWS business • But it has only won two major contracts in last 3 given active tenders, strength of technology, and years and has yet to achieve consistent positive EOS has a runway for competitive moat. cash flow. growth • EOS’ space and communication segments, while • EOS could win major new contracts but 1) that prospect is currently speculative, could provide future contribution likely priced in 2) future tenders may be more sparse. to EOS’ top and bottom line. • EOS space and communication segment remain speculative.

327 Max Schieferdecker 524% 5 Year TSR AIM:BVXP Rank: 52/104

328 Bioventix Overview

Bioventix is a biotech company based in Farnham, Surrey, UK, NTM EV/EBITDA Multiple that specializes in the development and commercial supply of high-affinity monoclonal antibodies for applications in clinical diagnostics. 2020 27.4x

Statistic 6/8/15 6/8/20 2015 13.5x Stock Price ₤8.25 ₤42.65 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x 30.0x Market Cap ₤41.67M ₤222.11M

Enterprise Value ₤37.87M ₤216.58M

Shares Outstanding 5.05M 5.21M

EV / NTM Revenue 9.71x 21.44x

EV / NTM EBITDA 13.53x 27.42x NTM P/E 17.84x 34.17x Z

Statistic CY1 2015 CY1 2019

Revenue 4.78M 10.02M

EBITDA 3.56M 7.91M

1HY ends on 12/31, so CY numbers are easily available for comparison 329 Bioventix Business Model

Primary Products Context Sales by Revenue Type BVXP helps blood tests become Sheep • Antibodies made for use 25.0% Monoclonal on blood-testing more accurate Antibodies machines • BVXP creates and manufactures 75.0% “Packaging” Methods antibodies to different human hormones and human disease • Non-exclusive portfolio of analytes antibodies for purchase by • The goal is to sell those Sales of Antibodies Usage Royalties anyone around the world antibodies to the big blood- Own-Risk • The reagents and the testing companies around Sales by Antibody Type resources to create and the world, such as Roche, 8.0% manufacture the SMAs Abbot, and Siemens come from BVXP • BVXP’s antibodies are derived 42.9% from sheep, but made in culture • Exclusive portfolio of 36.7% and mass-produced antibodies where the research is sponsored by a • Sheep are bigger and live longer 12.5%

Contract customer for use by said than mice, and their antibodies Vitamin D NT proBNP Others Testosterone R&D customer have an increased • The reagents and know- sensitivity/affinity, specificity in BVXP is a capital light business as material how may additionally be what they bind to, resulting in production costs are quite low. provided by said customer better blood testing capabilities

330 Low Threat Medium Threat Bioventix Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry Antibody Production

The players in this industry offer a antibodies for a variety of different • No intellectual property • First biotech company to end uses through their production • Only have physical the SMA market process. This consists of preparing property and know- • BVXP first exposed antigens, injecting them into animals, • High switching costs with how Roche to the and then recovering the antibodies a lot of risk attached for • Typically about a 5-year lag technology, and from the animals through their white customers between research and the blood cells. then their large revenue that comes as a • • Many customers competitors Antibodies are result of that research would not be followed suit being upgraded to Market Monopolistic willing to purchase • Heavily regulated by more effective • Extremely small team size Structure Competition unproven, cheaper government agencies versions (14 PT, 12 FT) allows for antibodies over 1 less overhead and a more • Customer concentration Market Size $12.3B more expensive, efficient workflow risk Industry proven ones > 10%1 • Products are unique and • Much of BVXP’s Growth extremely valuable to revenue comes from downstream providers the 4 largest players in the industry

1 https://www.grandviewresearch.com/industry-analysis/antibody-production-market 331 What Investors Missed The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years

• Micro-cap company trading on a smaller, British exchange that • The CEO, Peter Harrison, believed that the revenue growth from their is more lenient on regulation than the LSE vitamin D antibody would plateau • High-risk company whose business is quite confusing without around 2015/2016 researching it in depth • However, they continued to • Not a lot of resources are spent on investor relations and Vitamin D Antibody grow substantially (for there is very little specific information present in the reasons Peter’s stated he financial disclosures Outperforms doesn’t know), which was a large driver in the consistent EPS outperformance that can be seen in the Consensus vs Return Breakdown: Consensus vs Results Results graph (left)

• From what is easily accessible online, it doesn’t seem like there was a concerted effort to get the word out about the company before 2016 More Investor • Starting in 2016, Peter Harrison Exposure started going to investor conferences and doing interviews where he explains in detail the business and its opportunities

332 Back to List Bioventix Takeaways BVXP is a Good Business – 3.5/5 Future Outlook

• Clinical diagnostic products take years for BVXP’s Can BVXP Sustain its Advantages? customers to develop and obtain regulatory approval • BVXP can absolutely sustain its • Thus, when a product using a BVXP antibody is advantages given the fragmentation of the market and its strong relationships BVXP has a Moat created, it is unlikely that it will be replaced or changed with the large players in its customer base • BVXP capitalizes well by being the first to market for many of its products Can BVXP continue to grow? • BVXP is on pace to continue to grow • BVXP is extremely liquid with no debt • The vitamin D antibodies are expected to • They aim to keep around ₤5M on the balance plateau, but the CEO believes that their sheet for every HY, so anything over that is new troponin antibody (for uses in distributed to shareholder through dividends detecting heart attacks) is poised for high • Dividends have been growing a lot in recent growth in the coming years years because of the very high margins and high • This is going to be caused by the Very Strong Financial top-line growth, which has resulted in a lot of replacement of outdated antibodies excess cash on the balance sheet Profile Is BVXP poised to continue to outperform? • Because most of BXP’s revenue comes from “passive income” through the royalties of products • Much of the prior outperformance was that they had invested in earlier, actual COGS is cased by multiple expansion quite low • While there was substantial EBITDA growth • Recurring and predictable revenue streams are present as well, because of the predictability of as a result of long-term contracts and royalties in revenues, the future growth prospects seem perpetuity to be factored into the price already

333 Owen Stimpson 517% 5 Year TSR AIM:TSTL Rank: 53/104

334 Tristel Overview

TSTL manufactures and sells products addressing infection and EV / NTM EBITDA contamination control in human and animal healthcare, pharmaceutical and personal care manufacturing plants, and 2019 industrial water systems.

Statistic 06/08/2015 06/08/2020 2015 Stock Price £0.97 £4.65

Market Cap £39.71M £210.63M 0x 5x 10x 15x 20x 25x Enterprise Value £36.80M £210.37M

Shares Outstanding 41.15M 45.30M

EV / NTM Revenue 2.29x 7.01x

EV / NTM EBITDA 10.38x 22.87x

PE 20.75x 39.74x

Statistic FY 2015 FY 2019

Revenue 15.33M 26.17M

EBITDA 3.07M 6.15M

335 Tristel Business Model

Primary Product Context Sales by Segment Hospital infection TSTL is a manufacturer of 5% Human prevention products infection prevention and Healthcare under the Tristel brand. contamination control 3% products.

Veterinary practice • Principal technology is 92% Animal infection prevention formulation based on Healthcare products under the chlorine dioxide (ClO2). Human Animal Contamination Control Anistel brand. • Only company using ClO2 for Critical environment decontamination of Sales by Geography Contamination contamination control medical instruments. Control products under the 32% • Principal end-uses are for Crystel brand. 45% medical instruments and surfaces in hospitals.

• Core market is the UK with high penetration but has 23% UK EU Rest expanded across Europe. • Seeking approvals for TSTL is a medium capital intensity business. Sample Tristel products the US.

336 Low Threat Medium Threat Tristel Competitive Analysis High Threat

Competitive What’s Changed Risks Competitive Landscape Barriers To Entry Advantages in the Industry

Market Monopolistic Structure Competition Disinfectant • TSTL has a • TSTL is the only Manufacturing Market Size 3.5B1 proprietary company using • Customer formulation. concentration: Industry Industry chlorine dioxide LSD1 This industry manufactures Growth • TSTL has 277 for the • 28% of disinfectant products for patents in 36 decontamination human household and industrial uses. • TSTL is a leader with high countries. of medical healthcare Disinfectants are substances penetration in the UK market. instruments in the revenue • Healthcare increasingly that kill or inhibit growth of • Products often need world. from 1 • Has yet to enter competitive US important political harmful microorganisms to be certified for use customer. market where Clorox and issue across the by medical device • Reckitt Benckiser are largest Peer-reviewed, world. manufacturers. players with combined ≈15% published • Superior product market share. research is invented. • Regulatory validating • TSTL is only company with requirements (i.e. product. • Manufacturing CIO2 formulation for medical FDA approval). • 29 papers issues. devices disinfection. for TSTL.

1. US figures; Ibis World. 337 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • While UK market was highly penetrated, • Mature industry with limited room for topline and bottom line TSTL grew revenue from 9.8M in FY2015 growth. to 11.8M in FY2019 – representing solid • TSTL has already penetrated the UK market – more likely to 4.75% CAGR. lose market share than gain more. • Skeptical of international expansion and whether TSTL can • International revenue grew from 5.5M in FY2015 to 14.4M in FY2019. be successful outside of its core markets. Grew domestically • Limited options for good capital allocation. and internationally • International sales now 56% of total revenue. • TSTL is a good company but at >20x earnings, its already fairly • Acquisition of MODT (a company that valued. helps people administer healthcare through their smartphone) gives TSTL EPS Results potential access to the 5.8B people who do Return Breakdown: not have access to good healthcare.

• Management made dividend payments each year with extra capital. • Invested in regulatory approval for large and Strong capital untapped American market. allocation • Yet to gain approval, however. • Acquired distributors in Europe which were accretive and raised gross margins.

Multiple grew • PE multiple has essentially doubled to 39.74x.

338 Back to List Tristel Takeaways TSTL is a High Quality Business- 4.5/5 Future Outlook • TSTL has a proprietary formula and is the only Can TSTL Sustain its Market Position? company on earth that uses CIO2 for medical device • TSTL has a strong moat and has proven that by decontamination. maintaining its dominance in the UK. • 277 patents held by TSTL for products. • There are regulatory barriers and medical device TSTL has a moat • TSTL’s customers are sensitive to switching products approval barriers. due to their high importance but low cost. • Customer base is unlikely to seek alternatives given • 95% of TSTL’s revenue is recurring purchases. mission critical nature of TSTL products. • There are regulatory burdens, and products need to Can TSTL continue to grow faster than the industry? be approved by medical device manufacturers. • TSTL has positioned itself to grow internationally. • And has proven they can effectively grow in new • TSTL protected its strong market dominance in the UK markets over the last five years. and expanded internationally. • Market in US represents massive opportunity. • Grown international sales to 58% of total • TSTL has a truly proprietary product in that nobody else TSTL grew effectively revenue. uses CIO2. • UK sales grown steadily at ≈5%. Is TSTL poised to continue to outperform the market? • TSTL bought distributors in Belgium, France, and the • Approval in the US could catalyze growth that would Netherlands which grew margins and revenue. enable outperformance. • Can likely protect its current market share. • But barriers to entry that affect TSTL’s competitors • TSTL is in the regulatory approval process in the US. could stifle their growth in the US – and they are TSTL has a runway for • yet to be approved. future growth Acquisition of MODT can potentially enable TSTL to access many traditionally underserved markets (i.e. • At 40x earnings, TSTL does not have much margin for Africa, areas in Asia such as India, etc.). error.

339 Elizabeth DeSouza 513% 5 Year TSR OM:MCAP Rank: 54/104

340 MedCap Overview

MedCap is a private equity firm investing in healthcare NTM EV/EBITDA Multiple equipment and services, biotechnology, life sciences, and pharmaceutical companies, based in Stockholm, Sweden. 2020 15.5x

Statistic 6/8/15 6/8/20 2015 6.9x Stock Price 25.5 SEK 146.8 SEK 0.0x 5.0x 10.0x 15.0x 20.0x Market Cap 341.73M SEK 2.17B SEK

Enterprise Value 409.88M SEK 2.53B SEK

Shares Outstanding 13.40M 14.80M

EV / NTM Revenue 0.44x 2.94x

EV / NTM EBITDA 6.93x 15.51x NTM P/E 11.21x 31.33x Z

Statistic FY 2015 FY 2019

Revenue 817.8M SEK 757.40M SEK

EBITDA 35.0M SEK 92.30M SEK

341 MedCap Business Model

Primary Products Context Sales by Geography MCAP creates value through 1.0% active ownership 27.0% • MedTech segment Life Sciences • MCAP invests in small and mid- 57.0% • Specialty Pharma Investments sized private life sciences segment companies, primarily in central/northern Europe 15.0%

• Target of 5-10 core investments Sweden Europe • Investment size is typically SEK Nordics (ex Swe) Rest of World 25-150M in companies with EBITDA between SEK 1M and Sales by Category SEK 50M • Aim for majority ownership 43.4% with no specified length of holding period

• MCAP has an active ownership 56.6% strategy where it invests in development, resources, and MedTech Specialty Pharma Abliia, an MCAP investment, creates products like the MEMO operational improvement, as Timer shown above to help people with conditions like ADHD, well as looks for add-on epilepsy, and autism. acquisitions MCAP is a capital intensive business

342 Low Threat Medium Threat MedCap Competitive Analysis High Threat

What’s Changed in Competitive Advantages Risks Barriers To Entry the Industry Private Equity Firms

Private equity firms use funds from • MCAP has had success in • Market risk in that there accredited investors to purchase recognizing synergies and • is no guarantee that Changes in the ownership of or interest in an entity bringing value to the companies invested in healthcare industry that is not publicly traded companies they invest in • Significant capital is will grow at all (where MCAP • MCAP invests in companies invests) include an required to make • Bad management, failed operating in concentrated accelerating trend of investments product launches, or geographic regions, which young people being • Need skilled other disappointments Market allows for significant growth diagnosed with neuro Oligopoly employees with in investment operation Structure of the investment companies psychological knowledge in investing can cause significant via geographic expansion disabilities Market Size $3.9T1 and accounting losses for PE firms • MCAP has niche knowledge in • Middle market is • Liquidity risk for Industry the healthcare industry, underserved, with > 10%1 investors, as funds sit in Growth particularly in the Nordic more sellers than a private equity firm for region, helping them to make buyers 4-7 years on average successful investments

1 https://www.investopedia.com/articles/financial-careers/09/private-equity.asp 343 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years

• MCAP is a small, private equity firm, that operates in a • Listed on NASDAQ Stockholm in very specific region of the world 2016 • All MCAP financial publications are in Swedish, making it • MCAP invests in MedTech difficult to attract investors who don’t speak/read companies and Specialty Pharma Swedish • MedTech investments are • Difficult to know if their investment strategy will be companies that sell different types successful because of the nicheness of their investment of medical equipment and products area Investment • Specialty Pharma consists of companies that develop and sell Success pharmaceutical products and is the Consensus vs Results Return Breakdown: prioritized area • MCAP’s last acquisition was in Jan. 2018, and revenue still increased 6.8% in 2019 • Companies invested in have strong product portfolios that can lead the way for future growth

344 Back to List MedCap Takeaways

MCAP is a Good Business – 4/51 Future Outlook

Can MCAP Sustain its Advantages? • MCAP’s investment strategy has worked • MCAP invests in companies operating in the thus far, and there is no reason for it not MedTech and pharmaceutical industries, to continue to do so MCAP has a Niche specifically in the Nordic region • MCAP makes niche investments based • MCAP has area specific knowledge and a very on their industry expertise focused investment strategy

Can MCAP continue to grow? • MCAP can continue to grow by making • MCAP has created a strong portfolio over the last good investments and strategic 5 years, which is reflected by their financial acquisitions success and growth • Sales increased by 10% and profit increased Good Investments & 41% in FY 2019 Is MCAP poised to continue to outperform? Financials • Sales and EBITDA have a CAGR of 19% and 49% • MCAP has room for growth, and its past respectively over the last 4 years performance indicates that its investment • Gross profit and EBITDA margins were 56.3% strategy works, so it should be able to and 12.2% respectively in FY 2019, up from continue to outperform 30.1% and 1.5% in FY 2015

1This company analysis is based off of an MCAP investor presentation and the parts of annual reports that could be translated into English, which makes for somewhat sparse information 345 Owen Stimpson 499% 5 Year TSR OM:NLAB Rank: 55/104

346 Enlabs Overview

Enlabs, or Entertainment Laboratories, is an entertainment EV / LTM EBITDA company operating through three segments: brands, media, and solutions. The majority of Enlab’s revenue comes from online 2019 gaming, such as online poker and betting.

Statistic 06/08/2015 06/08/2020 2015 Stock Price €3.81 €22.30

Market Cap €145.43M €1.40B 0x 5x 10x 15x 20x Enterprise Value €88.73M €1.22B

Shares Outstanding 38.17M 62.83M

EV / LTM Revenue 1.24x 2.72x

EV / LTM EBITDA 19x 10.44x

PE 1.24x 13.90x

Statistic FY 2015 FY 2019

Revenue 102.95M 411.36M

EBITDA (6.05M) 105.46M

347 Enlabs Business Model

Primary Product Context Sales by Segment Online gaming under 5% several different 3% brands in regulated, or NLAB is an online gambling soon to be regulated, Brands company in the Baltics. markets. Various products such as Casino, Live • NLAB operates online Casino, Betting, Poker and 92% gambling sites that offer a Bingo. variety of online gambling Brands Solutions Media games: Conducts performance- • Casino games. Sales by Geography Solutions based marketing, so • Live casino games 3% 5% called affiliation. (through Evolution Gaming). 5% • Sports betting. B2B services including 87% delivering sports results • Holds approximately 25% Media and technical solutions in market share in the Baltics the online gaming online gambling market. Baltics Sweden Malta Other industry.

NLAB is a low capital intensity business.

348 Low Threat Medium Threat Enlabs Competitive Analysis High Threat

Competitive What’s Changed in Risks Competitive Landscape Barriers To Entry Advantages the Industry

• Online gambling Oligopoly / European Online Market penetration has Monopolistic • Regulatory Gambling Industry Structure • continued to Competition requirements: • Data that comes Disadvantageous regulatory changes. increase. 1 • Are often with scale can Market Size €22.2B • This industry consists of stringent enable better Latvian online online gambling companies Industry gambling HSD1 and product offerings. • Data breaches. and services operating in Growth grew at 29% complex. • Europe, such as online poker Brand name and YoY from • Vary from reputation. • Other forms of and sports betting. • Each country has different Q32019. country to • Regulatory entertainment regulations and • Lithuanian country. marketing becoming more competitive landscape: market • Subject to • Finland is hyper restrictions popular. anticipated to change. competitive with impede grow fast. • Network effects: competitors over 200 players. • Land-based casinos • Baltic online gambling from • Belarus is starting making major push penetration to ease regulations. can be social developing online / new catching up to • NLAB has a commanding (especially live brand. competitors. Nordic online 25% market share across games). gambling the Baltics. penetration.

1. 2018 figures; https://www.egba.eu/uploads/2019/12/European-Online-Gambling-Key-Figures-2018.pdf 349 What Investors Missed The Actual Story of the Last Five Years The Bear Thesis Five Years Ago: • NLAB maintained its strong #1 position in Latvian online gambling which is ≈70% of sales. • Not much room for growth: • Expanded to Lithuania which has likely • NLAB operates in small markets (Latvia, Ukraine, and increased targetable market by 30%-50%. Malta). NLAB expanded to • Currently 5th place but seeking to • NLAB will not be successful in expanding to new markets. new markets expand market share. • Unprofitable and negative EBITDA. • Made acquisition of KDB Games which will enable a future expansion to Belarus. • Keeping expansion to Ukraine open and also operating in Sweden and Finland. • EPS Results Profitable and EBITDA positive from FY2016 Return Breakdown: onwards. Profitable and • High ≈78% gross margins and ≈25% EBITDA EBITDA positive margins. • Clean balance sheet with minimal debt. • Y/Y online gambling growth in core Latvia market is 29% in Q3 2019. • Penetration in online gambling still Growing markets lower than the Nordics. • Online gambling penetration still low across the world – but is growing, especially with Covid-19.

350 Back to List Enlabs Takeaways NLAB is a High Quality Business- 5/5 Future Outlook Can NLAB Sustain its Market Position? • NLAB is a leading online gambling company in the • NLAB operates in an industry with high regulatory Baltics with commanding market share in Latvia, barriers to entry. and a strong presence in Lithuania and Estonia. • NLAB has a commanding market position in Latvia and NLAB has a moat • Highly regulated industries with restrictions on strong position in the rest of the Baltics. advertising impede new entrants. • The Baltics are less competitive than other markets, such • Land based operations are also required in Lithuania as the UK. and Belarus.

• Online gambling has grown, especially in Latvia, NLAB’s Can NLAB continue to grow faster than the industry? largest market. • NLAB is poised to capture market growth through further • NLAB has made product improvements such as adding online gambling market penetration. NLAB has grown Evolution Gaming for live games. • NLAB can realize further growth in new markets and continue consistently and to grow its ARPU in existing markets. responsibly • ARPU grew from ≈€120 in Q12017 to ≈€225 in Q32019. • NLAB has expanded into Lithuania market while has Is NLAB poised to continue to outperform the market? exited the less lucrative UK market. • NLAB has multiple avenues for further growth in existing • Online gambling penetration continues to increase, and markets and new ones. due to barriers to entry, NLAB is poised to capture • Online gambling, as a whole, is likely to grow, especially NLAB has a runway for industry growth. because of Covid-19 lockdowns. future growth • NLAB has made strides for future expansion into Belarus • NLAB’s 11.19x NTM EBITDA multiple is not at a major and Ukraine; also further room for growth in Nordics premium to the market nor do they trade at a steep premium and other markets such as Latin America. to peers.

351 Elizabeth DeSouza 496% 5 Year TSR ENXTPA:S30 Rank: 56/104

352 Solutions 30 Overview

Solutions 30, headquartered in Luxembourg, provides support NTM EV/EBITDA Multiple solutions for new digital technologies to individuals and professionals, such as, telecom support services, installation, and maintenance. 2020 19.5x

Statistic 6/8/15 6/8/20 2015 13.3x Stock Price €1.92 €11.23 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x Market Cap €154.63M €1.20B

Enterprise Value €158.91M €1.19B

Shares Outstanding 80.43M 107.13M

EV / NTM Revenue 1.17x 1.65x

EV / NTM EBITDA 13.32x 19.46x NTM P/E 15.12x 28.60x Z

Statistic FY 2015 FY 2019

Revenue €127.5M €688.2M

EBITDA €7.6M €65.3M

353 Solutions 30 Business Model

Primary Products Context • High-speed broadband S30 offers a wide range of IT Sales by Geography installation related services to its customers 17.9% • Installation and • Solutions are delivered to end- maintenance of energy 63.7% users (both individuals and IT Services related devices professionals), on behalf of large 18.5% • Installation and telecom and digital OEM assistance with payment France Benelux Other in Europe companies systems and POS terminals • Customers use S30 to outsource relatively unprofitable yet Sales by Category1 important service activities 4.1% 0.5% 0.3%

• S30 partners with large industrial 23.2% 61.7% and service companies to provide services to their customers 10.2% • These activities include rolling- Telecom IT out, installing, and maintaining Energy Retail digital equipment and providing Security Internet of things end-user support

• Group activities are concentrated S30 is a capital light business. in Europe

1 sales by category for revenues from France 354 Low Threat Medium Threat Solutions 30 Competitive Analysis High Threat

What’s Changed in Competitive Advantages Risks Barriers To Entry the Industry

IT Consulting & Services • S30 has a fairly • The density of the S30 • Main competitors are concentrated customer base, The players in this industry offer technician network allows • the internal with their largest customer Number of screens information technology and systems for rapid response time and departments of major accounting for 20% of per household and integration services, including customer satisfaction-10,000 revenue and their top 5 the use of internet information technology consulting, technology groups, technicians preforming largest accounting for 61%, video streaming information management services, energy suppliers, and 60,000 tasks everyday so losing any one of these have and continue to and commercial electronic data OEMs, some national • S30 services can customers would have a grow processing. players, and lots of small regional accommodate rapid significant impact on • Internet operators companies increases in volume and revenue are looking to Market large scale rollouts Oligopoly • Minimal start up costs • Political and administrative replace existing Structure • and low level of Strong relationships with decisions (especially in copper cable Europe’s largest technology networks with fiber Market Size $2.26T1 regulation countries experiencing groups economic slowdown / debt) optic ones • Primary barriers are Industry • against developing & • HSD2 educational experience The group is managed by Roll out of 5G Growth modernizing and ability to attract region, allowing for services networks requires telecommunications clients to be tailored to the area’s new kinds of specific needs infrastructure and energy services distribution networks could slow S30 growth

1 https://eresearch.fidelity.com/eresearch/markets_sectors/sectors/industries.jhtml?tab=learn&industry=451020 355 2YTD What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • In 2015, S30 experienced a number of changes involving its subsidiaries • Growth in France has been organic over the last 5 years, driven by the • Télima Digital World filed for bankruptcy in 2014, which success of their fiber optic and smart could have indicated a larger operating issue in S30, the meter energy products parent company Successful • S30 Created 10 companies in 2018 to • Unclear where they had the best opportunities for growth Organic meet the growth of their activities • S30 also restructured its German subsidiaries DBS GmbH Growth • S30 has become a top three player in and Connecting Cable France and Benelux regions • S30 acquired a 60% stake in Spanish company Rexion • Lots of growth potential with energy Computer, which increased investment outside of their core and IoT segments business in France/Benelux regions • International (outside of France) Return Breakdown: Consensus vs Results growth has been driven largely by strategic acquisitions and major contract wins • Acquisitions over the last 5 years have Successful strengthened S30 positions both in Acquisitions terms of geography and in solution offerings • Acquisitions in 2019 grew S30 market share of the telecom sector

356 Back to List Solutions 30 Takeaways

S30 is an Okay Business – 3.5/5 Future Outlook Can S30 Sustain its Advantages? • S30 has had success with both organic and • S30 has a recruitment strategy in place to inorganic growth attract and retain technicians • S30 has proven their ability to make strategic • Their relationships with European Multiple Channels for acquisitions that expand their geographic technology companies have taken time to Growth reach and increase their revenue create • S30 has also proven that it is capable of • These same technology groups could do organic growth, as shown by its success in the services S30 does themselves, making France and Benelux regions S30 obsolete Can S30 continue to grow? • S30 has plans to grow both geographically • S30 competitive advantages are weak and need and in services provided consistent investment to stay relevant • S30 sees the Internet of Things segment as an • Low barriers to entry make competition a area for strong growth constant threat Is S30 poised to continue to outperform? • S30 has had strong topline growth over the last Weak Advantages • Moderate multiple expansion, but still room 5 years and high gross profit margin of around for more 60% (66% in FY 2019) • Achieved growth goals in France and Benelux • S30 EBITDA margin is consistently low, not regions, which gives them a proven model to having exceeded 9.5% in the last 5 years work off of for other regions and continue to outperform

357 Elizabeth DeSouza 492% 5 Year TSR NASDAQCM:LUNA Rank: 57/104

358 Luna Innovations Overview

Luna Innovations Incorporated, based in Roanoke, VA, LTM EV/Revenue Multiple2 develops, manufactures, and markets fiber optic sensing and test and measurement products. 2020 2.5x

Statistic 6/8/15 6/8/20 2015 0.8x Stock Price $1.14 $6.67 0.0x 0.5x 1.0x 1.5x 2.0x 2.5x 3.0x Market Cap $30.74M $203.35M

Enterprise Value $17.79M $180.00M

Shares Outstanding 26.96M 30.49M

EV / LTM Revenue1 0.80x 2.47x

EV / LTM EBITDA2 N/A 18.38x LTM P/E3 N/A 47.75x Z

Statistic FY 2015 FY 2019

Revenue 44.02M 70.52M

EBITDA (92.56)K 6.82M

1NTM multiples not available prior to FY 2018 2EBITDA was negative for FY2015 359 3EPS was negative for FY2015 LUNA Business Model

Primary Products Context Sales by Geography • Fiber optic test and 0.5% LUNA primarily sells to 10.3% 2.0% measurement Products & telecommunications companies, instruments 19.4% Licensing defense agencies, government • ODiSI platform system integrators, and researchers 67.8% • LUNA products target the automotive, aerospace, energy, and U.S. • Provides research for Asia Technology infrastructure industries Europe customers in LUNA’s Development Canada, Central & South America areas of focus • LUNA fiber optic sensing products provide information on stress, strain (ODiSI platform), and Sales by Category temperature of other products in their design or manufacturing phases 36.9% 63.1% • Sensing products also used to monitor structural integrity of large

civil structures such as bridges Products and Licensing • LUNA makes sales through regional Technology Development teams of manufacturer representatives and partner LUNA ODiSI platform distribution channels LUNA is a capital intense business.

360 Low Threat Medium Threat LUNA Competitive Analysis High Threat

Competitive What’s Changed Risks Barriers To Entry Advantages in the Industry Electronic Equipment & Instruments • LUNA has proprietary • LUNA is subject to a licensing The players in this industry are technology (own or agreement from Intuitive involved in the manufacturing, design, license over 400 Surgical Inc., which if revoked • High costs for R&D and development, assembly, and servicing patents) would prevent LUNA from of electronic equipment and manufacturing marketing, manufacturing, or • Proprietary software components. • Government contracting selling their fiber-optic code that is critical to • Telecommunicatio generates revenue, but products their competitive ns industry is these relationships are • advantage Relations with the U.S. constantly difficult to establish government are entirely on Market Perfect • Good relationships with evolving • Very specific and their terms, and the Structure Competition major U.S. government • 2019 saw the technical products, so government can prevent agencies such as NASA launch of 5G Market Size $327.36B1 companies require highly commercialization of LUNA • cellular networks skilled employees to be Participant in the Small technology should they Industry Business Innovation > 10%2 successful foresee a national security Growth Research (SBIR) risk program • 40% of revenues were • Reputation for high derived from the U.S. quality products government

1 https://eresearch.fidelity.com/eresearch/markets_sectors/sectors/industries.jhtml?tab=learn&industry=452030 361 2Growth over the last 5 years What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story• ofIn the 2018, Last LUNA Five acquired Years Micron • In the years leading up to and including 2015, LUNA had Optics, which significantly increased poor financial performance, making it an undesirable their measurement capabilities and added three new product suites investment • Filed for bankruptcy in 2009 and reorganized in 2010 • In 2019, LUNA acquired General Photonics Corporation a leading • EBITDA was negative for a number of years provider in components used in • LUNA had very high operating costs fiber optic-based applications • No clear growth strategy and uncertain leadership • Revenue has grown close to 30% since 2018 Growth & • These acquisitions allow LUNA to Acquisitions consolidate market share and lower Consensus vs Results R&D costs, as LUNA is able to Return Breakdown1: absorb the companies’ technology • A new CEO was appointed in 2017 and is striving toward making LUNA the leading provider of fiber optic test, measurement, and control equipment • A new CFO was appointed in 2017

1Revenue used because EBITDA was negative in 2015 362 Back to List Luna Innovations Takeaways LUNA is a Okay Business – 3/5 Future Outlook

Can LUNA Sustain its Advantages? • LUNA creates and sells very specific types of • LUNA’s main advantage is its technology that are essential to client technology, which is protected by operations patents that are set to expire in 2037 • Competition is steep in the market because LUNA Serves a there are only so many contracts to compete Specific Purpose Can LUNA continue to grow? for • LUNA has made and will continue to make • Reputation and track record is everything in strategic acquisitions in the last 5 years order to win these contracts- LUNA has good • By acquiring competitors, LUNA eliminates past relationships and credentials to point to competition and devotes less to R&D expenses • LUNA can also grow internationally and • LUNA relies heavily on relationships that are diversify their sources of revenue somewhat volatile in nature Is LUNA poised to continue to outperform? • The U.S. government has complete flexibility in • Gross margins have steadily increased over their relationship with LUNA and could hinder the last 3 years to 50%, which is promising Volatile Relationships LUNA’s growth • Revenue is expected to grow to 81.9 M in • LUNA’s profitability also relies on maintaining a NTM, but there is no indication that they good relationship with Intuitive Surgical Inc. will meet this estimate • Given LUNA’s volatile history it is unclear if it will continue to outperform

363 Owen Stimpson 491% OB:MEDI 5 Year TSR Rank: 58/104

364 Medistim Overview In Norwegian krone (Kr)

Medistim ASA is a Norway-based company engaged in the EV / LTM EBITDA provision of medical equipment and technology. It develops, manufactures, and distributes medical devices primarily for 2019 cardiac and vascular surgery.

Statistic 06/08/2015 06/08/2020 2015 Stock Price 38.5 Kr 223 Kr

Market Cap 697.48M Kr 4.06B Kr 0x 10x 20x 30x 40x Enterprise Value 655.47M Kr 4.00B Kr

Shares Outstanding 18.12M 18.12M

EV / LTM Revenue 2.94x 10.77x

EV / LTM EBITDA 12.92x 35.17x

PE 20.83x 53.86x

Statistic FY 2015 FY 2019

Revenue 249.97M 356.91M

EBITDA 57.76M 102.31M

365 Medistim Business Model

Primary Product Context Products that combine MEDI makes the only device that ultrasound imaging integrates ultrasound imaging and and transit time flow Sales by Geography TTFM. measurement (TTFM) 6% MiraQ in a single system for • Surgeons used either ultrasound cardiac surgery, imaging and TTFM for various 37% vascular surgery, and procedures but MEDI enables them to other tasks. 45% use both simultaneously. • Improves patient outcomes: during Coronary Artery Bypass 11% Graft (CABG) surgery many surgeons rely on their fingertips US Asia EU Rest to determine blood flow – MEDI MEDI is a medium capital intensity business. The MiraQ designed for enables them to use ultrasound cardiac surgery. imaging instead.

• MEDI seeks to make their MiraQ products the standard of care for CABG surgery and other coronary and vascular surgeries.

366 Low Threat Medium Threat Medistim Competitive Analysis High Threat

Competitive What’s Changed in Risks Competitive Landscape Barriers To Entry Advantages the Industry

Market • MEDI has Oligopoly • Fee for value model Cardiac Surgery Structure • Regulatory burdens: clinical evidence rather than fee-for to support Quality Assurance Market Size ≈2B Kr1 need approval in each service increasing Medical Devices market by regulatory product prevalence. Industry 2 body. effectiveness MSD • Increases Participants design, Growth (i.e. 2019 • Patents. demand for manufacture, and sell medical • Industry understated by REQUEST • Clinical evidence • Product failure quality devices that enable quality approximately 1 billion as MEDI study). supporting scandal. assurance assurance during cardiac has opportunities for growth in • effectiveness (i.e. MEDI has products. surgery procedures, such as the global vascular market. dominant studies). • New technology • CABG. • MEDI is by the far the largest market share REQUEST study • Significant R&D costs. emerges. player with 82% market share. which bolsters demonstrated • MEDI equipment used in • Approval for use by reputation. effectiveness of 33% of total bypass hospital boards, etc. MEDI’s product: surgeries worldwide. • MEDI has the • Doctors need • 25% of • Largest competitor has ≈7% only device to be trained which does surgeries share of bypass surgeries. were • 60% of surgeries use no and familiar ultrasound improved by quality assurance device to with product imaging and using monitor blood flow – as well. TTFM technology. opportunity for MEDI to grow. simultaneously.

1. 2019 10k. 2. Using CABG surgery per year growth as a proxy; https://www.grandviewresearch.com/industry-analysis/coronary-artery-bypass-graft-cabg-market 367 What Investors Missed

The Actual Story of the Last Five Years The Bear Thesis Five Years Ago: • MEDI consistently grew topline each year • The CABG market is conservative and sensitive to change: through its distributors and sales force, • And the biggest change MEDI could have asked for - being added leveraging the clout it received from ECS to European Society of Cardiology (ECS) and European and EACTS. Association for Cardio-Thoracic surgery (EACTS) as standard of care during CABG – already happened five years ago. • FY2015 250M in revenue grew to MEDI grew 363M in FY2019. • Too early to invest until REQUEST results are in – difficult to judge value incrementally • Consistently expanded market share in US of MEDI product without these results. market (largest market) by taking advantage of trend towards value based • Minimal avenues for growth. care: • Market share increased from 17% Return Breakdown: Consensus vs Results in FY2016 to 23% in FY2019. • 5-year REQUEST study process culminated in 2019 report. • Study showed that 25% of patients had REQUEST results their surgery change based on data from positive MEDI’s device. • Underscoring MEDI’s argument that surgeons relying on sensing a pulse is inaccurate. • Launched MiraQ product with goal of Expanded into capturing share of vascular surgery market. vascular segment • 1B market and just 15% of sales - but growing at 18% each year.

