Samir Patel, Portfolio Manager at Askeladden Capital, discusses his recent letter to MIX Telematics (MIXT).

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Transcript begins below

Andrew Walker: Hello, and welcome to the Yet Another Value Podcast. I'm your host, Andrew Walker. If you like this podcast, it'd mean a lot if you could rate, subscribe, follow, and review it, wherever you're watching or listening. With me today, I'm happy to have Samir Patel. Samir is a portfolio manager at Askeladden Capital. Samir, how's it going?

Samir Patel: It's going pretty well. Thanks for having me on the podcast, Andrew. I really appreciate it.

Andrew: Thanks for coming on. A very good reason to come on. Let me start this podcast the way I do every podcast. First, a disclaimer to remind everyone that nothing on this podcast is investing advice. That's always true, but kind of particularly true today because we're going to be talking about a stock that trades in the US but it is foreign-headquartered. Its market cap is just under $200 million. We have very small. We have a foreign company. That combination absolutely creates extra risks. Everyone should just remember that neither of us is a financial advisor. This isn't financial investment advice. Please do your own work. Then second with the pitch for you, my guest, I was thinking back, we've known each other almost 10 years at this point.

I remember we went to Bill's Burger and got burgers back in the Seeking Alpha days. Samir launched his own company back in, I think he was 21 at the time. I remember you're like, "It's important to get this done before I'm 21." He's had absolutely outstanding results. He's a great fundamental analyst and I think that's really going to shine through for the company we're talking about today. All that out the way, let's go. The company we're going to talk about is MiX Telematics. The ticker is M-I-X-T and I'll just turn it over to you. What is MIXT and why are we so interested in it?

Samir: MiX Telematics is a leading global telematics company. For those who don't know what Telematics is, at its simplest, it's just like a 'Find my iPhone' type of application. It can just be a dot on a map saying, "Hey, where's my stuff?" Whether that stuff is a rental car or a big truck. Of course, this goes all the way up to fully video AI-based solutions which can tell when a driver is sleepy. It can help reduce fuel consumption. All those sorts of things. Summarily, Telematics Solutions allow companies to track their assets, increase utilization, and increase efficiency. There's a quantifiable ROI. MiX Telematics, in its deck, actually says that they generate $442 million of annual efficiency savings on $123 million of annual recurring revenue as of Q1FY23.

That's a very quantifiable ROI and that doesn't take into account the intangible benefits, such as fewer collisions, and fewer people dying in road accidents. That's what they do. They've been around since the 1990s. They've grown both organically and through acquisitions. We've been investing with them actually twice. First in 2017 and then second from 2019 to the present. Our strategy is generally high-quality businesses and good valuations. Recurring revenue is strongly profitable. Cash flow was our investment thesis when we started.

Andrew: One number you mentioned, I'm just pointing this out of nowhere. But you mentioned, their products save over $400 million dollars per year, I think that was the number-

Samir: That is the number they disclosed in an investor back.

Andrew: Just compare that to their revenue because they'll give everyone a sense of their financials. Do you know how that compares to other competitors? And we can talk about other competitors in the space as well.

Samir: Are you talking about the efficiency savings or the revenues?

Andrew: Yeah, efficiency savings.

Samir: I'm not a hundred percent sure how it compares to other competitors because, necessarily, I don't think all the competitors disclose that kind of a figure. I mean, MiX has $120 million of ARR, Annual Recurring Revenue. So, they state that that ARR saves their clients $442 million a year. In terms of their scale, they are one of the larger players. They have large global blue-chip clients like Heineken, Holcim, and Total. These kinds of big companies. Their technology is validated. They've got good technology, and they are certainly not the largest player in the industry. There are some players that are larger, but it's also a very fragmented industry. They are one of the larger players and they have a global presence.

Andrew: That's all perfect. People can think that they've had roughly $120 million, they're saving their clients. Again, somebody else could come in and say, "Oh, we saved ten times the revenue or something like that." There's a little bit of [inaudible]. But they're saving their clients three to four times what it costs and there are all sorts of other benefits. As you said, one of my next questions is, this is not, "Oh, it's Mom and truck. Mom-and-pop, truckers are doing this." They've got a real client list here. Chevron, DHL, Shell, and a bunch of other people. Technology's kind of validated by the customer list, I would say.

Samir: That's my perspective.

Andrew: They've undergone a kind of a hardware subscription switch. I know you've invested in a lot of hardware subscription switches. I want to talk about both that, and kind of use that to dive into the churn because I think it shows both the quality of the business and maybe the opportunity. It's kind of a little validating. I think that's kind of important to think about.

Samir: Maybe just to level set. When we're talking in broad terms here, I'm not going to be talking about specific financials. They have kind of two parts to their business. Technically, there are three but we'll just think about it as two. One is this premium fleet business, where typically the contracts are multi-year. They have recurring revenue that's locked in for multiple years at a time with these big global companies we're talking about. They very rarely lose a client there. I think as you referenced, it's about 98%. That was the figure that they disclosed at one point in time. They have another portion of their business who's more consumer-like, particularly in a market like South Africa where there's a lot of crime and vehicle theft. So, for consumers to be able to track their vehicles, sort of more like a LoJack type solution if you think about a US brand.

Obviously, they are the turn is higher. But those are also the rPool on those consumer solutions as much lower, obviously, than what you're going to be selling when you're selling a bunch of videos facing every different direction to a large multinational. Their business results in general, we think are driven more by that higher-end segments. But to your point about the hardware and software, if you go back to the earlier part of the 2010s, the way their business model typically worked at the time was they would sell you the hardware upfront, and then they'd collect their monthly piece of revenue for the software. What they found over time is that a lot of customers for various reasons, similar to the SAS transition and software, a lot of customers just like having one monthly payment, as opposed to kind of a big chunky payment upfront. So, they transitioned to a model in which they financed the equipment for customers, essentially. They just give you one all in price. It's like, "Okay, I'm paying $35 a month. But there's no hardware and software broken out." It's just for the term of the contract is $35. We give you the hardware, you don't pay for it, and then they obviously make the money back over the contract term.

Andrew: That's perfect. I want to dive into that, but I do just want to mention. You mentioned there is South African business for the consumer. I think it's called Beame and it is pretty cool. Just want to talk about how the technology works. It is LoJack-like, but what's kind of different about it?

Samir: It's been a while since I've looked at it in detail. But if you go into their investor days and things, they talked about it and it's kind of like they have some neat technology. They talked about having some neat technology, in terms of being able to basically network these devices together where you may not have a reliable cell signal or things like that. That also allows them to lower the cost because then a lot of times when you're not paying off the cell tower thing. They have some really neat technology that's allowed them to deliver quite a powerful product at a fairly low hard rPool.

