P10 Inc (NYSE:PX) A Bull Case Theory

We came across a bullish thesis on P10 Inc (PX) on ValueInvestorsClub by TallGuy. In this article we will summarize the bulls’ thesis on PX. P10 shares were trading at $7.65 when this thesis was published, vs. yesterday’s closing price of $9.78.

A young entrepreneur pitching their venture capital investment idea to a board of directors.

P10 Holdings is an alternative asset manager that facilitates client access to private markets, charging fees on committed capital over extended periods. Recent challenges, including a mix shift in strategies, CEO transition, and growing working capital, have led to shrinking cash margins and a devaluation of its stock, presenting a buying opportunity. P10’s new CEO, Luke Sarsfield, has been incentivized with a stock grant based on achieving various VWAP hurdles, motivating him to grow Fee Paying Assets Under Management (FPAUM) and improve margins.

P10 is expected to return to double-digit organic FPAUM growth, leveraging Sarsfield’s expertise and strategic direction. Despite guiding to only 4% net growth in FPAUM for 2024, below peers, the long-term outlook remains positive. Margins, which have declined due to rising compensation costs and a shift towards lower-margin direct strategies, are anticipated to recover as these investments bear fruit. The firm has guided 2024 adjusted EBITDA margins to mid-40s but aims to exceed 55% in the future.

P10’s valuation is currently low, offering a significant margin of safety. It plans to enhance shareholder value through M&A, stock repurchases, and strategic growth investments. However, risks include potential impacts from higher interest rates on private equity, declining PE allocations, and competition for talent affecting margins. Additionally, a significant receivable from its subsidiary, ECG, could be accretive if collected.

Overall, P10’s new leadership, strategic investments, and potential for margin expansion provide a compelling case for future growth and stock re-rating, despite current market skepticism. The firm’s alignment of management incentives with shareholder interests further supports this optimistic outlook.

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Disclosure: None. This article is originally published at Insider Monkey.