SiteMinder BusinessBytes - Part 1We've been looking at...

SiteMinder BusinessBytes - Part 1

We've been looking at SiteMinder and we want to get everybody's thoughts on the business. In this post, we'll touch on Buy Signals + Management Incentives. In our future posts of the company, we'll cover Bull / Bear views, Framework to think about SiteMinder, Financials and Market Expectations.

Buy Signals

• Trading under IPO price: All else being equal, the chance of a stock becoming a winning investment increases as the price drops. Currently, SiteMinder is trading at $4.89. The company IPOed at $5.06 and hit an all-time high at $7.10. The stock price dropped early April with no company-specific news. Unless we're missing something, we assume the stock price drop was part of the broader growth stock sell-off.
• Director buys 10k shares @ $4.4/shr: SiteMinder director, Jennifer Macdonald, buys 10k SiteMinder shares at $4.40/share (~$44k spent). As she was appointed in October 2021, she may have bought shares as part of the requirement of becoming a board member. Nevertheless, it should be considered a (weak) buying signal.

Management + KPIs

• Importance of management + board: It sounds obvious but we've recently realised the impact of the CEO. Whilst barriers to entry (licences e.g. patents, cost of capital to enter the market e.g. Amazon's logistics network, legacy brands e.g. Tiffany & Co) lead to sustained competitive advantges, the CEO will be one of the most important factors behind a business like SiteMinder.
• CEO & Director | Sankar Narayan: Formerly, the ex-CFO at Xero. From our research + talk on the street, Mr. Narayan is experienced CEO with a strong focus on numbers and attention to detail. As Mr. Narayan is also a Director, it's safe to assume he has a very strong influence on the direction of the company.
• Questions on CEO's incentives: We're looking to understand what behaviour is likely from CEO incentives. Questions we're asking ourselves are 1) do the incentives drive profitability? 2) do they drive long term or short term behaviour? 3) does it drive the CEO to act like an owner? 4) how iimportant is the success of SiteMinder to the CEO (financially)?
• SiteMinder CEO incentives: Base - $400k base; Short Term Bonus - up to 50% cash bonus each year; Long Term Incentives - when Mr. Narayan joined the company, he was granted 7m share options at $4.4 (vesting 25% each year). Long term incentive comments I) incentives are tied to stock price (as opposed to financial metrics). We expect investor views be very important II) Mr. Narayan will eventually own 2-3% of the company. We like this because we expect he wlll act in the best interests of the shareholders and build a long term business.
• Co-founders are still involved: Michael Ford (5% of the business) and Michael Rogers (1% of the business) are still involved with the business but have given up the CEO position to Sankar Narayan

Whilst we've validated our information above, please let me know if I've missed anything.

If you're keen on us doing more research on the company, let me know so we'll try to get you the next couple of sections. We started a Twitter account / Substack, we haven't decided whether we're going to post there or HotCopper. https://twitter.com/AusSpeculator / https://businessbytes.substack.com/p/coming-soon?r=6escc&s=w&utm_campaign=post&utm_medium=web