Fund spotlight; Sylogist

Greystone Capital Management released its 2023Q4 letter. Fund manager Adam Wilk has been pitching Sylogist for a while. Today the stock hit a fresh 52wk high. That still only looks like the beginning.

You can find Greystone’s full 2023Q4 letter here. Below is the part about Sylogist ($SYZ.to $SYZLF). 🏷️

Sylogist is our public sector software business that, like Franklin Covey, has undergone a significant strategy shift in pursuit of becoming a much higher quality and much more durable business. The company has successfully transitioned their business to a cloud-based SaaS platform, repaired relationships with customers, entered significant new whitespace opportunities, improved the management team and Board, strengthened investor communication, and attained sell side coverage, all in the span of a few years.

The past three quarters for the business have all shown record results from both top line and organic growth perspectives, and the company shows no signs of slowing down. Not to mention they have been consistently cashflow positive. Yet, shares languish well below peers, at a valuation not reflective of the underlying business quality and growth runway.

Outside of excellent operating results, I don’t believe there is much more that Sylogist could be doing to increase per share business value, other than repurchasing stock, which they have been very active in doing. It’s only a matter of time before the market finally takes notice. Sylogist is not a 50% top line SaaS growth business. But there aren’t many publicly traded businesses that exist with Sylogist’s fundamentals, trading at Sylogist’s valuation. There was a time not too long ago where investors were eagerly paying >10x revenues for SaaS based businesses. Sylogist trades at <10x EBITDA. With continued execution, and as they continue to repurchase their own shares, I am hard pressed to find a scenario where the stock doesn’t trade meaningfully higher than today’s price.

If you want to learn more about Sylogist, I can recommend this presentation at the MicroCap Leadership Summit. Adam Wilk also talks about the company here and here.