368 Back to List Medistim Takeaways MEDI is a High Quality Business- 4.5/5 Future Outlook • MEDI’s product is proprietary: MEDI is the only Can MEDI Sustain its Market Position? supplier in the world offering a system that • MEDI’s has a wide moat protected by regulatory provides integrated TTFM and high frequency hurdles, approval from customers (i.e. hospital MEDI has a deep moat ultrasound imaging system for intraoperative use. boards), and patents. • Regulatory burdens, patents, and studies • MEDI has a proprietary product. demonstrating product effectiveness insulate MEDI from competitors. • MEDI has successfully defended its high penetration • MEDI maintained dominant position in Norway and in core markets of Norway, Denmark, and Germany. Denmark where all cardiac centres carry MEDI Can MEDI continue to grow faster than the industry? equipment. • MEDI has the only product capable of integrating TTFM MEDI grew • Expanded market presence in new markets: increased and ultrasound, and has a moat protecting this advantage. US penetration to 23%, nearly doubled sales in Asia to • Competitors are minimal: MEDI is over 4x bigger than its 41.8M (where coronary surgeries are growing at 10% largest competitor (which is only competitor of note). per year), got regulatory approval in Canada. • Industry poised to grow: just 40% of surgeries using any • US market largest on earth but MEDI has only 23% quality assurance system. penetration (compared to 70% penetration in Germany, Is MEDI poised to continue to outperform the market? Spain, and Nordic region; and 80% in Japan). • MEDI has a wide moat and is poised to continue capturing • 75% of CABG surgeries still have no quality market share as the market expands. assurance to ensure proper blood flow; potential • There is a large opportunity in the US where 75% of CABG MEDI has a runway for for MEDI to become “standard of care” in US. surgeries use no quality assurance – despite the trend growth • Vascular market represents opportunity for growth: towards value-based care. • Strong presence for vascular surgery in Nordic • MEDI already has 23% market share. markets and Germany but minimal presence • MEDI trades at 53x LTM earnings but has many avenues elsewhere; 15% sales vascular customers but for growth (vascular market, US, etc.) a wide moat, and growing at 18% annually. operating leverage which will enable them to outperform.

369 Owen Stimpson 489% 5 Year TSR CPSE:AMBU B Rank: 59/104

370 Ambu Overview In Danish krone (kr)

Ambu A/S is a Danish company that develops, produces, and EV / NTM EBITDA markets diagnostic and life-supporting equipment (particularly single-use equipment) and solutions to hospitals and rescue 2019 services.

Statistic 06/08/2015 06/08/2020 2015 Stock Price 37.7 kr 221.7 kr

Market Cap 9.06B kr 54.73B kr 0x 5x 10x 15x 20x 25x Enterprise Value 9.94B kr 56.19B kr

Shares Outstanding 240.35M 246.88M

EV / NTM Revenue 5.11x 13.52x

EV / NTM EBITDA 29.24x 70.59x

PE 47.27x 123.17x

Statistic FY 2015 FY 2019

Revenue 1.89B 2.82B

EBITDA 434M 642M

371 Ambu Business Model

Primary Product Context Sales by Segment 28% Products for anesthesia, AMBU sells a variety of medical 23% Anesthesia such as resuscitators, face devices, with a focus on single-use Products masks, and breathing products. circuits. • AMBU focuses on single use 49% products (used by only patient) PMD Visualization Anaesthesia Visualization products as they are always clean, always such as single-use readily available, and cheaper for Visualization endoscopes, airway tubes customers. Products with integrated cameras, • For advanced products (i.e. Sales by Geography endoscopes) single use and video laryngoscopes. 11% ensures that doctors always have latest Products for patient technology (due to higher 45% Patient monitoring and churn rate). 44% Monitoring and diagnostics, such as • AMBU designs and manufactures Diagnostic cardiology and neurology their products, and sells mostly (PMD) Products electrodes, neck collars, direct through its salesforce. NA EU Rest and training manikins. • Primary customers include hospitals and rescue services. AMBU is a medium capital intensity business.

372 Low Threat Medium Threat Ambu Competitive Analysis High Threat

Competitive What’s Changed in Risks Competitive Landscape Barriers To Entry Advantages the Industry

Market Varies Structure Global Medical • Reputation. 1 Device Market Market Size ≈$425.5B Industry • Regulatory burdens. • Customers are MSD1 Growth recurring (due Participants, design, to single-use). • Regulations and manufacture and sell medical • Often requires • Market overstated: AMBU guidelines for devices for a range of medical approval by hospital participates mainly in the contamination in uses. board. • Sunk R&D. • Product failure. single-use medical device hospitals have gotten segment. more stringent. • AMBU is the leader in the single • Doctors need to be • Economies of • Regulatory comfortable with scale. change. use endoscopy market • Capital budget product. (estimated 2.5B size by 2024). reductions at • AMBU sees opportunity for • First mover hospitals. growth in Duodenoscopy • Technologically (single-use market (3.0B size at full single advanced product. endoscopes). use penetration). • AMBU is the only large company focused on single-use • Product breadth. medical devices.

1. https://www.fortunebusinessinsights.com/industry-reports/medical-devices-market-100085 373 What Investors Missed The Actual Story of the Last Five Years The Bear Thesis Five Years Ago: • AMBU built a market for single use endoscopes – a market which didn’t exist prior. • Growth will begin to slow as new demand for single use products • Product is better for hospitals given slows, AMBU’s market penetration increases, and there are less lower cost, low risk of new markets to expand to. contamination (cross- contamination regulations getting • Gross margins and EBITDA margins have trended downwards since more stringent too), more available 2010. AMBU grew through (not being used by another doctor, endoscopy no need for transport etc.) • Expanded product line to grow number of procedures product could be used for Return Breakdown: Consensus vs Results (from less than 1.2M to ≈24M). • Visualization not a reportable 2015 segment to now 49% of sales (484M). • 96K units to now anticipated >1M units FY2020. • AMBU continued to make consistent AMBU supported acquisitions. growth in other ways • AMBU invested heavily in its salesforce each too year; doubled EU and APAC visualization sales forces and tripled NA sales force in FY2019. Margins improved • Gross margin increased from 51% to 59% and from FY2015 to EBITDA margin increase to 3% to 19.6%. FY2019

374 Back to List Ambu Takeaways AMBU is a High Quality Business- 4.5/5 Future Outlook Can AMBU Sustain its Market Position? • AMBU is a first mover in the single-use medical • AMBU is first mover in single-use endoscope market device market, particularly endoscopes, and only and only player with scale focused on the industry. large player focused on single-use products. AMBU has a moat • Regulations and patents are strong barriers to entry. • Protected by patents and regulatory burdens. • Investing in R&D and sales force to maintain leading • Technological advantage due to focused R&D on position. single use products. Can AMBU continue to grow faster than the industry? • Single use endoscope market essentially non-existent • AMBU has a robust product pipeline with 13 new before AMBU launched products in 2012. products to launch within next two years. • Visualization (encompasses single use endoscopes) not • Strong direct sales force. a reportable segment to now 49% of sales. • AMBU is poised to launch product in for duodenoscopy AMBU created and • Single use endoscope unit growth average for past five which will enable them to grow faster (Duodenoscopy capitalized on opportunity years: 60%. division of hospitals general control largest portion in single use endoscopes. • Other segments growth more modest at average endoscopy budget for the hospital). low single digits per year. Is AMBU poised to continue to outperform the market? • Expanded product lines to cover wide range of • AMBU has essentially created a new medical device potential procedures. market and capitalized heavily on that opportunity. • Single-use endoscopy market still maturing and growing • So far, AMBU has done everything right: create a rapidly. compelling value proposition, invest in sales force, and expand product line to grow TAM. • And AMBU is best suited to capture growth given AMBU has a runway for first mover advantage, product breath, • AMBU will likely continue to grow and maintain growth specialization in segment, and scale (lower cost). advantage because of this. • AMBU has a robust product pipeline: 13 new single use • However, at 123x forward earnings any setback at all in endoscopes to launch within next two years. AMBU’s growth will cause them to underperform.

375 Max Schieferdecker 483% 5 Year TSR AIM:LTG Rank: 60/104

376 Learning Technologies Overview

Learning Technologies Group is an E-learning company based NTM EV/EBITDA Multiple in London that delivers digital and blended learning solutions to staff across the globe working in large multinational companies and government. 2020 21.3x

Statistic 6/8/15 6/8/20 2015 16.7x Stock Price £0.24 £1.27 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x Market Cap £84.48M £936.90M

Enterprise Value £80.12M £945.03M

Shares Outstanding 355.71M 735.98M

EV / NTM Revenue 3.82x 7.31x

EV / NTM EBITDA 16.65x 21.27x NTM P/E 33.45x 30.96x Z

Statistic FY 2015 FY 2019

Revenue 19.91M 130.10M

EBITDA 3.56M 42.19M

377 Learning Technologies Business Model

Primary Products Context Sales by Category 0.1% • Direct collaboration with LTG drives learning and talent Content organizations to teach a for business performance & 31.8% targeted group of people a Services • LTG operates has a holding specific thing company for 11 subsidiaries 68.1% • Software designed for a • It IPOed in 2013 with the Software variety of talent intention of consolidating a & management applications rather fragmented industry Software & Platforms Content & Services Rental Income Platforms as well as training • Utilizes the “buy and Sales by Geography development tools build” strategy • Content & Services are 15.3% typically one-time charges while Software and 19.8% Platforms offer a solid base 64.9% of recurring revenue • The focus is on all aspects of the employee lifecycle, which US UK Rest of the World is achieved by the development of long-term LTG is a capital light business as all no client relationships manufacturing is involved

378 Low Threat Medium Threat Learning Technologies Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry Corporate E-learning

The players in this industry offer help developing online training programs covering compliance, IT management, • The ability to consolidate and industry-related courses. • Very low barriers to entry and develop synergies • Anyone can offer between subsidiaries these services with • The rest of the • Management may not be • Companies have little up-front costs industry is highly able to adequately oversee Market Perfect become more fragmented 11 companies at the same Structure Competition • Established players’ digitized reputations do play a role • A mix of both single time time Market Size $70B1 in customer decision and recurring revenues making, however allows for a more balance Industry HSD1 approach Growth

1https://www.prnewswire.com/in/news-releases/e-learning-market-size-is-expected-to-grow-at-a-cagr-of-10-85-by-2025-valuates-reports 379 What Investors Missed The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years

• LTG IPOed in November 2013 with the intention of growing • Over the past 5 years, LTG via consolidation acquired 7 companies and spun • By June 2015, had made 2 acquisitions and merged them off a few more into one company, LEO Learning • A major focus of these • However, given the inorganic nature of their growth acquisitions was to expand plan and the uncertainty surrounding the success of their presence in the software side of the E-learning the acquisitions, it was very difficult for analysts to business accurately model the company • More recurring revenue Return Breakdown: Successful leads to more stable cash flows Consensus vs Results Execution of Consolidation • Strong increase in the financial Plan numbers as acquisitions were added to the portfolio • Revenue grew at a CAGR of 59.9% from £19.9m to £130.1m • EBIT grew at a CAGR of 85.2% from £1.4m to £16.6m • EPS grew at a CAGR of 60.4% from 0.239 pence to 1.584 pence

380 Back to List Learning Technologies Takeaways LTG is a Good Business – 4/5 Future Outlook Can LTG Sustain its Advantages? • Due to the wide variety of products in the space that • While they do have an advantage at the LTG offers, cross selling has been quite effective moment given their specific • The average client has purchased 1.3 products acquisitions, there is nothing stopping across all subsidiaries other companies from following the LTG has a Moat • This also lends to a broad client base, as LTG is not same business model and further concentrated in one industry consolidating the industry • The large percentage of recurring revenue has led to Can LTG continue to grow? strong margins and cash generation for continued future • Given LTG’s business model revolves acquisitions as well around the consolidation of an industry, it is highly likely that LTG will at least continue to grow through M&A • Recent acquisition of an online learning platform just prior • Organic growth is also not out of the to COVID will likely prove to be beneficial in the future question, but is not as certain Positive Impact of • Structural changes in general in the way information is COVID on the Is LTG poised to continue to outperform? presented will likely be permanently impacted Future • Because of the unpredictability about the • LTG is well positioned to capitalize on these size and success of future acquisitions, it is opportunities very difficult to accurately get a stock price, so there is room for outperformance Strong • The CEO Jonathan Satchell and CFO Neil Elton have shown • The scale of their growth is also quite that they are excellent at creating extremely accretive Management Team promising due to their strong management acquisitions and communicating their strategy to investors team and industry trends

381 Owen Stimpson 477% 5 Year TSR OM:NOTE Rank: 61/104

382 NOTE Overview In Swedish Krona (Kr)

NOTE is a northern European manufacturing partner with an EV / LTM EBITDA international platform for manufacturing electronics-based products that require high technology competence and flexibility 2019 through product lifecycles.

Statistic 06/08/2015 06/08/2020 2015 Stock Price 9.95 Kr 43.35 Kr

Market Cap 287.29M Kr 1.29B Kr 0x 2x 4x 6x 8x 10x Enterprise Value 329.39M 1.42B Kr

Shares Outstanding 28.87M 28.37M

EV / LTM Revenue 0.29x 0.72x

EV / LTM EBITDA 6.98x 8.04x

PE 9.39x 14.01x

Statistic FY 2015 FY 2019

Revenue 1.12B 1.76B

EBITDA 56.4M 151.5M

383 NOTE Business Model

Primary Product Context Sales by Customer Help customers make item 15% “produceable,” develop Development prototypes, and ensure efficient manufacturing. 20% NOTE is a manufacturing partner 12% 73% for electronics production.

Help management with • Helps customers through the Industrial Communication MedTech Defence productions costs, quality, entire product life-cycle from and can support development to production. Production production through Sales by Geography NOTE’s own production • Specialize in products that plants in China and require high technological 33% Estonia. competence and in low batch size. 67%

• Customers in a variety of industries: MedTech, defense, Help manage introduction industrial, etc. of new product versions After-Sales EU Rest and ongoing maintenance and service requirements. NOTE is a high capital-intensive business.

384 Low Threat Medium Threat NOTE Competitive Analysis High Threat

Competitive What’s Changed in Risks Competitive Landscape Barriers To Entry Advantages the Industry

• Major product Global Semiconductor Market Monopolistic issue which can & Electronic Parts Structure Competition damage Manufacturing Market Size 755.1B1 • Capital intensity – reputation. need high start up • Increased • Digitization of This industry manufactures Industry 1 capital to open LSD • Reputation as competition on semiconductors and other Growth manufacturing facility. everyday items has trusted partner. price from electronic parts that are used increased demand • This industry definition is Eastern in a variety of different overly broad – NOTE operates for electronic parts. • Highly specialized European applications. in a specific niche: electronic • Long-term industry. competitors. parts manufacturing consulting relationships • Increased • High human • China plant for northern European with customers, geopolitical issues capital exposed to companies. parts suppliers, with manufacturing requirements. geopolitical • NOTE mentions Enics, Inission, and in China. Kitron, OrbitOne and Scanfil as manufacturers. risks. key competitors. • Major contracts that • Customer • NOTE is the smallest of can be long-term. concentration: the group in terms of 15 largest revenue. customers are • Other niche players as well. 45% of sales.

1. IBIS World 385 What Investors Missed The Actual Story of the Last Five Years The Bear Thesis Five Years Ago: • NOTE both expanded its customer base and consistently upselled existing • Unlikely NOTE will grow: customers. • Relatively mature industry and NOTE often deals with SMEs. • NOTE does not seem interested in expanding geographically. • Focused on SMEs with large growth • Sold mechanical unit in 2015. potential which grew and became larger NOTE grew customers. • 5% EBITDA margin business, EBITDA margins have trended • Targeted specific geographies in Nordics downwards since FY2011, and were negative in FY2010. and became market leader, enabling NOTE to capture market growth. • Capital intensive business with potential working capital issues. • Revenue grew steadily at 12% CAGR – above management’s 10% target. • Promoted VP of sourcing to management Return Breakdown: EPS Results which underscores focus on costs. • Cut labor costs and consistent focus on Margins improved managing cost structure. • EBITDA margin expanded from 5% in FY2015 to 7.9% in FY2019. • High working capital investment is nature of the business, but management has been focused on managing it by taking steps to reduce cash tied up in inventory. Cash flow maintained • Inventory balance constant from FY2018 to FY2019 despite large increase in sales. • Cash flow from Ops positive each year.

386 Back to List NOTE Takeaways NOTE is a Strong Business- 4/5 Future Outlook • NOTE operates in a highly specialized industry, Can NOTE Sustain its Market Position? with high capital requirements, and long-term • NOTE operates in an industry with high barriers to entry . contracts/relationships. • NOTE has demonstrated strong customer captivity, which • NOTE focuses on specific geographies where it has an has been a key revenue growth driver. NOTE has a moat advantage, and is not afraid to divest from places • NOTE has shown an ability to remain focused on its core where it does not: markets and services. • Divested Swedish mechanical segment in 2015. Can NOTE continue to grow faster than the industry? • Divested from Norway in 2016. • NOTE is a leader in the Nordic market and has remained • NOTE did not expand across Europe and into different focused on maintain existing customers and capturing growth segment but doubled-down on the Nordics and its in that market specifically. existing services. • Gives them an advantage relative to peers who are • Pursued new customers which had growth potential focused on other geographies and segments of the NOTE pursued steady, and maintained existing customers by investing in market. consistent growth in both quality. revenue and bottom line Is NOTE poised to continue to outperform the market? • 80% of sales are sourced from customer relationships longer than five years old. • NOTE can likely outperform the market if there continues to be growth in the Nordics as NOTE is very well positioned to • Focus on cost efficiency increased EBITDA margins capture this growth. from 5% to 7.9%. • If not, NOTE will struggle to outperform. • Focused, steady approach to growth and returns can • NOTE has already leveraged its fixed cost based as evidenced likely continue. by the shrinking gap between gross margins and EBITDA NOTE can keep it up • NOTE can continue to incrementally add new customers margins. and upsell existing ones as the market expands.

387 Max Schieferdecker 472% 5 Year TSR ASX:DDR Rank: 62/104

388 Dicker Data Overview

Dicker Data is a value added, wholesale distributor based in LTM EV/EBITDA Multiple Kurnell, New South Wales, Australia, that focuses on the IT hardware, software, and cloud products of large, global technology companies. 2020 19.4x

Statistic 6/8/15 6/8/20 2015 15.5x Stock Price 1.93 AUD 7.69 AUD 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x Market Cap 253.56M AUD 1.32B AUD

Enterprise Value 372.51M AUD 1.44B AUD

Shares Outstanding 132.06M 172.03M

EV / LTM Revenue 0.37x 0.82x

EV / LTM EBITDA 15.46x 19.35x LTM P/E 80.00x 22.83x Z

Statistic FY 2015 FY 2019

Revenue 1.08B 1.76B

EBITDA 42.88M 72.59M

389 Dicker Data Business Model

Primary Products Context Sales by Product Type DDR helps businesses scale and • Distribution of IT 8.3% Infrastructure compete for larger opportunities hardware products • DDR acts as the middleman between global technology 24.4% • Perpetual and 67.3% companies and local, subscription licensing Software Australian-based resellers of software and cloud products • Products come from HP, Infrastructure Software Services LG, Logitech, Samsung, • Sales of 3rd party and many more Sales by Geography warranties and other • Services Makes money on the spread 6.6% services, in addition between their purchase price to commissions and their sale price

93.4%

Australia New Zealand

DDR is a capital intensive business due to its need for sufficient amounts of capital to operate

390 Low Threat Medium Threat Dicker Data Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry Australian IT Distribution

The players in this industry distribute • Strong relationships with IT products to resellers in Australia. both their vendors and • Most large vendors resellers already have reliable and • High brand awareness and • Increased need trusted great reputation as a • The two founders, David for IT products as • High up-front costs makes leading distributor in Dicker and Fiona Brown, Market businesses Oligopoly it difficult to compete with Australia collectively own 67% of the Structure become more the already-scaled, company • Close proximity to Sydney digitized Market Size $6.29B1 existing players in the allows DDR to provide space same-day delivery to Industry > 10%1 resellers in the Sydney Growth area

1 Investor Presentation 391 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years

• As DDR continued to successfully • Micro cap stock with no analyst coverage distribute their vendor’s • The stock was not on the radars of many investors products, they were able to • Extremely low profit margins meant that in order to leverage their success to get realize significant bottom line growth, top-line would Past more business have to grow at a very high rate Performance Led • They were able to attract new to Greater vendors, which significantly Volume reduced their vendor concentration risk Return Breakdown: • They were trusted with more Consensus vs Results product lines from existing customers

• Arguably the most important feature that is necessary for distributors to grow is increased capacity No Analyst Estimates Laid Out Plans to Increase • In 2019, DDR sold its current facility, which it now leases, and is in the Capacity process of building a facility next door which will double the capacity of their operations

392 Back to List Dicker Data Takeaways DDR is an Okay Business – 3/5 Future Outlook

• Given the tough unit economics that distributors for Can DDR Sustain its Advantages? large tech companies face, the fact that DDR was able • to reach economies of scale puts it in a better DDR should be able to keep its financial position than potential competitors reputation and relationships that have made them successful up to this point DDR has a Moat • Strong reputation as one of, if not the, best • technology distributors in Australia The increased capacity close to Sydney should allow them to sustain their • This is evidenced by their portfolio of products presence within Sydney as well from the most well-known IT companies around the world Can DDR continue to grow? • The distribution industry is notorious for its extremely • When the new facility opens up in the near low margins, and DDR is no exception to that rule future, capacity will double which will • Although top-line has grown substantially, likely lead to strong growth figures in the margins have not material increased over future the same period of time Financial Strategy could be a Cause for • DDR pays out all of its profit in the form of dividends, Is DDR poised to continue to outperform? as David Dicker doesn’t take a salary and is only paid Concern by these dividends • Given the high growth that will likely be seen in the future, it is highly likely that • This makes DDR a great dividend stock, but not seeing profits being reinvested into the business DDR will continue to outperform even at is a cause for concern when the company is the relatively high multiples it is currently growing trading at

393 Elizabeth DeSouza 470% 5 Year TSR TSX:APHA Rank: 63/104

394 Aphria Inc. Overview

Aphria Inc., based in Leamington, Canada, produces and sells NTM EV/EBITDA Multiple medical and adult-use cannabis and cannabis-derived extracts. 2020 31.1x

Statistic 6/8/15 6/8/20 2015 22.4x Stock Price 1.01 CAD 6.69 CAD 0.0x 10.0x 20.0x 30.0x 40.0x Market Cap 53.00M CAD 1.91B CAD

Enterprise Value 43.76M CAD 1.91B CAD

Shares Outstanding 52.48M 286.00M

EV / NTM Revenue 7.06x 2.99x

EV / NTM EBITDA 22.44x 31.06x P/E 101.00x N/A Z

Statistic FY 2015 FY 2019

Revenue 600K CAD 237.1M CAD

EBITDA (3.0)M CAD (41.1)M CAD

395 Aphria Business Model

Primary Products Context Sales by Geography APHA sells cannabis products for • pharmaceutical- 1.7% 33.3% grade medical medical and recreational use directly to cannabis consumers Cannabis products • APHA sells cannabis in a variety of 65.0% Products • adult use forms including vapes, edibles,

recreational concentrates, topicals, and wholesale North America Europe cannabis products Latin America products • APHA brands include Solei, RIFF, and Sales by Category Good Supply, with each targeting a 1.3% 18.4% different type of audience & Broken Coast a wholly owned grower • Brands are targeted at current/ novice 15.6% users, experienced / art community 66.6% users, and regular users respectively 2.4% Medical Cannabis Adult-use Cannabis • Medical cannabis patients can order Wholesale Cannabis Distribution Operations directly from APHA (online or over the Other phone) using their prescription • APHA has supply agreements with APHA is a capital moderate business as they Aphria and its subsidiaries offer cannabis Canadian retailers in 10 provinces and produce the cannabis but not all of their products such as the cartridge above Yukon, accessing 99.8% of Canadians products in full

396 Low Threat Medium Threat Aphria Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry Pharmaceuticals

The players in this industry research, • APHA is waiting approval to • One of only a few licensed develop, market, and distribute drugs, use for facilities they have producers with most commonly in the healthcare • Strict governmental already invested in (Aphria agreements in every • sector regulations on approval of One, Aphria Diamond) Increase in province in Canada popularity of CBD all pharmaceuticals • APHA is reliant on a license • Seed-to-Sale quality (compound • Cannabis is a controlled with Health Canada to management program, a derived from substance in certain cultivate, store, and sell 509 step process, that goes Hemp) acting as a Market countries / states cannabis products Oligopoly beyond cannabis industry stepping stone to Structure • • Significant funds needed regulations mandated by The industry is highly legalization of regulated, causing Market Size $1.3T1 for R&D to create a Health Canada. adult-use product that is both safe diminished profitability • Brand loyalty- APHA adult- cannabis Industry and enjoyable to the target • MSD1 use brands target very International legislation can Growth customer specific customer bases to complicate and discourage create recurring revenue investments in cannabis companies such as APHA

1 https://investmentbank.com/pharma-industry-overview/ 397 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • APHA only began carrying out business in 2012 and did • Recreational Cannabis was legalized not generate revenue until 2014, making its future in across Canada in 2018, creating a way 2015 very uncertain for APHA to significantly increase • Medical cannabis had very strict regulations on its Legalization & revenues Acquisitions production and distribution in 2015 • Acquisition of CC Pharma has given • Cannabis industry was largely untried, making investors APHA access to the German market and warry of companies like APHA’s ability to succeed generated significant sales and cash flow • Cannabis had the reputation of an illicit and scary substance • A short-seller made allegations in 2018 that Aphria was ultimately a scheme to Consensus vs Results funnel funds from retail shareholders into Return Breakdown: the pockets of insiders • He also claimed that Aphria insiders bought worthless companies overseas Worrisome through shell companies and then had Allegations Aphria buy out these companies at inflated prices • After these allegations, two executives including the CEO stepped down from their positions • Shares plunged more than 50% in the wake of these allegations

398 Back to List Aphria Inc. Takeaways APHA is an Okay Business – 3/5 Future Outlook • The Cannabis industry is not necessarily Can APHA Sustain its Advantages? the most desirable space to be in • Part of APHA’s advantage is the quality of their • Cannabis is legalized on a state by state products, but their products are mainly protected as basis in the U.S. and cannabis cannot be trade secrets transported across state lines • APHA’s ability to sell internationally can be replicated Controversial • Cannabis must be produced in the state it by other companies by simply complying with Industry is sold in, meaning APHA will have to legislation and investing in facilities invest in production facilities in every state it wants to sell in Can APHA continue to grow? • Aphria has established a somewhat • Legalization of vapes, concentrates, and edibles give APHA legitimate reputation in what some still a catalyst for revenue growth consider an illicit space • Received German certification to export Canadian cannabis for German distribution, which would cut costs • APHA recently posted a $99.8M CAD net loss, and increase revenue of which $64 M were related to one off losses • Cannabis seems to be heading away from the controlled due to Covid-19 substance category, which APHA is poised to capitalize on • EPS was negative in the past year Mixed Recent • Even in Covid-19 times, APHA revenue has Is APHA poised to continue to outperform? Financial continued to grown (many of its peers have • APHA continues to increase its efficiency in productions Performance (dried cannabis production costs down 5% to $0.88 CAD seen declines in revenue) per gram) which bodes well for profitability • Aphria is a cash flow positive business, with • Revenue has grown year over year and is anticipated to around $500 million in cash on their balance continue this trend over the next 3 years sheet

399 Owen Stimpson 467% 5 Year TSR

TSX:CJT Rank: 64/104

400 Cargo Jet Overview In Canadian (CAD) Dollars

Cargojet Inc. provides time sensitive overnight air cargo NTM EV/NTM EBITDA Multiple services in Canada, and internationally. Its air cargo business activities include domestic overnight air cargo between 15 2019 cities.

Statistic 06/08/2015 06/08/2020 2015 Stock Price $25.78 $144.00

Market Cap $243.46M $2.25B 11.40x 11.60x 11.80x 12.00x 12.20x 12.40x Enterprise Value $530.67M $2.21B

Shares Outstanding 9.44M 15.6M

EV / NTM Revenue 1.60x 5.53x

EV / NTM EBITDA 10.58x 15.07x

PE 19.83x 59.08x

Statistic FY 2015 FY 2019

Revenue 289M 486.6M

EBITDA 45.1M 129.3M

401 Cargo Jet Business Model

Primary Product Context

Provides a variety of time sensitive air-cargo CST is Canada’s pre-eminent overnight Air Cargo Sales by Division services, primarily in and time-sensitive air cargo company. Canada. • Cargo focused – only does passenger routes on an ad-hoc basis for charter 28% routes.

• Consolidates cargo from customers and transports it to 14 Canadian 72% cities, and a few international routes. • Handles the “middle mile” as many logistics companies focus Domestic Cargo Charter Flights on the “last mile.” CJT is a high capital intensity business. • Also provides aircraft and crew for charter flights, primarily within Canada and between the US and Canada. Air Cargo domestic westbound flights (2019 presentation).

402 Low Threat Medium Threat Cargo Jet Competitive Analysis High Threat

Competitive What’s Changed in Risks Competitive Landscape Barriers To Entry Advantages the Industry

• CJT has access to Market • Pilot unions Oligopoly • Contracts can be 90% of the Structure long-term. Canadian can increase • Ecommerce which costs. Canadian Air Market Size 762.2M1 population. often requires Cargo Industry cargo flight in Industry • Start-up capital is • Services MSD2 • One-time Canada has grown. Growth required to get areas like Consists of companies that access to airplanes. Nunavut, problems can • $29.63B in transport cargo via planes in which are have long-term 2015 to Canada. remote. reputational $49.67B in • CJT is the clear leader in • Airport hanger / damage. 2019 – a 68% pure-play air freight in runway space is increase. Canada; very few significant limited, and • Reputation for • USMCA competitors. contracts are long- reliability and • Customer poised to term. timeliness concentration: 3 customers increase e- • Major Canadian airlines (i.e. extremely provided commerce by Air Canada) only offer belly important. • Canadian regulations 60.3% of lowering space (not the entire plane) are restrictive for revenue in duties. for Cargo. • foreign carriers. Scale enables CJT to FY2018. spread out costs.

1. Canada only; Ibis World 2. Canadian domestic planned air travel growh 403 What Investors Missed In Canadian (CAD) Dollars The Actual Story of the Last Five Years The Bear Thesis Five Years Ago: • Revenue grew at 16.7% CAGR from FY2014 • There has not been much growth historically– no reason to believe to FY2015 from $192.4M to $486.6M. that there will be rapid growth in the next five years. • Signed major seven year contract with • From FY2004 to FY2014 revenue grew at a 6.6% CAGR. Canada Post and Purolator that was main • Air cargo is not a high growth industry either. Signed contracts reason revenue increased 50% from FY2014 to FY2015. • Margins have been shrinking: FY2010 9.8% EBIT margin shrank to and grew revenue 2.5% in FY2014. • And then extended it by 3 years in FY2017. • CJT has high leverage at 13.8x EBITDA in FY2014, and negative cash • Signed many other major contracts (i.e. flow from operations. UPS). • Ecommerce in Canada has grown to ≈50B per Return Breakdown: year, yet retail penetration still lags many The ecommerce and other countries, such as the UK, US, and China. Consensus vs Results Amazon opportunity • Amazon bought warrants that could be buy 9.9% of CJT, with vesting contingent on 400M of business from Amazon. • Leverage reduced to 4.6x EBITDA in FY2019 – debt was used to fuel growth but then paid down. Financial health and • Cash flow from ops positive each year from efficiency improved FY2015-FY2019 and EBIT margins doubled: 6.6% in FY2015 to 12.3% in FY2019. • Efficiency increased: revenue per plane up from $12.5M to $20M from FY2015 to FY2019.

404 Back to List

Cargo Jet Takeaways In Canadian (CAD) Dollars CJT is a Solid Business – 3.5/5 Future Outlook

• Capital intensity, length of contracts, and Can CJT Sustain its Market Position? regulatory burdens impede new entrants. • CJT has a dominant position in the Canadian overnight air • CJT has multi-year major contracts that extend past CJT has a moat and cargo market and can reach 90% of the population. 2020, giving strong earnings visibility. strong revenue visibility • CJT’s 99%> success rate has given it a strong reputation. • Amazon warrants demonstrate Amazon’s commitment to continue to grow alongside CJT in • CJT has multiple, large multi-year contracts signed. Canada. Can CJT continue to grow faster than the industry? • Ecommerce increased demand for air-cargo and CJT • CJT’s deal with Amazon makes CJT positioned well to capitalized: capture growth linked to rising ecommerce sales. • Major Canadian airlines may start to enter the market in a • Signed major contracts. CJT capitalized on the rise bigger way if the industry continues to grow; firms might of ecommerce • Expanded flights to seven days a week from five vertically integrate more of their supply chain. due to customer demand driven by ecommerce • Already happened with “last mile” delivery to a large (consumer now expected quick delivery on extent. weekdays and weekends). Is CJT poised to continue to outperform the market? • There is an opportunity to grow for CJT but their multiple • CJT sees the path for sustained growth to come from requires immense growth for continued outperformance. more ecommerce fueled demand. CJT is betting on • At 59x P/NTM EPS it is very likely CJT will see multiple • But the company is still highly levered at 4.4x EBITDA, ecommerce going forward contraction. and losing one major contract renewal could severely • There is always the possibility of losing a major contract and damage both the top and bottom line. CJT’s balance sheet is still not strong.

405 Elizabeth DeSouza 449% 5 Year TSR OB:KIT Rank: 65/104

406 Kitron ASA Overview

Kitron ASA is a Norwegian electronics manufacturing services LTM EV/EBITDA Multiple company, that develops, industrializes, and manufactures electronics for the energy/telecoms, defense/aerospace, offshore/marine, medical device, and industry sectors. 2020 8.9x

Statistic 6/8/15 6/8/20 2015 9.7x Stock Price 2.66 NOK 12.2 NOK 8.5x 9.0x 9.5x 10.0x Market Cap 460.08M NOK 2.19B NOK

Enterprise Value 768.12M NOK 2.94B NOK

Shares Outstanding 172.96M 179.10M

EV / LTM Revenue1 0.43x 0.87x

EV / LTM EBITDA 9.72x 8.92x LTM P/E 11.63x 16.06x Z

Statistic FY 2015 FY 2019

Revenue 1.95B NOK 3.30B NOK

EBITDA 132.30M NOK 300.09M NOK

1NTM multiples not available for FY 2015 407 Kitron ASA Business Model

Primary Products Context Sales by Geography 2.8% 16.9% 17.9% • high level assembly KIT manufactures electronics of complex embedded in customer products and box-build products electromechanical 20.8% • Kitron provides a wide variety of products Electronics services to its customers 41.7% • Services ranging Manufacturing Norway Sweden from development, • It operates in 5 main areas: the & Assembly energy/telecoms, Rest of Europe USA & design to Other Services defense/aerospace, industrialization, offshore/marine, medical device, logistics, and industry sectors Sales by Line of Business 6.5% manufacturing, and • Business model covers the whole 22.5% redesign value chain from development, 18.1% industrialization, purchasing, logistics, and maintenance to 13.9% redesign • OEM’s are focusing more on their 39.0% competencies and transferring more Defense/AeroSpace Energy/Telecoms of the value chain to EMS partners Industry Medical Devices Offshore/Marine like Kitron • KIT offers increased flexibility, reduced costs, and improved quality KIT is a capital intense business, as their core Kitron manufacturing center to its OEM customers business is manufacturing

408 Low Threat Medium Threat Kitron ASA Competitive Analysis High Threat

What’s Changed in Competitive Advantages Risks Barriers To Entry the Industry Electronic Manufacturing Services

• KIT continuously improves The players in this industry design, upon its manufacturing manufacture, test, distribute, and quality through programs assemble electronic components for such as Six Sigma & LEAN original equipment manufacturers • Increasing manufacturing, giving it • Exposed to price risks (OEMs) pressure on superior quality over other because raw materials • Manufacturing is a very manufacturers to EMS follow international capital intense business be environmentally • KIT considers the market prices for • Manufacturing complex conscious Market “competence” of its electronic components Oligopoly electronic components • Rising demand for Structure employees as their • KIT operates in countries requires niche expertise consumer ultimate competitive that are susceptible to Market Size ~$542B1 electronics in advantage corruption and supply developed and Industry • KIT adds value to its chain disruption HSD1 developing nations Growth customers by offering flexibility, competence, quality, closeness, and full value chain capability

1 https://www.globenewswire.com/fr/news-release/2020/01/06/1966638/0/en/Outlook-on-the-World-s-Electronics-Manufacturing-Services-EMS-Market- 409 to-2023-Industry-Analysis-Financial-Benchmarks-and-In-Depth-Profiles-of-102-EMS-ODM-Firms.html What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years

• In 2015, there was uncertainty about the future prospects of KIT • All revenue segments have grown • In 2014, a new CEO was appointed so there was uncertainty over the past 5 years surrounding his ability to grow the company • Defense spending has grown worldwide since 2015 & with KIT • KIT is a small Norwegian company specializing in electronic Overall Growth revenues in this sector increased manufacturing, which is normally left to large manufactures in of Industry 65% in 2019 Sectors countries like the U.S. or China • Offshore/ marine revenues increased 341% in 2019 due to increased activity by customers in Consensus vs Results the oil and gas fields Return Breakdown: • The current CEO, Lars Nilsson was appointed in 2014, and has since laid out a clear growth plan Growth Plan • The growth plan targets three areas: organic growth, operational Laid out by New improvements, and acquisitions CEO • In 2019, KIT acquired the EMS division of API Technologies Corp. in the U.S. , which strengths their position in the U.S.

