Cvent Holding Corp (NASDAQ:CVT)
An interesting exercise in doing a case study for a growth fund
Hi! Hope you’ve been keeping well. I’ve been giving you radio silence for a while; work has been very busy for me, and had quite a bit of life admin. Sorry for not sharing more content.
One task which has yielded something investing-related, which I’m sharing with you now, was my decision to apply for the TDM Growth Partners Residency Program. They are/were looking for non-investment banking background candidates to join their investment team. These guys are a growth-focussed fund here in Australia which you can read about here.
As part of the application they asked me to do a case study on a company called Cvent. I wrote up the company as I normally would and prepared a slide deck. Links to both are below:
I’ve decided to share these now as its been enough time since I did the pitch and can only assume the selection process is nearing its end. As you may have gleaned, I wasn’t offered a slot in the residency program.
What got me interested was:
their desire to look at those coming at investing from a non-traditional IB or even accounting background
they are long-term focussed with very long holding times
one of their values is that “thinking and acting like a business owner” is key
their impressive CAGR
their involvement with the charitable effort called ‘Hearts & Minds’
Critically the founders cited Buffett as a key inspiration, and so I got the feel that these guys were GARP (emphasis on the reasonable price) investors - roughly aligned with my own philosophy.
Normally a company like Cvent wouldn’t come up on my radar, but I tried not to pre-judge. However, as I continued into the filings, I got more and more concerned, and you’ll see the writeup is particularly bearish and I advocate not buying the stock at current prices.
Keep in mind I wasn’t given a whole lot of time to do this - I did this write-up and slide deck over 48 hours (one weekend). Naturally when I feel I haven’t done enough work on an idea, I lean bearish and advocate taking no action until I secure conviction in the idea (if ever). I think this is reflected in the writeup.
A fun turn of events: Cvent was one of the highest conviction ideas for their fund, and not just right now - but over several years. It was their largest position in 2016 before it was bought out by private equity, and they just invested in the company’s PIPE (it went public again via SPAC) last year. Picture this: an investing novice (that these rather successful investors kindly invited into their office) proceeds to pitch a sell on on one of their highest conviction ideas. I can’t believe they didn’t laugh me out of the room. Massive kudos to the guys there, who took it all with a smile and gave some constructive feedback. Can’t imagine all the egos in funds management would react as stoically as they did. We didn’t see eye to eye on valuation and some aspects of the business, but hell - they’re the professionals not me. I’m probably missing something. Anyway, they actually advocated that I try to see if there were any value-leaning funds that were looking to take on interns (as I had put in a lot of effort and was clearly passionate), which I thought was a kind gesture. But TDM is not the home for me.
So, if you know anyone… you know where to find me. In the meantime, I hope you enjoy my writeup in which I whinge about an unprofitable de-SPAC with competitive headwinds, a controlling private equity shareholder, little management ownership, a statistically likely chance of bankruptcy within 2 years and compressing gross margins trading at 5x sales ❤️ (no, I’m not bitter).
I’ll revert back to normal small-cap quality names at reasonable valuations in the coming weeks/months.
As usual, nothing in this post, write-up or slide deck should be considered advice of any kind. DYOR and if necessary, obtain indepenent financial advice from a licenced professional. Here is a tip though: don’t take buy/hold/sell or other financial advice from anyone on the internet, including me.