Teaminvest Private (ASX:TIP): The ASX’s most unique investment company!

Teaminvest Private (ASX:TIP) may not be as prominent an investment company as Magellan or Wilson, but perhaps it has not been getting the attention it deserves.

Originating roughly 2 decades ago as an informal club of business owners for investment education and stock-picking purposes, it has evolved into a company with $1.6bn in funds in its education and advice business and a further $244m in Funds Under Management (ASX:FUM). Let’s take a look at how it got to this point, what the future holds and what it could become.

 

TeamInvest: 3 in one and one in 3!

TeamInvest has 3 divisions. The first is its wealth/funds management where it manages investors’ money directly. The second is its investor education business. And the third is its Private Equity/Active Investments division.

These divisions are complementary to each other. TIP uses its Insights to generate revenue through its education service and uses it to help improve business that its private equity and funds management businesses own. These lead to better returns for the companies and for TIP. This is summarised in the company’s ‘Noble Purpose’ in compound[ing] knowledge and wealth.

Teaminvest Private is very much a Graham-and-Dodd style investor and investment teacher. Graham-and-Dodd is a value investing approach originally developed by the American investors Benjamin Graham and David Dodd that focuses on buying undervalued companies with strong fundamentals at a price lower than their intrinsic value. Moreover, TeamInvest engages with its investments. With investee companies on the Private side, it works alongside management so that all parties can realise returns.

Its investee companies include truck manufacturer GLT Trailers, East Coast Traffic Control (ECT), Icon Metal (which makes architectural metalwork and structural steel) and Automation Group (which provides radio telemetry products and services as well as industrial automation).

 

The opportunity

Teaminvest sees two key issues facing Australian business today where it can help. The first is that it is difficult to obtain finance. Even though Australian SMEs are the vast majority of Australian businesses, big banks have shunned away from them in recent years. Between 2000 and 2017, the amount big banks lent to SMEs as opposed to mortgages fell from nearly $1 for every dollar to a mere 13 cents.

The second is the need for strategic advice as Baby Boomers transition their businesses to the next generation. Up to 1 million will retire in the next 10 years. The two biggest issues facing these new owners will be managing those companies (when they may not have the experience in their company’s industry, or even managing companies generally) as well as access to capital. They may not have a family home to ‘re-mortgage’ or be unwilling to take on the risk. They will almost certainly not have all skills necessary to be the CEO of a company and may not have mentors and/or colleagues at an executive level who can make up for missing strengths.

 

A good FY24 and a great start to FY25

Teaminvest had a good FY24 and a good start to FY25. In FY24, (the 12 months ended 30 June 2024) revenues were $158m, its preferred bottom-line operating metric, Look-Through EBITDA, rose 21% to $15.8m, and the company paid a dividend of 3c per share (a record for the company).

In the 6 months ended 31 December 2024 (1H25), the company delivered at a group level:

• Revenue of $80.2m (up 2%),
• Look Through EBITDA of $8.9m (up 12%),
• Operating NPAT of $2.6m (up 12%), and
• Statutory NPAT of $2.5m (up 21%).

The company’s most important division by revenue and EBITDA was its equity division which generated 93% of revenue and 68% of EBITDA (Figure 2). TIP paid an interim dividend of 1.5 cents per share, and opted to increase its share buyback.

TeamInvest’s total Money On Invested Capital (MOIC) was 2.9x. This means that for every $1 of capital invested, $2.90 has already been returned. Turning to the company’s Wealth Division: Its flagship Conscious Investor (wholesale), TeamInvest Access Fund (retail) and Corinthian Balanced Fund (NFP/charities) all outperformed their hurdles, delivering after-fee returns to investors of 23.5%, 14.4% and 6.8% respectively.

1H25 was a period of progress for many of TIP’s portfolio businesses. TIP has made an agreement to sell 85% of its stake in BizGPT and expects to sell this in the coming months. TIP retains an investment equal to 5% of the company to retain the benefit from future upside, but also enables the business to take funding from those better suited to funding the next iteration of software development. The company deployed in $0.5m into new investments in other listed equities. It invested $0.4m into unlisted Wattle Court Homes, a home developer, and owns 33.33%.

And the Education Business continued to be the engine room driving the company. Although each of its participants and funds invests their money as they see fit, a theoretical $1m invested into its automatic portfolio would be worth over $42m today. This would reflect a compound annual return of 18.39%, nearly double the All Ords Accumulation Index which returned 9.5% per year and would have netted a return of $7m.

The company has an internal target return of over 15% over the long run. Obviously, very few assets offer a sustainable yield of 15%! And so the company seeks assets where earnings grow over time, and to buy them where the price suggests market sentiment is (wrongly) below its historic mean.

 

The company is undervalued

Our friends at Pitt Street Research released a report on Teaminvest earlier today. It observed the company is trading at just 64% of its book value. If the company was trading at its book value, it could be trading at $3.18 – ~50% higher than its share price right now. It is also worth noting that the book value of the holding on its balance sheet may be an underestimation because Teaminvest does not revalue its holdings each year for balance sheet purposes. A realistic book value could be twice as high.

Using metrics other than Price-to-Book could also derive higher including:

• The average trailing P/E multiple for the ASX All Ordinaries Index which is 33x. With diluted EPS of 22.7c in FY24, this derives a share price of $7.49 per share.
• The average EV/EBITDA for the ASX All Ordinaries Index – 10.7x for CY24. Considering TIP made $15.7m in EBITDA, this would yield an Enterprise Value of $166.4m, equating to a market cap of $172.4m and a consequential share price of $5.57 per share.

 

Teaminvest has a bright future ahead

Teaminvest plans to continue growing its revenue and earnings by:

• Increasing Funds Under Management and Funds Under Advice in its Funds management business
• New investments, particularly those that bolt-on to existing businesses, or new businesses whose management aligns with the company’s philosophy,
• Working with management of existing investments to sustainable grow profits.

While this investment house obviously has some way to go before reaching the heights Washington H. Soul Pattinson (ASX:SOL), we think it has the firm foundations to grow into something special.

 

Teaminvest is a research client of Pitt Street Research

 

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