410 Back to List Kitron Takeaways

KIT is a Great Business – 4.5/5 Future Outlook • One of KIT’s advantages over Can KIT Sustain its Advantages? manufactures in the U.S. or China, is its • KIT continuously looks to improve upon its proximity and efficiency of service to its quality in manufacturing, one of its main Scandinavian customers advantages • KIT also offer niche expertise in the KIT has a Good • Continues to streamline processes in its electronic manufacturing services value chain, making it desirable to Business Model industry customers • Gross and EBITDA margins are low, but Can KIT continue to grow? are above industry averages • KIT has a clear growth strategy with focus on • Consistent dividends over the last 5 organic growth, operational improvements, years and acquisitions • To minimize supply chain risk, KIT tries • Increasing efficiency and transferring to limit its spending with any specific manufacturing to lower-cost countries will supplier, so that it does not exceed 20 per lead to margin expansion cent of the total revenue from the supplier Is KIT poised to continue to outperform? • KIT seeks to diversify its sourcing • KIT has consistently delivered higher than Diversified Portfolio & strategy estimated EPS over the last 5 years Supply Chain • KIT has a very diverse portfolio in terms of industries it services, meaning that if • KIT has had consistent topline growth since one industry declines, the company is 2015, which is expected to continue past 2023 protected by revenues created in the other • Medical device equipment industry offers industries interesting opportunity for growth in current climate

411 Elizabeth DeSouza 447% 5 Year TSR NASDAQ:XPEL Rank: 66/104

412 XPEL Overview

XPEL, Inc. is based in San Antonio, Texas and manufactures, LTM EV/EBITDA Multiple sells, distributes, and installs after-market automotive products in the U.S. and internationally. 2020 22.0x

Statistic 6/8/15 6/8/20 2015 25.0x Stock Price $3.00 $16.71 20.0x 21.0x 22.0x 23.0x 24.0x 25.0x 26.0x Market Cap $77.25M $461.41M

Enterprise Value $80.30M $459.73M

Shares Outstanding 25.75M 27.61M

EV / LTM Revenue1 2.47x 3.44x

EV / LTM EBITDA 24.96x 22.02x LTM P/E 23.48x 33.60x Z

Statistic FY 2015 FY 2019

Revenue 41.47M 129.93M

EBITDA 3.12M 18.85M

1NTM multiples not available prior to FY 2019 413 XPEL Business Model

Primary Products Context Sales by Geography 3%2% 2% 0% 3% • Paint and surface XPEL products help customers keep 6% protection films(mostly items in excellent condition 14% 47% Auto Parts used on automotive) • XPEL automotive films protect a 24% & • Architectural window car’s paint from rock chips and Equipment films other road debris U.S. China • DesignAccess Program • Window films (automotive & Canada Continental Europe U.K. Asia Pacific software (DAP) architectural) reject solar Latin America Middle East/Africa radiation and heat or secure glass Other in the event of breakage Sales by Category 6% 0% 3% • DAP is XPEL’s proprietary software 5% 2.5% / database that allows users to cut XPEL films to the necessary shapes 8.8% 74.9% • Primarily operate by selling films, installation training, and DAP to independent installers and new Paint protection film Widow film car dealerships Software Cutbank credits Installation labor Training • International market with about 50% of sales coming from outside Car being wrapped in XPEL film the U.S. (~25% from sales to XPEL is a capital light business as manufacturing distributor in China) is outsourced

414 Low Threat Medium Threat XPEL Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry Auto Components

• DAP, a proprietary • XPEL is reliant on one • Increase in use of software that has a distributor for all business ride sharing The players in this industry database of over 80,000 manufacture parts and accessories for in China, which makes up a services and vehicle applications for autonomous automobiles. • PPF are commoditized, quarter of their total their paint protection films vehicles have meaning there is not revenue • DAP was the first software changed substantial differentiation • Should relations between of its kind and allowed PPF consumer habits between brands China and U.S. worsen, and installers to cut films with in the industry China imposes harsher • Brand loyalty and precision, thus increasing and will continue Market Perfect regulations on U.S. goods, Structure Competition marketing are the only their efficiency to do so real obstacles to entry XPEL business could be • Offers instillation training, • Somewhat niche Market Size $116B1 (Customers are likely to significantly impacted which is very labor industry so the ask for a product by name • DAP software, what used to Industry intensive and specialized players and LSD2 i.e. Expel, 3M) be an XPEL advantage, is Growth consumers in the • Has a brand following, so being replicated and space are their products are improved by competitors requested, even if a better relatively product exists consistent

1 https://eresearch.fidelity.com/eresearch/markets_sectors/sectors/industries.jhtml?tab=learn&industry=251010 415 2Industry growth over the last 5 years What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • Increasing competition in the years leading up to 2015 • XPEL’s initial customer base of car created uncertainty about whether or not XPEL could enthusiasts supported the XPEL brand remain competitive and through word of mouth has • Gross margins fell every year from 2011 to 2015, falling in expanded the reach of the company total almost 12% to 29.7% • In a market where brand rarely means • This drop in gross margins could point to the new competition Brand Loyalty anything, PPF installers will have undercutting XPEL prices, causing XPEL to drop their own customers ask for XPEL by name • 3M, a competitor, filed a lawsuit against XPEL in late 2015 for • Strong customer base and brand loyalty patent infringement caused by the Ultimate film, a best seller have helped grow XPEL revenue significantly over the past 5 years

Return Breakdown: Consensus vs Results • Gross margins have steadily increased since 2017 (up to 36.3% today) • Increase in gross margins can be attributed to lower percentage of sales to lower margin distributors and Competitive improvements on product and operating Drive costs • XPEL and 3M reached a settlement wherein XPEL would license the disputed technology, allowing them to keep a very successful product

416 Back to List XPEL Takeaways XPEL is a Good Business – 4/5 Future Outlook Can XPEL Sustain its Advantages? • XPEL is a name brand in its niche industry • No, despite having patents related to the DAP software, competitors are coming out with similar • Customers of XPEL ask for it specifically, and improved software which incentivizes installers to use it over competitors’ films • Llumar (subsidiary of Eastman) has invested in 3D scanning technology that produces ultra precise XPEL has a Strong • The main type of XPEL customer appears to film patterns Following have disposable income, regardless of the economic climate Can XPEL continue to grow? • Following will only grow with strategic • XPEL has customers it has yet to reach- people who partnerships, such as one beginning in 2020 are unaware that they are in need of XPEL products with Team Penske • These untapped customers offer the opportunity for XPEL to continue to grow • XPEL plans to continue strategically acquiring companies to bring it closer to the end consumer and • XPEL has strong top line growth thus increase sales • The CEO is very committed to the success of Is XPEL poised to continue to outperform? the company and offers strong leadership • Both gross margins and EBITDA margins have steadily • Plan for global expansion centered on Strategic Planning increased over the last 5 years, showing improving establishing local relationships to control financial health of the company quality of service and increase margins • EV/EBITDA multiple is expected to be 21.8x in the • Variety of distribution channels to maximize NTM, up from 15.2x in 2020, capturing the continued sales expected growth of the company

417 Owen Stimpson 443% 5 Year TSR LSE:JD. Rank: 67/104

418 JD Sports Fashion Overview EV / NTM EBITDA JD Sports Fashion is a sports-fashion retail company based in Bury, Greater Manchester, England with shops throughout the United Kingdom, Europe, the United States, Asia and Australia. 2019

Statistic 06/08/2015 06/08/2020 2015 Stock Price £1.32 £6.48

Market Cap £1.29B £6.31B 0x 2x 4x 6x 8x 10x 12x 14x Enterprise Value £1.22B £8.51B

Shares Outstanding 973.23M 973.23M

EV / NTM Revenue 0.75x 1.65x

EV / NTM EBITDA 7.38x 11.82x

PE 15.89x 33.62x

Statistic FY 2015 FY 2019

Revenue 1.52B 4.72B

EBITDA 144.7M 461.9M

419 JD Sports Fashion Business Model

Context Primary Product Sales by Division Retail stores that sell 23% sports and sport fashion JD is a sports and outdoor fitness clothing from third-party clothing retailer. brands and JD’s own 3% Sports collection of brands. • JD operates 15 different retail store Fashion Multiple different retail brands with over 2,400 locations 74% stores, flagship store is across Europe, Asia, and NA. JD Sports. Also includes Retail Wholesale Multichannel sports fashion e- • JD’s flagship JD Sports sells renowned commerce presence. brands, such as Nike and Adidas, Sales by Geography alongside JD’s own brands. 5% Retail stores that sell • Stores have “world class” retail outdoor (i.e. hiking) theatre – the store themselves 26% clothing from third-party are very stylish. 43% brands and JD’s own collection of brands. • Outdoor JD has developed a robust online 26% Multiple different retail presence which accounts for roughly stores, flagship store is 23% of total revenue. Millets. Also includes • Sites operate under brands of US EU UK Rest outdoor fashion e- retail stores. commerce presence. JD is a high capital intensity business.

420 Low Threat Medium Threat JD Sports Fashion Competitive Analysis High Threat

Competitive What’s Changed in Risks Competitive Landscape Barriers To Entry Advantages the Industry Sporting and Oligopoly / • Ecommerce Market • Brand Outdoor Equipment Monopolistic • Capital intensive to undercuts brick Structure reputation and Retailers in the UK Competition purchase initial and mortar inventory, establish clout: people 1 business. industry Market Size ≈£10B retail location etc. know JD and its • COVID-19 drags • Ecommerce has Operators in the Sporting and Industry • Ecommerce stores and that’s MSD1 on for years continued to rise in Outdoor Equipment Retailers Growth competitors where they go harming brick- popularity. industry sell products geared when they need • JD sports also operates outside can circumvent and-mortar. towards outdoor activities, these barriers, sportswear. of the UK in NA, Asia, and • Customers buy including clothing, bicycles, • Scale enables • Customers are Australia. however. sporting goods, and camping cost synergies. direct from buying less volume • JD sports is one of the largest Nike/Adidas and fishing equipment. • but higher quality. players in the UK market. • Relationships with Store and/or • Key competitors include: major brands (i.e. experience: JD outcompeted Frasers Group (Sports Direct), Nike) to carry their has a leading digitally by • Athleisure trend has “retail theatre” Hadfords, and Decathlon UK. brands. Amazon. increased in • Also many local players making their • popularity. and ecommerce stores a better SportsDirect competitors (i.e. • Very easy to start new experience than becomes more Amazon). store – especially many local premium and online. competitors. competes more directly with JD.

1. UK only; IBIS World. 421 What Investors Missed

The Actual Story of the Last Five Years The Bear Thesis Five Years Ago: • Retail trends hit retailers at low-end of the market with minimal store experience. • Not a very attractive industry: retail industry is in a long-term decline and there is no reason to think JD is immune from these • JD catered to high-end part of the trends. market and has top-tier store experiences through its “retail • JD’s plans for international expansion are doomed for failure: what theatre” elements such as live DJs, competitive advantage does JD have in Asia or other markets? JD capitalized on dancers, technology, etc. industry trends • JD capitalized on athleisure trend and • Mature industry with minimal room for growth. heightened demand for sneakers. • JD is self proclaimed “King of Trainers.” Return Breakdown: Consensus vs Results • JD built out ecommerce business which grew from ≈ 9.9% of sales to ≈23% of sales from FY2016 to FY2020. • JD expanded to Asia, the US, Australia, and across Europe from FY2016 to FY2020. International • Used acquisitions, such as Finish Line expansion a success acquisition in 2018, to expand. • JD sports international store count increased from 104 in FY2016 to 379 in FY2020. • In addition to store count, JD grew comps each year from FY2016 to FY2019; average comps JD grew comps growth of 7.8% over five-year period and 10% in FY2020.

1. https://www.miniaturemarket.com/reviewcorner/the-games-workshop-renaissance-editorial/ 422 Back to List JD Sports Fashion Takeaways JD is a Good Business- 3.5/5 Future Outlook • While the industry faced widespread decline due to Can JD Sustain its Market Position? the rise of ecommerce, JD continued to thrive. • So far JD has mitigated the threat of Amazon and • Many key competitors did not thrive (i..e other ecommerce players, and the threat that Nike Sports direct who’s share price is ≈25% of its and other brands go DTC. 2015 value.) JD navigated the apparel • But COVID-19 threatens to fuel these threats • JD invested in their stores to ensure they remained a retail industry again. unique experience for customers (that they can’t get • JD may be able to open its store and leverage its online). ecommerce presence to mitigate COVID-19, but the • JD capitalized on athleisure and sneakers trend, and future is uncertain. consumers increasing desire for premium products. Can JD continue to grow faster than the industry? • Also built out robust ecommerce presence. • If JD can re-open its stores, leverage ecommerce, and • JD grew its international store count and expanded to continue to stay on top of trends, it will outperform. the US, across Europe, and into Asia and Australia. • Whether JD can do these three tasks successfully is • Expanded through both acquisitions and highly uncertain. JD grew organically. Is JD poised to continue to outperform the market? • International revenue grew from 413M to 3.5B • JD has mitigated persistent threats of ecommerce and from FY2016 to FY2020. capitalized effectively on industry trends. • Comps grew each year at an average 7.5% each year. • And outperformed as its peers continued to • COVID-19 could be an existential threat to JD’s brick and decline. mortar stores, but, at the least, it is likely to accelerate • The market is pricing JD for uncertainty given COVID-19’s trends towards ecommerce. potential impact on retail. JD has an uncertain future • JD can leverage its ecommerce presence to mute the • If JD can weather this crisis effectively, it will damage, but ultimately it could hurt the company's vast outperform. But there is no precedent on which to retail presence. base whether they will be able to do that.

423 Elizabeth DeSouza 441% 5 Year TSR OM:IVSO Rank: 68/104

424 Invisio AB Overview

Invisio AB, based in Copenhagen, develops and sells personal NTM EV/EBITDA Multiple communication and hearing protection systems for professionals in the defense and military, law enforcement, and security sectors internationally. 2020 31.0x

Statistic 6/8/15 6/8/20 2015 16.8x Stock Price 27.7 SEK 138 SEK 0.0x 10.0x 20.0x 30.0x 40.0x Market Cap 1.17B SEK 6.09B SEK

Enterprise Value 1.15B SEK 5.91B SEK

Shares Outstanding 42.24M 44.10M

EV / NTM Revenue 4.46x 9.09x

EV / NTM EBITDA 16.80x 31.04x NTM P/E 19.29x 44.64x Z

Statistic FY 2015 FY 2019

Revenue 229.8M SEK 513.8M SEK

EBITDA 47.5M SEK 134.4M SEK

425 Invisio Business Model

Primary Products Context

IVSO protects key personnel in critical environments and aids • IVSO products include Sales by Geography1 cables, control units, clear communication 2.8% 6.3% head sets, and intercom Personal • IVSO personal equipment systems Equipment reduces noise and enables • The two main solutions disruption free 21.2% are personal equipment communication in noisy and the intercom system environments, while also protecting the wearer’s 69.7% hearing

• Intercom solution for Sweden Europe

internal communication in North America Rest of the World vehicles, boats, and helicopters • Two major customers: military & defense and law enforcement & security

Invisio creates communication headsets like the one • Make sales mainly through IVSO is a capital light business, as all product shown above long term contracts manufacturing is outsourced.

1Sales by category not shown because IVSO business “consists of only one segment” 426 Low Threat Medium Threat Invisio Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Aerospace & Defense Barriers To Entry in the Industry

• Multi-year contracts with The players in this industry focus on • A limited number of the production, sale, and service of customers allow IVSO time • Significant investment in customers account for a commercial aircrafts, and military to develop deeper R&D needed in this space large portion of IVSO weapons and systems designed for to relationships and • Some very large revenues- 2 customers operate on land, seas, and air. understanding to further • Global increase of companies in the industry, account for ~55% of sales grow the business 3.6% in defense but new companies still • • IVSO’s small, advanced IVSO serves a very niche spending, have room to enter Market purpose that depends on Oligopoly communication headset totalling $1.97T Structure • IP, reputation, and long with unique integration being the best available in 2019 term relationships are product for military and law 1 offers an advantage over • Trend of Market Size $1.6T very important in this enforcement personnel typical communication implementing Industry industry headsets • Recent efforts in the U.S. LSD1 more modern Growth • Customers and providers • Flexible solutions at a good and internationally to systems, like “defund the police” could enter into medium term price point those offered by contracts, preventing negatively impact defense The market for “personal equipment” • Very good relationship IVSO competition from spending (but IVSO should for military services and law with the U.S. Department suddenly taking market be protected for the next enforcement is estimated by IVSO to be of Defense- renewed 6.5B SEK & they estimate their total share couple years by its contract in 2019 for 290M contracts) target market to be about 13.5B SEK SEK

1 Market value estimate by 2025 https://www.businesswire.com/news/home/20200611005398/en/1.6-Trillion-Aerospace-Defence- 427 Market-Assessment-2019-2025 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • Prior to 2013, IVSO dabbled in the consumer and professional • IVSO has developed a very successful spaces, but an order from the U.S. government shifted their relationship with the U.S. entire focus to equipment for professionals (police, military, • IVSO now supplies products to all etc.) branches of the U.S. military • Future growth for the company would depend heavily on the success Global Market • Has also had success in Europe- won of this relationship with the U.S. Penetration contracts with the Belgian army, • If the products were received well, other countries would follow with German police, and began talks with orders, but if they were not that would put a halt to IVSO growth the Swedish police in 2019 • Investors wanted to see how this relationship would develop in the • Breakthrough order with the Japanese long run- all of IVSO’s eggs were in one basket at this point, so to police in 2019 speak Return Breakdown: Consensus vs Results • Countries are increasing defense spending and looking to modernize the technology their personnel use • Structural growth in the number of Growing possible users of IVSO products Demand for • Growing concern for the effects of war IVSO on soldiers and how to best protect them Products • Hearing loss and tinnitus are the most common injuries among American veterans

EBITDA • IVSO products prevent these injuries

428 Back to List Invisio Takeaways

IVSO is a Great Business – 5/5 Future Outlook • The initial opportunity with the U.S. Can IVSO Sustain its Advantages? government in 2013 catapulted IVSO • IVSO has a very good reputation and strong IVSO has Solid • By having a successful relationship with the relationships with its customers Relationships U.S. military (the best military in the world), • This, coupled with a great product that has other countries have been influenced to work taken lots of R&D, will be hard for with IVSO competitors to beat • The market is growing structurally • Has some patent protected technology • In 2018 tinnitus and hearing loss together Can IVSO continue to grow? accounted for about 13 percent of American • IVSO has many possible customers it has yet to Growing Niche Market veterans’ received compensation, making IVSO reach in existing geographies (police with High Entry products all the more desirable from a fiscal departments and private security) and ones it Barriers perspective has yet to reach • High barriers to entry and the specificity of the • Continuing to develop new products to grow market prevent serious competition sales • Continuing to work on operating efficiency to get • IVSO’s average annual growth from 2015-2019 better margins was 20.6% and entirely organic Is IVSO poised to continue to outperform? • Sales growth in 2019 was 45% • IVSO has established itself as a leader in its field Strong Financial • Gross margins averaged 56% from 2015-2019 and has cultivated long lasting relationship that Profile and 61% in 2019 pave the way for future growth • IVSO has no debt and an equity/asset ratio of • Strong financial health and room for growth make 76% it likely that IVSO will have continued success

429 Owen Stimpson 441% TSX:KXS 5 Year TSR Rank: 69/104

430 Kinaxis Overview In Canadian Dollars EV / NTM EBITDA Kinaxis is a supply chain management, and sales and operation planning software company based in Ottawa, Ontario. 2019

Statistic 06/08/2015 06/08/2020 2015 Stock Price $31.39 $178.32

Market Cap $748.04M $4.73B 0x 10x 20x 30x 40x 50x 60x 70x Enterprise Value $648.31M $4.41B

Shares Outstanding 23.81M 26.52M

EV / NTM Revenue 5.81x 14.67x

EV / NTM EBITDA 24.19x 63.08x

PE 44.25x 103.12x

Statistic FY 2015 FY 2019

Revenue 122.1M 256.2M

EBITDA 34.0M 54.3M

431 Kinaxis Business Model

Primary Product Context

Supply Software for companies KXS is a supply chain management Chain that helps them optimize software company. SaaS their supply chains. Sales by Geography • KXS helps companies optimize all 2% layers of their supply chain: 10% • Sales and operations. • Capacity and manufacturing. • Demand planning and order 22% fulfilment. • Inventory management. 66% • Etc. US EU Asia Canada • KXS software helps companies reduce inventory, lead times, and KXS is a low capital intensity business. shorten planning cycles.

• Software used by companies in a variety of industries from aerospace Sample KXS software screenshots to retail to life sciences.

432 Low Threat Medium Threat Kinaxis Competitive Analysis High Threat

Competitive What’s Changed Risks Competitive Landscape Barriers To Entry Advantages in the Industry

• Switching costs: • Need to develop a customers’ wide breadth of Supply Chain Market operations are Oligopoly features to have a • Supply chains Management Structure embedded with competitive product. • New competitor have gotten more 1 software. Software Market Size ≈10.5B • Easier to do or existing player complex and • KXS has globalized. Industry with customer makes major > 10%1 >100% Growth feedback. investment to • And Participants develop and sell net disrupted retention capture market software for companies to • KXS is a leader in the industry due to • Need to attract high rate. share (i.e. manage and optimize all according to Gartner’s magic increased levels of human Oracle). aspects of their supply chains. quadrant. tariffs and capital. • Contracts are other • • Major competitors in leaders long-term. Data breach. issues (i.e. quadrant include: SAP, Oracle, • Start-up costs. Brexit). Gain Systems, Demand • However, lots • KXS cannot Solutions, and OM Partners. • Customer of venture feedback and innovate fast • Increased reliance capital money enough. • Industry is maturing and new relationships. on cloud and data and well players are vying to capture analytics. capitalized different parts of the market. • incumbents. Breadth of features.

1. 2022 estimated size; KXS investor presentation. 433 What Investors Missed

The Actual Story of the Last Five Years The Bear Thesis Five Years Ago: • Subscription revenues grew from 65M in • KXS is not suited for growth: BMO analyst estimates it takes KXS FY2015 to 118.9M in FY2019. 18 months to procure a new customer. 1 • Expanded into less competitive international markets and captured • Insiders selling: the CEO, directors, and other insiders sold millions market share: of shares in 2015. • International revenue grew from 15.4M in FY2015 to 66M in FY2019. • KXS is already highly valued and, as growth rates slow, its premium KXS grew • Knowledge services program launched in multiple will contract and be more in line with peers. 2015 which helps educate potential customers on software capabilities. • Robust partner program with partners Return Breakdown: Consensus vs Results including Accenture, Deloitte, and Genpact. • Continuous investment in product enables net revenue retention above 100%. Insider selling • Same CEO as 2015; stock continued to immaterial perform post insider selling. • KXS maintained above industry standard valuation multiples. • NTM EBITDA multiple grew to 60x from 24x KXS multiples grew in and revenue multiple grew to 15x from 5.8x. • Multiples grew in tandem with growth.

1. https://www.theglobeandmail.com/globe-investor/inside-the-market/kinaxis-stock-soars-as-sales-gain-traction/article23206645/?ts=150419233633&ord=1 434 Back to List Kinaxis Takeaways KXS is a Strong Business- 4/5 Future Outlook • Supply chains are becoming more complex and Can KXS Sustain its Market Position? globalized, and geopolitical events, such as Brexit and • Barriers to entry are not high, but KXS has developed the China trade war, have increased the complexity. an industry leading product. • Demand for SaaS products to optimize supply chains • Consistently recognized by Gardner as a has undergirded the 24% annual growth for supply “leader” in the industry. KXS built a great product chain management software. in a fast growing industry • KXS has a track record of maintaining customer base • KXS tapped into this growth by building a top-tier and has a >100% net revenue retention rate. product that is used by top brands, such as Toyota Can KXS continue to grow faster than the industry? and Unilever. • If KXS can continue to leverage its partnerships and grow • Quality of product underscored by >100% net internationally, they will continue to outperform the revenue retention. industry. • KXS grew revenue from 121M in FY2015 to 256M in • KXS’s growth is threatened by incumbents, such as Oracle FY2019. and Microsoft, making major investments to capture • Revenue is recurring and there is 80% visibility growth. into NTM revenue. • And new entrants that target specific niches (i.e. KXS grew • Long-term 2 to 5 year contracts. specific industries). • Strong international growth and partnerships with key Is KXS poised to continue to outperform the market? technology consulting firms, such as Accenture, drove • KXS has a great business: strong product, recurring consistent growth. revenue, high margins, strong growth runway. • But KXS’s moat is not very strong and there is a threat of • The industry continues to grow rapidly and with low new competitors or incumbents investing more in the KXS has a runway for incremental costs, strong recurring revenue, and strong space. growth revenue retention KXS could benefit by continuing to • At 15x NTM sales, KXS is very highly valued and if may capture market share and grow. suffer multiple contraction if they have any issues.

435 Elizabeth DeSouza 434% 5 Year TSR AIM:RWS Rank: 70/104

436 RWS Holdings Overview

RWS Holdings plc, headquartered in the United Kingdom, NTM EV/EBITDA Multiple provides intellectual property support services, such as patent translations and international patent filing solutions, in life sciences translations and linguistic validation. 2020 22.8x

Statistic 6/8/15 6/8/20 2015 3.0x Stock Price £1.28 £6.26 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x Market Cap £270.82M £1.72B

Enterprise Value £249.36M £1.76B

Shares Outstanding 211.58M 274.97M

EV / NTM Revenue 2.69x 5.08x

EV / NTM EBITDA 2.95x 22.79x NTM P/E 17.11x 30.26x Z

Statistic FY 2015 FY 2019

Revenue £95.2M £355.7M

EBITDA £23.3M £80.3M

437 RWS Holdings Business Model

Primary Products Context Sales by Geography • IP services RWS combines technology and 2.5% • Life sciences language 34.8% Business skilled staff to deliver services to services 39.0% Services businesses globally • Moravia • Language solutions • Sales are made B2B 23.7% • IP services include patent UK Coninental Europe translations, patent filing, and U.S. Rest of World research • Life sciences language services Sales by Category include translations, linguistic 4.2% validation, documentation, and 35.2% marketing 18.4% • Moravia helps global technology companies provide 42.1%

localized products IP Services Moravia • Language solutions cover Life Sciences translation and interpretation Language Solutions services to help business communicate globally RWS is a capital light business.

438 Low Threat Medium Threat RWS Holdings Competitive Analysis High Threat

What’s Changed in the Competitive Advantages Risks Barriers To Entry Industry Research & Consulting Services

• Growing demand for The players in this industry offer • Services use translation language services professional services, such as research memory technology, which driven by globalization and consulting, to businesses. • Ability to recruit and gives RWS a competitive retain high quality and international trade • There are no material edge employees is essential to • Growing number of barriers to entry in • High quality employees RWS, but competition for patents filed worldwide this industry creating excellent service this is high in key cities • Outsourced language • Employees need Market Perfect • Specialization in like London services has had knowledge of the Structure Competition translation work for • If changes in European unbroken growth since industry and command intellectual property and patent laws occur, this 2009 (CAGR 7.8%) Market Size $1.3B1 of technology for life sciences, which is work could effect RWS sales efficient services • Global healthcare Industry that is highly valued by while their clients decide MSD2 spending projected to Growth major global brans new best practices increase at an annual rate of 5.4% for the next 3 years

1 https://my-ibisworld-com.ezproxy.cul.columbia.edu/us/en/industry-specialized/od4753/industry-at-a-glance 439 2https://jsginc.com/2019/08/professional-services-industry-trends-2019-and-beyond/ What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • In 2015, RWS was still trying to establish itself internationally • In 2015, RWS decided to focus • Did not yet have a strong position in the U.S., but growth efforts on the United States realized its biggest growth opportunity • Transformational acquisition of • Acquired Corporate Translations Inc. for $70 million, Moravia in 2017 made RWS a which was financed in part by a $45 million five-year leading provider of technology- bank loan enabled localization services • Investors unsure if RWS would be able to grow • RWS revenue grew 87% in 2018, internationally Successful which is largely attributed to the International Moravia acquisition • RWS is also the world leader in Return Breakdown: Consensus vs Results Growth translation, IP support solutions and life sciences language services • After successful growth in the U.S., RWS is planning to focus on growth in China • 7% organic growth across the company for FY 2019

440 Back to List RWS Holdings Takeaways RWS is a Great Business – 4/5 Future Outlook Can RWS Sustain its Advantages? • RWS offers specialized linguistic services that • RWS has long standing relationships are needed by almost all businesses with major companies • Services like those offered by RWS require • RWS tries to create a positive corporate RWS has a Niche niche expertise of industries, languages, and climate to retain its employees Product Portfolio business • Competitors lack the size and reach of • More advantageous for customers to use RWS RWS than try to do the same services in house Can RWS continue to grow? • Globalization will help drive RWS success • RWS successfully grew in the United States, and it has now set China as its next • RWS has grown through acquisitions and geographic target for growth expanding its services and is now the world • Proven ability to achieve organic and leader in language translation services inorganic growth • Low barriers to entry, but RWS’s size and Is RWS poised to continue to outperform? reputation should protect it from competition • RWS leads the industry with its high quality Strong Growth • Consistent topline growth over the last 5 years Performance services and still has room to grow, making • Strong gross profit and EBITDA margins of it plausible that RWS will continue to 40.1% and 22.6% respectively for FY 2019 outperform • Margins have stayed flat despite revenue • RWS also trades above its EV/EBITDA growth, perhaps indication a lack of scalability multiple, perhaps indicating it is currently • Strong balance sheet and minimal debt overpriced

441 Owen Stimpson 431% 5 Year TSR NasdaqGS:ERI Rank: 71/104

442 Eldorado Resorts Overview EV/ NTM EBITDA Multiple Eldorado Resorts is an American hotel and casino entertainment company founded and based in Reno, Nevada that operates 23 properties across 11 U.S. states. 2019

Statistic 06/08/2015 06/08/2020 2015 Stock Price $7.77 $39.86

Market Cap $361.43M $3.10B 0.00x 2.00x 4.00x 6.00x 8.00x 10.00x 12.00x Enterprise Value $1.05B $6.51B

Shares Outstanding 46.52M 77.80M

EV / NTM Revenue 1.46x 2.79x

EV / NTM EBITDA 8.28x 10.11x

PE 56.41x 34.19x

Statistic FY 2015 FY 2019

Revenue 719.8M 2.53B

EBITDA 128.5M 670.0M

443 Eldorado Resorts Business Model

Primary Product Context Sales by Division ERI is a regional casino Casinos that contain a operator. variety of other amenities, Casino such as hotel rooms, 28% Resorts • ERI generates the majority of restaurants, and retail its revenue through gambling shops. at its casinos. 72% • ERI offers a variety of other amenities, such as hotel Gaming Non-Gaming rooms, restaurants, retail shops, and sportsbooks to Sales by Geography attract customer to 26% properties so they will 24% gamble.

19% • ERI focuses on regional casinos outside of major 33% hubs that attract visitors 23% from all over, like Las Vegas. • Focus on operating West Midwest South East Central casinos that are a High capital required for operating casinos, hotels and Eldorado’s Reno, Nevada Resort “drive away.” restaurants.

444 Low Threat Medium Threat Eldorado Resorts Competitive Analysis High Threat

Barriers To Competitive What’s Changed in Competitive Landscape Risks Entry Advantages the Industry

• Regulations: Oligopoly / • Regulatory Market • Scale can enable Monopolistic burdens are Structure operational • Industry has gotten Competition eased making Casino Hotel expenses to be more consolidated as Market Size 66.8B1 destination • Generally spread across two largest operators, Industry locations, like Industry capital- multiple casinos. Caesars and MGM, LSD1 Las Vegas less Growth intensive made major This industry is made up of • Loyalty attractive. establishments that primarily business programs, such acquisitions. • In the US, four largest • Regulations provide short-term lodging in (gambling as Caesars companies hold 30% market increased hotel facilities with a casino on machines, Rewards, can • Regulations have share (ERI in a tier just lowering the premises. buildings, etc.). entice repeat eased in certain states below in terms of size). gambling customers. and increased • Competition is high: revenue. • Regulatory • Better amenities competition. • Casinos are • Cyclical industry. barriers in can attract more • More concentrated in hubs most customers to the • Online gambling / international like Las Vegas. jurisdictions. premise – which other forms of competition (i.e. • Casinos often increases entertainment Macau) too. compete on gambling continues to become amenities and deal revenue. more popular and packages. cannibalizes revenue.

1. Only USA; IBIS World 445 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • Weakness at existing properties even in strong overall gaming • As industry focused on major hubs like Las market: Reno revenue down 5.8% YoY and Silver Legacy JV Vegas, ERI cornered regional markets revenue down 9.8 YoY. particularly Reno. • Yet, ERI still trades at only a slight discount to larger peers Bet on Reno and • Reno economy has boomed (major Tesla which have properties in bigger markets, more diversified regional casinos factory, #1 in US for job growth) which has portfolios, and nationwide loyalty programs. worked increased demand for Reno casinos. • Given poor recent of ERI casinos performance, skepticism that ERI • Western segment (encompasses management can make improvements to the newly integrated MTR Reno) grew revenue by 310% from Casinos. FY2015 to FY2019. • Management said that gambling revenue at the WV location may decrease by 17% due to an indoor smoking ban in WV.1 • Carano family has a long history in the 2 • ERI shares are already trading too high because of refinancing business and continues to be very involved. hopes. • Management outlined cost cutting / Return Breakdown: synergies targets multiple times and met Consensus vs Results them each time. Strong management • EBITDA margin increased by nearly 50% over 5 years from in17.8% in FY2015 to 26.5% in FY2019. • Increased purchasing power and lower marketing expenses. • The smoking ban did likely reduce revenue Smoking ban wasn’t at the WV casinos by 5.6% but this loss was the end of the world made up for by the success of other casinos. Debt refinancing was • Annual interest expense was cut from $80M to material $45M.

