The Owner-Operator Advantage

“Never, ever, think about something else when you should be thinking about the power of incentives.” – Charlie Munger

The Owner-Operator Advantage and Our Portfolio Focus

  • Breach Inlet Capital prioritizes long-term returns for our Partners
  • We favor “owner-operator” businesses where the CEO and/or Chairperson owns significant equity and is often the founder
  • Insiders’ large ownership stakes sharpen focus on value creation and increase alignment with us as minority shareholders
  • We consider aligned operators tend to be less myopic, as they prioritize long-term growth vs. beating Wall Street’s quarterly estimates
  • Owner/operators think independently and avoid the herd mentality of peers
  • We believe the owner-operator approach has a positive impact on company fundamentals and thus equity values over the long-term

Owner-Operator Mentality Leads to Better Capital Allocation

We believe owner-operators spend excess cash like it’s their own, because it truly is. Value maximizing capital allocation decisions include, but are not limited to:

  • Repurchasing shares
  • Special dividends
  • Value-accretive M&A
  • Strategic usage of debt
  • Internal investments

Our Portfolio Companies with Owner/Operators

  • IES Holdings (IESC)
    • Leading installer of integrated electrical systems in data centers, e-commerce warehouses, high-tech manufacturing facilities, and residential homes
  • Intermex (IMXI)
    • Leading provider of money transfer services from the U.S. to Latin America
  • OneWater Marine (ONEW)
    • Leading retailer of premium boats in the US
  • Tiptree (TIPT)
    • Holding company that primarily owns Fortegra, a leading provider of specialty insurance and warranties

IES Holdings (IESC)

  • Chairman/CEO Jeff Gendell owns 58% of IESC
  • Gendell’s equity stake is worth $600mm+, dwarfing his $825K salary
  • Executive compensation primarily tied to rolling 3-year cumulative earnings
  • Since Gendell named Chairman in Nov ’16, IESC deployed ~$150mm into accretive acquisitions and ~$60mm into opportunistic share repurchases
  • As a result, IESC generated a 25%+ EPS CAGR and 20%+ annualized shareholder return since 2016

IESC SharePx 9

Intermex (IMXI)

  • Tenured CEO Bob Lisy owns ~3% of IMXI
  • Lisy’s equity stake is worth $25mm+ or ~25x his annual salary 
  • Most of his compensation (80%+ in 2022) is variable and linked to profit growth
  • Since Lisy and the Board approved a buyback in 3Q21, IXMI already repurchased $67mm or ~8% of shares outstanding
  • Due to Lisy’s thoughtful leadership and a superior business model, IMXI generated a 35%+ EPS CAGR since 2017 and 20%+ annualized shareholder return since its 2018 IPO


IMXI SharePX 10

One Water Marine (ONEW)

  • Founder/CEO Austin Singleton owns ~10% of ONEW
  • Singleton’s equity stake is worth $50mm+ or 70x+ his annual salary 
  • His long-time COO (Anthony Aisquith) owns ~4% of ONEW
  • Most of their compensation (80%+ in 2022) is variable and linked to profit growth
  • Since 2016, they have deployed $386mm into attractive acquisitions
  • In turn, ONEW generated a 60%+ EPS CAGR since 2017 and ~30% annualized shareholder return since its 2020 IPO

ONEW SharePX 6

Tiptree (TIPT)

  • Founder/Executive Chairman Michael Barnes owns 27% of TIPT
  • Barnes’ equity stake is worth $140mm+ or 140x+ his annual salary 
  • Most of his compensation is tied to TIPT’s share price rising materially
  • Since 2017, TIPT’s primary asset (Fortegra) produced a 25% adjusted earnings CAGR
  • Fortegra’s high growth and Barnes capital allocation led to TIPT generating an annualized shareholder return of 15%+ over the past five years
Fortegra EPS 3

TIPT SharePX 4

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