Alright, here’s a new one: 908 Devices (ticker: MASS, on Nasdaq)
- in a somewhat similar space as Blackline Safety which was taken private a few months ago at a nice premium
- smart handheld measuring tools for chemical substances / drugs
- also small cap
- 380M market cap of which 100M is cash (they sold a non-core business a while ago; this ensures as well that they are fully funded to become profitable while also having dry powder for small bolt-on acquisitions without having to issue new shares)
- 70M revenues, growing at 20-25% YoY
- 57% gross margins (likely to go up as the company scales)
- 30-35% recurring revenue (expect this to go up as well as they introduce new offerings and leverage the growing installed base)
- Roughly 10M EBITDA negative
- At roughly 4x enterprise value one can have two perspectives
- Cheaper than say the price Blackline was taken private for
- But still significant
- My guess:
- Revenues are very likely to double in the near term resulting in nice leverage on the bottom line - this could easily become a valuation at 10x EBITDA in 2-3 years (low for this kind of business)
- It’s also a business which is inevitably going to acquired - either by a financial party who’s going to invest heavily into scaling faster (incl. buy and build) or by a strategic (Thermo Fisher Scientific, Bruker, Danaher, Teledyne, etc.
It’s had a very good run up in price already so one should not be afraid of heights, but this could be ramping up to something much bigger.
Somebody asked how I find these opportunities? Each case is different. In this case, I am connected to a corporate development person at a company I follow on Linkedin. I checked his Linkedin profile for companies he follows. This one popped up and it became clear that a lot of his colleagues are following this company. I took that to imply: the business may be on their target list. That led to me starting to do some homework myself.
Not yet taken a position, but expect to take one and build it out gradually.
Wish I had spotted this opportunity earlier.
Go ahead and shoot holes at it, learning is what this forum is all about.