Rather than “investment”, I should have probably said “capital allocation” into the big black-box punt that this thing really is (for those who do not have insider knowledge of it, at least).
10% of invested capital into OMN does look outsized to me, relative to the still conceptual nature of this business proposition; I’d be curious to know more about why a fund with a very respectable track record has taken such a big bet on this Company.
As to why I am in it, I guess it is just a mix of (in no particular order):
1) Track record of Management. 2) Agreement with the basic idea of helping brick-and-mortar retailers compete with large e-commerce platforms. 3) Scalability of the business. 4) Amount of capital sunk into the business and potential future revenue generation under a range of ROC assumptions. 5) Current and forward cash backing per share, factoring in the current rate of cash burn, as well as expected future dilution. 6) The fact the whole share register (with the exclusion of the Lowys' stake) has essentially been turned over since the spin-off occurred.
Definitely a speculative position for me. Essentially, I see this as an option that can pay off big, in the event of success, and whose premium is unlikely to be completely burnt out (a year from now, let’s say) in the event of failure.
