Venn Brown report sees tech-focused capital fund Bailador as ‘one to watch’

Equity research house Venn Brown sees Bailador’s portfolio as ‘one to watch’
Market doesn’t yet credit Bailador for consistently realising assets above NTA
Cashed up Bailador well positioned to capitalise on emerging opportunities

Special Report:  Small and mid-cap equity research house Venn Brown sees tech-focused capital fund Bailador Technology Investments as ‘one to watch’.

 BTI continues to deploy more than $100 million in balance sheet cash to new investments, following a string of highly profitable portfolio company realisations.

Venn Brown recently published a ‘One To Watch’ interview with Bailador Technology Investments (ASX:BTI) having identified the opportunity after watching the fund present at the ASX Small and Mid-Caps conference in September 2023.

The 16-page report from Venn Brown takes an in-depth look into BTI’s investment strategy including what they look for in a business, their current market opportunities, and portfolio performance.

Page 1 of the report summarises the key reasons why investors should watch BTI, including:

A ‘hyper growth’ IT focus: BTI invests purely in information technology companies looking for expansion capital. The constantly changing nature of the IT sector offers opportunities for outsized returns, while the expansion, hyper-growth stage presents an attractive risk reward balance to achieve the best returns.

Focus on quality investments: The fund focuses on technology companies that have proven market fit, strong management teams, a huge addressable market, strong unit economics and an enthusiastic and dedicated customer base. 

Dividends: BTI has a stated dividend policy of distributing 4% pa of the group’s net tangible assets. The policy was designed to provide the balance between maximising long term capital growth achieved through the out performance of the investment portfolio, while rewarding investors with a steady and attractive, fully franked income stream.

History of outperforming NTA: With the share price currently trading well below net tangible assets (NTA), the market doesn’t credit BTI for consistently realising assets at valuations above NTA. 

Outlook: The recent retraction of the tech sector and the hesitancy of investors in both the private and listed markets is presenting BTI with a growing number of attractive investment opportunities. With more than $100 million of cash on balance sheet, BTI is well positioned to capitalise emerging opportunities as other investors remain cautiously on the sidelines.

Co-founder and managing partner Paul Wilson says analysts like BTI often find it difficult to generate research reports in the normal form because the fund doesn’t disclose financial details of underlying portfolio companies.

“BTI keeps detailed portfolio company information confidential, respecting our position as a minority shareholder in these mostly private companies, and the wishes of the individual portfolio companies and fellow shareholders,” he says.

BTI’s share price at the time of publishing this article was $1.23 which is a 17.5% discount to its post-tax NTA of $1.60 per share (as at November 30, 2023).

The post-tax NTA per share is a measure of the portfolio’s net value attributable to shareholders after all fees and taxes are paid.

The BTI share price

 

Venn Brown has not and will not receive a fee either directly by the company itself or by a third party for its ‘One to Watch’ interview with Bailador Technology Investments.

This article was developed in collaboration with Bailador Technology Investments, a Stockhead advertiser at the time of publishing.

 This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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