{"id":75238,"date":"2023-10-21T10:36:44","date_gmt":"2023-10-21T14:36:44","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/tecnoglass-stock-tailwinds-and-competitive-advantages-warrants-a-premium-nysetgls\/"},"modified":"2023-10-21T10:36:48","modified_gmt":"2023-10-21T14:36:48","slug":"tecnoglass-stock-tailwinds-and-competitive-advantages-warrants-a-premium-nysetgls","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=75238","title":{"rendered":"Tecnoglass Stock: Tailwinds And Competitive Advantages Warrants A Premium (NYSE:TGLS)"},"content":{"rendered":"
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The following segment was excerpted from this fund letter.<\/em><\/strong><\/p>\n

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Tecnoglass Inc (NYSE:TGLS<\/span>)<\/h3>\n

Tecnoglass is a vertically integrated manufacturer, supplier, and installer of architectural glass, framing systems, windows, and doors. The company\u2019s automated manufacturing base in Colombia allows it to manufacture products at a much lower cost than domestic companies. Shipping expenses are a low-single digit percentage of revenues because Tecnoglass transports products to the United States in containers that would otherwise return empty (there is a significant trade imbalance between the US and Colombia).<\/span><\/p>\n

The company has a reputation for quality. Its entry-level windows are made of tempered glass (compared to more fragile annealed glass of competitors) and its framing systems are coated with a resin-based coating that performs better (resistance to fade\/scratches) than the powder coat coating of peers. The company initially took market share by pricing below competitors, but as its reputation for quality and dealer network has grown the company has been able to increase prices and currently prices at or near market rates.<\/span><\/p>\n

Before 2017, the company strictly supplied glass for commercial buildings. In 2017, the company entered the residential market. During the COVID19 pandemic, the company was able to maintain its output and took market share from domestic competitors who suffered from supply chain kinks and mandated factory shutdowns. Dealers who made the jump from competitors have mostly stuck with Tecnoglass. The rapid increase in market share has led to a >30% sales CAGR for Tecnoglass\u2019s residential business since 2020.<\/p>\n

Today, the bulk of the company\u2019s sales are made in Florida. Florida, specifically Miami-Dade County, has the strictest standards for impact resistant windows in the country. This is relevant as manufacturers of impact resistant glass are leading innovations in thermally efficient glass that is increasingly relevant as consumers and developers build and remodel homes today. Thermally efficient windows and doors were made eligible for federal tax credits as part of the Inflation Reduction Act through 2032. We expect the tax credits will provide a tailwind to Tecnoglass as the company enters new markets in Texas and along the East Coast.<\/p>\n

As of this write-up, Tecnoglass\u2019s closest peer, PGT Innovations, trades for 8.0x EBITDA and is in talks to be acquired. If we apply a similar multiple to TGLS shares we would get a share price roughly 60% higher than today\u2019s price. You can penalize the company for being controlled by the founders, but we think a premium multiple is warranted given the company\u2019s competitive advantages, its higher margins, healthier balance sheet, track record of taking market share, and its long runway for growth.<\/p>\n

In August, the company relocated its headquarters to Miami form Barranquilla, Colombia. This move should open the door for inclusion in index funds and make the stock more attractive to domestic managers.<\/p>\n

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DISCLAIMERS<\/h2>\n

This quarterly letter, furnished on a confidential basis to the recipient, does not constitute an offer of any securities or investment advisory services. It is intended exclusively for the use of the person to whom it has been delivered by Liberty Park Fund, LP and it is not to be reproduced or redistributed to any other person without the prior written consent of the Fund.<\/p>\n

This information has been compiled by Liberty Park Capital Management, LLC and while it has been obtained from sources deemed to be reliable, no guarantee is made with respect to its accuracy. The Fund does not represent that the information herein is accurate, true or complete, makes no warranty, express or implied, regarding the information herein and shall not be liable for any losses, damages, costs or expenses relating to its adequacy, accuracy, truth, completeness or use.<\/p>\n

This quarterly letteris subject to a more complete description and does not contain all of the information necessary to make an investment decision, including, but not limited to, the risks, fees and investment strategies of the Fund. Any offering is made only pursuant to the relevant private offering memorandum, together with the current financial statements of the Fund, if available, and a relevant subscription application, all of which must be read in their entirety. No offer to purchase interests will be made or accepted prior to receipt by an offeree of these documents and the completion of all appropriate documentation.<\/p>\n

Liberty Park Fund, LP and Liberty Park Select Opportunities, LP returns are audited; however, all other figures are estimated and unaudited. Net results reflect the net realized and unrealized returns to a limited partner after deduction of all operational expenses (including brokerage commissions), management fees and performance allocations. Performance data assume reinvestment of all distributions. Actual returns will vary from one limited partner to the next in accordance with the terms of the fund\u2019s limited partnership agreement. Past performance is not indicative of future results and investors risk loss of their entire investment. Performance results are shown for the period from March 2011 through September 2023.<\/p>\n

References in this presentation are made to the Russell 2000 Index for comparative purposes only. Liberty Park Fund, LP and Liberty Park Select Opportunities, LP may be less diversified than the Russell 2000 Index. The Russell 2000 Index may reflect positions that are not within Liberty Park Fund, LP\u2019s investment strategy.<\/td>\n<\/tr>\n<\/table>\n

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