Asset Manager Investing in Global Technology Sector

We're an asset manager allocating 100% of our capital into public companies and cryptocurrency assets driving disruptive innovation globally. We serve as a family office of an Asia-based HNW family whose key members have made their fortune in the technology industry and are believers in technology as the key enabler of disruptive innovation. We seek to continue the family's legacy in creating and preserving wealth through technology investing.

Our small investment team is made up of diverse professionals who researches, identifies, and executes relevant opportunities. While we are not accepting outside clients and investors at the moment, we occasionally share some of our internal investment memos, market commentaries, and analysis here.

Friday, June 5, 2020

Q2.2020 - Cornerstone OnDemand: Saba Acquisition Should Deepen Its Moat


  • The ~$1.3 billion Saba acquisition will generate FCF of ~$225 million, more than Cornerstone's last two years of FCFs combined.
  • With the goal to be a $1 billion-a-year business, the combined entity will deepen its moat in the enterprise LMS market.
  • The stock is now down ~65% from its YTD-high, potentially factoring in a CEO change in the midst of COVID-19 and two major corporate actions.
  • At ~$38 per share, the price is fair.

Cornerstone (CSOD) is one of the long-time players in the enterprise LMS (Learning Management System) market. The company has been in business for over 20 years. Since its IPO in 2011, growth has decayed from +60% to +7.5% today. Considering the $1.3 billion Saba acquisition that will produce a combined entity with a +$800 million of revenue and steadily expanding double-digit FCF margin, Cornerstone presents an interesting investment opportunity. Furthermore, the added risk factors as a result of recent corporate actions and COVID-19 headwinds have also put pressure on the stock to create a good entry point opportunity. Currently, the stock is down ~65% from YTD-high.

No comments:

Post a Comment