Enghouse ($ENGH) - 10x Revs, Flat 25% Margins, Falling -68% YTD Stock. Live Q&A

$HRMT

Here is a look behind the curtain at what we're building. No time for the full video? We’ve got you covered. Skip straight to the 2-minute breakdown below. Also Coming Up: In a few weeks, I’ll be hosting a live session with our incoming cohort of interns. We will be building out live valuation models (Comparable Companies, Precedent Transactions, and DCFs) and breaking down case studies in real time. Stay tuned. And feel free to start your due diligence by… From Fund to HoldCo This project marks the culmination of a decade in the trenches. After starting as an intern in 2014 and moving up to manage a family office portfolio, handle full due diligence at an M&A boutique, and run a Spanish hedge fund with an audited 16% annualized return, everything has converged onto this moment. We are expanding. We started with 13 partners in the fund; today, we are a community of over 35+ committed backers. The ultimate roadmap? Hit 100 stakeholders and take this entity public via a reverse merger. Note: This breakdown is recorded rather than live-streamed to protect the privacy of an active, confidential transaction. Capital Allocation Engines We have structured a UK-based operating company (OpCo) designed to acquire 100% of unsexy, cash-generative micro-caps and manage them from a centralized head office. This centralized framework will handle all heavy lifting, including due diligence, legal, auditing, HR, etc. Unlocking operational efficiencies, but most importantly, efficiently allocating capital. Our Reallocation Strategy Instead of hitting capacity constraints, we will dynamically shift capital across independent, decentralized engines based on where the best valuations sit: * Engine #1 (Private Ops): Sourcing private small businesses at rock-bottom multiples to compound capital at 20% to 25%. * Engine #2 (Public Markets): Opportunistic allocations in listed equities and monetary funds when public markets misprice assets. * Engine #3 (The Accelerator): Unlocked at £30m. Led by a specialized 4-man team, this engine will take 20% stakes in tech companies doing ~$1m in recurring revenue and scale them to $3m within 12-14 months. * Engine #n: There are a few additional teams we’d love to set up once we exceed £50m. More on these once we get there. Key Terms & Structure * Share Classes: Divided into A (voting) and B (non-voting) shares for maximum early-stage flexibility, merging fully upon public listing. * The Window: All core legal architecture (Shareholders & Subscription Agreements) is finalized. The initial capital subscription window officially runs from June 1st to July 31st. Leadership & Alignment Joining me on the board are two powerhouse M&A corporate veterans with over 10 years of experience across the Big Four and Spain’s top advisory firms. They are actively aiding the due diligence on our pipeline and will transition to full-time, autonomous management of Engine 1 once we cross 5 to 6 portfolio companies. Anchor Deal: Elderly Care Facility Our first proprietary deal is a textbook cash cow. A regional leader in the elderly care space operating at near 100% capacity. * Rough Numbers: Generating roughly €2.8m in revenue with stellar 29% EBIT margins (conservatively modeled at 20%), zero debt, and zero required organic CAPEX. * Arbitrage: We are buying this business at a low single-digit multiple of free cash flow via a structured earn-out and vendor financing, making it largely self-funding. Because we mark our book at a constant, conservative 8x free cash flow, this triggers an immediate, near triple-digit paper gain upon closing. * The .gov Moat: Massive regulatory barriers to entry (strict square-meter mandates, staffing ratios, and union hurdles) mean building a competitor from scratch is a bureaucratic nightmare. Meanwhile, revenues are effectively guaranteed, tied directly to inflation-protected public pensions. * Next Steps: The founding CEO is locked into a 5-year contract. He will spend the first 2 years mentoring a younger, internal successor, and the final 3 years acting as our regional expert to spearhead accelerated due diligence on additional sector-related acquisitions. Next Steps To perfectly balance our public and private pipelines, our current target is an initial £10 million capital raise. Our framework is fully visible across two years of granular, weekly performance updates dating back to June 2024, focusing heavily on circle-of-competence sectors: oil & gas, asset-backed healthcare, and cyber defense. If you have any questions or are ready to explore joining the holding company, let’s set up a time to talk. alejandro@hermit.es See you next Wednesday! - Alejandro Yela — CEO, Hermit Ventures Ltd This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit hrmt.substack.com/subscribe [https://hrmt.substack.com/subscribe?utm_medium=podcast&utm_campaign=CTA_2]

