An activist hedge fund, Praesidium Investment Management, was founded a decade ago by experienced investors, Kevin Oram and Peter Uddo. Prior to co-founding Praesidium Investment Management, Kevin Oram, a Chartered Financial Analyst, was employed at Sanford C. Bernstein, where he worked as a Senior Analyst, Senior Vice-President, and was in charge of investments in the technology sector. Previously, Kevin Oram was in charge of hotels, gaming, paper, and food industries. He graduated magna cum laude with a BSBA in Finance/Economics from North Adams State College.
Before forming Praesidium Investment Management with Kevin Oram, Peter Uddo broadened his investment knowledge at Viking Global Investors as a Portfolio Manager, and an Analyst in charge of newspapers and telecom services. And, prior to joining Viking Global Investors, Peter Uddo worked for JPMorgan Investment Management. He graduated with honors from Columbia Business School with an MBA in Finance and earned his undergraduate degree from Johns Hopkins University as a Phi Beta Kappa.
In a 13D Monitor interview from April, Kevin Oram explained the fund’s investment philosophy in more details. He said that its investment strategy is based on the private equity approach to public investing, or in other words, his team acts and thinks like the owner. The concept is simple – they approach each investment as if they were owners of the business and with an intention to hold it for a long period of time. Praesidium Investment Management is an activist fund, but most of its activism is private. The fund conducts thorough research about a company’s business, communicating with customers, competition, and suppliers, gathering all the important data possible, trying to figure out the best way for a company to improve its business. What sets Praesidium Investment Management apart from other activist hedge funds is their willingness to share all of its analyses with a company’s management in that manner establishing a productive and friendly collaboration with them.
The fund mainly invests in small and mid-cap companies, because it looks for businesses that are not that popular among other hedge funds, and that are in the least efficient areas of the market. These types of companies often time lack resources to conduct research for themselves, and that is where Praesidium Investment Management steps up. The fund usually has a concentrated portfolio with around 12 to 15 stocks, which it holds for more than four years on average. It mainly invests in enterprise software as it is the field its team is most experienced in.
At the recent Sohn conference in San Francisco, Kevin Oram talked about its best stock pick at the moment, Cornerstone OnDemand (NASDAQ:CSOD). This is a company that offers cloud-based learning and talent management solutions. It was founded back in 1999, by Adam Miller, Perry Wallack, and Steven Seymour, and it went public in March 2011, raising $136.5 million. Recently the company acquired Grovo Learning, Inc, the best provider of micro-learning content. According to its third quarter financial results, Cornerstone OnDemand is steadily growing its business, at its revenue for the quarter was $133.7 million, which represents an increase of 9.7% compared to the same period in 2017. It has a market cap of $2.64 billion, and over the last six months, its stock gained 33%, now trading at $46.77.
Kevin Oram said that Praesidium Investment Management has already helped the company make many adjustments in the management, and in the government, but it is still expecting the major effects of those adjustments to happen. He thinks that the company will become interesting for acquisition to some big companies such as Microsoft Corp, Oracle Corp, or Salesforce.com. Kevin Oram is of the opinion that the company will be acquired after its business is transformed, as there are companies that don’t like to go through all the troubles business transformation usually requires, and are willing to buy businesses at a bigger price once the businesses have made the needed adjustments. He also predicted a turnaround play, saying that it will probably almost double in a couple of years, setting a price target of $90, versus $48 on the day of the conference. You can find out more about Kevin Oram’s views on the company and about its investment thesis in the video below.
More about the fund’s performance and holdings you can read on the next page.