Andrew: I just thought it was cool because they've got so many devices out there. They literally say like, "If there's no cell phone tower, we can still ping where it is because we just use all of our other devices or something."

Samir: I think that was great technology.

Andrew: I thought that was cool, but it's not the needle mover here.

Samir: But it does demonstrate their technical prowess. It demonstrates that they have a great engineering organization. They've had a lot of success over time. We validated that for speaking to people in the industry and things like that through these tickers and other sources that we've reviewed those transcripts.

Andrew: You guessed the sponsor of this podcast. Thanks for mentioning. We're going to get-

Samir: That was organic. That was not planned.

Andrew: We're going to get Samir's letter later. You'll see, there's lots of link to tickers calls and everything. So, I'm Chevron. I'm using them. I believe Chevron uses them in Europe, if I remember correctly. I don't think globally. But some people do use them globally. I'm Chevron. I hire with MiX Telematics, like, what am I kind of getting from them? What am I going to be paying for them?

Samir: There are rPools. It's a little bit hard to pin down a number, because there's several factors that can implement it. There are rPpools can range, like I said, from $5 or something on the really low end all the way up to $80-$90 per vehicle per month. It's also going to depend on whether MIXT has the customer relationship directly or they're going through a dealer. Again, I don't want to necessarily talk about specific numbers in that sense because it's going to vary a lot. But generally speaking, the higher up you go, the more features you get. As you would guess, just basic asset tracking, literally just having a dot on a map of where your asset is that's going to be the lowest end solution. As they go up market, they start to offer their highest end product really is what they call 'video telematics' and that's comparable. We think, management disagrees to a company called Lytx or La-Tex. It's basically road facing video, driver facing video. That can enable them.

They literally track things like, "Okay, is the driver getting sleepy? Is the driver driving aggressively?" If they get accused of being involved in a collision, whose fault was it actually? They actually showed some videos of their investor day a number of years ago. All these things that's where your quantifiable ROI comes. Your fuel saving. You save money on fuel because the drivers drive better. Lower insurance costs because you have proof of how the drivers are driving. Their driving well, they're not the ones causing the collision. Obviously, increased asset utilization, knowing where your assets are. All these factors, save them money. To your point about about global, one of their calling cards is that they have a platform that works globally. And so obviously, in different jurisdictions, there's different regulations. Like in the US, there's ELD.

There's like, "Okay, you have to make sure truckers are only driving for this many hours specifically." Each jurisdiction has their own kind of nuances to that. They work really well and they have good clients in South America. They have clients in Australia. They have clients in Europe and in Africa and North America. They have a global platform that's really set up to handle that. Like you said, not always do they work kind of globally which meet with each client. But a lot of times when they're signing up new customers, sometimes it's another subsidiary of that same large global corporation where they're moving into a new geography with them and handling those vehicles as well.

Andrew: We'll talk about the stickiness and everything a second but it does strike me. The dumbest version of this is, "Hey, it's literally just, I'm following my truck on a map. It was on Iowa yesterday. It's in Montana today." I don't know how far those are across. Maybe that's feasible, maybe it's not. It does more stuff, but there's nothing in here that strikes me is, like, it's not rocket science. It does strike me as something, it's a subscription product. GM has OnStar, that's obviously the consumer side. But it's not recognized. It seems there's so many different companies that might be interested in coming at this. You can imagine if you're a truck manufacturer, why not put this into your all of your trucks go sell to one company, and say, "Buy our trucks. We'll do this. We'll get some subscription revenue. We'll cut out kind of mix." Or on Apple or on Amazon coming out and saying, "Hey, everybody's got phones. We'll use this for tracking stuff." What's kind of the moat that's preventing? I know nobody's hard attacking, but you could see a lot of different factors. What's the moat that's preventing that?

Samir: I think that's been one of the questions for quite awhile in the companies in the industry have continued to grow and prosper. Let's attack that OEM portion first. I, personally, again, this is just my opinion, like everything I'm going to say here. OEM Telematics, I think, is actually more of an opportunity than a threat. The reason for that is one of the biggest bottlenecks to growth for MiX Telematics or other companies is they actually have to go physically install a device on their customers cars. When you're not doing that on a factory, the customers have to take that vehicle off the road. Now, it can't be used for making a delivery, generating revenue, whatever it may be used for. Obviously, it cost less to install it in a factory. MIXT has engaged a number of partnerships with some OEMs. In some cases, they're basically taking data from the boxes OEMs put on and putting that into their software platform. In other cases, the OEMs are actually using MIXT boxes and installing those at the factory. That was one of my original concerns when I looked at it in 2017. I've come to believe that the software layer and kind of what you do with the data and the analytics around it is more valuable. As far as why OEM specifically wouldn't compete, I think there's three reasons.

The first and most important is that most global enterprises are not going to be using just one kind of vehicle. Think of Sayshep[?], they might have Ford F-150s as kind of the vehicles that our people are driving around. But then, maybe they have Volvo trucks and car trucks that maybe then because they're an energy. They have some specialty or high that's transporting around liquids and things like that. Maybe they have some kind of specialty vehicles from other manufacturers. Obviously, the customer, if you're Chevron, you don't want five different systems telling you, "Oh, here's one who will tell me where my Ford vehicles are. Here's one telling me where my picker trucks are." You kind of want one source of truth that's kind of across your organization. The second reason for this is that OEM Telematics, historically, they're not software developers. OEMs are not really trying to help you manage your business. The truck manufacturer is more interested in, "Okay, we want to capture the maintenance revenues and help you do predictive maintenance around that." They're not kind of trying to develop, I think, necessarily the same solution or use the data for the same purposes as a fleet management company. You can look at analogies here where for example, Trimble, in construction equipment or an agricultural equipment. They haven't been disintermediated by John Deere and Caterpillar.

Those companies have their own kind of digital agendas, because Trimble is kind of looking at it from a different perspective. As far as startups and things like that, we haven't seen so many of those. That's not to say there aren't those out there. I'm sure it's a large industry. It's hard to keep track of every single one. I think there's more interesting kind of private equity firms and people like that buying existing platforms that have a good reputation with customers that already have the technology. Maybe combining some of them together with other companies to get more scale, get synergies. For example, Vontier, which was a spinoff of Fortive which is a spin-off of Danaher. They have a business called Teletrac Navman. Teletrac and Navman were two separate businesses and they bought it and they put it together to kind of try and achieve those synergies there. I think we're going to see more of that going forward.

Andrew: Vontier, I remember them and I was impressed. I think it was in the PR you put out that you mentioned, because they're almost exclusively gas station supplies. If I remember that?

Samir: Gilbarco Veeder-Root is one of their big businesses.

