FQT
✈️ This small-cap company dominates the niche market of air traffic control software, boasting significant competitive advantages and high market share.
📈 Frequentis shows strong potential for margin expansion, aiming to double margins in its main segment, mirroring past success in other areas.
🤫 With minimal analyst coverage and low liquidity (only 22% float), large funds struggle to invest, creating a unique opportunity for individual investors.
@adriarivero:
“We also have examples like Frequentis, which is a very small company, a little-followed company in air traffic software that has many competitive advantages, which we already discussed in recent videos, that has a large market share, that has no debt. Well, a very good company, but again, it’s a company that will expand margins, that will double margins in the main segment, that has no analyst coverage, which is a company that, as we’ll see now, has already risen a lot, and I took the opportunity, for example, to invest. It’s a company of 450 million, while it only has a float, meaning what can be bought by investors, of 22%. So, of course, we have a part that belongs to Hannes, which would be the founding family, and another part from a fund. So, only what investors can buy in the secondary market would be 22% of the portfolio. So, imagine how small and illiquid this company is that many managers, even if they like this company, cannot buy. Why? Because they don’t have access, meaning they would have to spend days, weeks buying this company, and then if they want to sell it for whatever reason, they would have to spend weeks again and could get very stuck. In contrast, if we have to invest little money, we can perfectly be in those companies. Then those companies grow, become more liquid, and that’s when more funds start entering, and that’s when we can take advantage of already being inside to enjoy how the companies go up afterwards. Here we have, for example, the Frequentis issue, how they announced they were going to double margins when they had already done so in another segment. The company is at 28, and how the rise afterwards, this would be my sale, uh, of half the position, I lowered it and it has gone up again. It’s a company that can be more volatile, but volatility doesn’t mean risk, but rather more opportunities if we want to increase.”
Watch the exact part of the video where @adriarivero talks about Frequentis AG here:
Watch the video on YouTube
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