November 18-19, it was my pleasure to attend the Southwest IDEAS Conference in Dallas, Texas, sponsored by Three Part Advisors, a company founded by former Director of Research at Hodges Capital, David Mossberg.
The conference allowed me the chance to speak to top managers at a number of small- and micro-cap firms, and was a terrific source of investment ideas for me. The companies to whose pitch I listened came from many different industries and geographies. Here’s a partial list:
- B of I Holdings (BOFI): Interesting Internet banking company
- Park City Group (PCYG): Supply-chain management software company founded by the co-founder of Mrs. Fields Cookies
- Houston Wire & Cable Co. (WIRE): Specialty cable broker serving large industrial clients. The business has been hurt by the turn-down in fracking, but I spoke briefly with the CEO after his presentation and was impressed with the business and with him.
- ARI Network Services (ARIS): A great microcap software provider for independent dealer distributors of motor sports, tire and wheel, home medical equipment, and several other interesting verticals. I also got a chance to meet with ARI CEO Roy Olivier and CFO Bill Nuthern one-on-one to speak with them about potential sources of operational leverage for the ARI business. I have done a good bit of work on this company and will be publishing more about it.
- Macquarie Infrastructure Co. (MIC): Infrastructure owner / operator paying nearly a 6% dividend yield.
- MOCON (MOCO): Small specialty engineering company that makes sensors for the food packaging industry and for testing air quality.
- Edgewater Technology (EDGW): Technology consultant based in Boston specializing in Oracle and Microsoft system implementations.
- Applied DNA Sciences (APDN): Provides DNA tracking of botanical materials for supply chain management security and other applications.
- Sparton Corp. (SPA): A very interesting manufacturer of underwater subhunting drones for the military and contract manufacturing services for companies competing in highly regulated industries. Not only is the company in interesting businesses, I had the opportunity to speak with the CEO and was very impressed. Hailing out of private equity and a management career at GM before that, the new CEO has helped pull the company around and give it a plausible, sensible future. My main goal after coming back from Dallas is to learn more about this firm!
- Horace Mann Educators (HMN): A property and casualty (P&C) insurance company specializing on school teachers and administrators. This is the first P&C company that I thought had a good competitive strategy and I’m going to take a closer look at it.
- American Science & Engineering (ASEI): An innovative manufacturer of X-Ray systems for border crossings and freight terminals.
- StoneMor Partners (STON): The second largest operator of graveyards in the U.S. The demand environment for this firm is certain…
My biggest problem at the conference was that I didn’t have time to see all of the companies that I wanted to and that I simply can’t dig into every company that seemed interesting to me. These are good problems to have if you’re in the investment business!
Three Part Advisors did a great job with the conference and for those institutional clients interested in smaller capitalization names, I highly recommend the event. Keynote speakers at lunch each day were thought provoking, and there were wonderful chances to meet and socialize with other institutional managers and analysts.
Many of the companies who presented do not have a listed option market, but of course the valuation framework that lies at the heart of the Intelligent Option Investing method can be applied to any asset, regardless of whether or not there are options available.