Andrew: I was impressed that you were just digging into these little small subsidiaries in there. Let me commit the competition for one more angle. I think you've handled it perfectly. The other place that I could see is an insurance company and maybe this is silly. I'm thinking too much about myself under arsenal side, but the Geico's or the progressives worlds. A lot of them have started giving their consumers actually like, "Hey, you plug this thing in and it tracks your safe driving." Obviously, any company with asset management is going to be concerned with that. But could you see like a competitor in some form? Either it started up inside the insurance company or outside because obviously, all these guys are ensuring their vehicles. Could you say the insurance company like actually trying to attack that and saying, "Hey, you do this and we can take it off the insurance price a bit," or something along those lines?

Samir: Insurance telematics is a specific vertical and so, not to get too deep into the weeds here. But there's a company called - I may butcher the name - AirTran, AITRN is the ticker. They play a little bit insurance telematics or at least they did when I looked at them a few years ago. Again, similar to the OEM point, it's a little bit of a separate value proposition. Because if you're an insurer, you only care about certain elements or certain data that's coming out of that. If you're a company that's operating a fleet, you kind of have other concerns. Insurance is one of them, but then fuel usage is another, safety as well. You have kind of all these other concerns as well.

I think, historically, the insurance telematics market is growing. But I think on the business side, not so much the consumer side, we've actually seen. You actually see a lot of these kind of broader telematics companies. Some of them choose to address that market. Some of them choose not to, but I don't think that Geico progress over these companies would in-house it. Again, kind of for the same reason, maybe you even have different insurers for different parts of your fleet or maybe you have different jurors and different parts of your business depending on who's cheaper.

Andrew: Honestly, like Chevron, I said the insurance. But I'm not even sure Chevron might just self-insure all of these.

Samir: Again, I'm not a hundred percent sure. I'm just kind of hypothesizing.

Andrew: I think we've covered like Nietzsche. We've covered why this is not mission-critical. The 414 savings for 120 revenue. You keep tracking your assets like, actually, it is increasingly mission-critical. We've covered why competitors can't come in. Let's just cover one more reason why the proof is kind of in putting in the financials and especially the churn of why this is probably a pretty good, pretty sticky business. Why don't we just talk about retention insurance real quick?

Samir: Again, one of MIXT calling cards is that once they when a customer, they tend not to lose them. I don't know, they don't disclose this figure all the time. It's not like something that is closed on a quarterly basis like most SAS companies. But typically when they talked about it, they're throwing out numbers that are in the '90s. They've set for their largest premium fleet customers that it can be as high as 95-98, those types of numbers. Get on the consumer side, it is going to be lower. But overall, this is a business where we think they have substantial customer retention and even the ability sometimes it renewal to upsell these customers and maybe move them up the value added chain. Like I said, from a $20 rPool product to maybe a $40, $50 $80 rPool product. Of course, there's some negotiation either way. We do think that in general, it's a business that should retain its customers, grow with those customers as they grow their fleets, sell them higher value-added solutions, and then sign up new customers. And so, kind of multi-pronged algorithm.

Andrew: I mean, if you think of like a LoJack or something. A LoJack is a little box inside your car and you're paying for that. If you're ever going to churn, basically, you're going to shut it off. You're not going to churn because if you went to a competitor, you need to actually go uninstall the box in your car or at least install a new box into your car. This is so much more complicated because if you're somebody who's got 500 trucks all across the country, if you're going to switch to competitor, you have to go out to each and every one of these trucks and install something new. That is a really, really sticky business that's probably going to have some pricing power. When you start talking mid-'90s churn on the kind of [crosstalk].

Samir: Mid-'90s eternity. [crosstalk]

Andrew: Sorry, mid-'90s churn we're talking about is [crosstalk]. Mid-'90s retention. You're basically talking, "Hey, we lose customers when they go out of business." That's kind of where it's approaching. I think that really just shows the stickiness of the product, how it's good. I think we've covered a decent bit of the qualitative pieces of this company. Is there anything on the qualitative side we should talk about? Because I want to talk valuation and then I want to talk about kind of why you sent this letter and everything.

Samir: No, I think we're good. Let's move on.

Andrew: Let's just talk about as you and I are talking. Again, this is a foreign company. But the ADS is, I guess, it's called now trade in the US. It's about 825 per share. We can use rough numbers or anything. Let's just talk what's the market cap? What's the high level evaluation of this thing?

Samir: They have, I believe it's 22 and a half million shares outstanding. Don't quote me on that. But like you said, when you multiply that by the share price, you got a market cap that's kind of in the high 100 million close to 200 million type range. Historically, they've had a lot of net cash. We'll get to this in more detail later. But over the last few years, they've put a lot of that cash into inventory. Because again, they have to buy these devices to install them on customer vehicles and with supply chain challenges and whatnot. They kind of front-loaded a lot of that spend. Currently, they don't have it quite. They have maybe a little less than 10 million of net cash. But I think that that number is much higher. I don't know exactly what it is but it's closer to 20, 30, 40. Once you kind of get that inventory excess inventory they're keeping, and you get into the customer vehicles and turn it into cash flow. That's the kind of valuation. You're asking about the financials, that's we're starting to get towards the activists angle.

Pre-COVID, on a very similar ARR-based what they have today. They were posting about 30%-31% EBITA merchants. One thing you have to understand about this business is that our opinion, EBITA, has a little bit of a fake number. The reason for that is DNA is real expense. Most software businesses, CapEx DNA not two material, right? In this case, because of that bundling we talked about earlier, because they buy the hardware, we would tend to focus more on operating margins. It's a little hard to say. Their DNA bounces around a little bit depending on what hardware they would put in vehicles, what the cycles, how much, etc. But as a starting point, we take 10 to 11% of revenues kind of at least what you should be thinking about as DNA.

Andrew: I was like, "I'm going to get him on this." I knew you would know. But I was like, "I'm going to get him," because EBITA, as you're saying, there's a real cutbacks number here because they're going and buying the equipment and that equipment obviously depreciates. I just thought I was going to get you on that one.

Samir: Pre-COVID, they were doing kind of low 30s EBITA margins with a target of getting to 35+. Then if you take the DNA number off that - whether it's 10, 12, whatever it may be - you kind of get to 20-ish% operating margins plus or minus a few. As of today, B margins, they're targeting low to mid 20s EBITA for this year but kind of given that DNA number hasn't gone anywhere like we talked about. Operating margins have essentially been cut in half relatives where they were pre-COVID. That's kind of part of where we start to get into the activist angle.

Andrew: We'll go to the activist angle one more second. But let's just close the loop on valuation. We've talked 175 million, 200 million in EV, kind of matches up with the market cap. The subscription revenue is about 125 million. You're paying a little bit more than one time the subscription revenue. We can talk even or we can talk EBITA. But you're kind of looking at in the six-and-a-half range on an EBITA multiple. If you want to go hard EBIT, you're talking in the mid-teens. I don't know if I [crosstalk].

