LIND - Lindblad Expeditions

[brendanb22]

Was surprised not to see a post on them already.

 

Lindblad is a cruise company with a niche in the experiential space offering very high end trips. Unlike other public cruise co.'s they are cash generative, have strong pricing power and have developed what seems like a strong moat around their business. I really like their CEO and insiders own a significant portion of the company. The co. came public through a SPAC transaction and warrants trade that the company is currently buying back now.

 

Would love to hear others' thoughts!

[Astrea]

I bought a small position at $8.2. There are a lot of good things about this company. I've been side-tracked in finishing my DD with the whole election thing but will continue to explore as soon as time permits. I'd be interested in any views on market size (luxury expedition cruise market) and maintenance capex for these ships. I've been meaning to call the co to discuss as they haven't answered my emails (I expect they don't have much of an IR department).

[Jurgis]

I'm sure I read a writeup on this somewhere recently... maybe one of the hedge fund letters floating around ... gonna try to find ... no success so far.  ::)

[Travis Wiedower]

I'm sure I read a writeup on this somewhere recently... maybe one of the hedge fund letters floating around ... gonna try to find ... no success so far.  ::)

 

There's a pretty new write-up on VIC. Might be what you're thinking of.

[KCLarkin]

Greenhaven has written about this one:

 

http://www.valuewalk.com/wp-content/uploads/2016/08/Q22016FINAL.pdf

 

https://static1.squarespace.com/static/5498841ce4b0311b8ddc012b/t/58148e2515d5dbcebabe377f/1477742119029/Q3+2016+FINAL.pdf

 

Lindblad Expeditions (LIND / LINDW): The Lindblad Expedition warrants were discussed in detail in the last letter. We have added common shares to the fund as well because they have decreased in price. Part of the investment thesis is that investors were not looking out to 2017 and 2018. A recent Deutsche Bank initiation report was the first I have seen to model 2018 – one of us will be proven to be wrong, since our outlooks for the company are quite different. Lindblad Expeditions will be increasing capacity by more than 40%, adding land-based tours from its Natural Habitats acquisitions, and could grow its Cuba business over

Greenhaven Road Capital | scott@greenhavenroad.com | www.greenhavenroad.com

  time. Deutsche Bank thinks all of this will lead to decreased profitability and still has a $9.50 price target. If we apply the Deutsche bank multiples to my numbers, their price target would be close to double.

 

[Jurgis]

I was thinking about Greenhaven. Thanks KCLarkin.

[Jurgis]

Lindblad is a cruise company with a niche in the experiential space offering very high end trips. Unlike other public cruise co.'s they are cash generative, have strong pricing power and have developed what seems like a strong moat around their business.

 

Does it really have a niche and a moat?

 

I track medium-high-end trips, I get emails from at least couple of companies. Lindblad does not seem any different from them at least from the first glance.

 

E.g. see Natural Habitat Adventures that work with WWF: http://www.nathab.com/?utm_source=worldwildlife.org&utm_medium=referral&utm_campaign=WWF%20Search

IMO high end and very expensive (possibly more expensive than Lindblad, but I did not go through tour details to make head to head comparisons).

 

http://www.adventure-life.com/ - I've done couple trips with them. Cheaper than Nat Hab (and possibly Lindblad). But they are more of a tour agency and sub their trips, so perhaps not fair comparison.

 

In general though I'm quite skeptical that there's real niche and moat.

There is some switching cost: once you've gone on a trip with one company, you have some relationship with it, possibly "alumni" discount, possibly expect certain level of service in other tours with them, possibly get their emails and catalogs.

 

OTOH, at least at medium level, there's always local companies (that Adventure Life subs for example), that provide good to great quality and experience. I'm not sure there's any benefit of having single company doing Galapagos and Alaska... You might be better off with local Galapagos operator and local Alaska operator.

 

Anyway, these are general, non-financial thoughts.

 

Disclosure: see above. Also I donate to WWF.

[KCLarkin]

E.g. see Natural Habitat Adventures that work with WWF

 

Looks like Lindbald owns Natural Habitat:

http://investors.expeditions.com/file/Index?KeyFile=34192191

 

Update: Also looks like Natural Habitat is for land-based tours. Lindblad is cruises.

[Jurgis]

E.g. see Natural Habitat Adventures that work with WWF

 

Looks like Lindbald owns Natural Habitat:

http://investors.expeditions.com/file/Index?KeyFile=34192191

 

Update: Also looks like Natural Habitat is for land-based tours. Lindblad is cruises.

 

Thanks. Looking at the respective websites, Natural Habitat has ship based tours. Lindblad has tours that seem to be land-based. Maybe they merged by now... ;)

 

WWF and National Geographic are good partners to have to sell this stuff. Strong channels. OTOH, Lindblad probably pays for it, so the question is whether they get their money's worth and beyond.

 

Anyway, Nat Hab has some tours that I'd be attracted to. Expensive though... Gotta make some money in stock market or something...  8)

[brendanb22]

On the moat, a lot of it does come from the exclusive partnership with National Geographic. Customers clearly value this, paying over $1000 per trip. Their repeat customer rate is also over 35% which, in my mind, is great for any business, let alone a cruise company. Mgmt. estimates a 20% ROIC on their new cruise ships, exhibiting the pricing power they are able to command.

 

I believe there is also a lot of optionality embedded in the price with the company's expansion to Cuba and recent acquisition of National Habitat. At this price, those both are free additionally upside.