This is from a September newsletter from Lakehouse Capital. A bit old but given the pace of ELO threads on HC it is still of interest.
turning to ELMO Software. The Fund initiated its position at the company’s IPO at $2.00 per share and has done quite well with a total portfolio return of 145.6%. The position has been progressively reduced throughout calendar 2019, though, due to the combination of a full valuation and concerns about worsening reinvestment economics amplified by increasing marketing spend. We were tolerant of these issues, albeit on a reduced position size, but decided to part ways following the recent growth-centric $55 million capital raise and $35 million selldown from founders and early investors. We could see revisiting this thesis in the future as ELMO has good bones in the form of a loyal and diverse customer base, however, we would want to see greater rigour and proven success on the accelerated growth plans before revisiting.
ELO Price at posting:
$6.50 Sentiment: None Disclosure: Held