Samir: Low double digits may be there. Obviously, this is a business that's growing at high single to low double digits per year and should see operating expansion over time.

Andrew: If we just ignore capital allocation, if we just zoomed out, though, because normally we would look at a subscription business like this is probably on EBITA multiple. As we talk about the DNA, here's a lot more real than some of the other. What do you think like kind of the right valuation here would look at?

Samir: Again, it's hard to talk about this without getting into activist angle. But if you look at where transactions have occurred in this industry, pointer tell location was taken out and sometimes revenue. That was what we viewed as a lower quality business than MIXT. Of course, that's a subjective judgment but their revenue growth was lower. Their turn was higher because they did kind of more verticals that we didn't think we're quite as attractive. They were taken out at two times revenue, ten times EBITA. Cartrack, which is traded as Karooooo which is another South African telematics company that management doesn't think it's comparable. But again, we'll get there. I think they're comparable. That's my opinion. They currently trade at EBITA review multiple that's into it three times.

Obviously, they're currently posting much better financial metrics that MIXT. Their growing faster. They have 50% adjusted EBITA margins. There is a reason for that gap. But at the same time, we think based on current multiples precedent transactions, Lytx was valued. I forget the exact number, but it's a very high multiple of revenue. Even relative to what I'm talking about with Cartrack, kind of in its previous investment round in 2019. Of course, tech valuations have declined but that Cartrack multiple I'm talking about is today. We think intrinsic value of this business certainly in the private markets would be a minimum of two times they are. We have a hard time seeing this being worth less than that based on the research that we've done.

Andrew: Two times they are would get you into the low team share price-

Samir: Two times? Yeah. Two times ARR and, particularly, we think it's fair to add back their net cash and then also that inventory that they pre-purchased, because that represents something that is going to turn into cash. It's not like a fashion item that's kind of going to go bad hopefully overnight. We think that if you add that up, we're thinking 13, 14, 15 of shares kind of a floor for what this would be worth in the private markets.

Andrew: One more question then we'll turn to the activist angle. This is just a pop quiz. Karooooo, the competitor we mentioned in trades under K-A-R-O, if anybody wants to look up. But pop quiz for you, Samir. How many O's are in Karooooo.

Samir: Five. I know this because in my press release, I just started calling them Cartrack because I'm like, "I'm just going to keep getting the number of O's wrong and I'm just going to look like an idiot, so I'm just going to call them Cartrack because that's how everyone. Karooooo is kind of a newer name. Don't really know where it came from. Everyone sort of knows them as Cartrack. All the TV transcripts is like, "Former executive at Cartrack." So, I just called them Cartrack.

Andrew: I just laugh every time I see that a mutual friend, was I was emailing back and forth in prep for this podcast. He's like, "Karooooo," and he said the exact same. Sometimes you seven, three, I don't know how many O's are in it. I think we've done a nice job on the fundamentals. We've covered a little bit of the business. Why this is a generally good business, why it's kind of sticky, a little bit Modi. We've covered the valuation cheaper than pressing transactions of probably worse businesses. Let's turn to the meat. Kind of why we're hopping on the podcast.

Last week, you send a letter to the board. Obviously, the letter will be including the show notes or anybody can go read the full letter. Lays out a lot of the stuff we've already talked about. But basically you're saying, "Look, this company is underperforming and I think change is needed." You lay out all sorts of different angles. You just want a response and you're saying the opportunities here. We need a little urgency to act on these changes. I'm just going to let you talk about what you said in the letter, why you thought now is the time to release it.

Samir: It's a why now. I would respond with a sense of urgency. We do this business. It struggled during COVID, and that's not really their fault because a lot of the verticals that they were in, for example, they have a lot of business in bus and coach related to tourism. They have a very high market share in South Africa of rental car companies. They have obviously the oil and gas exposure and we know that oil prices went to -37 or whatever. They reached in April to May 2020 at that time period. They didn't lose customers per se, but they lost a lot of vehicles because, obviously, an oil company that had 100 vehicles in its fleet it boils negative, they're probably going to be kind of getting rid of as many of those vehicles as possible in a short term.

Same thing for a rental car company. They did see kind of subscribers, revenues, all those metrics, decline. But, of course right now, COVID is largely over. Other than China, Japan, a couple areas. Most of the world travels really booming. Energy investments booming. You can go look at those conference calls from those kinds of companies. We think that, not necessarily all, but a lot of those headwinds should actually be gone and have it burst into tailwinds, because we would think that an oil company and rental car company in November 2022 would have a lot more vehicles in its fleet than they did in November 2021. At the same time, the companies continue to sign a few subscribers and so on. What's happened, and the company has chosen to accelerate investments into sales and marketing in some other areas to try and drive higher revenue growth.

But that revenue growth is really showing up. They talk about records subscribers. But I like to say, "I can't get subscribers, I can't go to the bank and use subscribers to pay my mortgage." When you actually look at the revenue guidance for this year, the growth rate is in line with what they achieved last year despite the fact that, again, our opinion, they should be seeing a tailwind from some of these verticals that they're in that were hurt during COVID that now should be kind of on the recovery right on the ups, and so they're making these investments. To us, there's a lot of questionable decision making. Margins, EBITA margins, in the first half have gone from 30-31% in 2019 to 17% in the first half of 2020. I may be getting the fiscal years wrong, but like basically FY 2020 calendar 2019 versus FY 23 calendar 22 [crosstalk]. Of course, as we discussed with the DNA, it's even worse when you look at it from an operating margin standpoint, because that DNA has not kind of gone down proportionally.

At the same time, management, on the public calls you can see their comments. One I'd highlight, they talked about how they're getting price gouged from suppliers. These suppliers, all these components are really expensive. They're causing you to order years in and years out. At that same time when they say they're getting price gouge, they're also deciding to put the pedal to the metal with growth as opposed to maybe waiting for Powell to tamp down inflation and the prices of those components to return back to sort of a normal level. We look at the company and their margins have gone down. Then we look across and their revenue growth, by the way, hasn't, again, in USD terms they're organic. ARR today is actually below what it was pre-COVID. It's about the same level nominally that's because they did that little acquisition from Trimble that I know we're going to get to. Now, of course, currencies have hurt them. In fairness, constant currency, their revenues probably would have grown. But we think that using constant currency figures is, some good, some bad.

Obviously, the headwinds to the euro and the pound this year maybe kind of unforeseen. But when you're operating in countries like South Africa, the Rand has a very good look at it. Going back decades, it has a very long history of depreciating against the US dollar. Over the long-term, I think it's a reasonable assumption to believe that it will continue to do so because it's an emerging market. That's just how it goes. Of course, shareholders can spend dollars. Not emerging markets' currencies. The other thing, you look at the competitors and some of these other, and again, management says they're not competitors. But we find it a little bit concerning that the management team doesn't seem to have a lot of interest in comparing their results to say, Cartrack, to Lytx, to all these other companies. We think it's kind of a bad argument either way.

