Samir Patel
July 02, 2016
"My life is for itself and not for a spectacle." Qualitative small-cap value investor.

Franklin Covey: A Compelling High-Return, Low-Risk Pitch… And I’m Swinging

Summary: the "All Access Pass," a new go-to-market offering for performance-improvement company Franklin Covey, which is the equivalent of a season pass at Six Flags, is resulting in the company lowering reported guidance.  On the other hand, economic fundamentals of the business have never been stronger.  All Access Pass represents a tremendous value proposition for clients.  

While shares are illiquid, smaller funds (and/or PAs) have the opportunity to purchase a high-quality, cash-generative business at a significantly below-market multiple with significantly above-market growth potential.  High-integrity management strikes the perfect balance between devoting free cash flow to accretively repurchasing shares while not taking on any balance sheet risk.  

On reasonably conservative assumptions, I believe shares will be worth $25+ three years from today, offering investors the opportunity for low-risk compounding at 20% or greater.  Please see attached PDF for more detailed analysis.

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