Value Investing in my Circle of Competence, Hurdle Rate

Hurdle Rate

Value Investing in my Circle of Competence

The name “Hurdle rate” was inspired by none other than Mark Leonard of Constellation Software, and their prolific use of a fixed hurdle (discount) rate for their investments. Had you invested into Constellation Software at the time of their IPO as an Australian Investor you would of seen your investment multiply by >100x or (>35% CAGR), an enviable record (Updated March 2023).

Equity Bottom-Up

WRKR LTD provides software solutions. The Company offers platform for employers to take care of compliance obligations such as onboarding and ongoing verification solutions, which saves money, time, and reduces risk. WRKR serves customers in Australia.

<ul><li>Wrkr is an Australian regulatory software business founded in 2009 which helps employers with the various compliance moments for their employees such as superstream contributions, Single touch payroll (STP), employee onboarding and so on.</li><li>It is a business which predominately offers its solutions through the larger corporates and APRA superannuation funds across millions of employees at a very low average ticket size.</li><li>It is one of just 9 gateway operators on the Superannuation Transaction Network (STN) and one of 9 ESA providers (only 5 including Wrkr can process rollovers and release) in the country.</li></ul>

Wrkr is an Australian regulatory software business founded in 2009 which helps employers with the various compliance moments for their employees such as superstream contributions, Single touch payroll (STP), employee onboarding and so on.It is a business which predominately offers its solutions through the larger corporates and APRA superannuation funds across millions of employees at a very low average ticket size.It is one of just 9 gateway operators on the Superannuation Transaction Network (STN) and one of 9 ESA providers (only 5 including Wrkr can process rollovers and release) in the country.

Macompta.FR provides technology solutions. The Company develops SaaS software to help entrepreneurs in terms of invoicing, accounting, tax declarations, fixed assets, payroll, and expense reports. Macompta.FR serves clients in France.

<ul><li>Macompta is a French accounting software business which just listed in March 2024 on the Euronext Access Paris exchange without a primary oƯering.</li><li>The company is issuing no new shares but listed to allow its employees to sell shares to the public.</li><li>Over the coming months the company is looking to gradually build up to a free float of 10% (8% coming from one shareholder) and to list on the Euronext Growth exchange within 2 years.</li></ul>

Macompta is a French accounting software business which just listed in March 2024 on the Euronext Access Paris exchange without a primary oƯering.The company is issuing no new shares but listed to allow its employees to sell shares to the public.Over the coming months the company is looking to gradually build up to a free float of 10% (8% coming from one shareholder) and to list on the Euronext Growth exchange within 2 years.

Xero Limited offers an online accounting system.  The software features bank transaction importing, a cashbook, a general ledger, invoicing, accounts receivable, accounts payable, financial reporting, and management of expense claims.

<ul><li>This is the first blog post on the Hurdle Rate website, a series of blog posts which I intend to cover specific topics rather than unit trust investments.</li><li>From time to time I may consider company deep dives, but predominately I want to make these posts more specific in nature around the global landscape in professional and financial services.</li><li>Today’s post is going to talk about the recent bombshell that is Xero’s price hikes, a controversial topic here in Australia for the accounting industry, and a perfect start to the blogroll given my background and focus.</li></ul>

This is the first blog post on the Hurdle Rate website, a series of blog posts which I intend to cover specific topics rather than unit trust investments.From time to time I may consider company deep dives, but predominately I want to make these posts more specific in nature around the global landscape in professional and financial services.Today’s post is going to talk about the recent bombshell that is Xero’s price hikes, a controversial topic here in Australia for the accounting industry, and a perfect start to the blogroll given my background and focus.

Avant Corp develops computer applications for business solution. The Company sells accounting, planning, and management software. Diva also provides consulting, training, and maintenance services.

<ul><li>Avant was founded in 1997 by the current CEO Tetsuji Morikawa and is a Japanese holding company of financial and non-financial software which have the collective goal of assisting its clientele to increase corporate value.</li><li>This includes ‘Diva’ as Japan’s foremost (43% market share) consolidated accounting software and board meetings platform in addition to ‘Avant’, a management system for corporate value enhancement through consolidation of information (Avant Cruise) , charting (Avant Chart) , and corporate value enhancement (Avant Compass).</li><li>Lastly, there is ‘Zeal’ which includes several non-financial platforms that help organise and integrate (with Avant Cruise) from external sources. And interestingly, Avant also owns and operates Internet Disclosure Co, which runs Kaijinet, a site I have frequently visited over the years.</li></ul>

Avant was founded in 1997 by the current CEO Tetsuji Morikawa and is a Japanese holding company of financial and non-financial software which have the collective goal of assisting its clientele to increase corporate value.This includes ‘Diva’ as Japan’s foremost (43% market share) consolidated accounting software and board meetings platform in addition to ‘Avant’, a management system for corporate value enhancement through consolidation of information (Avant Cruise) , charting (Avant Chart) , and corporate value enhancement (Avant Compass).Lastly, there is ‘Zeal’ which includes several non-financial platforms that help organise and integrate (with Avant Cruise) from external sources. And interestingly, Avant also owns and operates Internet Disclosure Co, which runs Kaijinet, a site I have frequently visited over the years.

Begbies Traynor Group plc provides professional services to businesses, professional advisors, and banks in the areas of insolvency, restructuring, and risk management activities in the United Kingdom. The company offers business rescue options, advisory options, forensic accounting and investigations, corporate and commercial finance, and personal insolvency solutions and services to banking, legal, and accounting sectors. It operates in two segments, Insolvency and Restructuring, and Property. The company also provides financial and risk consultancy, network organization, property consultancy, insurance brokerage, employee trust, and facilities management services. In addition, it offers trusted advisory services to banks, independent accountancy practices, law firms, as well as directors and shareholders of independent and quoted businesses. The company serves small businesses, professional advisers, corporations, and financial institutions. Begbies Traynor Group plc was founded in 1989 and is based in Manchester, the United Kingdom.

<ul><li>Begbies Traynor is one the UK’s largest outfits of insolvency practitioners which are also in the process of growing its non-insolvency service lines such as corporate finance, financial advisory, asset valuations, PP&amp;E transactions, and property consultancy.</li><li>Whilst these service lines differ there is much collusion between them allowing for revenue synergies where appropriate.</li><li>For reference I suggest that readers refer to my older write up which goes into detail about the business.</li></ul>

Begbies Traynor is one the UK’s largest outfits of insolvency practitioners which are also in the process of growing its non-insolvency service lines such as corporate finance, financial advisory, asset valuations, PP&amp;E transactions, and property consultancy.Whilst these service lines differ there is much collusion between them allowing for revenue synergies where appropriate.For reference I suggest that readers refer to my older write up which goes into detail about the business.