Their argument is that they're not competitors. Obviously, if they were competitors and they were doing so much better than MIXT, that'd be really bad. If they're not competitors, we also don't think. If they're not playing the exact same segments, we still don't think that's a compelling way to think about things because, for example, Lytx, if you go to their website and look at the marketing for their video AI product, it's very similar to the kind of marketing that makes uses for its video AI product. Cartrack, their former executives who worked at both companies, who go on LinkedIn, there's lots of employees in similar roles who've worked for both companies which suggests that those skills and experiences are transferable. Even if they're participating and say slightly different market segments, if these other companies are doing so much better, they continue to report strong growth, strong profitability while MIXT is kind of reporting the same growth and less profitability. Maybe one of their priority should be to kind of get some executives from those businesses and go after those segments of the market that are more attractive.

We just got frustrated because, typically, when a business would have seen its operating profit margins decline so substantially on a fairly similar revenue base, we think they should have said, "Okay, you know what? We're going to draw a line in the sand here. We're going to do a restructuring. We're going to look at all of our costs. We're going to do this. We're going to do that." The response that we got when we spoke to management prior to the press release, it seemed to be just kind of business as usual. Then, we did get a letter from the board after our press release and it said things like, "We think the management team ably steered the business through COVID. We're confident in the track. We're confident that the strategy is the right one to create long-term shareholder value." And Andrew, if you look at the stock price over the past one year, three years, five years, and going all the way back to the IPO, shareholders have not done well. They not done well in absolute terms and they've certainly not done well relative to the performance of the Russell 2000 SNP, NASDAQ, whatever benchmark you want to look at.

We're kind of sitting here being like, "Why is there not a sense of urgency?" We're all for long-termism and creating long-term value. But shareholders haven't benefited over sort of any long-term period from the company's action. So, why is there not more of a sense of urgency to take action today for shareholders who are sitting here with substantial losses after three years of investments? Margins kind of going the wrong way. We do think results will improve organically. We just don't think there's enough sense of urgency to kind of get them where they need to be, kind of in a short time frame. Our perspective was, "Okay, either management should engage in significant cost cutting, pull back on the growth investments because we're not seeing a clear ROI because the growth has an exit." The subscriber growth may have accelerated but if it's lower end subscribers who aren't contributing as much profitability and revenue, that's not really a win. Ultimately, and then of course, the free cash flow has been actually negative because they're investing so much in these devices while they're operating cash flows were down because their margins are down and so on and so forth.

We really just want to see the company. Of course, we're also in a market where the market is currently rewarding cash flow and profitability today. We're not saying that you should optimize necessarily for the next quarter of the next year. But again when shareholders have suffered so much over long term periods promises of kind of long-term shareholder value ring hollow because you don't have a track record of long-term shareholder value creation. This isn't a stock that was at an all-time high and then just dip 20 or 30% because of the market. This is a stock that is very much down from levels of historically traded at. We think that management should either engage in cost-cutting and sort of lower the growth target and focus first on getting mergence, and then on making targeted investments, or they should sell the company because as we discussed, we believe that private market valuations would be substantially higher than the prices shareholders have been able to monetize that over any time in the past three years.

Andrew: That was absolutely fantastic. You covered a lot in there and I just want to poke into different pieces and kind of expand on them a little bit. I guess, the first thing I want to poke on is, you mentioned the management team said, "Oh, we're growing but we're seeing lower margins because everybody's familiar with semiconductor ablation, commodity. Everyone's familiar with that." To me, that's true.

Samir: I just want to add a disclaimer. That was all just my opinion. That's my interpretation of the numbers they put out there in the things they've said. They're going to have a different interpretation.

Andrew: Though the margin question is the margin. We'll talk about revenue growth. These questions are really just number everyone can interpret it differently but the numbers are the numbers. To me, I look at this coming and say, "Okay, we'll talk about the lack of revenue acceleration a second." But I look and say, "Okay, your revenue growth is kind of staying similar in the high single digits and you're saying, 'Oh. Pricing inflation in commodity semiconductors all this sort of stuff and having to pay it to get equipment.'" I look at that and say, "You've got a serious pricing problem on your hands, like either the business isn't as good as we thought it was because you're basically having to cut into your margins to sell this equipment or management." You're just not adjusting fast enough because, clearly, people are willing to pay $10 last year for this, $20, whatever. They're probably willing to pay 23 if you go to them and say, "Hey, our costs have inflated 15%." Either they're willing to pay that in the business as good as we thought or they're not, and the business isn't as good as we thought or you're not. It seems to me, you're not asking and you're really having a pricing and margin problem that self-created because you're not adjusting your pricing in real-time.

Samir: We've attributed some of that to the multi-year contracts where they can't go back and renegotiate during the term, so maybe that's part of it. But when we look at it more broadly, this again is where we look at the comparable and we haven't heard a clear explanation of why Cartrack is not a good comparable. The excavation we've gotten is that they play in a different segment of the market, may be true. That's fine. But at the same time, their margins. You look at that slide that I put in the press release and Cartrack's margins have done very well. They haven't seen the same kind of margin degradation over the past several years. There's just EBITA margins today or in the, depending on how you look at it, 40-50% type range.

Conceivably, Andrew, you can tell me if I'm really crazy here. But just as a lay person, you would assume that the components that go into a telematics box and the telematics service, whether it be laver, the cost of cell service, whether it be the fuses, whether it be the various GPS tracking, whatever widgets that do that. You would assume the Cartrack and MIXT, it's not like Cartrack would see an inflation of 5% and MIXT should seen inflation of 100% on kind of that same type of component. When there's other telematics companies out there that continue to report strong margins and MIXT is seeing like this huge degradation. That's what kind of makes us wonder like, "Do they need to bring in another executive who has a better kind of history with cost control margin?" The DBS and their business system type of executive who can really kind of get that margin structure back on track because we, again, our first question will be, "Okay, is this an industry-wide problem?" Then, we see other companies that don't face that same problem. Your interpretation as an analyst is maybe it's a company's specific problem.

Andrew: It brings us nicely to the next question. I think this is maybe, to me, this was the key point of your letter. You might disagree and feel free so. Anyone can go and look at their investor deck. It's on their website. They've got a July 2022 investor deck. Look. Right now, our annual recurring revenue growth estimate you and I talked about is just under it's in the high single digits. Our gross margins right now are 63.8%. Our adjusted even on margins 22%. They say, "Look, our long-term goals. we're going to accelerate recurring revenue growth to over 20%. Gross margins are going over 70. Adjusted EBITA margins are going over 30." That's great. Samir and I talked about why maybe it should be better right now. You can go back to their 2019 investor deck and Samir's the one who did this. I followed this for a while, mainly, because I followed simmer for a while. Go back to their 2019 investor deck.

