Despite being quiet on this extremely high quality BCC thread I...

Despite being quiet on this extremely high quality BCC thread I share similar path to many of you my fellow BCC-holders! Like many of you I bought in in 2021 after getting excited about ZOLEO thesis, like many of you I was beating myself up last 2 years for not selling after the quick run up to 60c and like many of you (I assume) I felt like I lost a great teammate after seeing that Stealth sold.

BCC has basically turned out to be a decent B2B growth story with ZOLEO call option and JV arbitration outcome will determine the exercise price.

In my view with so many smart people on this thread we should try our best to determine JV's value as a stand alone business. Not that we can affect the arbitration much but it is one of the most useful things we can do as investors as a learning exercise because our assumptions will be put against reality in less than a year.

Let's have a look at the JV.




What can we say about the company called ZOLEO? To start off this is not a software company. This company needs to source and sell hardware first and then it collects subscription revenue after selling the hardware. Incremental cost of capital to acquire more revenue is, therefore, pretty high. Of course, thesis is that subscription revenue will be a larger share of total revenue which will improve the gross margin, but that is in the future.

Access, first of all, thank you for your incredible contribution to the BCC discussion. Your estimation of $20-40m payout to BCC implies value for the JV of $40-80m. I respectfully disagree. Today, market does not tolerate money losing high promise software companies with GM of 50%+ and puts 1-2x revenue multiples on them. And that takes a premium for liquidity of being public company into account. How will market value ZOLEO numbers given it is a private illiquid company with current gross margin of 12%? I don't know but I doubt the number will be as high as you predict.

As for whether management will be able to achieve favorable outcome or not, I do give them benefit of the doubt. JV terms were really bad but management did raise money at very good prices (luck or not, they did it) and were able to achieve ROE of 12% for the year which is not bad at all for a B2B manufacturer.

This is one hell of a story to watch and learn from. I do hope for the best.