The Capital Doesn’t Fall Far From the Pinetree
More than a Constellation Software copycat
**Disclosure**: The author of this post personally owns shares in Pinetree Capital.
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A Hidden Gem in the Investment World
In the vast universe of investment opportunities, there are those that shine brightly on everyone's radar and those that remain hidden, only to be discovered by the most astute investors. Pinetree Capital appears to be the latter. This holding company, which specializes in investments in public vertical market software (VMS) businesses, has demonstrated a remarkable ability to grow its book value over time (albeit in a lumpy way).
The firm invests primarily in minority equity stakes in public VMS businesses. The VMS part is the aspect where its Constellation Software DNA comes in. Where they differ is they do not buy whole businesses. Because of some net operating loss carryforwards, Pinetree is able to rinse and repeat without any tax drag for the time being. This strategy longer term is not as appealing as Constellation but it is something that very well might evolve with time. Because they are small they are able to concentrate in a dozen or so positions with relatively small businesses that are not at sky high valuations. You can also look to enter Pinetree itself at times when it is trading at fractions of book value. It recently traded below 4$ with a book value now approaching $6.
