How long have you held the stock?
We took a position on IPO in December 2014.
What do you like about it?
Catapult (CAT) has a globally unique service offering with an attractive recurring revenue model. It also has a very sticky customer base and continues to demonstrate a strong ability to execute on its strategy through signing multiple league-wide deals. The core business also provides the company with multiple potential future revenue opportunities in the prosumer market as well as in data monetisation.
How is it better than its competitors?
CAT has more professional sports teams than all its competitors combined. Its advantages over its competitors stem from its products, and its growing data resource. CAT has the most advanced athlete tracking system available which has enabled it to sign the majority of teams in many leagues around the world. This has led to a number of league-wide deals as a league can benefit from one provider through the utilisation of the combined data.
What do you like about its management?
Management has shown a strong ability to execute and achieve more than what has been promised since IPO. Management has a clear vision for the company and is moving towards that vision through its recent acquisition of XOS. It has also shown an admirable ability to evolve with the growth of the company, with CEO Shaun Holthouse recently handing the reins over to Joe Powell, recognising a different set of skills will be required as the business matures.
What is your target price on CAT?
We do not have price targets. We buy or sell based on our expected risk adjusted relative return within the portfolio over our five-year investment horizon.
At what point would you sell it?
When the Internal Rate of Return falls below our threshold, which is the risk-free rate plus an equity risk premium. Other reasons to sell may be due to a significant, unexpected, change in the management team or a change to the business model.
How much has it added (subtracted) to your overall portfolio over the last 12 months?
CAT has been a strong performer since listing, up over 270%. More recently, though the stock has retreated from its highs of $4 to closer to $2.
Is it a liquid stock?
CAT’s liquidity has grown since its listing as it has become a larger company and with the recent capital raising to fund the XOS acquisition. As with all small caps though, liquidity can vary.
Where do you see the value?
In the data. CAT is cultivating an extremely valuable resource of the statistics of the world’s best athletes. The uses of this data will continue to grow over time and include applications in media, betting, player transfers, scouting, entertainment, gaming and consumer products to name a few.
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