In its Q2 investor letter, Greenhaven Road Capital talked about both Etsy Inc (NASDAQ: ETSY) and Envirostar Inc (NYSEAMERICAN: EVI). Etsy is a $6.15-billion market cap e-commerce website focused on vintage items, while Envirostar is a $435.73-millin market cap distributor of commercial laundry and dry cleaning equipment. Let’s take a look at comments made by Greenhaven founder and portfolio manager Scott Miller about Etsy and Envirostar.
All other Etsy news pales in comparison to their decision to raise prices, increasing the per-transaction fee from 3.5% to 5%, as announced this quarter. It is rare for a company to introduce a near 50% price increase and still be unlikely to face a significant decline in demand. As this is a platform business, virtually all of the incremental revenue could drop to the bottom line. Management has pledged to make significant investments in marketing and product so there will not be an explosion in profitability, but we should continue to see growth in buyers, frequency of purchases, conversion rates, revenue, and ultimately profitability.
EnviroStar has had a quiet year so far, announcing only one acquisition to date. As discussed in previous letters, CEO Henry Nahmed has articulated a buy and build strategy. He has the currency with his stock to make the acquisitions in a very accretive manner. Time will tell, but I suspect the back half of the year will see significantly more activity on the acquisition front.
Etsy Inc (NASDAQ: ETSY) has been performing very well on the share market this year so far. Since the start of the year, the company’s share price has moved up 151.74%. The stock has jumped 20.10% over the past three months and 198.72% over the past 12 months. Further, Etsy isn’t a very popular stock among hedge funds tracked by Insider Monkey. As of the end of the second quarter of 2018, there were 30 funds in our database that held shares of the company.
Meanwhile, shares of Envirostar Inc (NYSEAMERICAN: EVI) are up 1.83% since the start of the year. The company’s share price has fallen 2.75% over the past three months. However, the stock has increased 40.36% over the past 12 months.