SPSC · investment memo
TTM realised GAAP operating margin, held flat. FY2025 15.7%, TTM 15.34%, latest quarter 12.8% — the margin is DETERIORATING, so a flat terminal is already the generous end.
Four distinct questions, one field each. A price is not a thesis: the trigger below forces a re-underwrite and freezes further purchases — it is never an automatic sell.
A daily close below $60.61 triggers a mandatory re-underwrite and freezes further purchases. It is not an automatic sell unless a separate fundamental invalidation condition has been breached.
Fundamental and falsifiable, never price-based. If one is satisfied the thesis is marked dead and the position is retained only by explicit decision.
Named cause: SPSC has been buying revenue growth at roughly 5x sales to offset an organic rate that is now ~6%, and the acquisition engine has stopped covering the gap. The mechanism is arithmetic, not narrative. Reported growth = organic + acquired. Organic is ~6% and decelerating with retail-supplier spend. Acquired growth requires ~$210m of consideration per deal to add ~$40m of revenue (Carbon6), i.e. ~5.0x revenue, funded from a $154m cash balance and share issuance from treasury. Two deals in fourteen months consumed $424m and produced $270m of goodwill. When the deals anniversary — whic