1. https://archive.triblive.com/news/presque-isle-downs-mountaineer-adapt-in-battle-over-smoking-rules/#axzz3YWlJPv7s 2. https://seekingalpha.com/article/4100713-eldorado-resorts-among-best-of-breed-in-regional-gaming-is-well-positioned-for-growth 446 Back to List Eldorado Resorts Takeaways ERI is a Ok Business - 3/5 Future Outlook • ERI made the right call and doubled down on Reno and Can ERI Sustain its Market Position? the regional casino industry: • ERI’s current regional casino property portfolio have • Owns ≈30% of all Reno hotel rooms. demonstrated robust demand. • Reno’s economy and population growing quickly; • ERI’s management have proven to be strong operators. only a few hours drive away from SF/ • But, with the pending Caesars acquisition, leverage could Sacramento. go as high as 8x EBITDAR adding risk. ERI made the right bet • ≈50% of revenue in Reno is from actual gambling • Also, shifts ERI regional casino focus to Vegas. on itself and the (highest margin) ; ≈34% of Vegas revenue from Can ERI continue to grow faster than the industry? regional casino space gambling. • Difficult to continue to grow after Caesars acquisition given • Revenue grew from $127M to $483M, and their size. margins increased. • Las Vegas has faced more competition internationally • Caesars reward program could create more recurring revenue (i.e. Macau) whereas regional casinos have not – they are and regular gamblers (program is known as the best in the different experiences, Vegas is a holiday, regional casinos industry). are weekend getaways. • Management has increased EBITDA margins. ERI management Is ERI poised to continue to outperform the market? • Management has exceeded synergies targets in multiple proven they are • ERI shares trade at ≈50% of their 2020 peak, and if the capable major acquisitions (i.e. Circus Circus, Isle of Capri, Grand company can whether the coronavirus could outperform if Victoria). bought as these levels. • ERI has staked its future on the acquisition of Caesars where • Future very uncertain: whether Caesars acquisition will go Future lies n the they plan to realize 500M in annual synergies, become the through (pending legal uncertainty), coronavirus impacts, pending Caesars largest gambling asset company, and leverage Caesars post-acquisition leverage, whether synergies will be realized, acquisition rewards program. etc.

447 Max Schieferdecker 430% 5 Year TSR NASDAQGS:FOXF Rank: 72/104

448 Fox Factory Overview

Fox Factory Holding Corporation is a designer, engineer, manufacturer, and marketer of premium performance shock NTM EV/EBITDA Multiple absorbers and race suspension products for a variety of “extreme” vehicle uses, and is based out of Braselton, GA. 2020 27.7x

Statistic 6/8/15 6/8/20 2015 10.3x Stock Price $16.76 $87.51

Market Cap $618.12M $3.38B 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x 30.0x

Enterprise Value $660.21M $3.82B

Shares Outstanding 37.83M 39.15M

EV / NTM Revenue 1.87x 4.81x

EV / NTM EBITDA 10.35x 27.72x NTM P/E 16.87x 42.23x Z

Statistic FY 2015 FY 2019

Revenue 366.80M 751.02M

EBITDA 56.41M 128.68M

449 Fox Factory Business Model

Primary Products Context Sales by Category FOXF helps improve • Performance enhancing Powered performance products for vehicles Vehicles • Vehicles that Fox caters to 60.1% with motors 39.9% include Side-by-Sides, on- road vehicles with and • Performance enhancing Specialty without off-road capabilities, products for mountain Sports off-road vehicles and trucks, Powered Vehicles Specialty Sports and road bikes ATVs, snowmobiles, specialty vehicles and applications, Sales by Geography motorcycles, and commercial 1.0% trucks 16.0% • Strong marketing presence due to good relationships 66.9% with professional athletes 16.1% and sponsored race teams • Sells products both directly to the original equipment North America Asia Europe Rest of the World manufacturers (OEMs) as FOXF is a capital intensive business as most Fox Factory suspension bike forks well as aftermarket through dealers and distributors manufacturing is done in house

450 Low Threat Medium Threat Fox Factory Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry Automotive Suspension

The players in this industry offer • Global interruptions to systems of spring, shock absorbers, trade could harm the supply struts, control arms, and ball joints chain as many of FOXF’s that connect the vehicle to the wheel • FOXF has established products are manufactured and subsequently enable relative motion between the two trademarks that are overseas perceived as high quality, • A substantial amount of • OEMs have taken premium brands FOXF’s marketing success a lot of market • No significant barriers to • Strong relationships with comes from partnerships Market Perfect share away from entry OEMs who view FOXF with professional athletes, Structure Competition the aftermarket products as a way to so if support for Fox is lost sellers Market Size $57B1 increase the sales of their from one or many athletes, premium products business could be harmed Industry LSD%1 • High levels of customer Growth concentration as the 10 largest customers account for 45% of sales

1 https://www.alliedmarketresearch.com/automotive-suspension-market 451 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years

• Fox has acquired 5 businesses that • Uncertainty surrounding the growth of the bike business, as have helped them expand the markets that they operate in Y/Y growth was stagnant the prior year Accretive • In particular, their bike and • Wide margin of future year estimates because of Acquisitions aftermarket businesses have seen headwinds due to increased competition and importing growth as a result of these issues acquisitions

• Over the past 5 years, revenue grew steadily at a CAGR of 15%, while Consensus vs Results slightly increasing margins Return Breakdown: Steady Growth • Demand increased as more ordinary people had the money to spend on discretionary hobbies towards the end of the decade

• Fox got the contract to provide the suspension for the famous Ford Ford Raptor Raptor truck Success • Increased brand recognition to go along with their already successful partnerships

452 Back to List Fox Factory Takeaways

FOXF is an Okay Business – 3/5 Future Outlook

• Fox has established itself as a premium brand in the Can FOXF Sustain its Advantages? auto parts/suspension industry • FOXF’s reputation in the industry is FOXF has a Great • The quality and performance has resulted in many strong, and its relationship with OEMs Reputation OEMs using Fox’s products in their high-end products and its Fox athletes are unlikely to be • Fox is endorsed by many successful racers and tarnished in the future athletes as well Can FOXF continue to grow? • Being in a business that relies heavily on the ability of • FOXF is continuing to make accretive consumers to make discretionary purchases, the acquisitions and are actively expanding stability of the growth is uncertain Operates in a Cyclical their international presence as well • The industry is not a ground-breaking one, and the only Industry • However, the size of the growth is not real chance at industry growth is through a large certain, as the industry Fox operates in is increase in interest, which is not something that is easy not a high growth one to facilitate or likely to happen Is FOXF poised to continue to outperform? • The Ford Raptor partnership has greatly affected Fox’s business in a positive way • It is unlikely that FOXF will continue to • grow at the rate it has before, as much of Great Partnerships The Raptor is a variation of the most popular truck in America, the F-150, which has resulted in the stock growth can be attributed to Provide Great Benefits a large increase in units sold to Ford multiple expansion, and FOXF is already • This partnership has opened the door for more OEM trading a very high P/E for its industry at contracts in the future as well around 40x

453 Owen Stimpson 427% 5 Year TSR OM:BEIJ B Rank: 73/104

454 Beijer Ref Overview In Swedish krona (kr) Beijer Ref engages in the wholesale of refrigeration products for EV / NTM EBITDA refrigeration installation contractors, and service and contracting companies. It markets and sells refrigeration systems, components for refrigeration systems, and air-conditioning and 2019 heat pumps.

Statistic 06/08/2015 06/08/2020 2015 Stock Price 57.67 kr 275 kr

Market Cap 7.33B kr 34.08B kr 0x 5x 10x 15x 20x 25x Enterprise Value 8.51B kr 35.23B kr

Shares Outstanding 127.17M 126.54M

EV / NTM Revenue 1.02x 2.43x

EV / NTM EBITDA 12.63x 23.16x

PE 17.58x 47.07x

Statistic FY 2015 FY 2019

Revenue 8.36B 14.82B

EBITDA 621.7M 1.32B

455 Beijer Ref Business Model

Primary Product Context Sales by Segment BEIJ is the largest refrigeration wholesaler 10% Commercial Wholesale of in the world. and commercial and Industrial industrial refrigeration • BEIJ is a B2B wholesaler of refrigeration, Refrigeration products from a range 57% air conditioning and heat pumps. 33% (CIR) of suppliers. • Sells best known brands and their

own products which they develop. CIR HVAC OEM Wholesale of HVAC • Products used in food stores, factories, ice rinks, etc. (heating, ventilation, Sales by Geography HVAC and air conditioning) • products from a range Installation engineers buy products from 16% 12% of suppliers. BEIJ and then install them for customer (i.e. food store). 9%

Manufacturing of • Operates under multiple subsidiaries and 4% 24% refrigeration products creates value by maintaining stock, under BEIJ’s own distribution, technical support, and OEM 35% brands. Focus on customer adaptation. environmentally Nordic Central Europe Southern Europe friendly products. • BEIJ has massive reach with over 1,200 Eastern Europe Africa APAC suppliers, 100K products, and 60K customers around the world. BEIJ is a high capital intensity business.

456 Low Threat Medium Threat Beijer Ref Competitive Analysis High Threat

Competitive What’s Changed in Risks Competitive Landscape Barriers To Entry Advantages the Industry

Market • Increased Fragmented Structure urbanisation has Refrigeration • Product breadth: need Market Size ≈7B1 • Global reach. grown demand for wide product breadth Wholesale Industry • Scale enables refrigerated food. Industry and relationships with MSD1 purchasing • • Larger middle class Growth suppliers. Exposure to Participants source power. foreign means more homes • BEIJ also has refrigeration products from • BEIJ is the largest commercial • Low customer exchange. can afford to cool exclusive suppliers and sell them and industrial refrigeration concentration: 5 their homes. distributor wholesale to end customers. wholesaler in the world. largest • Regulatory changes: contracts (i.e. • Suppliers customers ≈ 5% • Toshiba in going direct to 2016 Kigali • Key competitors include: of sales. Ahlsell in Sweden and Europe). customers. agreement Denmark, Reiss and Fischer in • Customer signed by 90 Germany, Wolseley in the relationships: countries: HFC • Capital intensive to • Working United Kingdom and Pecomark 60k customers use to carry inventory, set capital in Spain and France. and 80% decrease by up warehouses, etc. employees have management. 85% by 2045 • Industry growth generally contact with (HFCs exceeds GDP growth by 2% due customers. commonly to growth tailwinds from food used in fridges industry. today)

1. Ibis World; US only 457 What Investors Missed The Actual Story of the Last Five Years The Bear Thesis Five Years Ago: • BEIJ pursued consistent acquisitions to grow to new markets. Revenue CAGRs: • Minimal avenues for growth: BEIJ operates in a mature industry Africa (13.34%), Southern Europe with minimal growth prospects. (11.70%), Asia Pacific (37.82%). • Already highly penetrated in core markets – minimal room • to capture market share but possible to lose it. Regulation changes increased demand for • Refrigeration industry is a fast-evolving, growing industry. BEIJ grew in new environmentally friendly refrigeration as • Not particularly attractive business model: high capital intensity, markets and old tech is phased out. potential to be undercut by suppliers selling direct, minimal value through OEM • Expanded OEM business (which addition. capitalized on environmentally friendly • EBITDA and gross margins have decreased for past five years. trend) from one order in 2015 to 180M in FY2019 (10% of revenue). • Doubled capacity in FY2019 to Return Breakdown: Consensus vs Results continue to capture market share. • Optimized logistics by moving to regional warehouse (rather than country based) warehousing; automated more processes. • Launched ecommerce site (≈2% of FY2019 BEIJ optimized sales but growing) and online PIM system for business model customers. • Ensured proper integration of acquisitions (i.e. 2016 slowed acquisitions to ensure integration after many 2015 acquisitions). • Gross margins up to 31.7% from 30.3% and Margins improved EBITDA margins up to 8.9% from 7.4% due to operational improvements and OEM sales.

458 Back to List Beijer Ref Takeaways BEIJ is a Strong Business- 4/5 Future Outlook • Largest refrigeration wholesaler in the world with Can BEIJ Sustain its Market Position? global reach, diversified customer base, strong • Barriers to entry are not that high as any company supplier relationships, and efficient logistics with capital can buy refrigeration systems and sell BEIJ has a moat capabilities. them. • Has exclusive contracts with some key suppliers (i.e. • But, BEIJ’s competitive advantages are very strong: Toshiba). large customer base and supplier base, scale which • BEIJ continued to capitalize on industry fragmentation enables low costs, strong logistics, global reach. by consistently pursuing acquisitions: 11 acquisitions • Also #1 player in the industry. since 2015. Can BEIJ continue to grow faster than the industry? • Acquisitions enabled robust expansion across the • BEIJ can continue to make acquisitions and consolidate a world, especially in Asia, Africa, and Southern Europe. fragmented market. BEIJ capitalized on market BEIJ also maintained leading position in core Nordic • OEM business can continue to be a source of growth, trends and Central Europe markets. especially given its alignment with key industry trends. • Capitalized on trend towards environmentally friendly Is BEIJ poised to continue to outperform the market? refrigeration by developing OEM business which • BEIJ is a strong company in a mature but growing specializes in this niche. industry that is benefiting from social and regulatory • Non-reportable segment in FY2015 to 10% of tailwinds. FY2019 sales. • BEIJ has avenues for growth including further acquisitions • Industry trends which increased demand for and the OEM business. refrigeration (urbanisation, rising middle class, • My concern is that OEM business may eNduce some BEIJ has a runway for regulatory changes to environmentally friendly tech) suppliers to expand direct sales capabilities (as BEIJ is no growth likely to continue. longer neutral wholesaler); and new market growth is not • OEM capacity doubled in 2019 and can continue to grow. always a home run (i.e. BEIJ has challenges in Africa). • BEIJ PE (47x) is highest ever – by far.

459 Elizabeth DeSouza 426% 5 Year TSR SWX:BANB Rank: 74/104

460 Bachem Holding AG Overview

Bachem Holding AG, headquartered in Switzerland, is a NTM EV/EBITDA Multiple technology-based biochemicals company, that, through its subsidiaries, provides services to the pharmaceutical and biotechnology industries. 2020 31.0x

Statistic 6/8/15 6/8/20 2015 11.9x Stock Price 49.95 CHF 224.5 CHF 0.0x 10.0x 20.0x 30.0x 40.0x Market Cap 675.47M CHF 3.14B CHF

Enterprise Value 667.33M CHF 3.23B CHF

Shares Outstanding 13.52M 13.99M

EV / NTM Revenue 3.38x 9.06x

EV / NTM EBITDA 11.87x 30.95x P/E 21.48x 50.21x Z

Statistic FY 2015 FY 2019

Revenue 208.6M CHF 313.7M CHF

EBITDA 56.3M CHF 84.5M CHF

461 Bachem Holding AG Business Model

Primary Products Context Sales by Geography • Active Pharmaceutical BANB provides a full range of 19.1% 7.3% Ingredients (APIs) services to the pharma and • Custom synthesis biotech industries 5.4% services 5.6% • BANB develops efficient 48.4% • Generics (drug manufacturing processes and 6.7% substances whose 7.5% Peptide produces peptide-based patent protection has Chemistry active pharmaceutical Switzerland U.S. Germany expired) ingredients Austria Great Britain Japan • Research chemicals used Rest of world to make peptides and • BANB products are used in advance biochemical research and development, Sales by Category knowledge cosmetics, diagnostics, and medicines • New Chemical Entities 11.8% • Customers in the field of research are mainly universities, institutes, and 88.2% research departments of pharma companies APIs Research Chemicals • BANB is pursuing the largest number of peptide projects BANB is a capital intensive business. worldwide

462 Low Threat Medium Threat Bachem Holding AG Competitive Analysis High Threat

What’s Changed in Competitive Advantages Risks Barriers To Entry the Industry Life Sciences Tools & Services

The players in this industry are • Global market leader in • Increase in involved in drug discovery, peptides and unique in its collaborative development, and production by • Sophisticated products ability to produce long-chain innovation between providing analytical tools, and technology requires and complex peptides in large life sciences instruments, consumables, supplies, significant R&D to quantities for commercial • Industry is subject to companies rapid scientific and contract research services develop applications • Increasing research in change, so BANB • Strict regulatory • Expertise in peptides, with a new applications for success depends on environment large portfolio of peptide generics continued Market • Relationships and generics in the industry • New technologies like Oligopoly innovation Structure reputation are very • Extensive range of services telemedicine, virtual • There is no important and take time with high degree of vertical clinical trials, and AI Market Size $461.97B1 assurance BANB to build integration could increase and products will obtain Industry • Long-term customer diversify medical > 10%2 • Employees need a high regulatory approval Growth level of education and relationships and long-term research industry knowledge supply contracts regulate • Use of peptides prices and purchase volumes increasing in cosmetics

1 https://eresearch.fidelity.com/eresearch/markets_sectors/sectors/industries.jhtml?tab=learn&industry=352030 463 2YTD What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • BANB had a less sizable market share in 2015 and was working toward becoming a market leader in peptides • BANB is the global market leader in • Acquired American Peptide Company in 2015 in hopes peptides of strengthening its position in the U.S. • BANB has successfully established • Looking to Japan as a next area for growth itself in Japan, and Asia as a whole now account for just under 10% of • Recently divested in its immunology product line in Market Leader BANB sales 2014 • Able to identify and realize new • Trying to establish itself as a global player projects in Japan, South Korea, China, and Taiwan in FY 2019 Consensus vs Results Return Breakdown: • Growing NCE pipeline contributing directly to increasing sales • Generic sales increased from 110.3M to 137.4M from 2015-2019 Diversified • Expanding from peptides into oligonucleotides, with a medium Operations term goal of establishing this as a second pillar for BANB • Demand and interest for oligonucleotides exceeded company expectations

464 Back to List Bachem Holding AG Takeaways BANB is a Great Business – 4.5/5 Future Outlook Can BANB Sustain its Advantages? • BANB has a niche in peptide manufacturing • BANB has patent protection • Unique capabilities for peptide • BANB has extensive knowledge of the industry development, as well as years of industry and long term relationships with customers Peptide Niche experience and expertise • BANB is an FDA-approved API manufacturer for • BANB uses its peptide expertise and works all clinical phases and commercial supply with its customers to come up with the perfect solution for their needs Can BANB continue to grow? • Entrance into oligonucleotide market presents an exciting opportunity for growth • Consistent topline growth over the last 5 • Building extension to their largest existing years production facility to create room for capacity Strong Financial • Strong gross profit and EBITDA margins of expansion Profile 29.5% and 26.9% respectively for FY 2019 • Customers operate in a range of industries that • High and consistently increasing EPS, with BANB has not fully targeted yet EPS of 3.91CHF in FY 2019 Is BANB poised to continue to outperform? • BANB has a strong financial profile, opportunities for • BANB founder Dr. Peter Grogg owns all class A growth shares through Ingro Finanz AG (50.01% of • Seems likely BANB will continue to outperform, Majority Ownership share capital), and combined with his family, however they have seen significant multiple maintains majority ownership of BANB at expansion since June, perhaps limiting them going 61.6% forward

465 Owen Stimpson 424% 5 Year TSR NasdaqGS:ETSY Rank: 75/104

466 Etsy Overview

Etsy is an American e-commerce website focused on handmade EV / NTM EBITDA or vintage items and craft supplies. These items fall under a wide range of categories, including clothing, home décor, and art. All 2019 vintage items must be at least 20 years old.

Statistic 06/08/2015 06/08/2020 2015 Stock Price $16.78 $79.81

Market Cap $1.88B $9.47B 0x 10x 20x 30x 40x 50x 60x 70x Enterprise Value $1.87B $9.52B

Shares Outstanding 111.79M 118.68M

EV / NTM Revenue 6.27x 7.76x

EV / NTM EBITDA 62.47x 33.58x

PE NA 55.92x

Statistic FY 2015 FY 2019

Revenue 273.5M 818.4M

EBITDA 12.9M 118.2M

467 Etsy Business Model

Primary Product Context Marketplace platform that connects sellers of Etsy an online marketplace for non- Etsy crafted and curated commercial, individually crafted and Sales by Geography vintage goods with curated goods. buyers. 33% • Etsy is the go-to marketplace for sellers Marketplace platform for who make their own goods, such as selling new, used, and Reverb pottery or clothing. vintage musical • Etsy is not the platform for mass Instruments. produced goods such as iPhones. 67%

• Etsy charges a small listing fee, a 5% US Rest transaction fee when a sale is made, and charges for other services such as priority ranking in search results. ETSY is a low capital intensity business.

• Etsy is available in nearly every country; 65 million items listed on the marketplace.

Screenshot of Etsy marketplace.

468 Low Threat Medium Threat Etsy Competitive Analysis High Threat

Competitive What’s Changed Risks Competitive Landscape Barriers To Entry Advantages in the Industry

Market Oligopoly • Network effects: Structure Etsy’s platforms 1 get better as Online Retail Market Market Size ≈$249.B • Sellers go DTC and each new buyer Industry establish their own > 10%1 and seller joins Participants offer online retail Growth ecommerce sites. • Reverse network the platform. services either by selling their • Ecommerce has own products, by creating a • Etsy competes against major effects: difficult to • 2.5M • Amazon / eBay continued to rise platform to sell products, or online marketplaces such as establish base of sellers makes major push in popularity. both. Amazon and eBay. buyers without and 46M suppliers, and vice buyers. into industry. versa. • Or by • Trend towards • Etsy is the leading player in its • Global reach: another environmental niche of unique goods. Etsy is available and socially • Google search result in nearly every new conscious goods. rankings. country. competitor • Etsy also competes against such as • Algorithms to brick-and-mortar stores such Facebook or determine what as vintage stores and Instagram. independent shops, as well as products buyers independent ecommerce sites. may be interested in.

1. 2019 10k. 469 What Investors Missed The Actual Story of the Last Five Years The Bear Thesis Five Years Ago: • New CEO appointed in 2017. • Etsy is unprofitable and the path to profitability appears it could • ESTY continued to increase its user base take years and is uncertain. and GMS increased each year from FY2015 • Etsy has been spending lots on advertising to remain to FY2019. competitive. • ETSY increased it transaction fee from ETSY became 3.5% to 5% in FY2018; • Highly competitive industry – Etsy will eventually get crushed by profitable Amazon and eBay if they capture too much market share. • ETSY reduced advertising costs by • Amazon has already launched handmade section. charging merchants a fee when ETSY’s ad led to a sale of their product. • Etsy is highly valued already at 6x forward revenue. • Forced sellers to offer free shipping on orders above $35 (or be ranked lower in search) – at sellers expense. Return Breakdown: Consensus vs Results • Amazon’s handmade store did not turn out to be successful. • Fees were too expensive, and most sellers didn’t migrate but rather ETSY carved out a opened an Amazon store in addition to niche their core Etsy store. • Esty has grown buyers from 24M in FY2015 to 46M in FY2019, and sellers from 1.6M to 2.5M. • ETSY increased gross margin from 39.8% to ETSY justified 60.5%, EBITDA margin from 4.7% to 14.4%, valuation and grew revenue multiple to 7.76x from FY2015 to FY2019.

470 Back to List Etsy Takeaways Etsy is a Strong Business- 4/5 Future Outlook • ETSY is the largest player in the handmade, curated Can ETSY Sustain its Market Position? ecommerce niche and benefits from network effects. • ETSY’s platform business model gives it a wide moat • Amazon tried to enter the market but ultimately through network effects. ETSY has a moat failed to capture share from ETSY. • Amazon has already tried to compete with ETSY and • ETSY has demonstrated its advantage relative to largely failed – no other competitors more formidable competitors by exercising its pricing power and than them. increasing its transaction fees to 5%. • Demonstrated pricing power abilities. • ETSY continued to invest in marketing to increase its user base which grew to 2.5M sellers and 46M buyers. Can ETSY continue to grow faster than the industry? • ETSY began offloading advertising costs to sellers by charging them a fee when their ad led • ETSY is more likely to attract new buyers and sellers to a sale. given their strong user base. • Room for international growth. ETSY grew • ETSY increased conversion of website browsers to buyers. • Handmade goods market is less competitive than other markets (i.e. electronics). • Combination of more users, more transactions, and increased transaction fees enabled ETSY to become Is ETSY poised to continue to outperform the market? profitable and grow revenue to 818M in FY2019 – a • ETSY has a strong moat and competitive advantages. 31% CAGR from FY2015. • However, ETSY’s multiples prices them for rapid growth – • As the platform has gained users, its moat is and that might be difficult at this stage in ETSY’s cycle. strengthened through network effects. • ETSY also has to be careful about growing too fast ETSY has a runway for • ETSY can leverage this advantage by continuing as it could compromise the integrity of the growth to raise fees. platform (counterfeit goods, mass produced goods, • Network effects attract more users, which increases # of etc.) transactions and will enable ETSY to grow topline.

471 Max Schieferdecker 423% 5 Year TSR NASDAQGS:BEAT Rank: 77/104

472 BioTelemetry Overview

BioTelemetry is a leading remote medical technology company NTM EV/EBITDA Multiple focused on delivering critical health information to physicians and patients and is based out of Malvern, PA. 2020 16.6x

Statistic 6/8/15 6/8/20 2015 8.3x Stock Price $9.32 $50.53 0.0x 5.0x 10.0x 15.0x 20.0x Market Cap $252.12M $1.73B

Enterprise Value $264.61M $1.88B

Shares Outstanding 26.93M 36.59M

EV / NTM Revenue 1.40x 4.21x

EV / NTM EBITDA 8.25x 16.63x NTM P/E 26.38x 55.39x Z

Statistic FY 2015 FY 2019

Revenue 170.47M 417.34M

EBITDA 28.07M 107.74M

473 BioTelemetry Business Model

Primary Products Context Sales by Category 1.4% 1.4% • Diagnosis and monitoring BEAT advances connected health 12.4% BioTel of cardiac arrhythmias or • BEAT’s technology and services Heart heart related disorders in enable healthcare providers to a healthcare setting monitor / diagnose patients and clinical research subjects in a 84.7% • Cardiac monitoring & more efficient, accurate, and cost- BioTel imaging services for drug effective manner Heart Research Care Alliance Research trials in a clinical research • Recurring revenue is generated environment through their monitoring Sales by Geography services of their remotely 1.0% • Remote monitoring and connected devices in their 24- BioTel analysis of blood glucose hour monitoring service centers Care for diabetes population health management 99.0% • Develops, manufactures BEAT’s next generation U.S. International and markets medical BioTel MCOT patch system devices to medical Alliance companies, clinics and BEAT is a capital light business due to the hospitals subscription-based business model

474 Low Threat Medium Threat BioTelemetry Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry Cardiac Monitoring

The players in this industry offer • Reimbursement by medical devices that record and Medicare is highly regulated display pressure and electrical • Medicare is BEAT’s waveforms of the cardiovascular • Significant amounts of largest payor, at 35% system for measurement and expertise are required to treatment be successful in this of FY19 revenue industry • • Largest player in a very Sales, in a large part, rely on • • In order to break in, a new fragmented markets outside physicians to Medicare company would have to go prescribe BEAT’s services reimbursement Market • Already established with Oligopoly through the long and • rates have Structure many physicians as a high- BEAT is in the possession of strenuous R&D and FDA decreased quality, reliable device life-and-death level data, so Market Size $27.4B1 approval process, while at any breach in their security the same time not could be very harmful for Industry HSD1 infringing on existing their customers and their Growth patents reputation • The industry is also highly regulated by the FDA

1file:///C:/Users/schie/Downloads/ROBOGLOBAL_BIOTELEMETRY_Research-Update.pdf 475 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years

• In 2016, TelCare was acquired with the goal • Given its small market cap in 2015, there was not a whole lot of expanding into the glucose monitoring market of interest and attention given to BEAT Many Key • Acquired their second largest competitor in • There was also a worry that management was focusing Acquisitions too much on expanding margins instead of trying to the market, Lifewatch, in 2017 expand their market reach and grow the top line • Geneva Healthcare was acquired in 2018 to bring their software/services to the cloud • In July 2016, BEAT received FDA approval for their next generation mobile cardiac Return Breakdown: Consensus vs Results telemetry (MCT) device in a patch form for Successful New greater convenience Product Rollout • The full launch of the product in Q1 2018 resulted in a 69.1% growth in revenue over Q1 2017 • In late 2017, BEAT partnered with Apple and Stanford to provide cardiac monitoring services in conjunction with Apple the Apple Heart Study Partnership • The goal is to use Apple Watch data to identify irregular heart rhythms

476 Back to List BioTelemetry Takeaways BEAT is an Okay Business – 3/5 Future Outlook

• As one of the largest established players in an Can BEAT Sustain its Advantages? industry with notoriously high barriers, it is • So long as there is no big scandal that BEAT has a Moat promising that BEAT will maintain its market tarnishes their reputation, BEAT should position into the future be able to sustain its physician relationships and remain one of the • Strong operating cash flow growth largest players in the field • However, margins throughout the past 5 years have been far from consistent Can BEAT continue to grow? • Profit was the highest in FY16 at $53.4M, • BEAT has 2 relatively untapped businesses Weak Financial Profile despite the top-line growing at a CAGR of 28% in its arsenal to expand in the future (Care from $208M and Alliance) which have a lot of promise • Also, top-line growth has slowed in FY19, as it was only • The rate of growth is uncertain, however, 10% compared to the much larger growth figures in as top-line growth has slowed greatly, and previous years COVID is not going to help its cause

• BEAT has the ability and the resources to expand their Is BEAT poised to continue to outperform? offerings into other fields • While consensus does project high top-line • One of the big opportunities that BEAT could growth rates in the future, BEAT has been capitalize on is the glucose monitoring for Large Upside Potential patients with diabetes drastically underperforming consensus EPS estimates lately, so it is not safe to be • With the Geneva platform, BEAT can also gather data from all cardiac devices from all manufacturers, which hopeful off those numbers, despite has opened a large outsourcing market opportunity multiples not being at ATHs

477 Owen Stimpson 421% 5 Year TSR OM:HTRO Rank: 77/104

478 Hexatronic Overview In Swedish Krona (Kr) EV / NTM EBITDA Hexatronic offers system solutions for fiber networks based on proprietary products, in combination with products from partners around the world. 2019

Statistic 06/08/2015 06/08/2020 2015 Stock Price 10.45 Kr 53.00 Kr

Market Cap 341.27M Kr 1.99B Kr 0x 2x 4x 6x 8x 10x 12x Enterprise Value 331.8M Kr 2.47B Kr

Shares Outstanding 32.66M 37.51M

EV / NTM Revenue 0.48x 1.22x

EV / NTM EBITDA 4.81x 10.25x

PE 11.06x 20.24x

Statistic FY 2015 FY 2019

Revenue 628.4M 1.84B

EBITDA 63.5M 149.5M

479 Hexatronic Business Model

Primary Product Context HTRO offers complete system solutions for Sales by Geography Fiber Optic HTRO is a fiber network fiber networks using Communication system company. their own proprietary Solutions products, and products • HTRO helps customers from other companies. develop fiber network systems.

• Provides all products necessary to develop fiber system, includes HTRO Rest Sweden NA EU proprietary products and products from partner companies. HTRO is a high capital intensity business.

• HTRO provides necessary training and services for customers to maintain network.

HTRO Business Model

480 Low Threat Medium Threat Hexatronics Competitive Analysis High Threat

Competitive What’s Changed Risks Competitive Landscape Barriers To Entry Advantages in the Industry

Market Multiple Structure structures • Reputation: Global Fiber Optics choice of Market Size 3.1B1 Industry • Regulatory burdens. products / Industry working > 10%1 • Fast, reliable Companies in this industry Growth methods makes • Long-term contracts internet has only develop and sell products and major impact and relationships • Technological become more services for the creation and • Different segments of the and customers between existing change / important with maintenance of fiber optic industry have different can trust HTRO players and obsolescence. rise of streaming, systems. competitive dynamics: to make these customers. gaming, etc. • Some products segments decisions given are oligopolies, others reputation. • Regulatory change. are monopolistic • High capital intensity • Relationships • 5G adoption has competition, and some business. begun and is are commodities. with suppliers of products. anticipated to • HTRO is a large European grow quickly. player and has strong • Technologically • HTRO offers a positioning in its markets. advanced industry. Turnkey fiber • HTRO seeks to acquire optic network companies with market solution. leading positions.

1. Estimated using growth rate; https://www.reportlinker.com/p05798563/Global-Fiber-Optics-Industry.html?utm_source=GNW 481 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • HTRO has maintained higher gross • Skepticism about business changes: HTRO was a distributor then margins as a system provider: gross became a supplier and now aims to be a complete system provider. margins now ≈45%, up from ≈30%. • HTRO has won major contracts: • Skepticism over stated plan to grow revenue at 20% per year and • 500M City Fibre contract in UK and use acquisitions to do it. System provider • High targets and willingness to make acquisitions might change worked 40M German market contract in entice management to make poor deals. FY2019. • HTRO has consistently expanded its • HTRO will not have much success internationally. services: training and education acquisitions have expanded HTRO training offerings. EPS Results Return Breakdown: • Various acquisitions made to expand into new markets and improve service offerings. • Consistent acquisitions but management has Strong acquisitions remained disciplined (i.e. no acquisitions made outside of core business / at crazy valuations). • Acquisitions have been accretive: EPS grown from 1.21 in FY2015 to 1.80 in FY2019. • Acquisitions have enabled HTRO to grow outside of Sweden. • BlueDiamond acquisition successful and International growth company is expanding American operations. • Non-Swedish revenue grown at 54% CAGR since FY2015 from 226M to 1.3B

482 Back to List Hexatronic Takeaways HTRO is a Strong Business- 4/5 Future Outlook • HTRO operates in a specialized industry with high Can HTRO Sustain its Market Position? capital requirements, regulatory burdens, and • HTRO has a moat due to the specialized nature of the long-term contracts. industry, capital requirements, and long-term contracts. HTRO has a moat • HTRO has expanded their moat by becoming a • HTRO is a market leader across Europe, especially in complete system provider – making their services home Swedish market. paramount to the establishment of their customer’s • HTRO is pivotal to customers fiber system development fiber networks. as they are involved in the entire process. • HTRO has expanded into new territories and their Can HTRO continue to grow faster than the industry? service offerings through strategic acquisitions. • HTRO has the potential to grow faster than the industry if • Acquisitions have ultimately been accretive, as it can continue to win major contracts. evidenced by EPS growth. HTRO has grown • Home market of Sweden will see least growth due to effectively • HTRO has won major contracts, such as the 500M City already high fiber to the home penetration – growth will Fibre Contract in the UK. come from international markets. • HTRO’s decentralized management model has enabled • Formidable competitors exist in all markets so it is acquired companies to continue to thrive and capitalize difficult to know who will win market share. on potential synergies while avoiding corporate bloat. Is HTRO poised to continue to outperform the market? • Increasing need for high-speed internet, rise of 5G, and governments seeing fiber networks as a national • If HTRO can continue to make accretive acquisitions and competitive advantage will drive future growth. expand successfully into new markets – it will HTRO has a runway for • Home fiber network penetration is high in Sweden but outperform. growth remains low in other countries. • But, this is harder and harder as HTRO grows. • Germany has low penetration and plans to invest • HTRO’s 20x PE multiple is in line with the market which 14-16B to develop fiber networks by 2025. HTRO means growth expectations are roughly in line with the will seek to win this business. market.

483 Elizabeth DeSouza 419% 5 Year TSR NASDAQGS:ARWR Rank: 78/104

484 Arrowhead Pharmaceuticals Inc. Overview

Arrowhead Pharmaceuticals, Inc., headquartered in Pasadena, NTM EV/Revenue Multiple California, develops medicines for the treatment of intractable diseases by silencing the genes that cause them. 2020 32.5x

Statistic 6/8/15 6/8/20 2016 287.1x Stock Price $6.52 $35.74 0.0x 100.0x 200.0x 300.0x 400.0x Market Cap $387.93M $3.64B

Enterprise Value $272.23M $3.34B

Shares Outstanding 59.50M 101.77M

EV / NTM Revenue N/A 32.54x

EV / NTM EBITDA N/A N/A NTM P/E N/A N/A Z

Statistic FY 2015 FY 2019

Revenue $400K $168.8M

EBITDA -$81.6M $65.6M

485 Arrowhead Pharmaceuticals Inc. Business Model

Primary Products Context ARWR’s medicine pipeline shown below1

• RNA interference (RNAi) ARWR develops drugs for therapies that silence diseases with a genetic basis the expression of disease associated genes • ARWR has a portfolio of Drug • Therapies that reduce RNAi chemistries and modes Therapies the production of of delivery specific proteins • ARWR therapies trigger the • Liver Disease, Cystic RNA interference mechanism Fibrosis, Hepatitis B and to induce knockdown of other medicines target genes • License agreement with Janssen Pharmaceuticals to develop and commercialize ARO-HBV • Collaboration with Janssen to develop therapy for chronic Hepatitis B infection • Engaged in a license agreement with Amgen Inc. ARWR is a capital intensive business.