China Insights. Field Research Debrief / 对冲基金经理中国行：为期一月的实地调研深度汇报

As promised, here is the recording of our China trip insights. While financially focused, much of the content explores the cultural and human aspects of both the people and the businesses. This is our lived experience of what feels like a futuristic country paving a well-constructed road into the future. Hope you enjoy! Beyond the recording, here are a few insights on our top three picks of the companies we visited. For all of them, we met with middle and senior management for sit-down meetings and toured their facilities. Their reactions were of pure astonishment; they were surprised by the level of international interest in their business methods. As they were mostly accompanied by interpreters, the language barrier was also part of the experience. Rather than a deep dive, we’ve focused on their business models and the lessons we can extract to make them more applicable and approachable for a Western audience. Read about our top 3 by reading the post on The Hermit Hope you enjoy! - Alejandro Yela — CEO, Hermit Ventures Ltd. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit hrmt.substack.com/subscribe [https://hrmt.substack.com/subscribe?utm_medium=podcast&utm_campaign=CTA_2]

How to Value a Tech Company: $RDVT Excel Valuation Masterclass

This tutorial provides a practical, step-by-step walkthrough for valuing a listed company, using Red Violet as a live case study. The session focuses more on the methodology of valuation than finding an exact, ‘perfect’ price, though the resulting figures proved remarkably accurate compared to the market. Find the model we used live here: And feel free to check out all of our content by… 1. The Core Valuation Methodology The tutorial utilizes a Discounted Cash Flow (DCF) approach, projecting a company’s performance five years into the future to determine its present value. * Projection Period: The model projects cash flows through 2030. * Historical Context: Data from 2019 to the present is used to understand past trends and “normalize” numbers for future projections. * Terminal Value: This accounts for the company’s value beyond the five-year window, calculated by pushing the final projected cash flow into perpetuity using a growth rate. * Key Inputs: The instructor emphasizes five critical financial metrics that define 90% of the valuation work: Revenue, EBIT, Operating Cash Flow, Working Capital, and Net Debt. 2. Key Assumptions and Adjustments Valuation is heavily dependent on specific assumptions that must be adjusted based on the company’s risk profile and management guidance. * WACC (Weighted Average Cost of Capital): Used as the discount rate for future money. A standard 10% was used for this exercise, though 15% is common for smaller microcaps. * Growth Rate (G): A terminal growth rate of 2% was applied as a standard for perpetual growth. * Dilution: For tech companies like Red Violet, it is vital to account for share dilution from options and warrants. The model used a projected share count (e.g., 16 million) rather than just the current count to remain realistic. * CAPEX vs. Intangibles: Because Red Violet is a tech company with few physical assets, the instructor used “other investing activities” as a proxy for CAPEX to better reflect software development needs. 3. Data Sourcing and “Checking Your Work” The tutorial highlights the importance of data integrity when moving from raw numbers to a model. * Filing Aggregators: Tools like Ticker or Bloomberg are used to quickly pull quarterly data, though the instructor warns against using FactSet. * Manual Verification: Even when using aggregators, one must manually check yearly figures against official company filings to ensure accuracy. * Color Coding: A professional model uses specific colors to maintain clarity: Blue for manual inputs, Black for formulas, and Green for data linked from other tabs. 4. Understanding the Business Landscape Beyond the spreadsheet, a “thorough evaluation” requires understanding why the numbers look the way they do. * Business Model: Red Violet is a cybersecurity and data analytics firm that creates “digital personas” to help lenders assess creditworthiness and criminal risk. * Scalability: Tech valuations often rely on the transition from early-stage unprofitability to high-margin scalability as the company grows. * Competitive Moat: Investors must consider how protected a company is against incumbents, new players, and emerging technologies like AI. Hope you enjoy! - Alejandro Yela — Principal Advisor, Equity Focus FIL and CEO, Hermit Ventures Ltd This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit hrmt.substack.com/subscribe [https://hrmt.substack.com/subscribe?utm_medium=podcast&utm_campaign=CTA_2]

Mining Expert Talks Copper, Batteries, Tungsten, and Critical Minerals

We had a very interesting chat with mining expert Adrian Godas. Hope you enjoy! - Alejandro Yela, Principal Advisor, Equity Focus FIL This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit hrmt.substack.com/subscribe [https://hrmt.substack.com/subscribe?utm_medium=podcast&utm_campaign=CTA_2]

Enghouse ($ENGH) - 10x Revs, Flat 25% Margins, Falling -68% YTD Stock. Live Q&A

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit hrmt.substack.com/subscribe [https://hrmt.substack.com/subscribe?utm_medium=podcast&utm_campaign=CTA_2]