I don’t think that we are facing an identity crisis because of the branding and investors’ views of the Kaddy vs. WD brand that a ticker change would resolve. If the firm was focused on FMCG and its services were available to the general public then I could see how the brand itself ‘may’ be an aspect, but since it is basically a B2B business that issue is much less applicable at this point. A ticker change may attract some ST momentum from punters but it will have zero impact on the underlying business’ revenue and earnings generation. And that is exactly what is driving the SP over the long term.
Reality check: DW8 did commence business in CY2019 Q4 and since then has focused on building, incl. acquisitions, the foundation blocks required to support its intended value proposition. All of the components that Mr. Taylor has repeatedly referrenced are now in place, putting the firm in the position where it will be executing the strategy to grow market share and revenues. A little over 2 years in, the brand is still being built rather than being already established. It is also worthwhile to remember that the firm is (imho) just progressing from the introduction stage into the growth stage.
Yes, cases shipped have risen dramatically from approx. 2,100 in FY20 Q2 to 382k in FY22 Q2, as has revenue (and costs, to be fair), but this should be considered in the appropriate context of the firm’s overall TAM and implied current market share for both handling of fulfillment volume and tapping into GMV transacted for the wholesale or total liquor market (depending on one’s preference). Based on that the firm is really just at the beginning of its life cycle and thus still very much under the general public’s radar. Take a survey of people – outside of those that may have invested or heard about the stock and industry folks – and I bet you brand awareness is still in its infancy – and that’s ok as I wouldn’t expect it overwise for a B2B firm. Most people never heard of SAP until the mid-2000s when the stock started making headlines despite the firm having been around since the early 1970s. Imo the firm won’t become a household brand until it moves into mainstream investing when it starts showing up in peoples’ mutual funds in the super accounts, and that’s exactly where the primary investment opportunity lies (assuming it is able to execute on its objective).
As a long-term investor, I am less concerned about sentiment which by definition is short-term focused, and acknowledge that aspect being more crucial for trading which is by definition ST focused. I like the expression a trader once coined that ‘investing is wealth generation while trading is cash flow generation’ – assuming it is done correctly. I think the trading stats of more than 90% of traders failing speak for themselves how many succeed on a consistent basis in extracting cash flow from the market. If you are indeed different from the crowd – hubris aside and not confusing brilliance with a bull market – then my hat off to you. But for those that seek to generate serious compounding, the reality is that it takes time as that is directly linked to the underlying asset’s performance. And we are just at the beginning of this firm’s life cycle. For the time being this remains a ‘ground floor’ investment opportunity imo.
At the current SP levels the firm’s value is arguable substantially below FV for a number of reasons and that offers an opportunity for investors. It is almost comical how much sensible investment advice is out there, how freely some of the best investors continue to share it, and how easily accessible for people it is to educate themselves, yet how consistently the majority of people don’t follow it. And DW8 wasn’t immune from that during the March/April 21 run and isn’t going to be immune from it on the next run-up when momentum will beget momentum, attracting investors who will rush in to get their piece of the action. Jesse Livermore tapped into this a century ago and we humans haven’t changed a bit since. Going against the grain isn’t suited for many investors due to their lack to control behavioral biases (which can be learned!!), but for those who succeed in checking their emotions and ego there’s empirical evidence of the compounding return generation opportunity this can present. In that sense these prices offer an opportunity. Whether investors choose to take advantage of that or be swayed by factors that influence the SP in the ST is their concern. My conviction in the firm keeps being reinforced by mgmt. executing as planned and I am certain that over time the SP will reflect that.
For those not sure whether to invest for the ST or LT, please review Monster Beverage (MNST on the NASDAQ) – among many, many other examples -- to gain some perspective on what time and management executing correctly on their strategy can deliver in terms of SP compounding to investors. Rome wasn’t built in 2 years…nor were any of the other successes no matter what their industry. Zoom out to contextualize things and focus on what really matters to create value in the underlying business which eventually will be reflected in the SP. DYOR, GLTAH and all that.
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