Silver Beech Capital: A Deep Dive into WillScot Mobile Mini ($WSC) and Dentalcorp ($DNTL)
In their Q1 2024 investor letter, Silver Beech Capital showcased their disciplined value-oriented approach by presenting compelling investment cases for WillScot Mobile Mini ($WSC) and Dentalcorp ($DNTL). Portfolio manager James Hollier and his team believe these under-the-radar companies possess strong fundamentals, recurring revenue streams, and significant upside potential.
WillScot Mobile Mini ($WSC)
- Dominant provider of modular building units and portable storage in North America
- Mission-critical products with minimal technological obsolescence risk
- Exceptional pricing power: 16% annual growth in average rent per unit from 2019-2023 despite declining utilization
- Contracted recurring revenues, leading market share, and high returns on capital
- Relatively insulated from economic weakness due to 3-year average lease duration
- Attractive valuation: 11x 2023 EBITDA and 7% 2024 free cash flow yield
- Silver Beech sees 50%+ upside to fair value
Dentalcorp ($DNTL)
- Leading consolidator of dental practices in Canada, previously discussed in Q3 2023 letter
- Predictable, recurring cash flows with ~89% of patient visits being recurring
- Canada boasts among the highest dental compliance rates globally
- Recent revenue growth slowdown likely temporary ahead of new government dental subsidy
- Flexible M&A strategy; Dentalcorp could profitably halt acquisitions and operate practices in steady state
- Undervalued at 9x 2024 EBITDA and an 11% free cash flow yield
- Silver Beech believes fair value is 70%+ above the current price
Silver Beech Capital’s investment theses for $WSC and $DNTL are underpinned by several key factors: high-quality businesses with recurring revenues, market-leading positions, aligned management teams, and compelling valuations. The firm believes the market has overlooked these companies, presenting an attractive opportunity for patient, long-term investors.
Despite near-term volatility and economic headwinds, Silver Beech Capital maintains a high conviction in the long-term prospects of $WSC and $DNTL. As these companies continue to leverage their competitive advantages and generate stable cash flows, the investment team believes they are well-positioned to deliver strong returns for investors over the coming years, even if the broader market remains challenging.
Click here for the full investor letter.
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