They say, "Hey, our long-term goals: get recurring revenue growth over 20%, get gross profit margins over 70%, get adjusted EBITA margins over 35%." And guess what? They've actually gone in reverse on every single one of those metrics over the past three years. Management might come out and say, "COVID and inflation." But going that far in reverse when I think you should, as you said, you should have the tailwinds up every rental car companies desperately trying to get rental cars. Energy is back. They should have some tailwinds and seems like we should have at least seen some movement on it. I'll let you comment on that.

Samir: That's exactly our point, Andrew. Look, I mean, you said everything. It's difficult to factually argue with what you just said. There's going to be subjective interpretation about how many head wins versus tailwinds they're facing. Again, I just want to clarify everything. It's just our opinion. That being said, they're competitors or - sorry, not their competitors - but other telematics companies that they stated not their competitors. Samsara is reporting great growth, Lytx is reporting great growth. Cartrack Karooooo was reporting great growth. It makes this kind of odd one out here. My working hypothesis is that sometimes, what you have with these entrepreneur-led companies, is that the right strategy, the right team to take a company from being a scrappy startup to being a company with 100-150 million in revenue. Sometimes when an organization gets too large, they don't have the right strategy, the right team in place to be the same approach to take it from 150 to 300 or 500 or a billion.

As small cap investors who've actually seen this quite a lot where sometimes there are these companies that were historically family-run that kind of work in a niche but then to take it to the next step, they had to bring in an executive with experience with the larger organization because it just changes. Managing a business with 30 million revenue is not the same as managing a business with 30 million dollars in ARR. The weird part to us is that, historically, pre-2019, that executed fairly well. They hadn't necessarily met those targets but they did consistently grow. They did consistently drive operating leverage over time. Just ever since, we invested in 2019. Just like you said, there's kind of knot. They can point to subscribers but again, we can't spend a subscriber. I can't go to my clients and say, "Well, here's a subscriber to fund your financial needs."

Andrew: I think that be a human trafficking issue, actually.

Samir: We can't spend a subscriber. There's two things we can spend. We can spend free cash flow dollars that they distribute as dividends or we can spend stock price dollars that they get that we can monetize in the public market or that they sell to a private company. I think that if they want to pursue a strategy that's not going to get the stock price up, then they should partner with the private equity firm. They should take minority shareholders, public shareholders out at reasonable valuation. Return that capital and then they're in the private equity firm. I think they can kind of figure out what they want to do. But I just think there needs to be some sense of urgency when, like you said, not only have they underperformed these other companies in the telematics industry but they underperformed their internal targets and that's not an opinion. That's a fact. They keep putting out these targets and years later they, like you said, it's not kind of reasonably plausible to say, "Oh, because of COVID." It's like if you're a little below because of COVID and disruptions, that's one thing. But when your USD denominated revenue is the same as it was then and that's with an acquisition, it's hard to attribute that all the currency or all the COVID when you were supposed to. Businesses that grow 15 to 20%, they should be able to overcome a lot of headwinds.

Andrew: A lot of the headwinds, the COVID, they were temporary headwinds. They do have tailwinds and as you said, 15 to 20% and tracking like that actually did have a lot of tones. You mentioned private equity and I'll say it [crosstalk] it's not words in your mouth. But this does strike me as the perfect private equity situation where you have a small company that's maybe having a little bit of pricing problems, maybe having a little bit of keeping the metrics problems. It throws off a lot of cash. Perfect private equity company in a private equity comes, they install... A private equity company is going to be religiously focused on KPIs.

We only get information every quarter, and because it's subscription, today's decisions might not matter for 9 or 12 months. Private equity firms are going to have up to the minute information. If there's a problem within a month, they're going to be laser focused on it. If the problem eventually turns out to be the management team, the salesforce, you can bet they're going to make changes and they're gonna be tracking everything. It does strike me as a situation. I know private equity can get a bad word but we're a private equity firm. It actually could add a lot of value from just religious tracking and monitoring and really holding people's feet to the fire on this. I'll let you comment on that if you want to say anything there.

Samir: I completely agree, Andrew. It goes back to that term I keep using, which is a sense of urgency. Again, I'm all for long-term investments. One thing we did not do, we've never stated in that letter or in subsequent communications. We don't think they need to cut RND[?] because that's what keeps them competitive. We're all for them continuing to develop new platforms, new technologies. But some of these other investments, we've questioned the prioritization of those. We talked a little about MIXT now. Then, if we're going to have time here but they have launched some products that just haven't panned out the way that they thought. We really think that there just needs to be more focus and more of a sense of urgency around like shareholders have not done well over the past three years.

All of our business matrix are not... We're supposed to be seeing this accelerating revenue growth. But guidance for this year is kind of the same as it was the previous year and still way below that long-term target. There's just not really any metric I see that gives me confidence as a shareholder that they have that like, "Okay, we need to do well and we need to do well," like you said. "We need to be kind of on top of this on an on the minute basis. Not just like in 12 months and 18 months, things will improve." I'm sure things will improve in 12 or 18 months. It's just, as someone who's owned the stock for three years and is down substantially on that investment despite it being a multi eight-year ARR contracted business at a good valuation, it's very frustrating that they're kind of still talking about the long term when I think they need to draw a line in the sand and say, "Hey, we need to get back on track here and then we can start thinking about three to five year plan."

Andrew: Let me ask real quick. When I was talking to other shareholders or people who've been involved in the name before and I think one of the things you say in your PR is, there's some concern about the salesforce here. Maybe not being as aggressive enough. Maybe a lot of [crosstalk] the salesforce, I just want to toss that over to you as well.

Samir: Look. We're just trying to piece together puzzle pieces as best we can as outsiders. Maybe we're way off base. Again, when you see an industry where you can look at all these companies in the industry whether they be public or private, and they're all growing at very high rates, and then you look at one company that's not right. My first question or my first story is they're technology inferior or they're getting out competed on the basis of technology. Again, I wouldn't consider myself an expert. I'm not going to say they have the best technology in the history. They probably don't, but we haven't seen any indication in our research that their technology is not good enough. As we were talking about earlier, the fact that they have these global blue-chip clients who renewed, that would suggest that it's not like they're seeing something out there that's so compelling that they feel the need to switch away.

On the other hand, while they're very good at keeping their existing customers, certainly from their revenue growth numbers, it doesn't seem like they've been signing up new customers and off or at least new customers that are willing to pay them at a high enough level to make their time worthwhile. Again, you look at the kind of margins that Cartrack generates and it's hard for me to believe that there aren't customers out there because they're growing at a double-digit rate with adjusted EBITA margins that are in the 40 to 50% range. So, it's hard for me. Again, maybe they're playing a different segment than MIXT. But then, maybe MIXT number one priority should be, "Okay. Our second of the market isn't as attractive as Cartrack's." We have good technology.