1ARWR is still in the development phase of its medicines and has yet to make sales 486 Low Threat Medium Threat Arrowhead Pharmaceuticals Inc. Competitive Analysis High Threat

Competitive What’s Changed in the Risks Barriers To Entry Advantages Industry Biotechnology • The industry is reliant on investment to fund R&D, The players in this industry engage in • Intellectual property is but investment has the research, development, key in this industry and • There is no assurance • declined due to Covid-19 manufacturing and/or marketing of is often patented Patent protected that ARWR products will products based on genetic analysis treatments related economic • Government regulations obtain regulatory and genetic engineering. (approximately 383 uncertainty are strict, and drugs approval issued patents) • Major industry players require lengthy and • ARWR faces potential • taking part in M&A costly clinical trials Exclusivity benefits from product liability products with orphan activities Market before reaching market exposure Oligopoly drug designation • Patient Protection and Structure • Long start-up periods • ARWR has a history of • Affordable Care Act with high fixed costs Products in pipeline net losses and expects to 1 should benefit players in Market Size $1.12T and little profit target tissue types other continue to incur losses than liver, which is a this industry with tax Industry • Competitive landscape and may not achieve or > 10%1 significant advancement breaks and simplified Growth consists of hundreds of maintain profitability in RNAi regulatory landscape small companies and a • Healthcare system under few industry giants increasing pressure to reduce costs

1 https://eresearch.fidelity.com/eresearch/markets_sectors/sectors/industries.jhtml?tab=learn&industry=352010 487 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • ARWR has a short development history with RNA • Signed a collaboration deal with interference and there is a limited amount of information Janssen (Johnson & Johnson about them upon which to evaluate their business subsidiary) to develop a treatment for • ARWR was an immature company with products in the chronic Hepatitis B pipeline that were far from approval • Janssen deal resulted in $250M in upfront payments and equity • 6 drug candidates in the pipeline, with 3 coming from Collaboration investments for ARWR the acquisition of Novartis (3 of these candidates would Deals • Amgen Inc. acquired an exclusive be discontinued in 2016) license from ARWR in 2016 to • No sales or anywhere near making sales develop and commercialize ARO-LPA for $35M in upfront payments and Return Breakdown: Consensus vs Results $21.5 M in equity investment in Amgen Not meaningful due to revenue history. • Acquired RNAi research and development portfolio of Novartis in 2015 • Novartis had been working in the Increased field for over a decade and had Capabilities proprietary developments • This acquisition allowed ARWR access to patent families and candidates that were not fully realized in 2015

488 Back to List Arrowhead Pharmaceuticals Inc. Takeaways

ARWR is an Okay Business – 3.5/5 Future Outlook

• ARWR success is dependent on the success of Can ARWR sustain its advantages? their product pipeline, which depends on • ARWR currently controls 383 patents regulatory approval and clinical trials • ARWR competition has more resources to • ARWR has a pipeline for RNAi therapies, but devote to R&D, and some have successfully Dependent on it has yet to have a product pass phase 3 developed RNAi medicines clinical testing Product Pipeline Can ARWR continue to grow? • By the time ARWR gets a therapy down the • Successful commercialization of ARWR pipeline, competitors could develop therapies would allow ARWR to grow something better that makes the ARWR therapy obsolete in a few years • ARWR could leverage knowledge (such as modes of delivery) from one successful drug to make more successful drugs Is ARWR poised to continue to outperform? • Partnerships with other companies, such as • Newer tools under development that offer Janssen, increase ARWR’s likelihood for success curative potential rather than silencing disease- by increasing their resources and capabilities driving genes could limit long-term market Opportunity for • ARO-ATT, a liver disease therapy, and JNJ-3989, opportunities Success the Hepatitis B therapy from the Janssen deal, • Outperformance is very dependent on whether are in later stages of clinical trials, and if ARWR can commercialize any of its products in approved, could cause ARWR share pricing to the pipeline soar • ARO-ATT and JNJ-3989 will be main drivers of stock price in short term

489 Owen Stimpson 416% 5 Year TSR XTRA:ILM1 Rank: 79/104

490 Medios AG Overview

Medios AG, together with its subsidiaries, engages in the EV/LTM Revenue wholesale of specialty pharmaceutical drugs in Germany. It operates through Pharmaceutical Supply and Patient-Specific 2020 Therapies segments.

Statistic 12/05/20161 08/08/2020 2015 Stock Price €7.80 €39.50

Market Cap €87.73M €635.36M 0.85x 0.90x 0.95x 1.00x 1.05x 1.10x 1.15x Enterprise Value €86.52M €625.73M

Shares Outstanding 11.25M 16.08M

EV / LTM Revenue 0.94x 1.11x

EV / LTM EBITDA NA 39.09x

PE NA 66.07x

Statistic FY 2017 FY 2019

Revenue 254.1M 517.4M

EBITDA 7.3M 15.6M

1. Date Medios AG became publicly listed 491 Medios AG Business Model

Primary Product Context Sales by Division Wholesale trade in ILM1 ensures specialty Pharmaceutical specialty pharmaceutical 10% pharmacy partners get the 1% Supply medications that are products they need, and at the available in Germany. best price.

• ILM1 pools the buying power of specialty pharmacies to 89% Pharmaceutical order in bulk from Supply Patient-Specific Manufacturing Other Patient-Specific production of patient- pharmaceutical Manufacturing specific preparations on manufacturers. Sales by Geography behalf of pharmacies. • ILM1 manufactures patient- specific treatments for specialty pharmacies, if Implementation of required. analysis methods for the Drug Safety identification of • ILM1 seeks to license its (founded in counterfeit medicinal proprietary drug testing 2019) Germany Sample GAWproducts, miniatures among other capabilities. things. ILM1 has medium capital intensity due to the inventory and capital required for patient-specific manufacturing segment.

492 Low Threat Medium Threat Medios AG Competitive Analysis High Threat

Competitive What’s Changed in the Risks German Competitive Landscape Barriers To Entry Advantages Industry Specialty Pharmaceutical Market Monopolistic • Network effects: Industry Structure Competition • Many different • More pharmacies Market Size €13.5B1 regulations that • Demand has increased: Industry consists of increases buying must be adhered • New treatments manufacturers, Industry power. HSD1 to. were created. wholesalers, and Growth • More • GMP • One major • Aging pharmacies which pharmaceutical make and sell • The manufacturing portion manufacturing error can demographics. manufacturers specialty of the industry is highly certification tarnish increases • Chronic illness pharmaceuticals. fragmented with players needed to be reputation. supplying power. more common. Specialty specializing in specific drugs. make drugs. • • A new law was passed in pharmaceuticals are a • Scale required ILM1 quality testing is • Regulations • There are roughly 1000 May 2017 prevents designation of to attain strong far superior to existing are subject to specialty pharmacies in insurance companies pharmaceuticals that buying power tech: ILM1 can test in change. Germany. from covering only are classified as high- from one minute vs weeks for cost, high complexity existing technology. certain drugs. This made • ILM1 serves as a pharmaceutical ILM1’s service more and/or high touch. • Reputation as a key consolidator of buying and manufacturers. useful given the range of player in the industry selling of specialty • Need highly drugs offered. and strong track-record pharmaceuticals drugs in trained staff. Germany. of safety.

1. https://medios.ag/en/wp-content/uploads/sites/3/2020/06/200612-company-presentation.pdf 493 What Investors Missed

The Actual Story of the Last Five Years The Bear Thesis Five Years Ago: • ILM1 is the largest player in the wholesale • The specialty pharmaceutical niche makes up only 1% of the total specialty pharmaceutical segment, which pharmaceutical market; why invest in a company that only seeks to has entrenched its moat. address a small portion of the total industry? • Benefited from network effects that • ILM1 plans to continue to raise equity to fund growth – but it may impede competitors. just dilute exiting shareholders. • The niche is getting bigger: ILM1 dominates the niche • New products continuously being • Limited ways for ILM1 for to differentiate itself from competitors. improved which has led to the global specialty pharmaceutical industry • Business model is simple but there is no clear runway for long-term doubling in size from 2013-2019 to growth. $336B. Return Breakdown: Consensus vs Results • ≈10% industry growth anticipated in Germany. • While multiple equity raises did increase Dilution funded the share count, the proceeds were used to fund growth the ultimately accretive growth plan. • Developed vastly superior quality testing. ILM1 did • Developed proprietary digital software to differentiate improve sourcing and logistics. • Expanded patient-specific drug manufacturing Patient-specific capabilities and leveraged network of drugs grew the top pharmacies to increase sales: and bottom line • Segment grew at 48% CAGR from 2016 to 2019 to €57M.

494 Back to List Medios AG Takeaways ILM1 is a High Quality Business- 4.5/5 Future Outlook • ILM1 is the dominant player in the specialty Can ILM1 Sustain its Market Position? ILM1 has a wide moat pharmaceutical supply industry in Germany. • ILM1’s moat is strong. • Network effects has entrenched ILM1’s moat. • The niche nature of the industry, required scale, and • ILM1 has continuously grown its patient-specific regulations impede new entrants. manufacturing of drugs. • ILM1 has invested in digital infrastructure since • Leverages pharmacy network to grow sales. inception. ILM1 has capitalized on its niche. • Capitalizes on trends towards increasingly specific drugs. Can ILM1 continue to grow faster than the industry? • Created digital back-end that optimizes operations and • There will likely be few formidable competitors to ILM1 given has invested in proprietary quality testing. their moat. • Future growth opportunities in patient-specific drugs and • The industry continues to grow due to demographics, licensing of testing technology provide clear path for growth. pervasiveness of chronic disease, and creation of new drugs. Cyclicality is also extremely minimal. Is ILM1 poised to continue to outperform the market? • ILM1’s scale makes them the clear choice for the • The specialty pharmaceutical industry anticipated to grow at remaining 800 specialty pharmacies in Germany. nearly 10% annually and already doubled from 2013 to 2019. ILM1 has a clear pathway • Also will likely be more specialty drugs to sell as • ILM1 has clear pathways for growth in patient-specific drugs for growth. new ones are invented. and testing technology licensing. • ILM1 can continue to grow its capacity to create new • ILM1 will likely consolidate industry further and sign up more patient-specific drugs. pharmacies – which will strengthen its moat, buying power, • ILM1 plans to sell its proprietary testing system that can and revenue with little incremental expenses. test the authenticity of drugs in minutes rather than • ILM1’s multiple is very high – 50x earnings – and the last time weeks. ILM1 traded at a high multiple, the stock cratered.

495 Owen Stimpson 415% 5 Year TSR NASDAQGS:AMED Rank: 80/104

496 Amedisys Overview

Amedisys, Inc. is a healthcare services company and is a provider NTM EV/EBITDA Multiple of home health, hospice, and personal care services. The company owns and operates approximately 524 centers in 39 states and 2020 the District of Columbia.

Statistic 06/08/2015 06/08/2020 2015 Stock Price $37.4 $174.08

Market Cap 1.26B 5.64B 0x 5x 10x 15x 20x 25x Enterprise Value 1.36B 5.94B

Shares Outstanding 33.67M 32.38M

EV / NTM Revenue 1.10x 2.86x

EV / NTM EBITDA 15.53x 23.77x PE 29.40x 36.42x Z Statistic FY 2015 FY 2019

Revenue 1.27B 1.66B

EBITDA 88.1M 197.4M

497 Amedisys Business Model

Primary Product Context Sales by Division Home healthcare for those 4% recovering from surgery or AMED helps people live their lives, Home illness or live with chronic in the best way possible, at home. Health diseases, and to help 32% prevent avoidable hospital • AMED has different services to 64% readmissions. help people live at home: • Home Health is for people who are sick. Home Health Hopsice Personal Care • Hospice is for people who are nearing the end of their End of life care for people Sales by Geography Hospice with less than six-months life. to live. • Personal care is for people that are incapable of simple tasks.

• AMED helps people live at home Provider of assistance with for as long as possible, and avoid 100% Personal essential acts of living, such hospitals and care homes. Care as companionship and USA cooking. AMED is a medium capital intensity business.

498 Low Threat Medium Threat Amedisys Competitive Analysis High Threat

Competitive What’s Changed Risks Key Facts Barriers To Entry Advantages in the Industry

• Barriers to entry are • AMED could lose • Reimbursement Home Health Market Pure low: its quality edge. Structure Competition now based on • Low setup • Scale enables • Reimbursement quality, not just 2 Skilled nursing services in the home, Market Size $28.5B costs. operational rates could be Fee-for-Service. combined with a range of other home Industry • Little efficiencies. cut. • Positive LSD2 services such as personal care Growth differentiation. • AMED has • New entrants for AMED services, homemaker and companion • Regulatory burdens strong quality chip away at given their services. • AMED is a major player at and complexity of scores. market share in strong 1.8% market share, but the billings are the key different quality industry is very fragmented. barriers. markets. scores • Scale enables • AMED could lose • Market Pure operational Reimbursement Hospice its quality edge. Structure Competition • Barriers to entry are efficiencies. now based on low for same reasons • Reimbursement quality, not just 1 • AMED has Market Size $218.8B above. rates could be Fee-for-Service. Industry that provides programs that strong quality Industry • Regulatory burdens cut. • Positive offer symptom relief and pain HSD1 scores. Growth and complexity of • New entrants for AMED management for patients with life- • Relationships billings are the key chip away at given their terminating illnesses. with potential • AMED is a major player at barriers. market share in strong referral 1.97% market share, but the different quality 3 services (i.e. industry is very fragmented. markets. scores doctors).

1. https://www.grandviewresearch.com/press-release/global-home-healthcare-market 2. IBIS World 3. https://homehealthcarenews.com/2020/01/amedisys-closes-hospice-acquisition-right-at-home-to-move- 499 headquarters/#:~:text=With%20just%201.97%25%20of%20U.S.,and%20HCR%20ManorCare%20were%20larger. What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • CMS reimbursement rates were increased - Revenue will continue to be hampered by reimbursements cuts by 2.2%. Government made by the CMS, and Medicaid customers might lose coverage if • Transition from fee-for-service to value the ACA is repealed. concerns didn’t pan based reimbursement a strong tailwind for - The company does not have a strong track record of cutting costs as out – instead they AMED which has strong CMS quality cost per visit was rising. This squeezed margins further. helped AMED scores. - The 2015 failure of their proprietary AMS3 operating system to cut costs amplified this concern. • The ACA was not repealed. - AMED was fined 150 million by the federal government over • The fine was a one-time cost, the AMS3 allegations that they violated the False Claims Act by submitting system was replaced by better system that false home healthcare billings to the Medicare program. Not exactly cut costs, and AMED made other operational a positive sign for investors. Costs did come down improvements. • EBITDA margins have, as a result, risen Return Breakdown: Consensus vs Results steadily.

• AMED has made 9 acquisitions since 2015. • Fragmentation in the Home Care and Hospice industries have enabled AMED – one of the Market largest players – to pursue accretive fragmentation has acquisitions and create further value through given AMED many operational synergies. acquisition targets • Acquisitions have also been a way for the company to reinvest its healthy cash flow from operations.

500 Back to List Amedisys Takeaways AMED is a Solid Business – 3.5/5 Future Outlook • Low start-up costs and minimal service Can Amedisys Sustain its Market Position? The industry has two key differentiation have created low barriers to entry. • AMED’s scale will continue to provide them with an issues: barriers to entry • Reimbursement rates are always subject to change by edge over their competitors – but it is ultimately a and susception to the CMS. weak advantage. political risk • Runway for industry growth due to demographics, • With the CMS’s newfound emphasis on quality, other but it is not clear who will capture the growth. competitors may start to improve quality and erode that advantage. • AMED captured market share through acquisitions. AMED took advantage of • AMED made large gains in 2018 while three out of its Can Amedisys continue to grow faster than the industry? the industry’s growth and • AMED’s scale will enable them to continue to grow faster size five major competitors were boggled down by major acquisition integration. than the industry via tuck-in acquisitions of smaller players. • AMED exploited the low barriers and industry • Organic growth without reinvestment will likely not fragmentation to entry by acquiring many smaller exceed the industry because their quality advantage competitors. will shrink and major competitors will not be bogged • Reimbursement rates were changed to reflect quality, an down integrating major acquisitions. advantage of AMED relative to the industry, which Is Amedisys poised to continue to outperform the market? Industry issues have not helped them. • AMED trades at the highest NTM EV/EBITDA multiple of its been a problem – yet. • AMED is a solid business in an unattractive industry. peer group and in its history. AMED will likely suffer • AMED has scale and quality advantages. multiple contraction due to the points mentioned above. • But low barriers to entry will keep competition • There is a chance political pressures push reimbursement high, and political risk can hurt their topline at rates down. any moment which means AMED is not a high- • Competitors have begun to consolidate and there will be quality business. more competition for accretive M&A.

501 Owen Stimpson

411% 5 Year TSR AIM:IGR Rank: 81/104

502 IG Design Group Overview

IG Design Group plc designs, manufactures, and distributes EV / NTM EBITDA celebrations, stationery and creative play, gifting, and not for sale consumable products. Its celebrations products include greetings 2019 cards, Christmas crackers, gift bags, gift wraps, etc.

Statistic 06/08/2015 06/08/2020 2015 Stock Price £1.27 £5.86

Market Cap £75.56 £564.53M 0x 5x 10x 15x Enterprise Value £165.86M £695.41M

Shares Outstanding 57.92M 96.34M

EV / NTM Revenue 0.71x 1.41x

EV / NTM EBITDA 10.00x 13.85x

PE 10.85x 19.01x

Statistic FY 2015 FY 2019

Revenue 229.0M 484.4M

EBITDA 15.6M 35.0M

503 IG Design Group Business Model

Primary Product Context Sales by Segment IGR designs, manufactures and IGR designs, manufactures, 9% 3% distributes gift packaging and and distributes a variety of greetings, stationery basic, cheap goods. 11% Consumer and creative play products, Products seasonal décor, design-led • IGR aims to be a one-stop 77% giftware, and ‘not-for-resale’ shop for its customer across consumables. all its product categories: ccelebrations, stationery and Celebrations Stationary Gifting NFR creative play, gifting and Sales by Geography ‘Not-for-resale’ consumables.1 9% • IGR designs and 28% manufactures 30% of products and the remainder are sourced. 49% 14%

• IGR focuses on major customers (“winners”) UK EU USA Australia • Top 10 customers 48% Sample IGR Products of revenue; Walmart 20% of revenue. IGR is a medium capital intensity busines.

1. Not for sale consumables combines our well-established Polaris business with paper twist handle bags 504 Low Threat Medium Threat IG Design Group Competitive Analysis High Threat

Competitive What’s Changed in Risks Competitive Landscape Barriers To Entry Advantages the Industry

Oligopoly / • Market Customer Toy and Craft Monopolistic Structure concentration: Wholesaling Competition • Need relationships 48% sales from Market Market Size ≈29.4B1 with various suppliers top 10 to match product customers. Industry • Wide product LSD2 range. • E-commerce has This industry consists of Growth range which continued to grow. wholesalers of toys and craft makes IGR “one • “One stop shop” supplies, including fireworks, • Not a perfect industry • Capital intensive to stop shop for matters less for games, playing cards and overlap since IGR operates manufacturer / design customers.” ecommerce • Relationship with hobby goods. in multiple industries not new products. players who can Walmart has grown included such as stationaries rely on drop to 20% of revenue • Operational and not-for-resale shipping. following acquisition • Not very difficult to synergies with consumables. of Impact. create new, cheap scale. • IGR acquired a former major party items like gift • Seasonal competitor: Impact. wrap (essentially business (focus • Biggest threat to IGR is commodities too). on Christmas customers working directly which is 60% of with suppliers. sales).

1. Ibis World. 505 What Investors Missed

The Actual Story of the Last Five Years The Bear Thesis Four Years Ago: • Enabled IGR to market itself as “one-stop Brand change shop” for retailers and expand into worked • Brand change will not have a material impact. adjacent spaces. • Maintained, and grew, key relationship with • IGR sells basic goods, many of which are essentially commodities, Walmart which now accounts for 20% of and will not be able to guard their market share. revenue. • Especially given customer concentration. • Acquisition of Impact Innovations • IGR has not shown that they are capable of achieving topline IGR protected its strengthened relationship as they now growth: growth essentially flat since 2011. positioning supply seasonal décor and gift wrap. • IGR’s focus on winners strategy has increased revenue customer concentration of top 10 customers to nearly 50% - IGR has grown its Return Breakdown: Consensus vs Results relationship and position with top retailers. • Grew revenue by expanding production selection. • I.E. giftware sales increased from 31M in FY2017 to ≈50% in FY2019. • IGR doubled down on major retailers: IGR grew revenue • Top 10 customers nearly 50% of sales. • 2019 organic growth from top 10 customers 19%. • American major retailers drove USA revenue from 58M in FY2015 to 282.4M in FY0219.

506 Back to List IG Design Group Takeaways IGR is a Good Business- 3.5/5 Future Outlook • IGR’s products will always be relatively easy to Can IGR Sustain its Market Position? replicate but IGR has built a moat through scale. • IGR has demonstrated that they can maintain – and build • Since IGR offers so many products to its customers, upon – key relationships. IGR built a moat switching is difficult – they would need to find a new • While its products are replicable, its scale and selection is supplier for many different items. not easily copied. • Invested in manufacturing and sourcing capabilities to maintain this advantage. Can IGR continue to grow faster than the industry? • The “focus on winners” strategy enabled IGR to grow its relationships with key, major retailers who now • IGR can likely continue to grow its product selection account for ≈50% of sales (Walmart alone ≈20%). organically and via acquisitions. • Stores may start to simplify their product selection which • Grew revenue from 229M in FY2015 to 484.4M could mute sales (i.e. following trends of Aldi and other stores in FY2019. with less SKUs). IGR executed a simple, but • Grew product categories: “Not for Resale” Consumables • With such large scale, it is difficult to continue to grow fast. strong, strategy 8.5M FY2017 revenue to 19.9M in FY2019; creative play 5M to 16M in same period. Is IGR poised to continue to outperform the market? • Also entrenched relationship with customers as • While IGR poses customer concentration as an advantage, risk they supply more products. of losing major customer looms and would destroy returns. • Expanded seasonal diversity so less reliant on • Retail is evolving and IGR may not be poised to continue to Christmas. perform: stores trending towards less SKUs, ecommerce growing. • IGR aims to continue to expand its product line • At 10 NTM EBITDA IGR could continue to outperform given IGR path forward is (organically and inorganically), grow major customer modest valuation and simple strategy that has worked well so simialr relationships, and attain operational efficiencies through far. scale.

507 Owen Stimpson 407% 5 Year TSR AIM:IDEA Rank: 82/104

508 Ideagen Overview

IDEA provides information management, safety, risk, and EV / NTM EBITDA compliance software solutions that allow organizations to achieve operational excellence, regulatory compliance, and 2019 reduce risk.

Statistic 06/08/2015 06/08/2020 2015 Stock Price £0.38 £1.88

Market Cap £68.01M £425.39M 0x 5x 10x 15x 20x 25x Enterprise Value £65.21M £446.61M

Shares Outstanding 177.81M 226.27M

EV / NTM Revenue 3.28x 7.57x

EV / NTM EBITDA 11.39x 22.54x

PE 15.00x 32.58x

Statistic FY 2015 FY 2019

Revenue 14.4M 53.0M

EBITDA 2.2M 9.2M

509 Ideagen Business Model

Primary Product Context Sales by Segment IT solutions and IDEA makes IT software for products for companies in regulated 1% Management Governance, Risk and industries. 30% Software Compliance (GRC) for • IDEA’s software is for 21% companies in highly companies that must be regulated industries. extra cognisant of regulations and security 38% given their industry. SaaS software Support • Most customers in Software Licenses Professional Services industries listed on the Sales by Geography left. • IT products for Governance, 1% Risk and Compliance (GRC) 38% solutions. 12% • Sold as SaaS products with maintenance and support services available. 38% • Help customers meet UK NA EU Rest regulatory and IDEA’s customers are in mainly in the Automotive, Aerospace, compliance standards. IDEA is a low/medium capital intensity business. Defense, Life Sciences, and Finance and Banking Industries.

510 Low Threat Medium Threat Ideagen Competitive Analysis High Threat

Competitive What’s Changed Risks Competitive Landscape Barriers To Entry Advantages in the Industry

GRC (Governance, Risk, Market Monopolistic Compliance) software Structure Competition • Switching costs: small expense for customers industry Market Size 1.62B1 but their operations • Increasing amount Participants develop and sell Industry 1 are embedded with • IDEA’s product is • Technological > 10% of international software than enables Growth the software. Industry standard: change. companies to achieve their standards that • Idea retention • High governance objectives, manage • IDEA operates in a subset of the customers must rate > 95%. penetration • Security breach. risk, and act with integrity. industry: focuses on companies meet. I.E.: in target in highly regulated industries • IATA/e- industries. with heightened GRC • Regulations that • Major regulation IOSA for requirements. software needs to changes that aviation. address can be • Reputation and require new • ISO 45001 complex and are • IDEA has strong market security, especially investment for for health position: subject to change. given sensitivity of software and safety. • 7/10 top UK accounting GRC for customers. updates. • Etc. firms. • Low-start up capital • 80% of NHS Trusts. required to develop • Top 7 global aerospace competing product. and defense companies.

1. https://grc2020.com/wp-content/uploads/2019/02/2019-02-2019-GRC-Market-Analysis.pdf 511 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • IDEA’s TAM grew as regulations became • IDEA has already penetrated its core markets: 7 of the top 10 UK more stringent and companies began to accounting firms, over 80% of NHS Trusts and the top 7 global seek an enterprise wide approach to Aerospace and Defence companies. handle GRC. • TAM grew at roughly 13% CAGR. • Acquisitions are not the best use of capital. • Skepticism over 17.5M Gael acquisition. • IDEA expanded customers from Customer base grew 1500 in FY2015 to 4700 in FY2019. • Technology will likely evolve fast – uncertainty whether an old • Acquisitions accelerated growth as company like IDEA can keep up. company used cash flow to buy 11 other companies since 2015. • Maintained existing recurring revenue EPS Results Return Breakdown: customer base: contract renewal rate of 95%.

• Acquisitions successfully integrated and enabled IDEA to scale quickly and consolidate a fragmented industry. Strong acquisition • EPS grown from 0.35 in FY2015 to 0.48 in history FY2019. • Acquisitions accelerated growth but IDEA still grew organically >8% each year. • IDEA has leading technology and improved Leading technology technology by integrating acquisitions. • Set up dedicated research team in FY2018.

512 Back to List Ideagen Takeaways IDEA is a Strong Business- 4/5 Future Outlook Can IDEA Sustain its Market Position? • While barriers to entry are not sky-high, IDEA has • IDEA has an extremely high 95% retention rate. developed the widest moat it can by ensuring it has • IDEA developed the the best product and maintaining a strong reputation. IDEA continually invests in improving its product. deepest moat it could • • Used acquisitions to scale quickly and consolidate a Healthy cash flow can enable future investments and consolidated fragmented industry that is growing. to maintain strong product either through R&D or acquisitions. • Enabling IDEA to capture the industry growth.

• IDEA grew its customer base by 313% from FY2015 to Can IDEA continue to grow faster than the industry? FY2019. • IDEA can continue to pursue acquisitions that will enable • IDEA seized on market growth as companies begin to rapid growth. IDEA captured industry seek enterprise wide solutions for GRC issues and as • IDEA is a dominant player and can likely capture growth and maintained regulations become more stringent. disproportionally high amount of industry growth. existing customer base • IDEA maintained its existing customer base with >95% retention rate. Is IDEA poised to continue to outperform the market? • 67% of revenue recurring as well. • IDEA is a strong player in an industry that is growing. • IDEA’s earnings visibility is strong given their high • Robust and increasing cash flow will enable IDEA to customer retention and recurring revenue. continue to make acquisitions and scale. • At 32x forward earnings, IDEA trades at a premium but, IDEA has a runway for • Market trends that grew TAM likely to continue. given their position this is warranted. growth • IDEA is one of the largest players and is seen as the • Strong track record of consistently meeting targets safest option for companies seeking a GRC solution. each year. • “Nobody ever got fired for hiring IBM. “

513 Max Schieferdecker 405% 5 Year TSR OM:SECT B Rank: 83/104

514 Sectra Overview

Sectra is a healthcare IT company based in Linkӧping, Sweden, NTM EV/EBITDA Multiple that manages medical images and patient information related to diagnostic imaging. 2020 44.5x

Statistic 6/8/15 6/8/20 2015 17.0x Stock Price 109.75 SEK 496.50 SEK 0.0x 10.0x 20.0x 30.0x 40.0x 50.0x Market Cap 4.12B SEK 19.12B SEK

Enterprise Value 3.86B SEK 18.86B SEK

Shares Outstanding 37.54M 38.51M

EV / NTM Revenue 3.59x 10.14x

EV / NTM EBITDA 17.02x 44.47x NTM P/E 29.74x 74.89x Z

Statistic CY 2015 CY 2019

Revenue 1.06B 1.67B

EBITDA 189.06M 296.45M

515 Sectra Business Model

Primary Products Context Sales by Category • IT systems for 3.2% 0.1% SECT B helps hospitals improve managing, archiving, 11.3% their operational efficiencies Imaging IT and presenting all Solutions types of medical • SECT B offers one secure images and patient Enterprise Imaging Platform 85.4% information that stores hospitals’ images and information in the cloud Imaging IT Solutions Secure Communications Business Innovation Other • Products and services • This software can be for secure voice and used for radiology, Sales by Geography data communications mammograms, Secure 6.2% and the protection of pathology, cardiology, Communications society’s most and any other –ology 20.1% 27.8% sensitive IT • Operates as a SaaS company infrastructure that takes care of the storage 9.0% and the upgrades remotely 13.9% 23.1% • IT systems for for the hospitals planning and • 1800 hospitals around the U.S. Sweden UK Netherlands Rest of Europe Rest of the World Business monitoring orthopedic world use SECT B’s platform, Innovation surgery and products which provides a solid base of SECT B is a capital light business due to the non- for medical education recurring revenue existent need for manufacturing and heavy R&D and research projects

516 Low Threat Medium Threat Sectra Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry Medical Imaging Software • High availability (stability The players in this industry uses the and usability) of Sectra latest technological advancements, PACS (picture archive and software, and latest equipment in communication system) order to generate graphical • High quality representations of the interior of a implementation and body for diagnosis, clinical analysis, • High switching costs as training • Not being able to maintain and medical intervention. most hospitals already • an adequate pace of • have integrated software Effective integrations with Electronic health innovation to continue to into their systems EMRs (electronic medical records have Market Perfect records) and other grow become more • High levels of Structure Competition systems • Political decisions could prevalent than technological expertise are 1 • impact healthcare before Market Size $3.44B needed to develop a Awarded best in KLAS reimbursement quality product award for 7 years in a row Industry HSD1 by healthcare research Growth firm KLAS • Hospitals take KLAS rankings into account when purchasing

1 https://www.mordorintelligence.com/industry-reports/medical-imaging-software-market-industry 517 What Investors Missed The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • In 2018, there were any multiyear contracts that were signed that contributed to a record-high number • Sectra was a solid company but there was no expectation of Retained Many of orders Customers for extremely high growth into the future • This was driven by an • This was likely because there was not a lot of attention the Long Run increased presence in many given to the stock by analysts and investors markets, including the US, Australia, Canada, and France • As a result of the coronavirus pandemic, many medical students got sent home, thus making many aspects of the Return Breakdown: Consensus vs Results curriculum difficult to deliver • As a result, demand for the Sectra Education Portal increased dramatically COVID-19 Caused a Surge • The SEP allows educational institutions to store their own lectures based on in Demand clinical cases as well as access cases from other connected institutions all remotely • Allows for students to still access high-quality medical school material and cases from their own homes

518 Back to List Sectra Takeaways SECT B is a Good Business – 4/5 Future Outlook

• Sectra provides a very high-quality products and are Can SECT B Sustain its Advantages? well known for their history of customer satisfaction • SECTB has a great reputation as a firm • However, there are a few larger players (Agfa, that puts its clients above all else, which INFINITT, GE Healthcare) in the industry that is praised by KLAS may make it harder to further penetrate the • This is especially evident in their market SECT B has a Moat extremely low churn rate • The products offer a lot of value to its customers that need to move to the cloud to increase their efficiency and thus reduce costs Can SECT B continue to grow? • The cloud model also makes it easier for • As SECTB continues to invest in the R&D of patients to access their medical images and new products and the SEP continues to do records well due to the changing education landscape, it will continue to grow • Stable base of recurring revenue and cash flows from existing customers allows for an increased focus on future growth Is SECT B poised to continue to outperform? • Customer churn rate is also very low so it is • Due to a large part of the past Strong Market highly unlikely that the business will go downhill outperformance coming from multiple Position anytime in the near future expansion and the relative penetration of • Growth opportunities include the consolidation of hospitals that it already has, SECTB is hospitals (leads to the need for a more centralized cloud unlikely to continue its outperformance into management system), expanding upstream to larger the future hospitals, and fully utilizing cloud deliveries

519 Owen Stimpson 400% 5 Year TSR OB:TOM Rank:84/104

520 TOMRA Systems Overview In Norwegian krone (kr) EV / NTM EBITDA TOMRA Systems ASA (TOMRA) is a creator of sensor-based solutions for resource productivity within the business streams of reverse vending, material recovery, recycling, mining and food. 2019

Statistic 06/08/2015 06/08/2020 2015 Stock Price 70.25 kr 339.4 kr

Market Cap 10.39B kr 50.10B kr 0x 5x 10x 15x 20x 25x 30x Enterprise Value 11.58B kr 53.06B kr

Shares Outstanding 147.88M 147.62M

EV / NTM Revenue 1.94x 5.18x

EV / NTM EBITDA 9.34x 25.90x

PE 15.22x 51.82x

Statistic FY 2015 FY 2019

Revenue 6.14B 9.35B

EBITDA 1.16B 1.64B

521 TOMRA Systems Business Model

Primary Product Context

Sensor based material Sales by Segment Sorting sorting solutions for TOM helps increase recycling Solutions food, mining, and rates through sorting and reverse recycling end markets. vending machines. 50% Reverse vending • RVMs enable easy return of 50% machines (RVM) for bottles for consumers in areas recycling bottles and with bottle deposit system. cans. Also includes • Deposit system shown to Collections Sorting Collecting material recovery: pick- improve bottle return rates Solutions up, transportation and significantly. Sales by Geography processing of empty • RVM’s sold directly or beverage containers on owned and operated by 20% behalf of beverage TOM in throughput model 36% producers/fillers (fee per returned bottle).

• Sorting products enable 45% customers in those end markets to sort materially more NA EU Rest efficiently and effectively (i.e. food color sorting). TOM is a high capital intensity business. TOM reverse vending machine in use.

522 Low Threat Medium Threat TOMRA Systems Competitive Analysis High Threat

Competitive What’s Changed in Risks Competitive Landscape Barriers To Entry Advantages the Industry

Reverse Vending Market • Lithuania and New Oligopoly • Dominant Structure South Wales moved Machine Industry market share / • New entrants Market Size ≈$14.91B1 to deposit system. • Development costs global reach. enter market / Participants design, develop, • England and Industry (TOM machines have • Enough capital target specific and sell reverse vending LSD1 Australia moving to Growth strong user to use geographies. machines for bottle and can deposit system. • Largest RVM company with experience, app, etc.). throughput • Deposit system collection. • UN called for all >80k units installed. Only one model. regulation nations to introduce other company with more than • Scale enables changes. deposit systems 10k (Diebold Nixdorf). cost advantages. (2017). • Over 70% market share.

Market Materials Sorting Oligopoly • Push to increase Structure Industry • Breadth of • Major product efficiency of • Technologically Market Size ≈$6.87B1 products (TOM failure. manufacturing advanced product Participants design, develop, products cover • Exposure to end process through data Industry 1 with high and sell products that enable > 10% range of sorting / robotics. Growth development cost. market customers in mining, food, and criteria). cyclicality (i.e. • Recycling supported • Technology protected recycling to sort their • 25% market share in food, 55- • Customer mining by legislative by patents (over 80 materials more efficiently and 60% in recycling, and 40-50% relationships. commodity changes: EU target effectively (industry only patents). in mining. • Reputation. prices). 70% packaged including those end markets). • Leading player in recycling / recycled by 2030. mining.

