Greg Dean, lead investor, Langdon Equity Partners
Focus: global small caps
Top Picks: A&W, BayCurrent, Smartcraft
MARKET OUTLOOK:
We remain confident that our disciplined investment approach – combining thorough deskwork with on-the-ground research – has positioned our investors well for attractive long-term returns. We don’t have a market outlook we have deep and detailed outlooks on each of our investments and dozens of companies we do not own but follow very closely. Our view is the stock market doesn’t create value it merely reflects the value that companies create.
We are active and engaged investors in around 30 world-class smaller companies and we investigate these companies on the ground and in person. As a team we are typically travelling to 15 or so countries a year and spending significant amounts of time in each. I was out of the country for over 140 days last year meeting companies and even relocated with my family to rural France for several months to be closer to many of the investments we hold.
We do not know or frankly care when small caps will outperform. Our responsibility is to deliver resilient and strong returns regardless of the economic backdrop.
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TOP PICKS:
A&W (AW TSX)
A&W is Canada’s second-largest burger chain and has merged its operating business with its publicly listed royalty company, creating a pure-play multi-brand quick service restaurant (QSR). The company boasts a strong track record of profitable growth, reinvesting in new restaurants at attractive returns and generating substantial cash flow. The recent Pret-A-Manger rollout and a valuation disconnect relative to North American QSR peers position A&W for significant value creation in the years ahead. It trades for a very modest 13 times cash price to earnings (P/E) and offers a six per cent dividend. It has an $800 million market cap. Insiders own over 60 per cent of the company. We first invested in late 2024 at around $35.
BayCurrent (6532 TYO)
This company is a mid-market consulting firm based in Japan. It does a lot of strategy consulting in the digitization of business processes area and are the largest company locally. It has been growing headcount and revenues 25-30 per cent for a very long time. We bought this business at 15 times cash earnings and still think it represents a great opportunity for long term investors. Japan has a very significant legacy IT infrastructure issue and we see a big runway for continued growth for BayCurrent. What makes them unique is early career consultants don’t specialize they remain generalists which makes it a much better experience with a lot more training and variety for their staff. Insiders own around 15 per cent. We first invested in 2024 at around 3,000 Yen.
SmartCraft ASA (SMCRT.OL)
Smartcraft ASA is a Norwegian company that provides digital tools and software as a service (SaaS) to the construction industry and craftsmen. Its solutions help with project management, quality and safety, and more. The company’s business model is highly scalable, based on 97 per cent recurring revenue and low churn. The construction sector is among the least digitalized industries and represents a NOK 10bn software market in the Nordics, growing at a double-digit rate. We first invested in late 2022 at around18 NOK.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| AW | N | N | Y |
| 6532 | N | N | Y |
| SMCRT | N | N | Y |
PAST PICKS: April 9, 2018
Middleby Corporation (MIDD NASD)
- Then: US$123.33
- Now: US$165.82
- Return: 35%
- Total Return: 35%
Zamp SA (BKBR3 BZ)
- Then: 15.45 BRL
- Now: 2.43 BRL
- Return: -85%
- Total Return: -82%
Keyera (KEY TSX)
- Then: $34.34
- Now: $42.82
- Return: 25%
- Total Return: 66%
Total Return Average: 6%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| MIDD | N | N | N |
| BKBR3 | N | N | N |
| KEY | N | N | N |
