Speedwell Research's Weekly Recap
New CoStar Competitor, 3 hour Axon Podcast, Litigation Builds Trust, Improbable Risks Get Ignored, Tariffs, Product Intutition
Welcome to Speedwell Research’s Newsletter. We write about business and investing. Our paid research product can be found at SpeedwellResearch.com. You can learn more about us here.
This is a weekly recap, where we summarize recent content you may have missed.
Table of Contents:
Speedwell Releases & Upcoming
Spotlight
Coverage Updates
Sharing Links
1. Speedwell Releases & Upcoming.
Research.
We have released eight 4Q24 business updates so far this earnings season. We have released business updates on Coupang, Evolution, Airbnb, CoStar Group, Floor & Decor, Permiter Solutions, Copart, and Dream Finders Homes.
The Synopsis Podcast.
This week on our podcast, we released the highly anticipated Axon company podcast. This near 3 hour episode draws on our 75-page research report on Axon Enterprises providing a very in-depth break down of the company from its business history since its founding to the competition that they face.
You can find our Axon Research Report here.
Upcoming.
Podcast
We will release another dialogue business update covering Dream Finders Homes and and Floor & Decor! We then will cover Copart and CoStar the following week.
Research
We will release our report on APi Global (stock ticker NYSE: APG) this week! (actually this time).
This company is a leading provider in life safety and fire protection services. Their statutorily mandated services, high customer retention, and mission critical service that is a small portion of a customer’s expenses drew our interest in diligencing them.
We will release an update on Constellation Software soon!
Coverage
No conferences this week from our coverage.
Become a Speedwell Member today to get access to all of our research updates and our in-depth research reports!
2. Spotlight.
Below are select quotes from our various writings and podcast.
10 Lessons From AXON Founder Rick Smith
Trust Your Intuition Amid Doubts: "Axon’s largest business today (the body cam + Evidence.com software platform) was almost shut down just before it started to see success."
Comprehensive Solutions Increases Switching Costs: "They insisted that the body camera be integrated with their own software so video uploading and management took little to no incremental time."
Trust Through Defense: "After defending so many law enforcement agencies, they built trust that if something went wrong with their product or service, they would make it right… An upstart, without a history of working with law enforcement or building trust through defending them in litigation, would have had a much harder time convincing them to make this transition, despite how logical it may have been on paper."
Read the 10 Lessons From Axon Founder Rick Smith article here.
The Risk Circle: Deciding What Risks Matter and When
Pricing Risk Appropriately: "As an investor, you must gauge risks and make sure you are adequately compensated for them, similar to an insurance adjustor."
Know Your Risk Tolerance: "There is a whole category of risks when investing that you cannot explicitly be compensated for because no compensation would be high enough, so you are stuck making a judgement on whether you can live with such a risk."
Improbable Risks Get Ignored: "However, you would never expect an analyst to list 'magnetic poles flipping' as a risk on their investment."
Read The Risk Circle Memo here
3. Coverage Updates.
APi Group
CEO Russell Becker at the J.P. Morgan Industrials Conference
M&A Geographic Expansion: “Our average multiple on our bolt on M&A is less than six times. And if you’re paying less than six times, in general, for every dollar of purchase price you get, you’re going to get roughly $1 of revenue… our goal would be to do another [$250 million] this year, another two fifty the next year and continue to build out our geographic footprint.”
Integration of Chubb Acquisition: “We identified roughly $125 million of synergies… at the end of the year, we’re at $90 million so we’ve got $35 million to go, of which the lion’s share of that will come through 2025.”
Tariff Impact: “We’re just seeing more noise than anything… the biggest commodity that we buy is pipe. And so we’re obviously watching hot rolled coil prices. We’re pretty protected.”
CoStar Group
Rocket agrees to buy the online real-estate brokerage Redfin for $1.75 bn
Redfin has been a by and large mismanaged asset that has sputtered into irrelevance overtime. Their stock is down 50% since IPOing in 2017 and they have been superseded by Homes.com in terms of trafffic.
Rocket is likely interested in finding a new channel to generate orginates for their mortgage business, hoping that the online platform can be a venue of low cost leads for their mortgage orgination business. This is there second foray into the online real estate business with their initial entrance coming form an acquisition of ForSaleByOwner.com, which is a real estate advertising and info site that allows owners to list properties without brokers.
While we should never totally discount a competitor, it will certainly be an uphill battle to present a threat to the current US residential leaders Zillow and Homes.com.
4. Sharing Links.
Speedwell’s Drew Cohen launched a YouTube Channel two weeks ago! It is focused on general investing and business content. Videos are released every Tuesday and Thursday. Feel free to drop questions you want answered on any video!
Stocks EXPLAINED: How to Be a Great Investor
Why stocks were orginally created.
How the invention of the stock market unlocked capital formation.
The right way to think about investing in the stock market.
Smart Investors Understand Price vs Value
The fundemental concept required to be a successful Investor.
How the price vs value dichotomy permeates everyday life too.
Other Links.
A Letter a Day: CIO of Viking and Founder & PM of Alua Capital (link)
Wolf of Harcourt Street Evolution Model Update (link)
Howard Marks: Mr. Market Miscalculates (link)
Mohnish Pabrai: Buffett Succeeds at Nothing (link)
Chris Mayer: How Many Stocks Should You Own (link)
And a special thank you to Matthew Harbaugh for helping put this weekly recap together!
The Synopsis Podcast.
Follow our Podcast below. We have four episode formats: “company” episodes that breakdown in-depth each business we write a report on, “dialogue” episodes that cover various business and investing topics, “article” episodes where we read our weekly memos, and “interviews”.
Speedwell Research Reports.
Become a Speedwell Research Member to receive all of our in-depth research reports, shorter exploratory reports, updates, and Members Plus also receive Excels.
(Many members have gotten their memberships expensed. If you need us to talk with your compliance department to become an approved vendor, please reach out at info@speedwellresearch.com).
Looking forward to the F&D discussion!