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Jared Leary - Hourglass
$859.2k follower assets
Author of the Hourglass Investing series - providing deep-dive research for the self-directed investor. Articles provide insight into management, valuation, company history, business models, and much more, plus podcasts & newsletters!
22 following39 followers
Unity is really starting to annoy me
What is it with management? It's one thing after another. I would say they just don't seem to get it, but they clearly do, given the fact they sold off a boatload of shares a week before this runtime fee announcement. They get it, but they don't care, which is even worse.

Such a short-term oriented move. This management is clearly just not aligned with their shareholders or userbase, and just doing their own thing.

Like @interrobangbros I will begin selling my position slowly. I'd just feel much more comfortable having my money with a company who's management has a similar time horizon to myself. Sucks because this is a real company, and seems to just need a bit of an overhaul at the top.

Anyways, naturally I ranted about it in my most recent podcast.
if you're interested in my full views on the runtime fees, plus a pretty brief overview of the co.
Unity Software - Brilliant Business, Terrible Management?
Listen to this episode from Hourglass Investing - For the Self-Directed Investor on Spotify. Unity Software has built an engine that powers creators across gaming, film, and industry - but their management team threatens to tear down the brilliant product and attractive business model with moves that manage to peeve just about everyone involved.

It's so frustrating. I want to be a shareholder but Riccitiello is just so mediocre at his job. I'm beginning to understand why he resigned due to poor financial performance at EA. The only reason I'd consider holding is insiders only held 9% of outstanding shares (at YE'22) so it feels like an activist investor could take a stake and shake up management but I just don't see that happening here.
WSP Global
Fresh out the oven! Check out my research into WSP Global, $WSP.TO, a global leader in engineering and infrastructure consulting, growing through steady, balanced acquisitions across the globe and organic net revenue growth.

Locating one definitive point in history that marks the founding of WSP Global is difficult; with a long history of global acquisitions, reorganizations, and consolidation, WSP’s history is scattered and its timeline into the modern day confusing. As investors, this scarcely matters to us; the short story is that WSP, an engineering consulting firm which was then called Genivar, went public on the TSX (Toronto Stock Exchange) in 2006 after decades of growth through strategic acquisitions and mergers. Starting as a small Quebec-based engineering firm, the company was able to build out a vast toolbox of infrastructure services through this growth strategy, and each tool they added expanded their capabilities to serve various sectors, from transportation and energy to the environment and industry.

And that strategy didn’t stop when they came public; just 6 years later, Genivar acquired UK-based WSP and adopted the brand, reorganizing as the company we know today; WSP Global, a global professional services and consulting firm with expertise in planning, design, management, and engineering across a wide array of infrastructure sectors, including building, transport, industrial, energy, water, and environment sectors. Since going public, shares have steadily compounded at an 18% CAGR, easily exceeding the ~10% mark of the benchmark S&P 500 over that same period. This growth is in large part due to the continued expansion of the business through, you guessed it, yet more acquisitions. This strategy has served them well; today the company has:

  • Global Presence - Operations in APAC, AMER, EMEA, with over 50 offices globally

  • Massive Workforce - More than 68K employees (+10.9K in 2022)

  • Multidisciplinary Expertise - Top 10 ranking in eight markets

WSP’s massive footprint across both globe and industries alike means that, regardless of where you are in the world, there’s a good chance that WSP had something to do with the city skyline you're gazing out on, or the bridge that you traveled on to get to work this morning, or the sewage that your daily constitutional traveled down. It’s a reminder that behind every structure is a team of hands and minds at work to shape our world.

And that’s exactly what WSP intends to do; their guiding vision is to “future-proof” the world’s increasingly populated cities and environments against warming temperatures, rising sea levels, and heightening climate risks. By staying ahead of the trends transforming the world - geopolitical contexts, decarbonization, technology & digitization, and community-oriented solutions - WSP considers the drivers, disruptors, and developments that go into consistently delivering future-proof project outcomes. The company envisions their solutions addressing the growing need for sustainable solutions across industries and facets of society, designing for the future, and ultimately building communities where populations can thrive for generations to come.
Read the rest here.
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WSP Global
Buy, Grow, Expand. Rinse & Repeat. A Rollup of Engineering and Consulting Firms.

