| Micro & Small Cap project

GSE Systems: Insightful letter from Spear Point Capital

by | Oct 8, 2019

GSE Systems, Inc. (NASDAQ: GVP)
M.Cap: $32 million

On November 23, 2015, Rodney A. Bienvenu, managing partner of Spear Point Capital Management, sent a letter to the board of GSE Systems, and expressed his belief that the company enjoys several competitive advantages.

Well, the letter was written roughly five years ago. So, why am I flagging it now? Over the past seven months, GSE stock has sold off from more than $3 a share to just $1.60 today. I think it could be a good time to revisit the stock.

Source – Refer “Exhibit E”

https://www.sec.gov/Archives/edgar/data/1488917/000139834419017029/fp0046051_sc13da.htm

The Company delivers very sophisticated, mission critical products and services to the nuclear and hydrocarbon industries requiring high levels of industry specific knowledge and expertise.  This creates significant switching costs for existing customers and relatively high barriers to entry (or in Wall Street’s latest parlance, “moats”).  Competitors cannot just show up and say “let us run your nuclear plant”.

GVP has great barriers to entry, extremely high levels of industry and institutional knowledge, a very large base of current customers, and mission critical software solutions that once installed become extremely difficult to dislodge or replace.

Furthermore, the hidden gem lies in the fact this is a highly defensible niche technology Company that heretofore has not acted like one and has not been valued like one.

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