Eureka Report: Our newest LIC purchase: Bailador
by Mitchell Sneddon via www.eurekareport.com.au
Summary: David Kirk’s Bailador Technology Investments looks for early stage unlisted technology operations with established business models and proven track records. The LIC enters these businesses as a convertible preference shareholder, giving some downside protection. The LIC is currently trading at a 13 per cent discount to NTA, but has closed that gap significantly and has the potential to close it further in near future.
Key take-out: At the market open on Tuesday April 11, we will take a five per cent stake in Bailador Technology Investments (BTI).
Category: Listed Investment Companies
Recommendation:
- Call = Buy
- Price = $1.00
- Risk = Medium
Since the last time I sat down with Bailador Technology Investments (BTI) chief executive David Kirk, the IT focused private equity investment company has been on my mind. It appears Kirk and company are getting it right and they are trading at an attractive long term entry point – this is why BTI is coming into the model portfolio at a 5 per cent weighting.
What boxes does BTI tick?
- Significant skin in the game by management
- Experience, with now a five year track record for the portfolio returning approximately 24.3 per cent pa since inception
- No distractions: BTI is the team's only portfolio there are no other portfolios vying for attention
- Proactive in communicating the investment approach with shareholders and the market
If you think back to my management checklist article (you can read it here: LIC managers: Finding your perfect match, February 29, 2016), the above list covers close to every point.