This Week at Hourglass
It has been a crazy week here! Slowly chugging through the to-do list though. Just released our weekly newsletter - this week's read is Deep Economy by Bill McKibben, the weekly watchlist is $STRL to keep in theme with my recent infrastructure trend, and the investor spotlight is on @ifb_podcast, the first podcast I have shouted out! You can find the article here if you're interested in any of the above, plus news on $ABNB and $PL (+thoughts from @valuetowhom), and a teaser on my upcoming research article on WSP Global.

I also released a new episode of the Hourglass Investing podcast on Wednesday! It was one of the most enjoyable episodes to make so far as I was doing it on a favourite company of mine, Duolingo - $DUOL. In the epi I dive into the company, business model, growth levers, how they're maintaining their market position, and the balance sheet. You can check that out on Spotify here or find it on the podcasting platform of your choice!
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Episode VII - Duolingo
Listen to this episode from Hourglass Investing - For the Self-Directed Investor on Spotify. Duolingo is a language-learning powerhouse on the path to transforming itself into a full education platform. Today's episode dives into their products, balance sheet, and the potential investment opportunity behind Duolingo.

Infrastructure Play
A quick peek at WSP:
Market Cap: $23bn
5-yr CAGR - 21% CAGR
3-yr Revs - 15%
EV/Sales - 2x
P/E - 46x
5-yr EPS - 11% CAGR
7.3% Organic Growth in Net Revs; this is WSP's most important metric, as it shows their success in folding acquisitions under their umbrella.

WSP is one of my favourite pure-play infrastructure companies, which in turn is an industry I'm extremely bullish on in the coming years. WSP is positioning themselves to be a global leader benefitting from tailwinds to the industry, with developments in financing, a global transition to (and need for) sustainability, and improvements in technology for various sectors within the wider infrastructure market.

Their focus on earth and environment, water, and adapting property & infrastructure to the impacts of climate change has WSP well-positioned for strong growth for years to come, and their ability to fold in and organically grow acquisitions will be another huge aid to that.

I'm diving into WSP now, with that article coming out next Monday! Stay tuned to read about one of the under-appreciated stock market beasts.
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WSP.TO? If so, market cap at $23B is actually in CAD so USD market cap is $17.31B. Color me intrigued!
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Newsletter VI - Return of the Hourglass
A snippet from the weekly watchlist stock from this week's newsletter:

Talk about a Peter Lynch special! Supremex is one of the largest manufacturers of shipping labels, packaging, and envelopes in North America. Now, this is about as boring as a company can get, but I love it. It has many of the hallmarks of a Lynch-esque investment; a boring company within a boring industry, but growing at a decent clip (+24% TTM rev growth!), attractive margins, a high return on invested capital, and extremely attractive valuations. It’s certainly underappreciated by the Street (given that it’s around $120m in market cap this is unsurprising), as it’s trading below book & revenue values, and only ~1% of the business is owned by institutions. Insiders are buying back a ton of shares, and they generate a decent amount of free cash flow considering the size of the company.
It’s also facing industry tailwinds and wider secular growth with the rise of e-commerce and the copious packaging that goes along with that. The more I read into this company, the more impressed I am. I will definitely be doing some thorough research into this pronto, as the valuation looks incredibly attractive to me from a brief glance and the stock falls into my focus on small-caps and a more recent shift towards boring companies. Plus, it’s a homegrown Canadian lad!
Read the rest of the newsletter here
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Newsletter VI - Return of the Hourglass
Recapping a Week in the Markets: Aug.28 - Sept.01

Episode VI - Mt. Rushmore of Investing
I just released my latest podcast episode! I had a lot of fun with this one, researching a ton of different investors and choosing the ones that I thought belonged on my own Mt. Rushmore of Investors. I cover the investment strategies of Buffett & Munger (of course), Li Lu, George Soros, and Peter Lynch. If you want to hear about them, you can listen here. Who would make your Mt. Rushmore? I didn't have time to cover a lot of the other greats that definitely deserve to be up there, so I'll probably do a part 2 at some point
Spotify for Podcasters
Episode VI - Mt. Rushmore of Investing by Hourglass Investing - For the Self-Directed Investor
Every investor can, and should, learn from the greats. Their unique approaches to the market, their strategies, insights, and investing criteria are invaluable for investors looking to build, and improve, their own investment strategies. Today's episode is going over some of the greatest investors in the game - the Mt. Rushmore of modern investing. Find us on Substack - Stay up to date, with full access to our archive of episodes, newsletters, and research -

Schrödinger Deep Dive
Just wrapped up and published my deep dive into $SDGR. You can read the full article here or get a sense of the company below!

