Tieton Capital Management

4700 Tieton Drive, Suite C
Yakima, WA  98908
(509) 965-6488

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June 14, 2018

June 14, 2018 By Lora Leavenworth

Purchased Health Insurance Innovations (HIIQ): 

  • Develops, distributes and administers individual health insurance and supplemental plans
  • Takes no underwriting risk
  • Debt free
  • High return on capital
  • Free cash flow generator
  • Growing customer/policy count rapidly
  • Rolling out new technology platform – could further accelerate revenue growth & create new business opportunities
  • Margins should expand meaningfully with growing revenues
  • Approximately 12x consensus earnings at time of purchase

Purchased Insight Enterprises (NSIT): 

  • Provide technology solutions to Fortune 500 companies and governments
  • Solid return on capital
  • Successfully integrating large 2017 acquisition
  • Demonstrating financial accretion from acquisition
  • Should lead to free cash flow generation
  • Free cash flow will likely lead to additional strategic acquisitions
  • Benefitting from software & solutions moving to recurring revenue model
  • Trading less than 10x consensus earnings when purchased
  • Significantly, earnings guidance has since increased

Added to Atlas Financial (AFH): 

  • Niche commercial vehicle insurer
  • Strong belief in management team
  • Business & industry confidence increased after recent meetings with management and attending May analyst meeting
  • Trading less than 6x management’s guidance for 2018 earnings (rarity for non-cyclical)
  • Raised weighting to 5% – largest weighting will buy 

Added to Green Bancorp (GNBC): 

  • Texas business bank
  • Successfully cleaned up problem loans tied to oil price drop
  • Originally purchased modest weighting, then stock price ran
  • CEO acknowledges bank will ultimately be sold (CEO has done before)
  • Earnings caught up with stock price
  • Added to position for loan growth phase and potential acquisition

Added to ZAGG, Inc. (ZAGG): 

  • Leading designer and marketer of mobile device accessories
  • Last year trimmed position after it ran on high expectations
  • Price dropped after fourth quarter report
  • Used erratic investor reaction at lower price to finish rebuilding trimmed shares – around 10x consensus estimates
  • After addition, first quarter earnings beat investor expectations by wide margin

Sold Innospec (IOSP): 

  • Specialty chemical company
  • Management doing splendid job with synergies tied to large acquisition last year
  • Profits advancing nicely
  • Share price responded
  • Therefore, forecasted upside diminished
  • Concerned highly profitable business line disappearing in medium-term
  • Sold to deploy funds to better alternatives

Trimmed Barrett Business Services (BBSI): 

  • Outsourced human resource services company for small and medium sized businesses
  • Management executing business plan
  • Stock price moved up
  • Consequently, forecasted upside decreased
  • Trimmed to raise cash for alternatives with greater forecasted upside

Trimmed Enova International (ENVA): 

  • Online subprime lender with operations in U.S., U.K. and Brazil
  • Management masterfully executing business plan
  • Surprised investors with strong income leverage in first quarter and big earnings beat
  • Stock price responded quite favorably
  • Forecasted upside reduced as a result
  • Trimmed to raise cash for alternatives with greater forecasted upside

Filed Under: Portfolio Change Updates

Archieve

  • December 21,2020
  • February 27, 2020
  • April 18, 2019
  • December 4, 2018
  • September 14, 2018
  • June 14, 2018
  • January 22, 2018
  • November 15, 2017
  • September 7, 2017
  • June 28, 2017
  • April 26, 2017
  • January 23, 2017
  • October 20, 2016
  • July 28, 2016
  • June 2, 2016
  • March 9, 2016
  • December 21, 2015
  • June 12, 2015
  • October 14, 2015
  • February 18, 2015
  • December 2, 2014
  • September 3, 2014
  • June 10, 2014
  • December 18, 2013
  • August 1, 2013
  • March 21, 2013
  • December 27, 2012
  • August 23, 2012
  • August 23, 2012
  • July 3, 2012
  • July 3, 2012
  • April 20, 2012
  • April 20, 2012
  • March 5, 2012
  • March 5, 2012
  • September 23, 2011
  • September 23, 2011
  • July 14, 2011
  • July 14, 2011
  • April 19, 2011
  • April 19, 2011
  • January 24, 2011
  • January 24, 2011
  • October 28, 2010
  • October 28, 2010
  • September 29, 2010
  • September 29, 2010
  • August 13, 2010
  • August 13, 2010
  • February 5, 2010
  • February 5, 2010
  • August 13, 2009
  • June 11, 2009
  • June 11, 2009
  • April 23, 2009
  • April 23, 2009
  • December 15, 2008
  • December 15, 2008
  • November 26, 2008
  • November 26, 2008
  • July 15, 2008
  • July 15, 2008
  • April 25, 2008
  • February 5, 2008
  • February 5, 2008
  • December 14, 2007
  • December 14, 2007
  • September 17, 2007
  • September 17, 2007
  • August 24, 2007
  • August 24, 2007
  • June 19, 2007
  • June 19, 2007
  • March 27, 2007
  • March 27, 2007
  • January 9, 2007
  • October 23, 2006
  • October 23, 2006
  • August 21, 2006
  • August 21, 2006
  • June 7, 2006
  • June 7, 2006
  • April 21, 2006
  • April 21, 2006
  • April 14, 2006
  • February 16, 2006
  • December 22, 2005
  • October 19, 2005
  • October 4, 2005
  • September 6, 2005
  • September 6, 2005
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