1. Based on 2020 investor presentation market share data. 523 What Investors Missed The Actual Story of the Last Five Years The Bear Thesis Five Years Ago: • TOM was not fined again for anti- competitive practices. • TOM will not be able to maintain its ≈65% market share in RVMs as TOM maintained • Market share maintained; now at ≈70%. the technology is replicable. dominance • TOM has been fined by the European commission for • Scale, experience, reputation, and product abusing its market leading position in the past. quality enabled TOM to capture share of new markets (i.e. Lithuania). • Minimal room for growth given saturation of core European • TOM expanded to new markets for core RVM markets. products: Lithuania, New South Wales, Australia. • Gross margin trended downwards since 2010. • And capitalized on cyclical replacement cycle of old machines (i.e. in Sweden and Germany). Return Breakdown: Consensus vs Results • Grew sorting solutions business from 1.89B in sales in FY2015 to 4.71B in FY2019. TOM grew • Continually improved products for mining, food, and recycling each year. • Compac acquisition in 2016 enabled TOM to become leader in food sorting. • Capitalized on industry trends to lower waste and improve efficiency (also undergirded by political changes like China’s ban on imported waste in 2018). • Gross margin improved from 57% in FY2015 Margins expanded to 61.2% in FY2019.

524 Back to List TOMRA Systems Takeaways TOM is a High Quality Business- 4.5/5 Future Outlook Can TOM Sustain its Market Position? • TOM is market leader in all its end markets. • TOM has sustained its market position in RVS for • TOM’s competitive advantages in RVS enabled them decades and is the clear leader. to continually capitalize on new markets, like New TOM has a moat • Scale enables TOM to maintain their industry leading South Wales and others. products. • Advanced technology and patents gives TOM a moat • Reputation, breadth of products are key advantages. in sorting solutions. Can TOM continue to grow faster than the industry? • TOM’s positioning will enable them to continue to capture • Industry trends towards minimizing waste and market share as the TAM expands. improve efficiency such as lowering food waste and • TOM’s leading technology and product/service offerings moving towards circular economy. can help them outcompete and capture existing share TOM capitalized on • Consistency captured new markets as they came for from competitors. industry trends core RVS segment. Is TOM poised to continue to outperform the market? • Made purchases of Compac and BBC to expand sorting • TOM has a dominant position in a growing market with business; continually improved products and strong secular tailwinds that show no sign of slowing. technology each year. • TOM has maintained market share and grown its business by consistently growing the adjacent sorting solutions • Political and social trends towards minimizing waste and segment. improving efficiency likely to continue. • At 25x NTM EBITDA TOM is not cheap but I think its • I.E. only 14% of plastic packaging recycled – lots multiple is fair given its history, dominant positioning, TOM has a runway for of room for growth. growth and room for growth. • Dominant market share and competitive advantages can • Multiple expansion may be unlikely but so is enable TOM to continue to capitalize on industry growth. contraction –EBITDA growth, however, is likely to • Order backlog of 1.7B as of Q2 2020. continue.

525 Owen Stimpson 394% 5 Year TSR XTRA:AOF Rank: 85/104

526 ATOSS Software Overview

ATOSS Software AG develops and sells workforce management EV / NTM EBITDA software. It also provides software maintenance, hardware, and consulting services related to the electronic systems that control 2019 personnel deployment.

Statistic 06/08/2015 06/08/2020 2015 Stock Price €19.82 €89

Market Cap €157.65M €707.83M 0x 5x 10x 15x 20x 25x 30x Enterprise Value €131.93M €694.66M

Shares Outstanding 7.95M 7.95M

EV / NTM Revenue 2.90x 8.43x

EV / NTM EBITDA 11.09x 27.16x

PE 19.95x 46.50x

Statistic FY 2015 FY 2019

Revenue 44.9M 71.4M

EBITDA 11.8M 20.4M

527 ATOSS Software Business Model

Primary Product Context Range of software AOF is a human resources IT solutions that covers Workforce provider. entire range of management workforce management software • AOF has a suite of software problems for companies Sales by Geography solutions that cover entire of all sizes. range of workforce management issues: scheduling, workforce 14% forecasting, time management, etc. 86% • Range of customers from small businesses, to major Germany Rest multinational companies, to governments. AOF is a medium capital intensity business • Consistent investment of because of their high R&D spend (which is ≈20% of revenue on R&D – capitalized in the ROCE graph). making AOF a leader in the space and a the forefront of Sample AOF customers HR IT innovation.

528 Low Threat Medium Threat ATOSS Software Competitive Analysis High Threat

Competitive What’s Changed Risks Competitive Landscape Barriers To Entry Advantages in the Industry

Market Oligopoly Structure HR and Payroll • Contracts / customer 3B1 Market Size ≈ relationships can be Software • Brand • Rise in automation Industry long-term. MSD1 reputation. has made human Growth Participants in this industry capital more develop, sell, and service HR • Many different important (less • Understanding • Data breach. and payroll software for features must be low skill jobs; the market. businesses and governments. • Largest players in the world are developed. more high skill • Losing major Workday, ADP, Oracle, SAP, • Customer jobs). customer. Ultimate. feedback also • AOF scale important to enables them to • AOF has strong foothold in • Evolving labour know what to have high R&D home German market and a regulations and develop. spend. partnership with SAP. collective • AOF has over 50 other bargaining distribution • Switching costs. agreements. partnerships.

1. 2020 Q2 presentation 529 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years

• Recurring revenue now 49M up from 28M • AOF has a small cloud business and still sells too many licenses. in FY2015. • Cloud business grown from 200k to 7.8M • Share price has already risen a lot – there is little room for future growth. AOF increased in sales, and has grown especially fast in • Growth will begin to stall now. recurring revenue the last few years (2M in FY 2017). • Licenses continue to be consistent revenue • Poor capital allocation - AOF does not need to spend so much on driver at 14.5M in annual revenue in R&D. FY2019.

• Strong growth continued: EPS Results Return Breakdown: • Revenue grew from 44.9M to 71.4M. • Healthy 26%> EBITDA margins Growth continued maintained. and margins • Customers quadrupled from 550 in FY2017 to maintained. 2,541 in FY0219. • Runway for future growth with increased recurring sales and growing TAM.

• Continual strong investments in R&D enabled Capital allocation AOF to become a market leader and worked consistently capture more market share. • Dividend increased each year.

530 Back to List ATOSS Software Takeaways AOF is a Strong Business- 4.5/5 Future Outlook Can AOF Sustain its Market Position? • 20% of revenue invested each year in technology • Not only maintained customer base but grew it developments has enabled AOF to maintain tis exponentially. position as the leading player in the market. AOF entrenched its moat • Low 1.8% churn rate. • Developed 5,580 new features into flagship through high R&D • Industry leading software. Efficiency suite product over 10 years. • Industry with high switching costs and long-term customer relationships Can AOF continue to grow faster than the industry? • Industry trends that emphasize the importance of high • AOF has demonstrated their capability to grow faster human capital and data analytics grew TAM. than the industry for 10 years. • AOF capitalized and grew customer base by 4x • AOF has industry leading software which caters to all AOF capitalized on from FY2017 to FY2019. segments of the market: from businesses of 2 people to industry trends and grew 200,000. • Expanded recurring revenue streams by building cloud offerings. • Strong recurring revenue base. • Sales per customer growing at 7%. Is AOF poised to continue to outperform the market? • Industry trends, such as emphasis on making data driven • Strong runway for growth and stable recurring revenue. decisions and importance of human capital, likely to • TAM likely to continue to grow and AOF is likely to AOF has a runway for continue. capture this growth. growth • AOF has industry leading software which continues to • At 8.43x sales AOF is very highly valued and there are improve through customer feedback and continued high other competent competitors in the market that could R&D investments. stifle their growth and cause multiple contraction.

531 Elizabeth DeSouza 392% 5 Year TSR ENXTPA:ALESK Rank: 86/104

532 Esker SA Overview

Esker SA, headquartered in Lyon, France, provides document NTM EV/EBITDA Multiple processing automation solutions to the life science, manufacturing, food and beverage, electronics, and chemical industries. 2020 27.4x

Statistic 6/8/15 6/8/20 2015 9.2x Stock Price €24.33 €116.2 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x 30.0x Market Cap €116.97 €650.95

Enterprise Value €104.52 €636.11

Shares Outstanding 4.83M 5.60M

EV / NTM Revenue 1.89x 5.53x

EV / NTM EBITDA 9.17x 27.39x NTM P/E 21.44x 60.84x Z

Statistic FY 2015 FY 2019

Revenue €62.3M €110.5M

EBITDA €10.8M €15.2M

533 Esker SA Business Model

Primary Products Context Sales by Geography ALESK is a SaaS, offering solutions 5.0% • Esker on Demand, a designed to eliminate paper and 11.0% cloud-based service inefficiencies in business 38.0% that enables • Document processing automation 5.0% companies to services sold to businesses that cover automate business the Order-to-Cash (02C) and the 41.0% documents Procure-to-Pay (P2P) processes Document USA France • Esker DeliveryWare, Automation • O2C is the cycle from customer order to U.K. Europe a license-based Asia/ Pacific Technology invoice collection document process Sales by Category automation product • P2P is the cycle from selection of 2.0% suppliers to invoice payment 0.0% • Esker Fax, integrates 7.0% fax with enterprise • Streamlining these cycles with applications and automation software improve company 73.0% messaging platforms efficiency 18.0% • ALESK products are sold as on-demand online services SaaS Consulting Maintenance License Hardware • ALESK solutions cover all customer and supplier cycles • Typical contract length is 3 years ALESK is a capital light business.

534 Low Threat Medium Threat Esker SA Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry Application Software

• ALESK considers itself the • Constantly only player covering evolving to create The players in this industry offer simultaneously the P2P and more efficient software programs and data O2C cycles software management to customers in all • High risk of hackers • Offers a unique solution with solutions sectors targeting the customer a single interface for all • Increased • Significant investment in data stored by ALESK administrative and financial concern for R&D needed in this space processes to be automated. • From a short-term cyber-security • Some very large perspective, the Group is • Advantage over its and protection of Market companies in the exposed to a potential Oligopoly competitors in the successful customer data Structure industry, but new risk of high turnover and integration of artificial • Increased need companies still have to an inability to recruit Market Size $10.8B intelligence into its solutions for businesses to room to enter quality personnel and • to digitize their Industry Deep learning has allowed it to preserve a balanced wage MSD processes Growth significantly improve the policy. recognition of unstructured • Organic growth documents and offer new will be driven by functionalities such as detecting cloud based anomalies or fraud solutions

535 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • In 2015, ALESK was a smaller, more regional business, with lots of competition from firms of similar size • In 2019, ALESK signed • Software provided by ALESK did not have as high of a partnerships with Fuji-Xerox demand as it does today and KPMG in the Netherlands • Unclear if big IT companies would take customers from • In 2020, the partnership with ALESK Fuji Xerox was extended to • Acquired two companies in 2015, one in the U.S. and one cover all of the APAC region in France, but uncertain if these acquisitions would • By partnering with a bigger company like Xerox, ALESK will benefit ALESK, and to what extent Strategic be able to reach more Partnerships customers and thus increase Return Breakdown: Consensus vs Results sales • Partnership with Quadient represented 10% of ALESK’s sales • Today, the focus is more on partnerships and organic growth, rather than acquisitions

EBITDA

536 Back to List Esker SA Takeaways

ALESK is a Okay Business – 3/5 Future Outlook

• ALESK is unique in that it covers the Order-to- Can ALESK Sustain its Advantages? Cash (02C) and the Procure-to-Pay (P2P) • ALESK has patent protected technology processes • Main competitive advantage is ability to ALESK has a Niche serve P2P and O2C cycles, but this could be • The market for back office automation services replicated by other companies is growing, and ALESK already offers a full portfolio of proven solutions Can ALESK continue to grow? • Demand for digitization of business processes is increasing, which will increase ALESK’s customer base and allow them to continue to grow • ALESK has invested heavily in developing the • Developing cloud platform service to grow into use of artificial intelligence in its products, a new customer class giving them a further edge over their Is ALESK poised to continue to outperform? Investments in New competitors • Contracts signed in 2019 have not yet fully Technology • Investing in cloud based platform to meet the growing demand impacted sales, so ALESK should see strong revenue growth in 2020 • About 10% of total group sales are allocated to R&D to keep ALESK technology competitive • Gross and EBITDA margins have decreased over the past five years • ALESK is currently trading at its highest multiple of the last 5 years at 37.87x

537 Owen Stimpson 388% XTRA:BC8 5 Year TSR Rank: 87/104

538 Bechtle Overview EV / NTM EBITDA Bechtle AG is the largest IT system house in Germany with 70 locations in the D-A-CH region. The business model combines IT services with the direct sale of IT products. 2019

Statistic 06/08/2015 06/08/2020 2015 Stock Price €33.62 €149.7

Market Cap €1.41B €6.29B 0x 5x 10x 15x 20x Enterprise Value €1.34B €6.55B

Shares Outstanding 42.00M 42.00M

EV / NTM Revenue 0.48x 1.12x

EV / NTM EBITDA 8.94x 18.73x

PE 16.13x 33.70x

Statistic FY 2015 FY 2019

Revenue 2.83B 5.37B

EBITDA 149.7M 276.6M

539 Bechtle Business Model

Primary Product Context IT strategy and Sales by Division BC8 is a one-stop shop for companies IT System consulting (project to build their IT infrastructure. House & planning, rollout, and 35% Managed maintenance); also • BC8 service portfolio spans the Services consists of sales of IT entire IT value chain – making BC8 a hardware and software. one-stop shop provider. 65% • BC8 can offer individualized IT IT software and solutions tailored for each System House E-Commerce IT E- hardware sold via e- customer. Commerce commerce and over the • BC8 is decentralized with 75 offices phone. and 1,700 sales reps which gives Sales by Geography customers a local contact, despite 18% BC8 being a major company. • BC8 E-Commerce segment operates 13% in 14 countries and offers 50,000 products that enable customers to purchase their entire IT portfolio. 7% 62% • BC8 focuses on medium-sized companies in Austria, Germany, and Germany Switzerland France Other Switzerland. Screenshot of BC8 ecommerce site. BC8 is a medium capital intensity business.

540 Low Threat Medium Threat Bechtle Competitive Analysis High Threat

Competitive What’s Changed in Risks Competitive Landscape Barriers To Entry Advantages the Industry

Market Monopolistic • Many customers German IT Market Structure Competition want a personal contact in their 1 • Need to offer a range Market Size ≈€84.3B region: BC8 has of products (both Industry 1,700 sales reps • Transition to MSD1 hardware and Participants consult, sell (both and 75 offices. Growth software) and cloud services hardware and software), services (consulting, undercuts need • Companies trending optimize, and maintain IT • BC8 is the largest IT company maintenance, etc.). • Scale enables for local IT away from buying solutions for corporate and in Germany. cost synergies providers, and hardware and public clients. • Industry is very fragmented: (greater destroys relying more on SaaS over 90,000 IT companies in • Can be capital purchasing hardware and Cloud software Germany (vast majority intensive to keep power). business. products instead. operating on local scale). hardware in stock. • Only 38 companies (including BC8) >250M in annual revenue. • Scale enables • Data breach. • Contracts can last for • BC8 has roughly 4% market BC8 to develop longer than a year. share. specific software • Top ten companies just modules on ad- 15% market share. hoc basis.

1. 2019 annual report (data from market research institute EITO) 541 What Investors Missed

The Actual Story of the Last Five Years The Bear Thesis Five Years Ago: • Continued to make successful acquisitions: • 9 acquisitions in 2019, major • Mature company with minimal room for growth. Inmac Wstore acquisition in 2018, • Relied on acquisitions to fuel growth in the past. etc. • Industry trends towards cloud more likely to shrink than BC8 continued to • Grew core IT System House revenue grow revenues. grow consistently each year from 1.8B to 3.48B from FY2015 to FY2019. • Not the best business model: EBITDA margins ≈ 5%, medium degree of capital intensity, needs to maintain large workforce. • Maintained strong presence and market share in Germany but increased share of international revenue from 30% to 37%. • Increased focus on e-commerce platform Return Breakdown: Consensus vs Results (investments and acquisitions) which grew more than 100% to 1.89B in revenue in Capitalized on FY2019 from 943M in FY2015. industry trends • In 2017, invested to update data center and launched Bechtle Clouds to capture cloud industry growth. • EBITDA margins expanded slightly to >5.2% due new focus on cloud and e-commerce. • Grew workforce from 7,205 to 10,005 which BC8 optimized is key competitive advantage. It lowered gross business model margins but contributed to growth. • Also enables future growth. • Consistently increased dividend.

542 Back to List Bechtle Takeaways BC8 is a Decent Business- 3.5/5 Future Outlook • BC8 stayed true to its core strategy of providing IT Can BC8 Sustain its Market Position? services to medium-sized business in Germany and • Large localized workforce enables BC8 to maintain adjacent markets. positioning relative to local companies (customers BC8 maintained its • Continued to make major investments in its often require having local contact person). positioning workforce, even at the expense of gross margin, • Scale enables operational synergies and purchasing given its importance to BC8’s success. power. • Continued to consistently make acquisitions but did • One of few large companies in the industry; minimal not stray from core strategy nor have any blow-ups. major competitive threats. • BC8 invested in cloud infrastructure and enhanced its Can BC8 continue to grow faster than the industry? capabilities to provide cloud services. • BC8 can likely maintain market share. • But also did not lose focus of hardware business which continues to drive revenue. • Can grow through acquisitions given industry fragmentation. BC8 found avenues for • Invested in and grew e-commerce platform which has • E-commerce site represents another avenue of growth. growth doubled in size since 2015 and provides a future runway for growth. Is BC8 poised to continue to outperform the market? • Less capital intensive as well given ability to use • BC8 can likely continue to grow incrementally via drop-shipping (BC8 does not need to hold as acquisitions, organic growth, and through its ecommerce platform. much inventory). • But it still operates in an industry that will likely face long- • Investments in workforce will enable BC8 to continue to term secular decline as hardware purchases are phased grow core IT System House segment. BC8 has a runway for out. • Market remains heavily fragmented – representing growth • At 33x forward earnings BC8 could outperform, but there opportunity for acquisitions. is no clear catalyst that would indicate strong likelihood of • E-commerce platform can continue to grow. outperformance.

543 Max Schieferdecker 388% 5 Year TSR NASDAQGS:LGIH Rank: 88/104

544 LGI Homes Overview

LGI Homes is the 10th largest residential homebuilder in NTM EV/EBITDA Multiple America and is based in The Woodlands, TX. 2020 11.9x

Statistic 6/8/15 6/8/20 2015 7.7x Stock Price $17.88 $88.04 0.0x 5.0x 10.0x 15.0x Market Cap $355.96M $2.21B

Enterprise Value $546.94M $2.84B

Shares Outstanding 19.91M 25.07M

EV / NTM Revenue 0.93x 1.53x

EV / NTM EBITDA 7.71x 11.94x NTM P/E 8.09x 14.73x Z

Statistic FY 2015 FY 2019

Revenue 630.24M 1.84B

EBITDA 82.69M 231.51M

545 LGI Homes Business Model

Primary Products Context Sales by Geography LGIH makes the dream of • New, affordable homes Homes owning a house more of a in attractive locations reality for everyday Americans 10.3% • LGIH provides an affordable 39.4% alternative to renting • Focuses on the starter 14.8% home market – people with not a lot of money to spend on a new home • Uses a very systematic approach with standard processes and procedures and intricate manuals 16.6%

• Allows for quicker 18.9% production times and thus more inventory Central Southeast Northwest West Florida • Generally targets land that is An LGI Home in the Houston area further away from urban LGIH is a capital intensive business as all centers to supply better value manufacturing is a key part of the business to the homeowner

546 Low Threat Medium Threat LGI Homes Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry U.S. Home Building

The players in this industry offer newly constructed single-family homes, in which units are separated • People are by ground-to-roof walls with no other • There are low amounts of • Failure to adhere to moving away units above or below. • High up-front costs and differentiating factors construction codes could from high COL state-based licenses are between most of the home result in heavy lawsuits areas in order to the only material barriers builders • Home buying trends are get more for their to entry • The advantages that heavily impacted by macro Market Perfect money • There is not a lot of are present in the level economics Structure Competition • Millennials are extremely specialized skill industry by the top • The elimination of the tax looking to Market Size $95.1B1 that is needed to operate players (size and benefits that come with purchase more in this industry money) are not homeownership could Industry houses than LSD1 possessed by LGIH reduce demand Growth before

1 https://my-ibisworld-com.libproxy.wustl.edu/us/en/industry/23611a/industry-at-a-glance 547 What Investors Missed The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • LGIH did their IPO in November 2013, and, while there had • LGIH expanded their end markets been sizable growth in the 1 full fiscal year before June 2015, it from 13 in 7 states in 2015 to 31 still was not a huge business markets in 18 states in 2020 • Investors and analysts did not forecast huge revenue • The acquisitions of relatively growth over the next few years because of this cheap land due to the • Some investors also feared that, because of LGIH’s outskirts strategy that they overexposure to the Texas market, the tanking oil prices hurt Expanded employ allows for higher the Texas economy as a whole, and thus the housing market Markets margins than the industry would also be effected Substantially average • They expanded into up-and-coming Return Breakdown: markets, such as Nashville, Las Consensus vs Results Vegas, and Portland, as well as expanded their operations in their current high-growth markets that include DFW and Houston

• Low interest rates on mortgages drove an increased interest in home buying Low Interest • Millennials were getting older Rates and the opportunities for cheap financing were, and still are, hard to pass up

548 Back to List LGI Homes Takeaways LGIH is an Okay Business – 3/5 Future Outlook

• While LGIH has been successful in executing its strategy, Can LGIH Sustain its Advantages? there is not much differentiating itself from the other large players in the industry • LGIH has no real advantages in the first place, so it is no going to sustain any in LGIH doesn’t have • Gaining market share relies heavily on the ability to the future a Strong Moat acquire as much land to build on as possible, and not much else • While quality is important, that is not a significant Can LGIH continue to grow? barrier • The strong industry tailwinds which has • With interest rates on mortgages lower than ever resulted in strong demand will likely before, there has been a surge in homebuying recently continue into the future • Interest rates aren’t projected to go back up • LGIH is also in the process of expanding Strong Macro significantly anytime in the near future into more markets as well, which will Tailwinds • The deurbanization and shift towards lower cost-of-living continue to grow the company areas has also become more popular • The work-from-home phenomena will likely accelerate that trend as well Is LGIH poised to continue to outperform? • LGIH has realized very impressive top-line growth • LGIH has a strong business model and is numbers (CAGR of 30.7%) pried to take advantage of tailwinds, while Solid Financial • However, EBITDA margins shrunk over the same at the same time, trading in-line with Profile period from 13.1% to 12.6% industry norm multiples (10x NTM • End markets have also become more diversified with regards EV/EBITDA) to its market concentration which has re-risked the stock

549 Owen Stimpson 384% 5 Year TSR AMEX:GSB Rank: 89/104

550 GlobalSCAPE Overview EV / LTM EBITDA GSB develops and sells computer software that provides secure information exchange, data transfer, and sharing capabilities for enterprises. 2019

Statistic 06/08/2015 06/08/2020 2015 Stock Price $3.15 $10.38

Market Cap $65.38M $194.21M 0x 5x 10x 15x Enterprise Value $53.04M $233.93M

Shares Outstanding 20.76M 18.71M

EV / LTM Revenue 1.90x 5.75x

EV / LTM EBITDA 9.89x 14.15x

PE 19.70x 14.89x

Statistic FY 2015 FY 2019

Revenue 30.76M 40.34M

EBITDA 6.58M 15.70M

551 GlobalSCAPE Business Model

Primary Product Context Sales by Segment GSB sells MFT software to GSB is a file transfer company. 2% enterprise that enables Managed File them to securely transfer • Helps enterprise customers Transfer data from one location to transfer files securely and Software another across their own effectively. (MFT) networks, and to 98% computers in other • GSB’s MTF platform provides networks. more security, automation, MFT Rest and performance compared to traditional FTP and email Sales by Geography based file transfer systems. 24%

• MTF service is in compliance with information protection 76% regulations.

• Sells products as either a SaaS service or by one-time US Rest license purchase (but with GSB customers annual service fees). GSB is a low capital-intensive business.

552 Low Threat Medium Threat GlobalSCAPE Competitive Analysis High Threat

Competitive What’s Changed Risks Competitive Landscape Barriers To Entry Advantages in the Industry

• Reputation as Market secure and Global MFT Software Oligopoly • Data breach which Structure reliable partner. could damage Industry 1 Market Size 1B • Regulatory burdens. reputation and • Switching costs: ruin sales pitch: Industry 1 Companies in this industry > 10% Growth • Long-term contracts customers’ • If value of develop and sell MFT software and relationships operations are MFT is • Major data to enterprises and consumers. embedded with • GSB is one of the fastest between existing security, breaches have MFT and would growing companies in the players and data breach increased demand incur costs if industry but is smaller than the customers. destroys for secure file- largest players. they switch. that transfer. • GSB is the only major • Licenses argument. • Technology start-up pure-play competitor. mean costs, but they are not • System issue which • IBM and Axway have ≈50% large very high relative to impedes global market share. upfront other industries. customer’s • Although their growth is costs, and business. slower than GSB (Axway higher • Regulatory change. 2015 MFT revenue switching declined). costs.

1. https://www.gminsights.com/industry-analysis/managed-file-transfer-market 553 What Investors Missed The Actual Story of the Last Five Years The Bear Thesis Five Years Ago: • GSB focused on its core MFT business: • Tech is an incredibly competitive sector and innovation happens 88% of revenue in FY2015 to 98% of quickly – GSB is an old player who likely will not be able to keep revenue in FY2019. pace. • Invested in core product and has won GSB competed multiple awards (i.e. Corporate Visions • Relatively new management with limited experience with GSB; past strongly best Enterprise File Transfer Solution in management also made poor capital allocation decisions by making 2019). value destroying acquisitions. • Maintained high service retention rates • Revenue growth has been minimal since 2013 but GSB’s multiple (>90%) and no competitor stole has already expanded. significant market share. • Bad revenue recognition scandal in 2018. • Focus on cutting opex: SG&A as a % of sales Return Breakdown: EPS Results down from 53% in FY2015 to 43% in FY2019. Management • Reversed focus on SaaS Kinetix product ultimately worked offering to core MFT license business. out • Avoided poor acquisitions; returned cash to shareholders through dividends (including 3.35$ special dividend in 2019). • Focus on core MFT business and grew revenue at healthy 7% CAGR. • Increasing amount of recurring revenue: Revenue grew maintenance and support revenue increased from 54% in FY2015 to 65% in FY2019. • Revenue, EBITDA, and earnings multiples also expanded.

554 Back to List GlobalSCAPE Takeaways GSB is a Strong Business- 4/5 Future Outlook • GSB realized it was spending too much time on other Can GSB Sustain its Market Position? business units that constituted less than 10% of sales. • The high upfront costs for GSB software make switching • GSB focused on core MTF business which now costs high. represents vast majority – 98%- of sales. • GSB software is embedded in customer operations. GSB focused on MTF • Ensured product quality was high: GSB has • GSB has a strong reputation and track record. won various awards for product quality. • Stayed true to proven license model when SaaS strategy did not work as well as planned. Can GSB continue to grow faster than the industry? • GSB took advantage of its moat and raised prices. • GSB has a strong reputation and high product quality which • Customers which buy a MFT license from GSB can attract new customers. pay large upfront costs and often must also • But GSB’s license model may be less attractive to many new invest in hardware, this makes switching less customers than more prevalent SaaS models given the high attractive. Growing effectively upfront costs. • GSB took greater advantage of channel sales, which bolstered growth and now represent 37% of total sales. Is GSB poised to continue to outperform the market? • Maintenance and support revenue continued to • GSB has a strong position in a growing market. increase, providing healthy recurring revenue. • Management has proven themselves to be solid capital • The industry remains competitive but GSB is an allocators by avoiding poor acquisitions and returning cash to established, reputable player with a strong customer shareholders through dividends. GSB is an established base. player in a growing • License model may impede growth and technology in the • Potential to continue to increase licenses sold, maintain market space could evolve. recurring maintenance revenue, and upsell existing • Threat of a major new entrant that could disrupt the customers. industry and capture market share.

555 Max Schieferdecker 384% 5 Year TSR XTRA:D6H Rank: 90/104

556 DATAGROUP Overview

DATAGROUP is an IT company based in Pliezhausen, Germany, NTM EV/EBITDA Multiple that provides modern day infrastructure, consulting, and development solutions to companies. 2020 9.8x

Statistic 6/8/15 6/8/20 2015 7.5x Stock Price €11.90 €52.00 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 12.0x Market Cap €90.11M €433.24M

Enterprise Value €123.46M €512.91M

Shares Outstanding 7.57M 8.33M

EV / NTM Revenue 0.76x 1.35x

EV / NTM EBITDA 7.46x 9.56x NTM P/E 14.14x 29.08x Z

Statistic FY 2015 FY 2019

Revenue 157.92M 307.54M

EBITDA 11.82M 35.67M

557 DATAGROUP Business Model

Primary Products Context Sales by Segment 0.3% • Modular system of flexibly D6H helps companies operate combinable services that efficiently in a digitized world 27.9% CORBOX cover the entire range of • For many small-to-medium corporate IT operations sized companies, it is expensive and difficult to find • Guiding companies 71.8% high-quality employees to IT along the path of work in a dedicated IT Transformation transforming Services Solutions and Consulting Other department internal IT systems • D6H provides IT Sales by Geography • Developing solutions that IT outsourcing services are tailored to the needs Solutions • With flagship product, of individual clients CORBOX, companies have a “box” at their disposal through 100.0% which they can pick-and- choose the IT service modules that are most suitable for them Germany • It also functions as a cloud enabling platform D6H is a capital light business as manufacturing through which D6H is not a key part of the business integrates their offerings

558 Low Threat Medium Threat DATAGROUP Competitive Analysis High Threat

What’s Changed in Competitive Advantages Risks Barriers To Entry the Industry IT Services

The players in this industry offer consulting, software development, and systems integration services that are used by organizations in creating, • Long-term M&A growth managing, and delivering information may not be sustainable as well as assisting with other business functions. • The founder and CEO, Max Schaber, owns 51% • Virtually no barriers to • Long-term contracts of the company, so the • Increased digitization Market Pure entry are present besides results in a low churn-rate entire fate of the of everyday IT Structure Competition know-how and reputation • High customer satisfaction company relies solely products on him for the most part Market Size $822.4B1 • Overleverage could Industry result in defaulting on MSD1 Growth interest payments

1https://www.statista.com/markets/418/topic/483/it-services/ 559 What Investors Missed The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • There was virtually no revenue growth from 2012 to 2015 • In September 2016, D6H took over 300 IT (CAGR of 2.4%) specialists from Hewlett-Packard • Historically, D6H’s growth plan revolved around heavy Enterprises M&A activity, and there was only one acquisition in the 3 • This acquisition caused D6H to years prior to June, 2018 be one of the leading providers of SAP HANA in Germany • This was a company of just 50 employees, which • SAP HANA is a key ended up not materially help top-line growth technology for digital • The lack of a long-term, organic, sustainable growth plan was transformation of companies worrisome for many investors • In August 2019, D6H acquired a 300- Return Breakdown: Several person company in bankruptcy called IT- Informatik Consensus vs Results Successful • From this deal, D6H received a Acquisitions broad portfolio of small and medium sized customers which allowed them to expand their market share • They also received 100 SAP experts which allowed them to expand their service capacity • Made that business profitable in less than 4 months, while providing a €20M increase in annual revenues

560 Back to List DATAGROUP Takeaways D6H is an Average Business – 2.5/5 Future Outlook • Customers are bound to contracts for 3, 5, or even Can D6H Sustain its Advantages? more years, with the average customer holding • Given its size relative to the much larger D6H has a Moat period being 10 years players, D6H is in a position to continue • This makes switching costs for customers high to be an industry leader in customer and customer churn low service, and thus customer retention • Strong IT capabilities have increasingly become a Can D6H continue to grow? critical part of run a successful business • D6H will continue to seek out acquisitions • The ability to manage people, products, and to expand their reach, as M&A growth is processes through technology allows for cheaper than organic growth on a per Promising Industry insights that can be used to increase efficiency customer basis for them • The future of business is going to revolve around more • The size of the deals and the speed at advanced technology, and if the smaller players want to which they happen are uncertain though remain competitive, they need help in order to utilize Is D6H poised to continue to outperform? those features in a cost-effective manner • It is unlikely that D6H will continue to • Top-line has grown at a CAGR of 16.8% over the past 5 outperform given the lack of organic years while EBIT margins have remained stagnant at scalability of the business model 5.7% • Although there was little-to-no multiple • A debt-to-equity ratio of 3.66 and declining returns Worrisome Financial expansion, the inorganic growth rates will on capital employed are signs of weak underlying Profile financial stability slow down each acquisition (only means of • While the M&A expansion strategy does allow companies material growth) will provide smaller to snatch up market share more easily, it is important to incremental revenue increases relative to do so without over-levering, which D6H is guilty of previous revenues

561 Owen Stimpson 383% 5 Year TSR ASX:CCX Rank: 91/104

562 City Chic Collective Overview In Australian Dollars (AUD)

CCX is a leading omni-channel retailer specialising in plus size EV / NTM EBITDA women’s apparel, accessories, and footwear. CCX core markets are Australia and New Zealand but is growing its international 2019 presence.

Statistic 06/08/2015 06/08/2020 2015 Stock Price $0.62 $2.71

Market Cap 118.23M $543.18M 0x 5x 10x 15x 20x Enterprise Value $119.13M $580.51M

Shares Outstanding 192.24M 200.44M

EV / NTM Revenue 0.15x 2.70x

EV / NTM EBITDA 3.36x 15.57x

PE 13.79x 28.20x

Statistic FY 2015 FY 2019

Revenue 791.5M 148.7M

EBITDA 9.7M 22.8M

563 City Chic Collective Business Model

Primary Product Context Fashionable plus size CCX is a women’s plus size apparel for women that clothing retailer. is sold through CCX Plus Size store, and online • CCX clothing is considered Fashion Retail through their own fashionable and CCX makes Sales by Geography website and other the majority of its sales at websites. full price without discounting. 20% • CCX sells its clothing in Australia and New Zealand 80% through its 109 retail locations.

Southern Hemisphere Northern Hemisphere • Online presence through City Chic website as well as CCX is a high capital-intensive business. partnerships with variety of online marketplaces (i.e. Macy’s, Nordstrom, etc.).

• Sells wholesale to stores in Inside a CCX store US and Europe.

564 Low Threat Medium Threat City Chic Collective Competitive Analysis High Threat

Competitive What’s Changed Risks Competitive Landscape Barriers To Entry Advantages in the Industry

Market Monopolistic Structure Competition Plus-Size Women's Market Size 9.8B1 Clothing Stores • Start-up capital to • Fashion risk: Industry design range of • Brand product no longer LSD1 Retailers in this industry Growth clothing and set up reputation and fashionable or specialize in plus-size store. fashion clout. brand loses clout. women's clothing, which is • Some of CCX’s closest • Less of a • clothing proportioned competitors, such as Ascena barrier now Brick and mortar • Established • Supply chain specifically for larger women. Retail Group in the US, are filing with retail sales have supply chain. disruptions. Typically, sizes 14 and up are for bankruptcy. ecommerce. declined and in the plus-size category; • Could represent M&A ecommerce sales however, not all brands and opportunity for CCX as • Product range • Brick and mortar have risen. • Brand awareness retailers follow this Ascena is the largest and SKUs. declines faster essentially only true convention. pure-play retailer in the (Covid-19 impact). US. barrier, however this is a weak barrier to • Most stores are owned and entry. operated on a local level.

