Silver Beech Capital: A Deep Dive into WillScot Mobile Mini ($WSC) and Dentalcorp ($DNTL)

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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.

Disclaimer: The information provided in this blog post is for informational and educational purposes only and does not constitute financial, investment, or other professional advice. The content is based on a third-party investor letter and does not represent an endorsement, recommendation, or solicitation to buy or sell any particular security or investment product mentioned.

Investing involves risk, including the potential loss of principal. Past performance is not indicative of future results. Investors should carefully consider their investment objectives, risk tolerance, and financial situation before making any investment decisions. It is strongly recommended to conduct thorough research and due diligence, and to consult with a qualified financial advisor or professional before making any investment decisions based on the information provided in this blog post or the referenced investor letter. The author of this blog post and the owners of this website are not responsible for any investment decisions made by readers and disclaim any liability for any actions taken based on the content presented herein.

Disclaimer: Third party content is provided for informational purposes only and should not be construed as an offer to sell or a solicitation of an offer to buy or sell any security. Third party content is not intended to serve as a recommendation to buy or sell any security and is not intended to serve as investment advice. Third party content creators are not affiliated with BBAE Holdings LLC, (“BBAE”) Redbridge Securities LLC (“Redbridge Securities”) or BBAE Advisors LLC (“BBAE Advisors”). All investments involve risk, including the possibility of total loss of principal. For additional important information, please click here.

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