Drugs and materials are a foundational cornerstone for the further advancement of human health and technology. Drugs play a crucial role in managing diseases, lengthening human life spans, and improving the quality of life for humans across the globe. Billions benefit from the advancements our society has made in developing new medications, but the process of developing these drugs is neither short, cheap, nor simple. From the initial concept of a drug, to identifying the appropriate components necessary to manufacture it, to introducing a safe and approved drug that is available to the millions of consumers whose lives could be improved by it, the entire process can take up to a decade and cost billions of dollars.

Most of this is spent in the ‘discovery phase’, the most complex and costly part of the process by far; during this part of the process, researchers determine the molecules or compounds capable of creating the drug, then test them in a series of different scenarios. The majority of potential molecules are determined to be unusable as researchers slowly refine the pool of candidates throughout testing.

The process is very similar for materials sciences, an equally important industry in human society for discovering and optimizing polymers, silicon hardware components, and the metals in our vehicles. Uncovering new materials will continue to play a huge role in allowing technological leaps and opening doors to innovations that reshape industries.

Given the importance of both drugs and materials in benefiting industries and the wellbeing of society as a whole, uncovering new possibilities in both of these spaces should be a top priority. Unfortunately, the discovery phase is so fraught with challenges and the potential combinations of molecules is so vast that traditional lab-based testing methods can only explore a fraction of the potential outcomes. This means that most potential drugs or materials will never see the light of day - the process is simply too time-consuming and costly to test all the potential combinations. But the missed opportunity to build a better world, one could argue, is far more costly to the entire human race.

Enter Schrödinger (Ticker: SDGR), a company leading the way towards a quicker, more efficient way to navigate the discovery phase. The company has developed a highly complex computational software that predicts how molecules will behave and combine with other molecules, in turn allowing researchers to simulate and analyze molecular interactions in a virtual environment. This reduces the need for costly and time-consuming physical experiments while achieving the same results, creating a faster, cheaper, and more efficient drug and material discovery phase. Schrödinger’s platform is paving the way for a future of innovation in some of the world’s most important and society-shaping industries.
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Schrödinger Inc.
Revolutionizing Drug and Materials Discovery with Machine Learning & Computational Physics

Investment Strategies & Criteria
What are your main criteria for an investment? What are the top attributes you look for in a company? What completely discourages you from making an investment?

Something I avoid: Names that everyone is talking about. For example, I wouldn't touch $NVDA right now, it's all the talk of the town. I'm also transitioning my portfolio to focus on boring names at the moment, given the current environment of extreme hype on some names, especially AI.

Some things I look for: Skilled & experienced management. Secular growth. Generally prefer less cyclical growth, as well, but willing to waive this for the right business, like $ANET.

What do you all think? What are your top red/green flags?

I’ll look for consistent dividend payments through tough times. Dividend growth during those periods is also a plus.
Add a comment…
Ozempic & $INMD
Ozempic has been all the rage recently as a medication for helping patients to lose weight. $INMD should benefit from this trend, as their equipment can help to provide treatments for tightening skin after the rapid weight-loss associated with using Ozempic. Tailwind? Won't make much of a difference?

One thing I’m wondering is whether Ozempic could be considered more of a substitute than a compliment.
If you use Ozempic and it works, will you feel like you need to go the extra mile and do more treatment?
Portfolio Moves - Cash Deploy
Deployed most of my cash position today, taking advantage of the small downturn. Added to $WSP, a rollup of engineering and consulting firms with strong organic growth, and finally initiated a position in long-time watchlist star $CSU - Constellation Software.

Great read-up by @mapsignals on small-cap strength and attractive valuations attracted me to Constellation, which does a fantastic job of M&A with small businesses. Obviously not exactly small-caps, but as the company scales up they are looking at larger acquisitions.

Currently working on releasing an article on my portfolio, with holdings, investment theses, allocations, and watchlist, which I'll then start updating monthly!

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