1. Underestimated figures as they do not include online sales or plus-size clothing sales from stores with multiple departments: Ibis World. 565 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • CCX completely transformed their business • Brand weakness, such as Rivers which is losing money. in July 2018 (impacting FY2019 and • Also seems like a poor acquisition, which raises questions beyond) when they divested from 5/6 of about capital allocation. CCX divested from their brands, including Rivers. • Brick-and-mortar stores are going away and CCX will not be able to five / six of their • CCX transformed into a pure-play adapt to ecommerce. brands women's plus size retailer. • Acquisitions since have been focused on • Extremely slim EBITDA margins at just over 1%; unprofitable at an the women’s plus size niche, and growing EBIT level. market share.

• Ecommerce sales as a % of revenue have EPS Results increased from 6.5% in FY2015 to 53% in Return Breakdown: Q12020. • CCX is focused on ecommerce: acquired solely the ecommerce assets of Avenue, a plus sized Ecommerce retailer in the US. penetration • CCX is not afraid to adapt their brick and mortar operations: • Opening larger stores as they’ve performed better. • Closed 14 stores in June.

• Divesting from other brands helped CCX grow Margins grew their EBITDA margin to 15.2% in FY2019 and the company is profitable.

566 Back to List City Chic Collective Takeaways CCX is a Good Business- 3.5/5 Future Outlook • CCX divested from 5/6 of its brands, impacting Can CCX Sustain its Market Position? FY2019 onwards. • Many traditional competitor are struggling to survive • All of CCX’s 5 year shareholder return was during coronavirus, and some are entering bankruptcy. CCX transformed into a generated in FY2019 as the market reacted • CCX has a strong balance sheet and no debt and pure-play women’s plus positively to this change. will likely weather Covid-19 successfully. size clothing retailer • CCX now is focused solely on the women’s plus size • CCX has made the pivot to ecommerce, a necessary pivot clothing segment, and no longer has any brands that to survive in the modern clothing retail space. are weighing down the bottom line. Can CCX continue to grow faster than the industry? • As brick-and-mortar retail sales decline, CCX has a • CCX is positioned to capture growth through both its strong effort to expand ecommerce operations stores in Australia and New Zealand and ecommerce • Launched various features, such as 24hr live channels. chat, and improved fulfilment capabilities. • CCX has a strong customer base. CCX has invested in • Acquired ecommerce business of major • Low barriers to entry in the industry, especially online, ecommerce American player Avenue. raise concerns over whether they can capture new • Ecommerce revenue now 53% of sales whereas it was growth. just 6.5% of FY2015 sales. Is CCX poised to continue to outperform the market? • Ecommerce revenue is also higher margin. • CCX has a strong ecommerce business and reputation in the industry. • CCX sees opportunity for international expansion through ecommerce and will enable CCX to test new • But Covid-19 is an existential threat to their entire brick- CCX has a runway for products and concepts given the “infinite store size.” and-mortar presence, which is still 47% of sales. growth • CCX can likely acquire American brands as many are • Low barriers to entry in the industry, especially online. entering bankruptcy. • CCX trades at 28x earnings, a premium to the market.

567 Elizabeth DeSouza 383% 5 Year TSR AIM:GAMA Rank: 92/104

568 Gamma Communications Overview

Gamma Communications plc, headquartered in Newbury, NTM EV/EBITDA Multiple United Kingdom, provides communications and software services such as collaboration, inbound call control, network services, and enabling services to businesses. 2020 15.8x

Statistic 6/8/15 6/8/20 2015 9.9x Stock Price £2.85 £12.4 0.0x 5.0x 10.0x 15.0x 20.0x Market Cap £255.27M £1.18B

Enterprise Value £242.07M £1.14B

Shares Outstanding 89.64M 94.93M

EV / NTM Revenue 1.28x 3.09x

EV / NTM EBITDA 9.87x 15.81x NTM P/E 18.23x 26.31x Z

Statistic FY 2015 FY 2019

Revenue £191.8M £328.9M

EBITDA £23.4M £58.1M

569 Gamma Communications Business Model

Context Primary Products Sales by Geography • Unified Communications GAMA provides business 4.6% as a Service (UCaaS) communication services to the UK • Unified communications and Dutch markets 25.4% products such as • UK Indirect segment supplies 70.0% messaging, video calling, GAMA solutions to channel and instant conference partners services and • UK Direct segment looks to UK Indirect UK Direct Overseas Telecom • Business-only mobile contract its services with 1 Services service enterprises, mid markets, and the Sales by Product • SIP trunking service 5.9% 0.4% public sector 13.9% gives businesses a more 11.5% resilient and cost • Overseas segment consists of sales made in the Netherlands made by effective phone service 8.8% • Broadband, ethernet, DX Groep B.V. and its subsidiaries and advanced network • Main product is voice traffic, from 59.5%

services which revenue is derived from Traditional Prodcts & Services Growth Products & Services channel partners & carriers Mid-markets Enterprise Public sector The Loop • Growth products derive income from IP voice traffic and rental income from SIP trunks and other GAMA is a capital light business. data products

1 Revenue shown by product market for UK Direct and UK indirect segments. Overseas revenue segment is not reported with any further specification 570 Low Threat Medium Threat Gamma Communications Competitive Analysis High Threat

What’s Changed in Diversified Competitive Advantages Risks Barriers To Entry the Industry Telecommunication Services • Growth of wireless The players in this industry include technology and Alternative Carriers, communications • Spectrum scarcity means a • Breach in data security decline of physical finite number of providers, and high-density data • GAMA provides channel could negatively impact connectivity transmission service providers. companies can operate GAMA reputation and partners with Gamma • Launch of 5G data Companies provide communications cellular or PCS services commercial position. Academy and Gamma services and and data services using high bandwidth within a specific Fines could also be Accelerate, their training unlimited data or fiber optic cable networks. geographic location and enforced should GAMA and marketing platforms bundles frequency breach GDPR • GAMA services are flexible, • Market structure has Market Perfect • Large service providers in • If GAMA’s network and scalable, and secure decentralized some, Structure Competition the general systems preform below • moving slightly away telecommunications GAMA customer service is market expectations, Market Size $1.07T1 from a monopoly industry make it difficult excellent, allowing product and revenue customers to easily place towards an oligopoly Industry for new entrants, but growth could be LSD2 orders, activate services, Growth antitrust measures negatively impacted and • Covid-19 has prevent a monopoly from and access support easily operating costs could increased the forming increase importance of mobile connectivity for businesses

1 https://eresearch.fidelity.com/eresearch/markets_sectors/sectors/industries.jhtml?tab=learn&industry=501010 571 2Last 5 years What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • GAMA was only listed on the AIM in 2014, making it a • Launched new Collaborate and Call newly public company in 2015 Recording platform in 2019 to • In 2015, investors only had about a year of GAMA public expand UCaaS offerings performance to look at • 2018 launched Connect a • GAMA was also engaged in a pricing dispute over ”ladder fixed/mobile coverage product New Products & pricing”, where fixed line operators billed other • Developing a Cloud Contact Center Platforms operators for certain toll free numbers solution for release, aided by the • In 2014 GAMA purchased control equipment that acquisition of Telsis provides the core of a mobile network, but it still had not • Consistently looking to develop launched in 2015 new products and integrated Consensus vs Results services to meet customer needs Return Breakdown: • Developed a clear growth strategy in 2018 that has 4 core ideas • Transition of their cloud telephony position into the UCaaS Medium and • Build on fixed and mobile telecom to Long-term differentiate themselves from pure Growth Strategy OTTs • Expand geographic footprint into Europe • Build on digital capabilities to assure agility and maintain competitiveness

572 Back to List Gamma Communications Takeaways

GAMA is a Good Business – 4/5 Future Outlook Can GAMA Sustain its Advantages? • GAMA consistently looks for ways to • GAMA also prides itself on the quality of distinguish itself from competitors their customer service, which can easily • GAMA grows its industry position by be maintained (and also replicated) GAMA is Constantly anticipating industry tends and launching • GAMA faces a lot of competition, Evolving new products to meet them especially as it enters into the UCaaS • Management has a focused plan for the market medium and long-term Can GAMA continue to grow? • UCaaS market is expected to grow 12% • UCaaS market is a new avenue for growth for annually over the next 5 years, GAMA • GAMA has a clear and well thought-out • GAMA has cash and equivalents of £53.9M, growth plan for the next five years which it can invest in expanding its UCaaS offerings, and GAMA has no debt Is GAMA poised to continue to outperform? Avenue for Growth • EPS has fairly consistently been above analyst • GAMA is well placed to whether negative estimates over the last 5 years impacts from Covid-19 and to capitalize on • Consistent topline growth over the last 5 years, the industry changes it causes with revenue growing 15.4% in 2019 • With opportunity for growth and good • Strong gross profit and EBITDA margins at management, GAMA should continue to 50.6% and 17.7% respectively for FY 2019 outperform

573 Max Schieferdecker 379% 5 Year TSR NASDAQGS:NRC Rank: 93/104

574 National Research Corp Overview

National Research Corporation is a leading healthcare-focused, NTM EV/EBITDA Multiple1 data collection and analytics software company based out of Lincoln, NE. 2020 22.7x

Statistic 6/8/15 6/8/20 2015 11.9x Stock Price $11.94 $59.20 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x Market Cap $396.52M $1.49B

Enterprise Value $367.27M $1.51B

Shares Outstanding 24.55M 25.73M

EV / LTM Revenue 3.71x 11.61x

EV / LTM EBITDA 12.38x 30.32x LTM P/E 20.53x 42.28x Z

Statistic FY 2015 FY 20191

Revenue 102.34M 127.98M

EBITDA 30.56M 48.60M

1Multiple from 5/19 due to no forward multiples being available after that date 575 National Research Corp Business Model

Primary Products Context Sales by Category NRC enables healthcare Voice of the • Portfolio of solutions organizations gather crucial Customer that collectively provide feedback from their patients Platform a comprehensive set of 37.3% 62.7% (VoC) data capabilities • Through the VoC platform, NRC offers market insight tools, patient experience • Advice for not-for-profit data, health risk The hospital and health management tools, and VoC Legacy Experience and TGI Governance system boards of organizational transparency Institute directors, executives, Sales by Geography tools, among others (TGI) and physician leadership • The goal is to capture, 2.8% interpret, and improve the Consumer Assessment of Healthcare Providers and Systems (CAHPS) data that is 97.2% required by the Centers for Medicare and Medicaid U.S. Canada Services (CMS) • The majority of products NRC is a capital light business as it is a SaaS operate as a subscription based business. Example of a real time customer satisfaction dashboard model

576 Low Threat Medium Threat National Research Corp Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry Healthcare Analytics

The players in this industry offer qualitative and quantitative tools to • • Little barriers to entry due Trend towards aid health care organizations in • to a lack of need for Because NRC’s customers medical services evaluating the quality of their uniqueness operate in a highly political compensation operations and regulated industry, cuts being tied to • NRC already competes to their margins due to patient outcome with a few players that further regulation could and quality of provide similar services as • NRC’s biggest competitive have a negative effect on service Market Pure they do, as well as advantage is its expansive NRC • Structure Competition healthcare organizations’ and diverse client base New laws are • market research teams NRC has no patents, so any requiring price Market Size $14B1 IP/software could be stolen, transparency • Also faces threats from replicated, and/or sold at a from care Industry traditional market > 10%1 lower price without any providers, giving Growth research firms looking to legal ramifications the patients more expand their offerings purchasing power

1https://www.prnewswire.com/news-releases/healthcare-analytics-market-size-to-reach-usd-40-781-billion-by-2025--cagr-of- 23-55---valuates-reports-301041851.html 577 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • In 2018, management led to a well • There was not a whole lot of coverage of NRC 5 years ago, so executed recapitalization of the firm the pure lack of knowledge of the existence of the firm that got rid of one class of stock and set up a singular stock contributed to its relatively low price Recapitalization • During a recapitalization in 2014, a confusing (to the • This allowed more clarity on the investors side, allowing them to feel market) share class split occurred more confident about investing in a • This provided an excellent opportunity for stock business they knew was strong arbitrage, but wasn’t very investor friendly • NRC has established itself as a consistent dividend stock • NRC pays out a substantial amount of its Return Breakdown: Consensus vs Results earnings in dividends Consistent • Given the CEO also owns over 50% Dividends of the shares and controls the company, there is more incentive for him to pay the shareholders before reinvesting into the company • EBITDA margins increase by 8% due to Substantial the reduction in material costs caused by Margin a change in survey methodology that Expansion relies more on the internet instead of postage in addition to economies of scale

578 Back to List National Research Corp Takeaways

NRC is an Okay Business – 3/5 Future Outlook

• Their business model is mainly collecting surveys for Can NRC Sustain its Advantages? healthcare organizations, which isn’t an extremely • It doesn’t seem like NRC is going to lose complicated business its existing client base, as the products • Although they have established themselves in the are well received and praised for their NRC has no a Moat industry already, there are many other players who quality and ease of use are actively focused on breaking in or already do what NRC does Can NRC continue to grow? • There is nothing special about NRC besides the quality of the actual product • The healthcare industry is shifting towards quality based compensation • NRC’s services are becoming more and more valuable given the changing • The saving grace for NRC is the changing dynamics environment in the industry of health care compensation in the United States • Medicare and Medicaid reimbursement from commercial payers is becoming increasingly more Is NRC poised to continue to outperform? focused on the value that was provided from the • Given so much of the large 5-year TSR has Good Industry to be in service and not just what services were administered come from multiple expansion, and the 5- • These regulations are making customer centric care a year revenue CAGR is unimpressive at 5.6%, focus for many organizations, as their financial health it is unlikely that NRC will continue to now depends on how good of a job they actually do, and outperform the market, despite the growing feedback is helpful for that market that it operates in

579 Owen Stimpson 377% 5 Year TSR OM:TROAX Rank: 94/104

580 Troax Group Overview In Swedish Krona (Kr)

Troax is a global supplier of area protection for indoor use (metal EV / NTM EBITDA based mesh panel solutions) within the machine guarding, warehouse partitioning and property protection market 2019 segments.

Statistic 06/08/2015 06/08/2020 2015 Stock Price 29.67 Kr 138.2 Kr

Market Cap 1.92B Kr 8.28B Kr 0x 5x 10x 15x 20x 25x 30x 35x Enterprise Value 2.46B Kr 8.96B Kr

Shares Outstanding 64.82M 59.94M

EV / NTM Revenue 2.63x 5.76x

EV / NTM EBITDA 12.12x 29.82x

PE 5.64x 51.23x

Statistic FY 2015 FY 2019

Revenue 1.07B 1.73B

EBITDA 243.3M 375.0M

581 Troax Group Business Model

Primary Product Context Sales by Division TROAX manufactures 15% and sells metal-based TROAX manufactures high-quality Metal mesh panels for use in metal-based mesh panels. Mesh guarding people from Panels machines, partitioning • TROAX’s products are used to guard 62% 24% factories, and property people from machines, to partition protection. factors, and to protect property. Property Protection Warehouse Partitioning • TROAX ensures its product are high- Machine Guarding quality and reliable: • TROAX uses a third party 5% Sales by Geography quality tester. • Products undergo rigorous 15% 16% testing and results posted online. 11%

• TROAX has manufacturing facilities 53% in 5 countries and sells worldwide. TROAX mesh panels in use. Nordics EU UK NA Rest • Largest player in the industry. TROAX is a high capital intensity business.

582 Low Threat Medium Threat Troax Group Competitive Analysis High Threat

Competitive What’s Changed in Risks Competitive Landscape Barriers To Entry Advantages the Industry

Oligopoly / Market Monopolistic Structure • Relationships Competition with major Market Size ≈£1.1B1 customers (i.e. • New competitor Metal Mesh Industry manufacturers). enters market Industry MSD1 • Capital intensive to and undercuts Growth • Auto industry ( a key purchase machinery TROAX on price. Participants manufacture and • Variety of end market) has • TROAX is the largest player and materials. sell a variety of different metal module sizes so with 15% market share. slowed. mesh products primarily for products can be • Product defect • Next biggest competitor use in factories and for • Product is not very pieced together or failure. is Axelent with 6% • Increasing use of property protection. difficult to produce and used in a market share. robots and humans and there are many variety of • Remainder of the market is • New product co-operatively in small and situations. fractured: (i.e. made from manufacturing. • 38% of global market independent players. new material) is controlled by • Reputation for invented and blacksmiths. quality and used. • 41% controlled by small, quality testing independent results. competitors.

1. Q1 2020 Investor Presentation 583 What Investors Missed

The Actual Story of the Last Five Years The Bear Thesis Five Years Ago: • TROAX has maintained its status as the largest player in the industry with roughly 15% market share (2nd biggest 6% share). • Not a very attractive industry: products are essentially • TROAX products are highest quality commodities, low industry growth, cyclical. available and is the only major company to TROAX is an have quality standards verified by third industry leader • TROAX is in a very mature industry and has minimal room for party certification company (TÜV). growth. • TROAX products are superior to many cheaper alternatives. • TROAX avg revenue growth of 15% > industry growth of 4%-6%. • Invested to increase production capacity each Return Breakdown: Consensus vs Results year since 2015. TROAX expanded • Expanded product line: TROAX now makes capabilities transparent PC panels which the company believes is an avenue for future growth. • TROAX maintained dominant market share in Nordics. • Consistently added distributors; grew revenue outside Nordics from 82.7M to TROAX grew 141.4M from FY2015 to FY2019. • Acquired Folding Guard in 2017 and expanded to US – large market and major avenue for future growth.

584 Back to List Troax Takeaways TROAX is a Good Business- 3.5/5 Future Outlook • Despite the market being largely fragmented, TROAX Can TROAX Sustain its Market Position? is the largest major player and nearly 3x as big as the • Mature industry and TROAX has consistently been nd 2 largest competitor. the leading player. • TROAX has high-end products that are more reliable TROAX is the industry • Not much room for innovation nor is there much than many cheaper alternatives: leader incentive for a major new competitor to enter (1.1B • Safety products so customers want most total market size). reliable product – not necessarily cheapest one • Reputation is key, and TROAX has one of the best. (especially given low cost relative to other costs). Can TROAX continue to grow faster than the industry? • Maintained market share in core Nordics market. • TROAX can likely continue to capture market share by • Grew incrementally in Europe (11.4% CAGR) and UK leveraging its reputation and quality, and by entering new (4.44% CAGR) by adding new distributors and markets / increasing penetration in existing ones (i.e. US). cultivating new customer relationships. • Fragmented industry and lots of opportunity for roll-up TROAX grew • Expanded to US via acquisition of Folding Guard. Large acquisitions. growth opportunity. Is TROAX poised to continue to outperform the market? • US now represents 15% of sales and TROAX is • Mature industry with minimal innovation – not much investing to expand capabilities and capture room for major growth surprises. market share. • TROAX can likely continue to grow in a similar fashion but will no likely no longer see return through multiple • Mature, fragmented industry with minimal innovation – expansion as it trades at 55x earnings (multiple also drove TROAX can likely continue to grow through acquisitions last five year return). TROAX can likely continue and by leveraging their brand and reputation. its growth trajectory • Trend towards automatization of manufacturing likely to • Still new to US market which represents large growth be a long-term headwind as there is less need for human opportunity. safety protection equipment.

585 Elizabeth DeSouza 376% 5 Year TSR NASDAQCM:NEO Rank: 95/104

586 NeoGenomics Inc. Overview

NeoGenomics, Inc., headquartered in Fort Myers, Florida, NTM EV/EBITDA Multiple operates a network of cancer-focused testing laboratories in the United States, as well as laboratories in Switzerland and Singapore. 2020 83.2x

Statistic 6/8/15 6/8/20 2015 32.5x Stock Price $5.63 $27.85 0.0x 20.0x 40.0x 60.0x 80.0x 100.0x Market Cap $339.88M $3.06B

Enterprise Value $318.71M $3.13B

Shares Outstanding 60.37M 109.74M

EV / NTM Revenue 2.90x 7.05x

EV / NTM EBITDA 32.54x 83.20x NTM P/E N/A N/A Z

Statistic FY 2015 FY 2019

Revenue $99.8M $408.8M

EBITDA $6.2M $46.5M

587 NeoGenomics Inc. Business Model

Primary Products Context Sales by Category • Molecular and next- NEO operates cancer-focused generation sequencing genetic testing laboratories 12.0% testing • NEO operates in two segments: Clinical and Pharma • Diagnostic test kits 88.0% • NeoTYPE panels • Clinical customers include Genetic including IHC and FISH community-based pathology Clinical Services Pharma Services Testing tests practices, oncology groups, • Clinical trials and hospitals, and academic centers research • Pharma includes pharmaceutical Sales by Type of Payer1 • Laboratory services companies seeking testing and 18.0% • Data interpretation services to support their studies services and clinical trials 59.0% • NEO helps biopharma customers 23.0%

develop diagnostic tests of their Medicare & other government own and identify drug targets Commercial insurance • NEO markets its services to Client direct billing pathologists, oncologists, urologists, other clinicians, NEO is a capital intensive business, as it has hospitals, and pharmaceutical laboratories worldwide. companies

1Sales by geography not given 588 Low Threat Medium Threat NeoGenomics Inc. Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry Life Sciences Tools & Services

The players in this industry are • NEO has substantial involved in drug discovery, • Lower cost and quick testing indebtedness with an • Increased development, and production by turnaround times is a key agreement providing $100M laboratory providing analytical tools, competitive advantage for revolving credit facility, automation instruments, consumables, supplies, • Technology requires NEO $100M term loan facility, and and contract research services significant R&D to • • Increased NEO invests in information $50M delayed draw term develop technology, automation, and pressure to lower loan healthcare service • Strict regulatory best practices to continually • Major competitors, including costs such as Market environment improve on this advantage Oligopoly Quest Diagnostics, can offer laboratory testing Structure • Relationships and • NEO is the leading provider of lower prices, thus making • Covid-19 reputation are very Molecular and next- Market Size $461.97B1 them more attractive to increasing important and take generation sequencing testing customers demand for Industry time to build • > 10%2 NEO can serve as a one-stop- • Facing efforts by government laboratory testing Growth shop, satisfying all oncology payers to reduce utilization and need for fast testing needs in their and reimbursement for turnaround time laboratory laboratory testing services

1 https://eresearch.fidelity.com/eresearch/markets_sectors/sectors/industries.jhtml?tab=learn&industry=352030 589 2YTD What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • NEO’s competitors were big, well established companies • Expanded from one operating with more expansive testing capabilities segment to two • NEO was looking to build the company by developing a • New Pharma segment supports high quality team of employees pharmaceutical companies with • NEO had one operating segment, Laboratory Testing, testing in clinical trials that delivered testing services to hospital, pathologists, • Gained market share by entering oncologists, other clinicians, and researchers into contracts with managed care • Net loss for 2015 of $2.5M primarily due to acquisition organizations and large hospital costs and FISH reimbursement cuts by CMS groups • Acquired Genoptix in 2018 and Consensus vs Results Market Share successfully integrated it, which Return Breakdown: Expansion helped increase revenue in 2019 by 48% • Announced a global strategic partnership with Pharmaceutical Product Development, LLC in 2018 • Opened a laboratory in Singapore and one in Switzerland • Above industry average employee retention rate, indicating success in creating positive company culture

590 Back to List NeoGenomics Inc. Takeaways

NEO is an Okay Business – 3/5 Future Outlook Can NEO Sustain its Advantages? • NEO’s main competitive advantage is its • NEO operates cancer-focused testing low costs and quick turn around time, laboratories, while its competitors have more which can be replicated by its general testing capabilities NEO has a Niche competitors • NEO can be a one-stop-shop and satisfy all • Tests are not proprietary oncology testing needs in their laboratory • Offers complete suite of cancer testing Can NEO continue to grow? • NEO has growth potential in the pharma services segment (had a backlog of $145M at the start of 2020) • Revenue has grown consistently over the last 5 • Can continue to grow geographically, years reaching new customers with their testing • Net income was negative until 2018, but has capabilities been positive for the last two, showing Is NEO poised to continue to outperform? movement in the right direction • Covid-19 could lower NEO testing volumes Financial Growth • Strong gross profit margin of 48.1% in FY 2019 with stay at home orders in place, thus (between 42% and 48% for the last 5 years) decreasing revenue in the short term • EBITDA margin in line with competitors’ at • NEO has a narrow potential for continued 11.4% in FY 2019 (around 11% for the last 3 growth, and it would need to cut costs to years) remain competitive and continue to outperform

591 Elizabeth DeSouza 376% 5 Year TSR XTRA:SANT Rank: 96/104

592 S&T AG Overview

S&T AG, headquartered in Linz, Austria, develops, implements, NTM EV/EBITDA Multiple and markets IT hardware, solutions, and services primarily in Germany, Austria, Switzerland, and Eastern Europe. 2020 13.0x

Statistic 6/8/15 6/8/20 2015 8.9x Stock Price €5.02 €23.56 0.0x 5.0x 10.0x 15.0x Market Cap €217.39M €1.53B

Enterprise Value €241.75M €1.57B

Shares Outstanding 43.27M 65.01M

EV / NTM Revenue 0.52x 1.30x

EV / NTM EBITDA 8.92x 12.96x NTM P/E 15.22x 29.34x Z

Statistic FY 2015 FY 2019

Revenue €470.9M €1.138B

EBITDA €22.9M €71.4M

593 S&T Business Model

Primary Products Context SANT offers a well rounded Sales by Geography 6.0% • Internet of portfolio of technological 13.0% solutions Things(IoT) • Business is split into 3 Services segments: IoT Solutions • Embedded Europe, IoT Solutions IT Services Computer America, and IT Services 81.0% Technologies (ECT) • IT Services segment North America Europe Asia • Hardware, software, encompasses IT services and professional undertaken in Europe Sales by Category 12.6% services • IoT Europe focuses on the 45.1% development of secure and networked solutions, combining hardware, middleware, and services 42.3% • IoT America business IT Services IoT Solutions EU activities are mainly in ECT IoT Solutions USA • Follows a “Plan-Build-Run” model of operation SANT is a capital moderate business as some of its production is outsourced

594 Low Threat Medium Threat S&T Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry IT Consulting & Services

The players in this industry offer information technology and systems • Growth of big integration services, including data has information technology consulting, • Regional subsidiaries can increased the • information management services, select technology partners Faulty products could need for data and commercial electronic data to create a portfolio damage brand reputation management and • Minimal start up costs and processing. tailored to their region and deter business IT services low level of regulation • • Certain internet systems SANT relies on product • Increased use of • Primary barriers are components manufactured Market for airplanes have been smart phones and Oligopoly educational experience Structure specifically certified for by third parties, primarily tablets as a means and ability to attract Airbus, Boeing, and other in Asia, and Covid-19 poses to access the Market Size $2.26T1 clients manufacturers the risk of interruption of internet supply chain or price Industry • Portfolio of proprietary • Security issues HSD2 increases Growth technologies have become a top priority for customers

1 https://eresearch.fidelity.com/eresearch/markets_sectors/sectors/industries.jhtml?tab=learn&industry=451020 595 2YTD What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • In 2015, SANT was a small, geographically concentrated company that did not have much differentiation from its • Acquisition of Kontron allowed peers SANT to add industrial computing • Until the takeover of Kontron in 2016, S&T AG was a technologies to their portfolio classic IT systems provider • SANT thus had computing technologies, production • It offered standard services like that of any other IT Strategic environments, and enterprise IT service provider Acquisitions • Made additional acquisitions in • Without clear competitive advantages, SANT did not 2019 of Kapsch CarrierCom and seem like anything special Kapsch Public Transportation Group Consensus vs Results • Sales have increased as a result of Return Breakdown: these acquisitions

• Management is committed to growing SANT and increasing its profitability • Plan to expand market share held by Focused all sectors Management • Increasing cross-selling and Plan integrated value added by SANT • More regular acquisitions to increase SANT portfolio of technologies, while growing organically

596 Back to List S&T Takeaways

SANT is an Okay Business – 2.5/5 Future Outlook

Can SANT Sustain its Advantages? • Low barriers to entry in the industry, • SANT competitive advantages are weak making it more possible for competitors • Their biggest advantage is the special to offer similar services as SANT SANT Advantages are certification given by airplane manufactures • Patented technology Weak • Although their technology is patented, there is no clear indication of how their technology is Can SANT continue to grow? better than their competitors • SANT can continue to expand into new geographic locations, but mainly through acquisitions • Acquisition strategy seems to have worked in the past • SANT has low gross and EBITDA margins at • SANT has €312M in cash to make 37.2% and 6.3% respectively that have only acquisitions as they arise grown slightly over the last 5 years Is SANT poised to continue to outperform? • SANT has had topline growth over the past 5 Weak Growth • Too much competition from similar service years, but at a slow year to year rate of about providers 12% • Without strong competitive advantages or a • Growth is mostly inorganic and the opportunity for organic growth seems low clear path for growth, it seems unlikely that SANT will continue to outperform

597 Owen Stimpson 368% 5 Year TSR OB:SALM Rank: 97/104

598 SalMar Overview In Norwegian Krone (kr)

SalMar ASA is a Norwegian fish farm company and one of the EV / NTM EBITDA world's largest producers of farmed salmon. The company's main activities include marine-phase farming, broodfish and smolt 2019 production, processing and sale of farmed salmon.

Statistic 06/08/2015 06/08/2020 2015 Stock Price 116.5 kr 464.1 kr

Market Cap 13.05B kr 52.41B kr 0x 5x 10x 15x 20x Enterprise Value 14.87B kr 55.97B kr

Shares Outstanding 112.00M 112.9M

EV / NTM Revenue 1.89x 4.83x

EV / NTM EBITDA 6.95x 14.72x

PE 10.17x 21.91x

Statistic FY 2015 FY 2019

Revenue 7.30B 12.23B

EBITDA 1.7B 3.44B

599 SalMar Business Model

Primary Product Context Production by Segment SALM is a salmon farming company. Vertically integrated 6% salmon farming in Norway Norway with 101 salmon • SALM aims to produce fish at Farmed farming licenses, 7 smolt lowest cost (cost leadership) by Salmon1 hatcheries, and 1 having top operational efficiency. 30% lumpfish facility. • Also aims to have lowest 63% price for customers. Iceland’s largest Central Norway Northern Norway Arnarlax producer of farmed Arnarlax • SALM is vertically integrated salmon. Fully integrated (Iceland controlling each stage of fish with hatcheries, sea Farmed farming from smolt hatching to farms, harvesting, and Sales by Geography Salmon) processing. sales force. Owned 59% 18% 23% by SALM. • SALM’s in-house sales team sells salmon globally, such as importers, retail chains, and larger processing Processing of SALM’s 17% companies. Sales and farmed salmon and sales 42% • SALM also has processing Processing to customers in over 50 capabilities. countries. Asia NA Europe Norway • Norway focused but has stake in salmon farms in Iceland and UK. SALM is a high capital intensity business.

1. SALM’s reports Central Norway and Northern Norway salmon farming separately. 600 Low Threat Medium Threat SalMar Competitive Analysis High Threat

Competitive What’s Changed in Risks Competitive Landscape Barriers To Entry Advantages the Industry

Market • Technological Oligopoly • Regulatory burdens: Structure need approvals to fish advantages in Norway Salmon fish harvesting Market Size ≈$4.02B1 at commercial scale. • Regulatory Export Industry which improve • SALM granted change and Industry 1 yields / lower Participants engage in range of MSD first eight political risk. Growth costs. • processes to enable the licenses for Increasing focus on production of salmon through • Understated as SALM sells 19% • Reputation and environmental offshore fish • Plant based farming from smolt hatching, of product to Norway reliability. impacts and customers. farming by substitute (i.e. to salmon farming, to • Innovative: sustainability. • SALM is 9th largest salmon Norway Impossible processing. Market only SALM opened producer in the world and 4th government. Foods) become includes value of farmed first offshore largest in Norway. more popular / • Off-shore and on- salmon exports from Norway. fish farm. • Norwegian salmon • Capital intensive to enter salmon shore salmon • producers: MOWI (#1 in open fish farm / Vertically market. farming technology world), Lerøy (#3 in processing facility. integrated improving and world), Grieg Seafood (minimal facilities being built. (#6 in world). reliance on • Essentially • Growth rates can be altered by • Specific geographies suppliers for commodity pricing (i.e. 2019 Norway are better for salmon smolt). product. farming (i.e. Norway export volume up 5% but up • Economies of and Chile). 6% in Norwegian Krone value). scale.

1. https://www.undercurrentnews.com/2019/12/05/global-salmon-production-set-to-rise-6-5-in-2019-the-highest-increase-since-2014/ 601 What Investors Missed The Actual Story of the Last Five Years The Bear Thesis Five Years Ago: • Offshore fish farm approved in Feb 2016 • Regulatory burdens impede growth: SALM cannot simply start (first one approved by Norway farming more salmon – even if has the capital required. government). • Offshore fish farm project has already absorbed 100M Kr, • World's first offshore fish farm. has been worked on since 2012, but still has not been Offshore fish farm • Operational in 2017 (on-time and budget). approved. launched • Preliminary results promising: not a single • Supplier risks for smolt, feed costs (which lowered 2015 margins), delousing treatment needed (get rid of salmon lice; and salmon is commodity so there is pricing risk as salmon lice), and strong fish growth rates well. and quality.

• Increased salmon yields each year since Increase in salmon FY2016. Return Breakdown: Consensus vs Results yields • Invested in salmon farms in Iceland by increasing share of Arnarlax. • SALM aims to be cost leader in the farmed salmon industry. • Minimized supplier risk by investing 800M to become nearly self-sufficient in smolt Improved processes production (built two new smolt harvesting and lowered supplier plants). risk • Salmon lice, other diseases, and feed costs continue to be issues but SALM increased EBIT / kg from Q4 FY2015 to Q4 FY2019 from 9.82 to 16.72 (high of 28.12 Q2 FY2017).

602 Back to List SalMar Takeaways SALM is a Strong Business- 4/5 Future Outlook • SALM operates in an industry with high barriers to Can SALM Sustain its Market Position? entry imposed by regulations. • SALM’s traditional inshore salmon farming is SALM has a moat • Capital intensive to farm fish and only companies protected by strong regulatory barriers to entry. operating in specific geographies (such as Norway) • One of the largest salmon farming companies in the can compete. world with scale and tech advantages. • SALM bought a controlling stake in Arnarlax, built two Can SALM continue to grow faster than the industry? new smolt harvest facilities, and built the world’s first offshore fish farm. • SALM’s positioning is protected by regulation but that also impedes its growth. • SALM increased salmon output each year from FY2016 • Lice and other diseases continue to be recurring issue for SALM invested and grew to FY2019 (decrease from 2015 to 2016 due to lice). industry but can be more/less concentrated in specific • Strong demand for salmon globally – while prices are areas – therefore could harm SALM disproportionately. volatile, they have trended upwards since 2013. • Offshore site could be gateway to outperformance. • Persistent focus on costs increased EBIT / Kg. Is SALM poised to continue to outperform the market? • SALM has developed the world’s first offshore salmon • SALM’s core salmon farming business is strong. farm. • However, the market justifies SALM’s premium valuation • Goal is to reduce costs associated with disease, especially due to its offshore salmon farm and its future potential. lice, and increase capacity. • Offshore salmon farming could be the future and a key SALM’s runway for growth • Also reduces crowded shorelines which are also competitive advantage for SALM if its proves to lower hinges on off-shore prime real estate for other uses (i.e. tourism). costs and disease, and increase capacity. salmon • Project still new and technology young – uncertain • Very speculative as it is currently more costly, concerns whether offshore farming will be the future or not over environment and fish escapes, and is unproven. (competing against onshore farming, potential for lab Onshore farming also may prove to be better. grown salmon, traditional inshore farming, and wild • Difficult to assess likelihood of outperformance given salmon). speculative nature of company’s offshore farm.