Let's figure out the right mix of product and sales force to go after that segment of the market and kind of try and achieve those results, or Lytx, because there's all these other companies like Samsara. The reason we didn't talk as much about Samsara is there are more kind of I believe the numbers are like 50% revenue growth but -20% margin. That's not the kind of strategy that makes this looking to pursue. Not the kind of strategy we want them to pursue. But that does demonstrate they have good gross margins. That does demonstrate that there is opportunity out there. I don't think Samsara is structurally unprofitable. It's clearly they're just investing a lot through sales and marketing but at 50% growth rates. They're getting a payoff on that investment.

Andrew: I've got a couple other questions but I just want to test for stance. You sent a letter to the company?

Samir: Yes.

Andrew: Listing out everything all these issues that we talked about. One solution to that could be the company. As we said, I think this would be a perfect private equity firm. They sell themselves to a private equity firm, or I think there's several strategic, but they sell themselves. That's one solution to a good thing. But there's another solution where they could say, "You know what? Some years, we should be doing better. We should be growing faster. Our margins should expand." I wonder if they say that, how are we going to track that? Four years from now, we'll know if the revenue accelerated in the margins. It's alright. But if they say that two months or four months from now, like, how are we going to see that? Because it does take time and subscription businesses, and there is the chance they just say that and then we've got a history of multiple years of them kind of not having their eyes on the ball. They say that and they don't execute or how are we going to track them and kind of hold their feet to the fire there?

Samir: I would say that that's why my number one focus is the margins and the cash flow. I think the two are correlated because, again, the cash flow is mainly a challenge because they've been trying to buy out all this inventory so that they can go grow at this high rate. Then, they're making the investments through the PNL as well that, again, at least in the near term, I'm not seeing it pay off and accelerated guidance for the amount of investments they're making. The amount of margins of gone down. You'd expect they're going to say, "Oh, we're going to hit 15-20% growth in ARR heading out of the year." Instead, they're still giving this guidance for kind of high single digit. It's a low double-digit. Even if they reach 12-13%, I don't think that's not a good trade-off. Unlike their margins being 17 instead of 20.

Like you said, I think that the right path here is to sort of start by pulling back on some of those investments. Get margins back to at least a high 20s type level. Get free cash flow to be positive. Burn off that inventory you have and stop kind of trying to place orders going out way in the future and focus sort of on the nearer term. Then once you're in that position of strength, then evaluate what are our highest return opportunities. Maybe in the meanwhile, take the opportunity to bring in an executive you can kind of retool that sales organization. Maybe do some strategic work around, "Okay, there are these other companies out there that are seeing really good results. We haven't seen as good results."

How are they able to achieve that, which are the segments of the market that kind of match up best with our targets. Then maybe even by the way, accelerate investments in some targeted areas. One of the areas I'm very bullish on is that OEM telematics solution, where I think it's great if they could get an OEM to put their boxes or someone else's boxes on vehicles and they don't have that bottleneck and then all they have to do is kind of just provide the software layer on top of that. To me, that seems like a much more scalable economic moat.

Andrew: They recently partnered with Ford Europe on this and people say, "Oh, the OEM is doing it." This is what Sirius XM does. It's great if your going to give up some margin if you partner. But it's great because you're going to be in every single one. You use all your, basically, all your customers. That's the holy grail of all these things.

Samir: Again, I'm not inside the company. I'm just trying to piece the puzzle together as best I can as an outsider. Maybe I'm totally way off base like the company says. At the same time, even if my interpretation of what's happened is really wrong, you can't question the fact that margins and cash flows are down.

Andrew: Working capital, right.

Samir: You can't question the fact that the stock price is way down from where it was three years ago, five years ago. These are not subjective opinions, their quantifiable fact. I just don't feel that the company is taking enough immediate steps to address them.

Andrew: If I was an investor holding their feet to the fire, I think based on what you're saying, the three things I'd be looking for working capital to come down as they work through that working capital, margins to go up. This is a highly subscription business. The company could even come out and start giving, "Hey, we know we've got a margin issue. Here's our incremental margin on the new deals we're doing," or they could get a quarter by quarter margin if they really wanted to. They don't have to say, "It's going to be 34.7%." But they can give a couple quarters of four margin so that shareholders can look and hold their feet to the fire.

Samir: One thing that a few other people are talking to investors, analysts, whoever and interesting, potential thing to do. They've never really disclosed very clearly, at least not to my knowledge, figures around say, LTP and Cack, exactly what they're sort of steady state margins would be. Because as you know with any business like this, if you're running it in run off mode, you can see very high margins. You can actually prove that during COVID because, obviously, when they weren't buying inventory, they generated a tremendous amount of free cash flow from that existing subscription business at the time. They clearly weren't investing and trying to sign up a bunch of people during a global pandemic. It's never really been. I don't think there's a lot of... I don't think shareholders have clarity on the ROI they're getting on the investments and exactly when they expect them pay off, how they expect them payoff. I think it would be very helpful if they would kind of put together some figures to disclose like, "Okay if we stopped growing today, here's what our financials would look like." On the income statement on the cash flow state.

Now, here's exactly how much we're investing in sales and marketing. Here's how many customers at what rPool we expect to be able to sign up using that and based on our retention figures and whatnot in the incremental margins, like you said, what the long-term value of that customer is because as of right now, all we see is costs going up, reviews are not really going up. If there is a long-term value proposition there, I just think they need to do a clearer version, clearer way of articulating it so that we, as shareholders in the market at large, can understand it. Another point I'd make, Andrew, is that one of the things... So I'm looking at this letter that the board sent me.

They said that we find many of your assumptions and assertions off base and misleading. I've heard some other shareholders who spoken to them who said that they don't think that I understand their business. My perspective is I've tried, I follow this company for 5 years. I do detailed research. I made my best, good, faith, effort to understand this business. One of our other large positions has a very similar business model when it comes to SAS and LTD. I understand these things. I am totally willing to accept that maybe I'm all wrong here. That's a possibility. But if that's the case, I would say that's the company's fault and not mine because I've just been trying to do the best I can with the information they put out with the [crosstalk].

Andrew: Thousands of research, all these things.

Samir: Exactly. If I'm way wrong, then that means that they need to do a better job of explaining themselves because if I'm so off base, then like, and by the way, I'm not the only one. I've spoken to many other shareholders to look at these numbers and have the same concerns that I do. It's a bit confusing why they won't kind of provide some clarity around these investments they're making and when they expect them to pay off.

