How long have you held the stock?

We initially bought into IPH Limited, the intellectual property services company, when it floated in late 2014. We have added and trimmed around the edges of our position from time to time, but we have very recently topped up our holding to over 6% of the company.

What do you like about it?

It’s a business that applies for, renews and protects patents and trade marks for a very sticky and diverse base of clients. This gives rise to defensive and recurring earnings and strong cash flows. From a strong base in Australia, it now has the opportunity to expand its business in Asia, which provides the longer term upside.

How is it better than its competitors?

Its main firm, Spruson & Ferguson, is the largest in Australia, having built up long term client relationships since starting out in 1887. Indeed, most of its top 20 clients have been with them for over 25 years. The firm has a very strong reputation with well-credentialed professionals.

What do you like about its management?

The MD has been with the company for over 40 years now, and is obviously well experienced. There is also depth to the broader management team. They are measured and deliberate in their strategy, and for example are very willing to walk away from acquisitions despite external pressure to execute.

What is your target price?

Without naming a price, we believe it will provide very attractive returns over the medium term as valuation grows with the expansion of the business offshore. This financial result may be unexciting, but we are looking for accretive acquisitions to drive the share price in the near term.

At what point would you sell it?

We would sell once we believe its growth plans are slowing down and maturity is setting in, which we don’t expect to see for some time.

How much has it added (subtracted) to your overall portfolio over the last 12 months?

It’s been a good contributor given a reasonable position in the portfolios we manage and the more than 40% return it has provided shareholders.

Is it a liquid stock?

It has reasonable liquidity given the size of the company.

Where do you see the value?

The incremental value from here is really in the expansion into Asia, both through opening its own offices, but more quickly, through acquisitions.

Source: Yahoo

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