Remitly Global (NAS:RELY) — mrkt cap $3.48B; Price $19.57; trailing P/E NA
STARTER POSITION INITIATED. Remitly is quickly becoming the gold standard in remittance payments for immigrants everywhere. The company is rapidly gaining market share from its competitors (most notably Western Union) and continues to grow in popularity. Remitly is close to reaching breakeven on its cash burn, and there are very tangible paths to achieving economies of scale as the company leverages its increased remittance volume to renegotiate variable cost structures with counterparties. The company is well-run with a clear focus on “transforming the lives of immigrants by providing the most trusted financial products and services on the planet.” These are more than just words, and the company consistently executes in line with this vision. They currently hold close to 2% market share, and it is becoming evident that their market share will increase further given the market opportunities and competitors. Paying about 4x sales for a company with attractive economies of scale and a trajectory towards rapidly expanding its market is appealing to us. We have initiated a starter position and are continuing our due diligence.
AZZ Inc (NYSE:AZZ) — mrkt cap $1.1B; Price $8.26; trailing P/E 11
PASS. AZZ is the largest galvanized steel provider in the USA with 30% market share. Galvanized steel is steel with a protective Zinc coating preventing rusting and corrosion. Typically, a finished product such as a guard rail is dipped into a hot batch of molten Zinc, upon which it will have a zinc finish. AZZ has almost 50 plants providing this service along with its other segment specializing in metal paint coating. Given the rise in infrastructure spending, AZZ will see tailwinds. Steel demand is forecast to rise about 10% which should directly benefit AZZ. They have footholds in industries such as transmission lines, towers, bridge rails etc. At 11x PE, it is trading around fair value and we will look to initiate a position given a pull back.
LivePerson (NAS:LPSN) — mrkt cap $382mm; Price $8.26; trailing P/E NA
PASS. LPSN caught our eye as it can stand to benefit from the convergence of LLM (large language models) and customer service. Customer service is a perfect use case for LLMs as it enables a better user experience coupled with cheaper costs. LPSN is a customer service platform that enables businesses to interact with their customers. It has large amounts of proprietary data that it can use to train LLMs. Although a large number of businesses will in-house their customer service, we believe the vast majority of small businesses will need to outsource this competency. Currently, LPSN is a show-me story as there is a significant amount of execution risk and historically LPSN has not been a good performer. With the long-time CEO stepping down, its fortunes may change with new management.