Andrew: I look at hairy situation sometimes and sometimes I'll call and the managers would be like, "Oh, our investors don't [inaudible]," and I'd be like, "That's your fault, man. You should be beat- If you've got a good story to tell and you want it to be told, you need to beat people over the head with it and make it as easy as possible. If you're consolidating a subsidiary and it makes you look way over lever and it's actually not recourse that, like, you just need first page of your IR deck. You need to call out, "Hey, this isn't recourse." For these guys, I don't see a net dollar retention number. I don't see lifetime LTV to act. I don't see any of these. If the business is so great, dollar retention is going through the roof, they're doing tons of investment, but it's going to be at such great margins.

Why isn't it in on page one of the deck so that you're not sending this letter and I'm not wandering on a podcast about it? Like, it should have been like that. I suspect the answer is because it's not as good. You can kind of see it in the margin starting to deteriorate and everything. Anything else here, I did want to ask one last question but I just want to make sure we did fundamentals, we did valuation, we did almost everything you covered in your letter. Can't be everything because it's a long letter. It's a good letter. Again, listeners will be in the show notes. Please go check it out, but anything else you want to cover here? I want to cover one more thing.

Samir: Sorry. Go ahead, Andrew.

Andrew: Last thing, you sent the letter end of October and on November second. A couple days after you send the letter, MIXT's Chairman sends one of the weirdest resignations letters I've ever seen. It's in the SEC filing, so people can go look it up. But he basically says, "Hey, I'm resigning because I own 15% of this company and I need to sell some shares and the Israeli exchange won't let me sell shares as a- South African, sorry. They won't let me sell shares as an insider, so I'm resigning so I can sell shares. And then, hopefully, you'll point me to the board after I'm done with my sales share program." It's just a bonkers letter on a ton of different ways. I wanted to ask your thoughts on it and the timing, you sending the letter and then him resigning three days later, doesn't strike me as maybe completely coincidental and we might even talk about the chairman. But that's the Chairman and the largest shareholder and does this two days after like-

Samir: My personal view, I think it was just a coincidence. I don't have any more information than you do. But from what's been put out there, it just seems like the exchange wouldn't let him kind of run attend a 5-1 plan while he was still the Chairman. In that sense, I'm on the company side, like, if he wants to be the chairman and just wanted to sell a few of his shares, then I don't really see why the exchange would have a problem with that. The one thing I will point out is that if he's a large shareholder, like you say, and he needs to sell some shares for whatever the reason might be, it is very confusing to me why they wouldn't do more to get the stock price up. When he's a very large shareholder and he's selling what amounts to over a percent of the company, we're talking about millions to tens of millions of dollars, depending on the valuation you get for those shares.

Why would you want to sell them at $8 which everyone, including the management team and the board, agrees is undervalued as opposed to like making more of a concerted effort in the public markets. Get the stock price to a more acceptable level or just find a buyer who's willing to pay $13, $14, $15 of share and then the Chairman gets to sell as many shares as he wants roll over whatever equity he wants to keep and to kind of that deal, and then public shareholders, like me, get liquidity for an investment that hasn't gone well for the past several years. That's my perspective on that. I don't understand. It doesn't make sense to me, kind of the lack of urgency to get the stock price up for, not only people who are big shareholders, but specifically people who are big shareholders or trying to sell shares.

Andrew: I'm with you. There are other things they could do to. A, they could just deliver great financials and send this stuff for. The company, it doesn't pay huge dividends but it's like 3% per year. It's not like he's not getting any income on this thing. He could have just held and taken the income. like, that's a pretty meaningful amount or it strikes to me the company, especially after they do that working capital drawdown that we've talked about, they'll have a lot of cash. They think the shares are undervalued. They could have just tendered for a bunch of shares at $10 per share and said, "Hey, our Chairman's going to tender equivalent with everyone else so he'll get a premium price that way and we'll retire shares." There's just a lot of other things they can do, though. I will say one person emailed me and said, "Ian Jacobs, the guy who's going to take his place as chairman, I think he's pretty highly regarded." He was at Berkshire for a while. I believed he was like Warren Buffett's. Like, first kind of investing apprentice back in the mid-2000 Berkshire. I don't know if you have thoughts on the chairman, if you've had any reactions with him or anything?

Samir: I have not. I did reach out, and they replied to me in the form of the letter and we'll see. Hopefully, they engage with me constructively. We'll see what happens. I would say that I tend to judge, as an investor, I tend to judge things by results. Over the period that he's been on the board and now that he's going to be Chairman, what have the company's results been. That's how I'd evaluate. It has nothing to do with him personally and whether he worked for Warren Buffett or not, it's not really relevant. I mean, maybe working for Buffett as an analyst is a very different skill set from being a public market's company Chairman or board member. We're just focused on intrinsic value and shareholder value. Right now, the company's metrics don't look great. Hopefully, he can get them moving in the right direction.

Andrew: I just love how you put that because it's so easy to fall prey to. "Oh, he's got a good track record. He's got a good pedigree." It's like, what have you done for me at this company specifically? That's really all I care about. If you've got a good track record and you're not doing something good, either I'm wrong in the company is really in trouble or maybe your trackers, maybe you're not as good, maybe you just don't care, all of those things. I really love what you said. I want to remind everyone. We've been generous of your time. I want to wrap this up, but I just want to remind everyone. A, nothing on this podcast was investing advice. We're not looking to form a group or anything. But I think Samir makes a lot of really compelling points. I'll include a link to his letter in the show notes. But Samir, how can people reach out to you if they want to discuss this a little bit further or anything?

Samir: My email address is samir@askeladdencapital.com. You can put. I'm not going to bother trying to spell it on the show. You can just put it. it's also on the press release at the bottom. Email is best. I'm also happy to talk to people. I'm always interested in connecting with other people who may have... Some people may disagree with me but even that's not, I mean, if you're an open-minded person, you should take feedback, whether it's positive or negative or somewhere in between.

Andrew: I would just say, look again, the stock, I think I follow teleco- I followed these types of companies for a while. I remember the pointer deal. I remember Verizon getting into a couple these things. Fleetmatics, I think if I remember correctly was like? These are strategic assets. This stock is down about 33% over the last three years if I remember correctly. If you are a shareholder, you should reach out. I'm going to say it's this muted. You should reach out to the company, reach out to Samir, understand both sides. At least, if you're really here at the company, that's fine. But understand both sides because this is the potential to be a very valuable asset, and it's a very strategic asset and you want to make sure that it's taken care of. I would just encourage anyone who's listening or interested with that. Samir, anything else we should be talking about? Anything else?

Samir: No, I think that's good. I really appreciate your time, Andrew.

Andrew: I appreciate you coming on. I appreciate you coming on for your first activist investment. I'd love to have you on again. But next time, let's not do it on an activist investment. Let's just do it on a normal, undervalued investment. Samir, thanks so much for coming on and we will chat soon.

Samir: Appreciate it. Thank you, sir.

[END]

Yet Another Value Blog

Samir Patel from Askeladden Capital on MIX…