This show originally aired April 13.
Nick Sciple: I’ve looked at Colliers a little bit recently, it’s CIGI in Toronto and in the U.S. It’s in the commercial real estate business, the fourth-largest real estate services business in the world. The other half of their revenue from investment management. … The founder still runs the company and has about 45% of the voting interests of what goes on there.
They’ve had a very successful acquisition strategy in the past and I think it’s a really quality business that because of the concerns around commercial real estate, can you get it at a better valuation than you would have gotten it in the past.
Another company that I think is interesting, although very aggressive. It’s called Dye & Durham in Canada. They have basically gobbled up a bunch of the software that lawyers in particular use to close real estate transactions. It reduces the amount of time that it takes to carry out all this paperwork by about, I think it’s like 6X. I mean, it takes goes from taking an hour to do the paperwork to like 10 minutes is my understanding.
Because this isn’t that complicated of paperwork and it accelerates the lawyers output very quickly, they’ve been able to take a lot of price, I mean, hundreds of percents of price increase over the past couple of years without meaningful churn from their customers. The issue with the business though is that it is tied to real estate transaction volumes. If there are not transactions going on in the housing market, then they don’t make any money.
Transactions have slowed down meaningfully because of the increases in interest rates and those types of things. Canada in particular has issues with its housing market and Dye & Durham is overexposed to the Canadian market. There are some concerns, and that’s driven the stock down quite a bit. However, the founder is one of the largest shareholders there, and his company owns 15%. They bought back 20% of the shares outstanding in the last quarter, which you don’t do unless you think the business has a stable floor up underneath it.
That’s a business again, it’s been beaten down because of concerns around slowing transaction volumes and because they’ve been very aggressive, also another acquisitive business that has lots of debt. This one has lots of debt on the balance sheet.
Colliers doesn’t have that to the same extent. But if you believe like their management does given how much stock they’re buying back that they’re going to be able to withstand this and keep moving forward, they’re an interesting stock to look at. Those are the types of areas I’m looking at where management is not concerned at all based on the behavior they’re carrying out. If you believe that the real estate market stabilizes, then you have some attractive valuations here.
Dye & Durham is DND on the Toronto Stock Exchange, and then Colliers is CIGI in the US and in Canada.