Q: I'm retired with a relatively conservative portfolio. Would like to add a bit of risk / reward and have considered LMN, partly because of its link to a very solid CSU. Questions:
How much influence / control does CSU have on this company? Is there a way to describe it or measure it ?
In a long recession scenario, generally speaking would the odds of its survival be better because of its association with CSU compared to other small caps?
It's P/S multiple appears to be around 3.6 X. This seems somewhat reasonable to me compared to some tech stocks in the U.S. Would you agree / disagree ?
How much influence / control does CSU have on this company? Is there a way to describe it or measure it ?
In a long recession scenario, generally speaking would the odds of its survival be better because of its association with CSU compared to other small caps?
It's P/S multiple appears to be around 3.6 X. This seems somewhat reasonable to me compared to some tech stocks in the U.S. Would you agree / disagree ?
5i Research Answer:
1) CSU owns about 61% of LMN fully-diluted. Of course, this ownership comes with influence, and we expect LMN to follow the same strategies (generally) as CSU. And why not? CSU has been an absolutely stellar creator of value. 2) Yes. In a problem scenario, we would fully expect CSU to financially support LMN or buy it out. CSU knows that most recessions/problems are short term, and the company management truly thinks 'long term'. CSU has significant capital capacity to help. 3) On price/sales, keep in mind some sites do not reflect the correct market cap because of the preferred shares. We would consider valuation expensive on P/S but not completely out of line with similar tech growth companies.