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While investors have been getting rid of companies that provide software as a service, or SaaS (short for Software as a Service) in recent weeks, domestic investment group Pale Fire Capital, on the other hand, has made a big splash in this area.
Pale Fire Capital (PFC) of Jan Barta and Dušan Šenkypl bought almost 5.6 million shares of the American software company Phreesia on February 11. The group stated this in a report to the US Securities and Exchange Commission (SEC).
According to the Gurufocus server, the group paid $12.5 per share. For a total of 70 million dollars (1.47 billion crowns), she acquired a share of 9.2 percent. “They are the largest individual shareholder outside of fund structures,” adds Cyrrus portfolio manager Tomáš Pfeiler. Only funds managed by investment giants Vanguard and BlackRock have larger shares.
“Multiple funds own equities. They may have it because of index copying,” says Pfeiler. Vanguard’s funds own a combined 10.1 percent of Phreesia’s shares, and BlackRock’s is 9.35 percent.
The American company Phreesia provides software solutions for healthcare facilities that manage patient admission, registration or, for example, payments. The company’s shares have been underperforming for a long time. In the last twelve months alone, share prices have fallen by more than fifty percent to a price of $12.27. According to Pfeiler, they are moving at levels around the historical minimum.
“The company has been losing money in recent years, but it is managing to reduce the loss,” says Pfeiler, adding that PFC’s investment is “a contrarian bet to turn the business around.” Contrarian investments represent the purchase of shares of companies that the market does not trust, and thus the investor goes against the flow when buying them.
The Phreesia stake investment was not PFC’s only purchase on the US exchange. According to data from the Bloomberg agency, the investment group also bought a package of shares in the technology company Angi in the volume of 1.4 million shares, thereby increasing the number of shares held to almost 3.6 million shares. PFC currently holds an 8.3 percent stake in the company.
It paid $10.7 per share, according to Bloomberg. For the purchased shares, she gave approximately 15 million dollars, which in crowns represents an amount of over 314 million. For investments in the shares of the companies Phreesia and Angi, PFC spent a total of almost 1.8 billion crowns.
Angi is a platform that connects artisans with homeowners. It was founded in 1995. According to Pfeiler, PFC started investing in it in 2023. The PFC group has not yet had time to respond to questions about its investments.
Like Phreesia shares, Angi shares are not doing well. They have lost over fifty percent in the last twelve months and are trading at $7.78. The PFC group is therefore at a loss on this investment. “They’re taking advantage of low prices to lower their average purchase price,” Pfeiler says of buying a large block of shares. However, according to him, that was not the only reason. “It’s a value stock that has growth potential,” he adds. Unlike Phreesia, the company is in profit for the whole year.
Pale Fire Capital invests in a wide range of industries, from technology and software to gold miners to, for example, food. The group’s largest holdings are in the discount portal Groupon and in B2Gold, a Canadian mining company that owns and operates gold mines in Mali, Namibia and the Philippines.
