Decoding Marketplace
Where the thesis heads
Hello,
As you already know, PharmX has been core holding of my portfolio since summer 2024. At that time the company was an incredible deal and combination of great business at a deep value teritory. You have been able to buy monopoly and moaty SaaS at less than 2x EV/Sales with an EBIT margins over 50% when it was a private company. These setups do not come that often and I did a mistake of sizing it just at 10.5%. Twenty months went by and the company trades at 9x EV/Sales, therefore R/R naturally evolved and it is important to get a new perspective on the stock. Investors today are holding on the promise of the marketplace working. It is completely different investor base compared to when I was buying shares at $0.03. So I expect they will be more reactive to any delays or possibly the thesis not playing out as expected.
Even though I have sold lots of my shares and made PharmX much smaller position, I still hold position that I want to let run, given the potential binary outcome for the upside which I estimate to be is roughly 200% in four years. Given that I was very vocal about this position, I would like to stay on the top of current development and understand the new perspective about marketplace today. And that is what I am diving deeper into today. I want to say special thanks to Hugo Navarro, who conducted great research on the company recently and who allowed me to share some of his findings about the marketplace after doing expert calls. Credit to him. I will add more commentary to them.
The questions are remaining: Has the thesis already happened? Or has it shift to something else? How did R/R evolved? This are key questions for today’s write-up. If there was important time to stay on top of due diligence, it is today.
This write-up consists of the conversation with pharmacist in the Australia, expert calls, conversation with the CEO, my model of the current opportunity and thoughts on the recent Sigma deal. This should be everything important for maintenance dilligence on this company.