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

<ul><li>Count (ASX:CUP) is an accounting and wealth business in Australia which is both the 18th largest Accounting firm whilst simultaneously being the 3rd largest AFSL holder in the country after its consolidation of Diverger (ASX:DVR) due to be implemented on the 1st of March 2024.</li><li><p>As some may gather, our shares in Count have come from the implementation of Diverger transaction, and as a result I will be focusing on the specifics of the combined business and its prospects.</p></li><li><p>First, Count’s Accounting division generates the lion’s share of its revenue and earnings, but the same can be said of its invested capital with all the related contract assets and receivables of some $20m at YE FY2023 whereas the net revenue due to advisers is more than what is due to from the client by an estimated $2.4m in the wealth division (negative net working capital).</p></li></ul>

Count (ASX:CUP) is an accounting and wealth business in Australia which is both the 18th largest Accounting firm whilst simultaneously being the 3rd largest AFSL holder in the country after its consolidation of Diverger (ASX:DVR) due to be implemented on the 1st of March 2024.As some may gather, our shares in Count have come from the implementation of Diverger transaction, and as a result I will be focusing on the specifics of the combined business and its prospects.First, Count’s Accounting division generates the lion’s share of its revenue and earnings, but the same can be said of its invested capital with all the related contract assets and receivables of some $20m at YE FY2023 whereas the net revenue due to advisers is more than what is due to from the client by an estimated $2.4m in the wealth division (negative net working capital).

Australia

HiTech Group Australia Limited provides recruitment and consulting services on a contract and permanent basis to the IT and telecommunications industries of Australia.  The Company provides recruitment for executive management, PC support, e-commerce, IT specialists, technical writing and various positions in the IT & T industry.

Ashley Services Group Ltd is an integrated provider of training and labour hire in Australia.

Energy Action Ltd operates an energy procurement platform which allows energy suppliers to competitively bid against one another to supply energy.  The Company has a suite of products and services that complement the Australian Energy Exchange and will allow companies to monitor and manage energy usage and carbon emissions.

YPB Group Ltd manufactures covert markers and additives for consumers who wish to mark their products in order to build customer awareness and loyalty, identify and remove fake products, and measure results over time.

QANTM Intellectual Property Limited operates in the commercial services industry. The Company offers services for patent, design, trademark procurement, and other related intellectual properties throughout Australia.

Ariadne Australia Limited operates a car parking facility and holds a portfolio of development and residential development project properties in Queensland, which include apartment complexes and housing projects. The Company also holds an equity securities portfolio and provides financial services.

Fluence Corporation Limited provides water treatment systems. The Company offers filters pre-treatment, energy-recovery devices, clean-in-place systems, packaged plants, and aeration equipment, as well as project financing services. Fluence serves small communities, schools, malls, resorts, hotels, golf courses, construction sites, and commercial centers worldwide.

Namoi Cotton Co-operative Limited provides cotton ginning and marketing services to Australian cotton growers.  The Company operates gin facilities in New South Wales and Queensland along with warehousing and distribution facilities.  The Company markets and distributes its cotton domestically and internationally.

BSA Limited is an Australian communications and technical services company primarily providing services to the telecommunications, broadcast, and utilities sectors. The Company's services includes installation, repair, maintenance, and support to its customers.

McMillan Shakespeare Limited provides salary packaging services.  The Company also offers services like procurement of motor vehicles, insurance, finance and fuel and service maintenance programs.

CAREER DESIGN CENTER CO.,LTD. provides recruitment information through magazines and Internet web site "@type."  The Company also provides job matching services for job seekers.

Heerim Architects & Planners designs and inspects buildings, residential houses and infrastructure such as highways, airports, and bridges.  The Company also provides geological surveys and environmental assessment.

Wesco Holdings Inc. is a holding company established by equity transfer of Wesco Inc. The Company's main business is civil engineering consulting services including designing and land and geological surveys.

GiG Works Inc. provides a variety of information technology services for individuals and corporations.  The Company's services include computer tutoring, seminars, consulting, system support, and network maintenance.

Nice D&B Co., Ltd. provides global business information report services. The Compay's services also incudes supplier management solution, risk management solution, and credit risk management system.

Staffline Group PLC provides recruitment and outsourced human resource services. The Company specializes in supplying temporary and blue collar industrial workers, and temporary and permanent placement in the engineering and consumer goods sectors.

BESTERRA CO., LIMITED provides demolition services for iron manufacturers,  utility and oil plants. This company also provides staffing and measuring  services.

China Index Holdings Limited is a holding company, which through its subsidiaries develops an online real estate information platform. The company is based in Beijing, China. China Index Holdings Limited operates as a subsidiary of Fang Holdings Limited.

Orbitech Co., Ltd. provides a variety of testing services. The Company's products includenondestructive engineering testing services, water and soil quality testing services, and radiation monitoring services.

Abist Co.,Ltd. designs and develops machinery and machine parts. The Company also provides IT outsourcing services engaged in design and development of software.

Countplus Ltd. offers accounting and other services.  Through subsidiaries, the Company offers accounting, financial planning, lending, legal, tax, corporate advisory, and payroll management services.  Countplus franchises some of its locations.

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Countplus Ltd (CUP AU)

Count (ASX:CUP)

Count (ASX:CUP) is an accounting and wealth business in Australia which is both the 18th largest Accounting firm whilst simultaneously being the...

Hurdle Rate

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