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Greenhaven Road Capital: Jockey bets

by | Oct 26, 2019

Greenhaven Road Capital: Jockey bets

Greenhaven Road Capital runs a concentrated portfolio that focuses predominantly on stocks that have a market cap under $500 million. In fact, four out of five of its top holdings have a market cap under $500 million.

Scott Miller, the founder, has a striking background – he cofounded an education company that grew to over 1,400 employees and $75 million in revenue.

In the latest investor letter, Scott Miller explained his rationale behind making “jockey” bets. He wrote, “Given my operating experience, I am a firm believer that people build businesses. Particularly in the context of a smaller enterprise, the contributions of a “jockey” can be profound. These are not super humans who can overcome all challenges, but the right jockey pursuing the right strategy with a little bit of good fortune can be very profitable.”

Miller outlined four “jockey” bets in his letter – Par Technology (PAR), EnviroStar (EVI), Chicken Soup for the Soul Entertainment (CSSE) and Canadian software company, Optiva (OPT).

Par Technology is flagged in his report for two reasons: (a) it is one of the fund’s top five holdings and (b) it is one of the four “jockey” bets.

Par Technology (PAR) is a wager that Savneet Singh will capitalize on the restaurant POS (point of sale) software opportunity currently buried under a defense business and a hardware business. The asset we want to own is the restaurant POS (point of sale) system, Brink, that remains buried under a defense contracting business and a hardware business that are currently far bigger.

Here is what we know: the new CEO, Savneet Singh, has only been on the job since the beginning of the year and has only had resources since April when PAR raised money through convertible debt. Hiring well and spending well takes time. Savneet has focused the company and laid the foundation for growth by investing resources in stabilizing the product, building a payments offering, announcing the exit of a small ancillary software business (SureCheck), and articulating that the defense and restaurant businesses should be separated (timing uncertain). He has also taken actions to improve the profitability of the hardware business through both staff reduction and growth, most recently paying less than 2X cashflow for a drive-through related asset that fits well with the existing portfolio of restaurant solutions.

Source: https://seekingalpha.com/article/4303991-greenhaven-road-capital-q3-2019-investor-letter


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