603 Elizabeth DeSouza 361% 5 Year TSR OM:VITB Rank: 98/104

604 Vitec Overview

Vitec Software Group AB, is a Swedish software company, NTM EV/EBITDA Multiple providing vertical market software in the Nordic and Baltic countries, the rest of Europe, and the Middle East. 2020 16.8x

Statistic 6/8/15 6/8/20 2015 8.7x Stock Price 45.6 SEK 202 SEK 0.0x 5.0x 10.0x 15.0x 20.0x Market Cap 1.34B SEK 6.58B SEK

Enterprise Value 1.45B SEK 6.99B SEK

Shares Outstanding 29.40M 32.57M

EV / NTM Revenue 2.45x 5.34x

EV / NTM EBITDA 8.69x 16.79x NTM P/E 17.34x 35.36x Z

Statistic FY 2015 FY 2019

Revenue 683.9M SEK 1,295M SEK

EBITDA 134.4M SEK 263.4M SEK

605 Vitec Business Model

Primary Products Context Sales by Geography 1.0% • Vertical Market VITB offers customers business- 25.0% 31.0% Software addresses critical, proprietarily developed the needs of any software given business in a • Sales are made B2B vertical market • Software is distributed to customers 19.0% Vertical • Vitec offers 24.0% via a subscription model, creating a Market standardized Sweden Denmark Finland high number of recurring revenues Software software that Norway Other • addresses the Software provided deal with Sales by Category business management specific to markets shown in 0.2% 15.7% each operating sector the Sales by 2.5% Category chart • Company growth is mainly achieved 30.8% through acquisitions within the 18.7% Nordic region 13.8% • Software in the Education segment 4.3% 14.1% provides reading and writing tools Auto Energy Real Estate Finance & Insurance for people with read/write disorders Environment Estate Agents Education & Health Shared • Software in the Health segment includes cloud based medical record management VITB is a capital light business

606 Low Threat Medium Threat Vitec Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry Application Software

The players in this industry offer • VITB sometimes enters into • Constantly software programs and data fixed price projects that evolving to create management to customers in all • VITB has a moat- its could result in significant more efficient sectors competitors are either losses if labor resources software • Significant investment in smaller and less organized required exceed those solutions R&D needed in this space or too big to care about such small markets calculated at the time of the • Increased • Some very large • VITB has a decentralized deal concern for Market companies in the industry, Oligopoly • Acquisitions present a risk cyber-security Structure but new companies still management structure, in a number of areas but and protection of have room to enter meaning subsidiaries each Market Size $10.8B1 have their own carry particularly high risks customer data management teams that linked to the assumption of • Increased need Industry MSD2 oversee business, ensuring liabilities from the acquired for businesses to Growth high quality service company to digitize their processes

1 https://www.thebusinessresearchcompany.com/report/application-software-global-market-report-2018 607 2 https://marketrealist.com/2014/07/must-know-overview-software-industry-2/ What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • In 2015, VITB was very small and very niche, making it an • Since 2015, VITB has made 17 intimidating investment acquisitions • Until 2015, they had only made 6 acquisitions • The 5 acquisitions in 2019 • Acquisitions are a big part of their strategy, so having a very added about SEK 160 million in short track record in that area made investors wary sales • At this size, it was more likely that a big company might try to • Acquisitions also help VITB take market share diversify their portfolio and thus their risk Profitable • Cash flow positive, so they have Acquisitions financing for future Return Breakdown: Consensus vs Results acquisitions • VITB has developed a very clear approach to assessing good acquisitions- all acquisitions must directly add to group earnings, they do not ”invest in future expectations”

EBITDA

608 Back to List Vitec Takeaways VITB is a Good Business – 4/5 Future Outlook Can VITB Sustain its Advantages? • VITB ‘s acquisitions have made it big • VITB operates in a very niche space, in a very enough so that it is the preferred choice specific area of the world, which makes it over its smaller, less organized competitors seem likely that its dominance in this market • The spaces VITB operates in are too niche will continue for big software companies to want to get • Many of their products are proprietary VITB has a Moat involved in • Can grow organically by reaching new Can VITB continue to grow? customers in their preexisting operating • VITB can continue to grow geographically into sectors through marketing and word or other parts of Europe mouth • The Nordic region seems to be their area of expertise, and they have not yet reached their • In 2019 recurring revenue grew about 22%, full potential there but of this, only around 6% was organic Is VITB poised to continue to outperform? growth • VITB had a strong Q2 2020 earnings report, after • VITB has consistent topline growth, but this which share prices shot up Little to No Organic can be attributed to their acquisitions, which • EBITDA and gross margins have grown every Growth have yet to slow down year and are forecasted to continue in this way • However, their acquisition strategy seems to • Although the have struggled to grow organically, be working well, and they claim to have over the growth strategy they have followed for the 100 possible targets past five years seems like it will allow VITB to continue to outperform

609 Owen Stimpson 361% 5 Year TSR XTRA:IVU Rank: 99/104

610 IVU Traffic Technologies Overview EV / LTM EBITDA IVU develops solutions for public passenger and goods transport, and transport logistics worldwide. Features include resource planning, fleet management, and billing. 2019

Statistic 06/08/2015 06/08/2020 2015 Stock Price €3.61 €14.95

Market Cap €63.91M €264.90M 0x 5x 10x 15x 20x 25x Enterprise Value €50.18M €234.95M

Shares Outstanding 17.72M 17.72M

EV / LTM Revenue 1.32 2.84x

EV / LTM EBITDA 9.29x 19.83x

PE 14.61x 25.42x

Statistic FY 2015 FY 2019

Revenue 58.1M 88.8M

EBITDA 6.0M 11.2M

611 IVU Traffic Technologies Business Model

Primary Product Context

Develops, installs, IVU makes comprehensive IT maintains, and operates solutions for buses and trains. integrated IT solutions for buses and trains. Integrated IT • Customers use IVU software Products cover the solutions for to help with tasks across the Sales by Geography whole spectrum of buses and trains planning, operation, and planning, operation and quality insurance spectrum. 3% quality assurance for • i.e.: creating public transport and timetables, fleet 49% railway companies. management, etc. • IVU software can often 48% replace many different systems at once as it is integrated. Germany Rest of EU Rest of World

• IVU software’s aim is to IVU is a medium capital intensity business. improve the quality and efficiency of public transport.

• IVU develops the software, installs it, and maintains it. DB long distance train which uses IVU software

612 Low Threat Medium Threat IVU Traffic Technologies Competitive Analysis High Threat

Competitive What’s Changed Risks Competitive Landscape Barriers To Entry Advantages in the Industry

Market Monopolistic Structure Competition Global Transportation • Contracts are long- Management System Market Size 2.5B1 term. • System breach or Industry Industry > 10%1 • IVU’s software is major system Participants develop, Growth • Highly complex integrated and failure. • Increasing implement, and maintain software which accomplishes urbanisation and transportation software • Variety of sub-industries for requires start-up multiple tasks. increasing reliance systems. different uses. capital to develop. • Losing a major on public • Many software products contract renewal. • Difficult to • IVU has research transport. are unbundled versions know features of IVU’s software, which relationships with • Car use needed • Technological is integrated. universities. anticipated without obsolescence. • Largest global players include to continue market JDA Software, Omnitracs, to decline. feedback from • Reputation and Descartes, and Oracle. • Contract customers. brand. • IVU has strong foothold in cancellation. native German market. • Human capital requirements.

1. https://www.globenewswire.com/news-release/2020/01/28/1976025/0/en/Global-Transportation-Management-Systems-TMS-Market-and-Transportation- Management-Solution-Market-2020-Insights-by-Top-Players-Types-Key-Regions-Applications-Growth-Analysis-Future.html 613 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • R&D as a % of sales has risen from 2% to 5% from FY2016 to FY2019. • Technology is evolving quickly – IVU is an old player that likely will • IVU developed leading integrated rail IT not keep up. solution – the only fully integrated product IVU capitalized on on the market. trends • IVU has had success in German speaking markets, but skepticism • Developed cloud product to capitalize on over whether they can achieve success internationally. SaaS trend, Pad to capitalize on tablet trend, RealTime for apps, and various • Logistics business revenue is flat, and has been flat for years. products for electric busses. • IVU’s product suite has enabled them to grow to >80% market share in Germany for rail IT. EPS Results • German sales grown at 8% CAGR from Return Breakdown: FY2015 to FY2019 to 43.7M. • IVU recorded substantial loss due to uncollected receivables in FY2016. IVU grew in new and • Adapted growth strategy to focus on existing markets adjacent European markets, especially German speaking ones. • Opened Vienna and Zurich offices. • International revenue now majority of total; revenue grown at 14% CAGR from 26.4M in FY2015 to 45.1M in FY2019. Logistics business • Integrated portion of logistics business into shuttered core business; sold election logistics business.

614 Back to List IVU Traffic Technologies Takeaways IVU is a High Quality Business- 4.5/5 Future Outlook

• IVU has a proprietary product in the rail IT segment – Can IVU Sustain its Market Position? no other product on the market is fully integrated. • IVU has a moat. • IVU has dominant >80% market share in Germany in • Long-term contracts. IVU has a moat an industry with high switching costs as systems are • Dominant market share in core German market. highly embedded into customers’ operations. • High-switching costs. • Contracts are also long-term. • Proprietary product. Can IVU continue to grow faster than the industry? • IVU has consistently invested in R&D and now has • strong product offerings in line with market trends: IVU’s investment in R&D has enabled them to develop digitization in rail, electric busses and transport, and products that can capitalize on new market trends. mobile apps for transportation. • IVU’s customer base gives them insight into market needs. IVU has invested and • Maintained market share dominance in core German grown internationally speaking markets (Austria/Germany/Switzerland) by • IVU has scale and strong human capital. establishing new offices. Is IVU poised to continue to outperform the market? • Focused on European markets. • Market trends show no sign of slowing down. • Avoided contract disputes since FY2016 after • Cars are likely to used in less than 50% of journeys strategy change. within cities by 2030. • Rail industry still growing at steady 2.5% - and • Recurring revenue is rising faster than sales. there is already major rail infrastructure all over • Digitization trends, and urbanisation (which increases the world. IVU has a runway for demand for public transport) will likely increase TAM growth • IVU has strong products and the reputation to capture going forward. industry growth. • Room for growth across Europe, and around the world. • IVU trades at a fair 25x forward earnings multiple.

615 Elizabeth DeSouza 357% 5 Year TSR NYSE:IPHI Rank: 100/104

616 Inphi Corporation Overview

Inphi Corporation, headquartered in Santa Clara, California, NTM EV/EBITDA Multiple provides high-speed analog and mixed signal semiconductor solutions for the communications, datacenter, and computing markets worldwide. 2020 24.4x

Statistic 6/8/15 6/8/20 2015 13.8x Stock Price $24.27 $110.63 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x 30.0x Market Cap $929.42M $5.33B

Enterprise Value $851.21M $5.63B

Shares Outstanding 38.30M 48.22M

EV / NTM Revenue 3.34x 8.93x

EV / NTM EBITDA 13.77x 24.37x NTM P/E 23.89x 40.01x Z

Statistic FY 2015 FY 2019

Revenue $192.7M $365.6M

EBITDA $16.0M $46.9M

617 Inphi Corporation Business Model

Primary Products Context • Telecommunications IPHI offers high-speed, mixed solutions carry data signal semiconductor solutions distances of 100s to • IPHI sells products directly 1000s of kms and indirectly to OEMs Sales by Geography1 • Data center edge • Sales are made on a purchase 11.8% interconnect solutions Semiconductors order basis, and IPHI does not 14.9% 45.0% deliver large amounts have long-term commitments of data with any of its customers • Inside data center interconnects solutions • IPHI designs and develops its 28.3% for cloud and products for the China U.S. Thailand Other enterprise customers communications and computing markets, which have design cycles of 2-3 years and product life cycles of 5+ years • IPHI works with OEMs to design IPHI products into their systems, so ODMs are required to purchase IPHI products for Inphi transimpedance amplifiers (TIAs) power the specific use IPHI is a capital intensive business. fastest networks on the planet

1Sales by category not shown because IPHI operates as one reportable segment 618 Low Threat Medium Threat Inphi Corporation Competitive Analysis High Threat

What’s Changed in Competitive Advantages Risks Barriers To Entry the Industry Semiconductors & Semiconductor Equipment • IPHI has a concentrated • Development of • Significant costs for customer base with 2 • IPHI employs process Internet of Things manufacturing customers accounting for technology experts, device systems expected to The players in this industry facilities and for about 25% of total manufacture semiconductors, technologists, and circuit increase sales research & revenue, and the 10 semiconductor equipment, and related designers development largest direct customers • Demand for products. • Silicon photonics and III-V • Major players have account for 70% of semiconductors has over 25% of market materials-based processes revenue been driven by their models are developed in use in consumer share • Products must undergo house electronics and the • Need accesses to the an extensive qualification Market • A number of IPHI customers high demand for Oligopoly latest technology to process, that does not Structure smart phones, mobile keep from becoming rely on them as their sole have guaranteed sales at supplier of semiconductor devices, and Market Size $2.28T1 obsolete the end of it solutions computers • Technologies are often • Average selling price of Industry • Successful research and • Covid-19 shift to > 10%1 patented semiconductors generally Growth development of new working from home • Need highly skilled decrease over time, which products and patent and distance learning employees could cause a decline in increasing need for protection revenue and gross bandwidth upgrades margins

1 https://eresearch.fidelity.com/eresearch/markets_sectors/sectors/industries.jhtml?tab=learn&industry=453010 619 What Investors Missed

The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years • IPHI faced competition from businesses with more • Introduced ColorZ in 2016 and began resources for R&D shipping commercial volumes in • Constant innovation needed in the semiconductor 2017 industry to remain competitive, and in 2015, IPHI was • ColorZ comprised 15%, 18%, and not sure if they had adequate resource for R&D to 17% of total revenue for 2019, 2018, and 2017 respectively remain competitive • IPHI introduced 45 new products in • Introduced 47 new products from 2014-2015 Successful 2018 alone and 22 new products in • Abandoned a project related to in process R&D and Products 2019 recorded an impairment charge of $1.8M • IPHI fabless manufacturing strategy, design expertise, proprietary model Return Breakdown: Consensus vs Results libraries, and design methodology allows for best possible products • Silicon photonics and DSP design expertise

• Acquired eSilicon in 2020, which expanded IPHI portfolio of cloud and telecommunications products Strategic • Demand for cloud and telecom Acquisitions products has increased as a result of Covid-19 causing people to work from home and use distance learning

620 Back to List Inphi Corporation Takeaways

IPHI is a Good Business – 3.5/5 Future Outlook Can IPHI Sustain its Advantages? • Silicon photonics and III-V materials-based • 893 issued, allowed, and pending processes models are developed in house, patents, with 780 issued and allow giving IPHI a competitive advantage because patents expiring between 2020-2038 these processes have complex material and • Niche expertise and high barriers to IPHI has Niche device interactions entry Expertise • Deep expertise in silicon photonics (Sipho), having developed first of its kind products Can IPHI continue to grow? Sipho products • Covid-19 has increased the number of • DSP design expertise on low-power and low- people working and learning from home latency DSP designs • IPHI sees growth opportunities with the increased demand for cloud and telecommunication products • Gross profit and EBITDA margins of 58.2% and • Needs for technology are constantly 12.8% respectively for FY 2019, which are in evolving line with their competitors’ • IPHI has high losses for the last 3 years, with a Is IPHI poised to continue to outperform? Consistent Losses net loss of $73 Million in 2019 • Increased demand for semiconductors and • Average EPS around -1.86 for the last 3 years related products offers the opportunity for • IPHI has only seen a positive EBIT twice in the IPHI to continue to grow last 10 years, raising uncertainty about the • IPHI still has room for multiple expansion company’s future

621 Owen Stimpson 354% 5 Year TSR NasdaqGS:ENTG Rank: 101/104

622 Entegris Overview

Entegris, Inc. is a provider of products and systems that purify, EV / NTM EBITDA protect, and transport critical materials used in the semiconductor device fabrication process. Entegris operates out 2019 of its headquarters in Billerica, Massachusetts.

Statistic 06/08/2015 06/08/2020 2015 Stock Price $14.56 $62.47

Market Cap $2.04B $8.41B 0x 5x 10x 15x 20x 25x Enterprise Value $2.44B $9.21B

Shares Outstanding 140.24M 134.61M

EV / NTM Revenue 2.20x 5.67x

EV / NTM EBITDA 8.35x 19.86x

PE 17.27x 31.83x

Statistic FY 2015 FY 2019

Revenue 1.08B 1.59B

EBITDA 232.4M 433.1M

623 Entegris Business Model

Primary Product Context Sales by Division High-performance and Specialty high-purity process ENTG is a semiconductor 28% 33% Chemicals and chemistries, gases, and materials solutions business. Engineered materials, and safe Materials delivery systems to • ENTG provides speciality (SECM) support semiconductor materials and chemicals used in manufacturing. the manufacturing of 39% semiconductors. SECM MC AMH Solutions to filter and Micro- purify critical liquid • ENTG also provides solutions to contamination chemistries and gases help companies transport, Sales by Geography Control used in semiconductor protect, and use these materials. (MC) manufacturing 19% processes. • ENTG provides a broad range of products and services – several 49% 24% Solutions to monitor, Advanced thousand products sold. protect, transport, and Materials deliver critical liquid 8% Handling • Manufacturing facilities across chemistries, wafers and (AMH) NA and Asia; global customer Taiwan NA EU Rest of Asia other substrates. base. ENTG is a high capital intensity business.

624 Low Threat Medium Threat Entegris Competitive Analysis High Threat

Competitive What’s Changed in Risks Competitive Landscape Barriers To Entry Advantages the Industry

Market Monopolistic • Range of products: ENTG Semiconductor Structure Competition • Customer • High technological sells thousands concentration: materials industry Market Size ≈52.37B1 expertise required. of products top ten • Increased enabling their Industry 1 • Capital customers 43% digitization and need MSD customers to Participants develop, Growth intensive to of sales. for semi-conductors spend less time manufacture, and sell • Few competitors that offer establish by rise of IoT, AI, 5G, facilities / buy sourcing. etc. materials used in the same range of products as • Materials equipment. production of semiconductors. ENTG (most focus on few sourcing: some • products or specific • High human Reputation and materials • Semiconductors have geographies). capital relationships obtained from gotten more • ENTG claims “there are requirements. with customers. single supplier. advanced and no global competitors smaller (atomic level that compete across the • Patents: ENTG has • Technology: manufacturing full range of products” • Technological ENTG has over required in many • Key competitors include: Pall 2,330 active patents obsolesce. 557M of sunk cases). Corporation, , Shin-Etsu and 1,040 pending patents. R&D in past five Polymer, and Gemu Vaulves, • Product defect. among others. years alone.

1. https://www.mordorintelligence.com/industry-reports/semiconductor-materials-market 625 What Investors Missed

The Actual Story of the Last Five Years The Bear Thesis Five Years Ago: • Trend towards smaller, more advanced • Roughly 20% of revenue is driven by IDM capex – and Q1 2025 had chips increased demand for ENTG the worst sequential decline for the semiconductor industry since products 2009. • MC segment grew at 20% CAGR • Unit demand seems to be peaking as well, and Gartner has from 437M in revenue FY2017 to reduced semiconductor growth estimates to 2.2% from 4.0%. 634M in FY2019. • Also highest margin segment Industry changes • ENTG is valued at a premium to peers. at 33% operating margin. were positive and ENTG grew • Chip demand increased due to “fourth • Poor cash conversion: 232M FY2015 EBITDA but just 79M levered industrial revolution” trends, such as 5G. free cash flow. • ENTG consistently pursued accretive Return Breakdown: Consensus vs Results acquisitions totalling 1.6B over past six years. • Grew product offering (a competitive advantage) and found operational synergies. • ENTG consistent above average industry performance over past five years justified its Justified multiple premium multiple. • NTM EBITDA multiple expanded to 19.8x. • ENTG has opted to consistently invest in ENTG invested in expanding their capacity and in acquisitions growth which has continued to depress their cash flow conversion but enabled their growth.

626 Back to List Entegris Takeaways ENTG is a Good Business- 4/5 Future Outlook • ENTG operates in a highly specialized industry with Can ENTG Sustain its Market Position? high technological barriers to entry: • ENTG has a moat due to its patents, and the • Patents. technological barriers to entry. • Start-up capital. • ENTG unit based revenue is largely recurring and has ENTG has a moat • Human capital. switching costs for customers who may consider • ENTG has a global reach and thousands of products – competitors’ products. not a model that is easily replicable by a new entrant. • ENTG’s large breadth of products and global reach is • And if it was, ENTG has long-lasting customer not easily replicable. relationships. Can ENTG continue to grow faster than the industry? • ENTG’s revenue is driven by semiconductors units – • ENTG has grown faster than the industry each year since enabling them to avoid the cyclicality of capex in the 2017. industry. • ENTG’s specialized products play into industry trends of • Leveraged high-quality products and breadth of product smaller, more advanced semiconductors. offering to expand business, particularly MC segment • Opportunity for future acquisitions. ENTG grew which grew at 20% CAGR. Is ENTG poised to continue to outperform the market? • MC segment most exposed to trends towards • ENTG is likely poised to protect its market share, and more advanced and smaller semiconductors. grow through acquisitions and by capturing new market • Pursued acquisitions that expanded product reach and share as the industry evolves. customer relationships, and enabled ENTG to grow. • But, in order to be competitive, ENTG needs to stay • Trends, such as 5G and IoT, that enabled MC segment to at the forefront of technology – and there is the chance they fall behind. ENTG has a runway for grow likely to continue. growth • Many locally based competitors focused on one or a few • Also, ENTG trades at the highest NTM EBITDA multiple in products – future opportunities for ENTG acquisitions. the last 10 years and at a steep premium to peers.

627 Max Schieferdecker 354% 5 Year TSR OB:NRS Rank: 102/104

628 Norway Royal Salmon Overview

Norway Royal Salmon is a salmon farming company based in NTM EV/EBITDA Multiple Trondheim, Norway, that provides fresh and frozen salmon to 55 countries around the world. 2020 16.7x

Statistic 6/8/15 6/8/20 2015 8.7x Stock Price 63.75 NOK 245.40 NOK 0.0x 5.0x 10.0x 15.0x 20.0x Market Cap 2.78B NOK 10.42B NOK

Enterprise Value 3.43B NOK 10.88B NOK

Shares Outstanding 43.57M 42.47M

EV / NTM Revenue 1.16x 1.77x

EV / NTM EBITDA 8.66x 16.67x NTM P/E 11.85x 16.40x Z

Statistic FY 2015 FY 2019

Revenue 3.21B 5.59B

EBITDA 277.78M 455.05M

629 Norway Royal Salmon Business Model

Primary Products Context

Sales by Geography • Fresh and frozen salmon NRS provides salmon to people Salmon that are farmed from around the world their licensed waters 0.2% • In 2019, 30,509 tons of 18.0% 13.1% salmon was harvested • This was accomplished under their 35,035 tons of maximum allowed 6.0% biomass (MAB) • Mainly operates their farms in the northern region of Norway 62.7% • These areas are better based off the “traffic light system” that the

Norwegian government Norway Western Europe Easern Europs Asia & ME Other put in place • Offers higher MAB A few of the salmon farms of NRS NRS is a capital intensive business given the large growth opportunities amounts of machinery and property needed to operate

630 Low Threat Medium Threat Norway Royal Salmon Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry Fish Farming

The players in this industry farm, • Commodity risk given the breed, and harvest fish in water status of salmon environments and then sell them to • Biological risks regarding distributors. the health of • Government regulations underdeveloped smolts and licensing for certain • Attempting to increase areas are necessary in • Large size of operations operational efficiencies may • Salmon has Market Pure order to operate • Key areas are harm the quality of the become more Structure Competition • High up-front costs give licensed to NRS product popular the established players a • Market Size $297B1 Regulatory risks may financial advantage inhibit expansion and/or Industry increase costs MSD1 Growth • Land-based salmon farms may take away demand in the future

1 https://www.alliedmarketresearch.com/fish-farming-market 631 What Investors Missed The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years

• In October 2016, though the purchase of • Revenue was down y/y in 2014 as a result of Norwegian 50% of Arctic Fish for €29m, NRS salmon’s largest market at the time, Russia, stopping all expanded their salmon farming imports of salmon from Norway and the EU Expansion operations into Iceland • The instability of the salmon market was worrisome given the into New • Arctic Fish was one of the largest of 6 companies with farming licenses in commodity status that it has Markets Iceland, so the investment laid the ground for substantial expansion into relatively untapped waters

Return Breakdown: Consensus vs Results • In September 2019, NRS announced the divestiture of their southern region for €124m • This was part of their larger strategy to concentrate and strengthen their Important position in Northern Norway and Divestment Iceland • The margins and sales of this segment had been steadily declining over the years and were significantly smaller at the time of the sale

632 Back to List Norway Royal Salmon Takeaways NRS is an Average Business – 2.5/5 Future Outlook • There are no real differentiating factors between NRS Can NRS Sustain its Advantages? and its competitors • Although their advantages aren’t very • Salmon is salmon, and most of the time strong to begin with, NRS should be able customers are just going to go with the to sustain its licensed areas to farm in cheapest option NRS does not have a • However, people are still going to eat salmon Strong Moat Can NRS continue to grow? worldwide, and there has been an increase in demand • Given the commodity status of salmon, over the past few years NRS doesn’t have a whole lot of control • NRS helps fill that demand and thus earns a over their pricing sizable amount of revenue given its relatively • Even if the demand for salmon continues large market share to increase into the future, there is no • While the 12% CAGR over the past 5 years is decent, certainty that NRS would be able to Mediocre Financial already low margins have decreased even more capitalize off of that Profile • EPS has been extremely inconsistent over the past 5 years, which shows a lack of a clear path for growth Is NRS poised to continue to outperform? • There is uncertainty surrounding the future of • Given the high multiples relative to peers, salmon farming, as there has been a lot of investment uncertainty surrounding the ability for NRS into land-based salmon farms in recent years to continue to grow and around the future Industry Uncertainty • This could change the requirements to be of the salmon farming industry in general, it competitive and force NRS to invest heavily is unlikely that NRS will continue to into PPE that would take a while to see a outperform in the future return on

633 Owen Stimpson 352% 5 Year TSR SWX:ALSN Rank: 103/104

634 ALSO Holdings Overview In Swiss Francs (CHf) EV / NTM EBITDA ALSN is an IT logistics company. ALSN has three core segments: supply (delivering hardware), solutions (setting up IT software), and service (IT maintenance). 2019

Statistic 06/08/2015 06/08/2020 2015 Stock Price 56.25 CHf 231 CHf

Market Cap 721.17 CHf 2.96B CHf 0x 5x 10x 15x Enterprise Value 964.61M CHf 3.19B CHf

Shares Outstanding 12.82M 12.82M

EV / NTM Revenue 0.13x 0.25x

EV / NTM EBITDA 6.82x 13.40x

PE 10.44x 23.17x

Statistic FY 2015 FY 2019

Revenue 8.38B 9.87B

EBITDA 150.3M 193.8M

635 ALSO Holdings Business Model

Context Primary Product Sales by Division ALSN is a middleman in the IT 18% Wholesales business for industry. Supply IT equipment. 4% • ALSN buys IT hardware from manufacturers and sells it to buyers (retailers, SMB resellers, etc.) who 78% then sell it to the final customers Project based support (consumers and companies). Supply Solutions Service services for IT equipment resellers and • ALSN also provides support services Solutions SMBs on questions of IT to their buyer customers to help Sales by Geography infrastructure and them optimize their IT 9% design. infrastructure and design. 39% • Cloud marketplace is replica of IT wholesale business except its for the 40% ALSO cloud marketplace: cloud – marketplace that brings 12% Cloud marketplace that together buyers (retailers, SMB Service helps IT resellers sell resellers, etc) and cloud software Switzerland Germany Netherlands Other cloud services. suppliers (i.e. Microsoft, Oracle, etc.). ALSN is a high capital intensity business.

636 Low Threat Medium Threat ALSO Holdings Competitive Analysis High Threat

Competitive What’s Changed in Risks Competitive Landscape Barriers To Entry Advantages the Industry

• High capital intensity • Reputation: Computer & Market Oligopoly and working capital ALSN is known • Working capital Packaged Software Structure requirements. as a reliable issues. Wholesaling Market Size ≈$268.9B1 • Need to be partner for both very efficient buyers and Industry • Major logistics In the Computer and Packaged LSD1 to maintain suppliers. Growth failure. Software Wholesaling industry solvency. • Efficiency: ALSN participants engage in • Synex is major American player • Need buyers has a high-tech, • Companies trending wholesaling computers, • Data breach. but operates primarily in the US (resellers, retailers, efficient logistics away from buying computer peripheral with more limited European capabilities to hardware and equipment, and computer etc.) to get suppliers presence. manage WC. • ALSN is cut out relying more on SaaS software. Manufacturers' sales (manufacturer, from value chain branches and offices with software developers, • Quantity of and Cloud software • ALSN is leading player in as their buyers wholesale functions are etc.) and vice versa. relationships: products instead. Europe. and suppliers included within this industry. • Concern is not ALSN’s business barriers to entry but is strengthened interact directly. • ALSN has presence across by the large Europe (23 countries) ; Also whether ALSN will amount of Cloud marketplace available in still be needed in the • Less demand for additional 64 countries around IT value chain (their buyers and IT resellers (key the world. suppliers and buyers suppliers they buyer group). interacting directly). have.

1. US only; IBIS world. 637 What Investors Missed

The Actual Story of the Last Five Years The Bear Thesis Five Years Ago: • Core Supply business remains working • Not a very attractive business: low margins (1.8% EBITDA capital intensive, low ≈1.8% EBITDA margins), high working capital requirements, and transactional margin, and transactional. revenue stream. • But ALSN maintained Supply business and • Barely cash flow positive. Expanded business built out adjacent new business lines: lines Solutions and Services. • Minimal runway for improvements to core business. • Services: low capital intensity and higher margin. • Minimal avenues for future growth. • ICT industry is mature. • Solutions: low capital intensity, high margin, and recurring revenue.

• Optimized WC: cash conversion cycle reduced Return Breakdown: Consensus vs Results Improved core by 4 days from 28days to 24 days. business • Suppliers nearly doubled from 350 in FY2015 to 660 in FY2019.

• Service business grew at 19.14% CAGR from 211M in FY2015 to 427M in FY2019. • And revenue is recurring. • ALSN expanded its reach outside ALSN grew internationally: grew revenue outside core Germany, Switzerland, and Netherlands markets from 2.48B to 4.16B. • But maintained (and grew market share) in core markets as well.

638 Back to List ALSO Holdings Takeaways ALSN is a Ok Business- 2.5/5 Future Outlook

• ALSN is a leading IT wholesaler in Europe with a wide Can ALSN Sustain its Market Position? supplier and buyer base. • ALSN is a leading player in the IT wholesale business • Despite low margins and high capital intensity, ALSN in Europe, especially in its core markets. ALSN has a strong has consistently grown the top and bottom lines and • New entrants in the IT wholesale space are hindered position in a difficult mitigated problems that could have arisen from WC. by capital requirements, and the need to develop industry • Also improved WC efficiency. many relationships with buyer and suppliers. • ALSN has developed a moat due to the quantity of • Long-term need for wholesalers, at all, in the industry relationships it has with buyers and suppliers. is less certain (especially with trends towards cloud).

• ALSN maintained and grew its market share in its core Can ALSN continue to grow faster than the industry? markets of Germany, Switzerland, and the Netherlands. • ALSN’s cloud business could propel ALSN to grow faster • Also captured market share across Europe. than the industry. ALSN grew • Grew its solutions and segments business which are • But if that happens, its likely core Supply business more attractive in terms of margins. will shrink. • Solutions business also recurring revenue.

• ALSN Also Cloud Marketplace taps into industry trends Is ALSN poised to continue to outperform the market? towards cloud software for businesses. • The bear thesis five years ago is essentially the same: poor • But on same token, could potentially be a long- business quality and minimal room for growth – but ALSN ALSN has a potential term headwind for core Supplies hardware outperformed. runway for growth segment. • I think underperformance is more likely given that ALSN • ALSN has been resilient to date but their position in the now trades at 22x earnings or roughly double its 2015 value chain is the least stable of all participants. multiple.

639 Max Schieferdecker 350% 5 Year TSR OB:GSF Rank: 104/104

640 Grieg Seafood Overview

Grieg Seafood is the 8th largest salmon producer in the world NTM EV/EBITDA Multiple based in Bergen, Norway, that farms and sells premium salmon. 2020 9.7x

Statistic 6/8/15 6/8/20 2015 7.3x Stock Price 28.00 NOK 109.50 NOK 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 12.0x Market Cap 3.09B NOK 12.29B NOK

Enterprise Value 4.91B NOK 15.72B NOK

Shares Outstanding 110.41M 112.23M

EV / NTM Revenue 0.95x 1.75x

EV / NTM EBITDA 7.33x 9.72x NTM P/E 10.47x 14.53x Z

Statistic FY 2015 FY 2019

Revenue 4.59B 8.30B

EBITDA 285.72M 1.27B

641 Grieg Seafood Business Model

Primary Products Context 0.6% Sales by Category 1.6% 5.2% • Fresh and frozen salmon GSF produces high quality Salmon that are farmed from salmon for consumption 0.0% their licensed waters • 3 main farming operations of the coasts of Norway, Scotland, and Canada 92.6% • It operates in the breeding Fresh Whole Fish Frozen Whole Fish Fresh Processed Fish 1 (smolt production), freshwater Frozen Processed Fish Other farming, seawater farming, harvesting, and sales & Sales by Geography 4.6% distribution segments of the supply chain 16.0% 53.0% • Sales & distribution are 5.3% handled by their subsidiary, Ocean Quality 9.5% • A lot of focus is put on the 11.8% sustainability and health of the EU UK USA Canada Asia Other fish from the beginning of the process Some cans of Grieg processed salmon GSF is a capital intensive business due to the high • Leads to high quality amounts of PPE needed to operate salmon

1 Young salmon that have not yet fully developed into adult salmon 642 Low Threat Medium Threat Grieg Seafood Competitive Analysis High Threat

What’s Changed Competitive Advantages Risks Barriers To Entry in the Industry Fish Farming

The players in this industry farm, • Commodity risk given the breed, and harvest fish in water status of salmon environments and then sell them to • Biological risks regarding distributors. the health of • Superior quality • Government regulations underdeveloped smolts • North American farming and licensing for certain • Attempting to increase operations allows for close areas are necessary in operational efficiencies may • Salmon has proximity to the fast- Market Pure order to operate harm the quality of the become more growing American market Structure Competition • High up-front costs give product popular • Dedicated sales and the established players a • Regulatory risks may Market Size $297B1 distribution company financial advantage inhibit expansion and/or (Ocean Quality) Industry increase costs MSD1 Growth • Land-based salmon farms may take away demand in the future

1 https://www.alliedmarketresearch.com/fish-farming-market 643 What Investors Missed The Bear Thesis Five Years Ago: The Actual Story of the Last Five Years

• Inconsistencies between top and bottom line y/y growth • As demand for salmon increased leading up to 2015 left investors unclear about future around the world as a result of growth trajectory society as a whole becoming • Russia, a decent sized market for GSF usually more health conscious, more representing ~10% of total sales, suspended trade with operational efficiencies were the EU, and thus Norway, towards the end of 2014 recognized • Received many new licenses that allowed them to expand the capacity of their Return Breakdown: Consensus vs Results More operations Consistencies • Strong growth and biological improvements were realized due to the economies of scale that became more present • Fixed price contracts were also implemented more which helped mitigate the effect of the fluctuations in the commodity pricing of salmon

644 Back to List Grieg Seafood Takeaways GSF is an Average Business – 2.5/5 Future Outlook • Although the quality of the salmon is supposedly Can GSF Sustain its Advantages? higher than its competition, at the end of the day, • It is unlikely that GSF will divest Ocean salmon is just salmon to most people Quality or its North American locations • Targeting the higher-end customers may not anytime in the near future GSF does not have a be a foolproof plan given the relative lack of • GSF has the reputation for being a high Strong Moat control individual companies have over their quality producer, as many high-end prices restaurants around the world use their • There has been a surge in demand recently, however salmon • America and China in particular have seen large increases in consumption numbers Can GSF continue to grow? • Given the heavy investment into both the • Expansion opportunities downstream will allow GSF to recent Newfoundland acquisition and the further vertically integrate and increase their margins steps it is taking to expand downstream in • Management has specifically mentioned the future, it is likely that GSF will continue moving into the value-added processing level of the supply chain to grow Growth Opportunities • M&A was also mentioned as a focal point in the future Is GSF poised to continue to outperform? are in the Pipeline as a way to increase capacity by gaining more licenses and thus more farming area • Given the high risks and volatility that is • An acquisition of a company in Newfoundland, present in the industry, it is not very likely Canada, recently took place already as an that GSF will grow at the same rate it has in example of this, and there will likely more in the the past and/or the stock will experience future significant multiple expansion

645