It is a nice surprise to see you here and good that you know the company.
I happened across a Montgomery story the other day and have had the page open ever since so I don’t forget it .
It’s a November 6 David Buckland interview with Gary Rollo of Montgomery explaining why it is/was one of the the largest holding in the Montgomery Small Companies fund:
It’s theme is cloud technology, it provides access to large corporate enterprises, to the burgeoning availability of all these new cloud services that are becoming available from those big household names like Amazon and Microsoft. So it’s megatrend is the cloud.
Today, it has a pretty reasonable market size, but we expect that market size to grow as many more corporates make that transition to using these cloud services. The thing that we really like about Megaport, and have for some time, is that we can see it’s quite competitively advantaged. So it’s proposition is quite new, quite unique.
What it does is it’s able to provide a single pane of glass that allows these corporate enterprises to access all of these cloud services in one location, irrespective of where those cloud services originate from.
Because today, in our basement, there’s a server that does all of the computing work, in the future, that server’s not going to exist, it’s going to exist in a data center somewhere
Gary Rollo:
And we’ve got to get that connectivity from where we are today to there.
And Megaport takes care of that seamlessly. In the future, you won’t even know where your workloads are being processed,
Megaport will help you move those workloads around. So that’s the thing that’s really exciting. It’s a first mover in that market. It has over 700 data centers globally.
And as I say, that competitive advantage of being able to allow you to move workloads around anywhere you like is the key feature, and to do it friction free.
Its business model is very attractive in our perspective, it’s highly profit dense, deeply scalable and capital light.
Gary Rollo:
We’ve got some big catalysts coming up as well, that’s why it’s one of the biggest stocks in our portfolio right now. The selling model and technology that really works, yet when you start off, this company was a startup a few years ago, and it needed to hire salesmen directly to go out and knock on every door.
But as the product becomes more mature, it’s capability to be sold by others, or resold by a reseller channel, becomes very powerful.
And that’s the prevalent technology sales model out there in the world, and that part of the business is really kicking off.
So we think that the ability to repeatedly sell is probably rising three or four fold now versus the past. And that’s the exciting thing for us.
So in summary, Megaport, it has the potential to be a world beater, and it’s going to have great unit economics as we enjoy that journey of growth, we think accelerating over the next couple of years, driven along by the cloud. So that’s why it’s one of the biggest stocks in the portfolio.
Back then the price was more than $19 so *ouch* to them - short term at least - if the trend continues;
(.. A power partner too based on this comment:
…. “It has been almost one year since Tech Data entered into a definitive agreement to merge with Synnex Corporation in a US$7.2 billion deal, creating a distribution powerhouse involving two titans of the supply chain.” )
— So Megaport seems to be ticking boxes despite the ailing price.
But noonster you clearly think the $13 level is good value…
I would appreciate any further thoughts.
cheers
MP1 Price at posting:
$13.09 Sentiment: None Disclosure: Not Held
(20min delay)