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In 2023, the Pacific Smiles Group experienced improved key performance metrics but still struggles with modest profitability and a high employee-to-revenue ratio. Management transitions and a potentially costly payroll tax issue also pose challenges. Despite potential growth from newly opened clinics, an unfavorable sales leverage situation and staffing surplus stymie profitability gains. While these measures point to a recovery, the future is uncertain, owing to the ongoing payroll tax dispute and questions about management alignment with shareholder interests.

Summary of my Portfolio as of Q3 2023.

Bank7 (NASDAQ:BSVN) is a small regional bank with a presence in Oklahoma, Kansas, and Texas. It has consistently demonstrated strong performance, navigating the regional banking crisis without any significant setbacks, and even managed to increase its deposits during this challenging period. While the bank’s performance generally mirrors that of the sector and is currently down 13% year-to-date, it has maintained a consistent growth in book value per share. As of now, it is trading at a relatively undervalued 1.3 times book value, especially noteworthy given the company’s consistent achievement of ROEs exceeding 20%. Not only that but the bank is exposed to Texas which I’m quite bullish on.

Airtel Africa’s significant growth potential, driven by increasing mobile penetration, data usage, and mobile banking expansion, is being greatly impacted by the devaluation of the Nigerian Naira and ongoing regulatory challenges. Despite recent high revenue growth trends, the devaluation caused a negative turn in revenue growth and an increase in foreign exchange losses. While the company maintains solid performance indicators, the ongoing uncertainties cloud the decision on whether to hold, sell, or add to the stake in the company.

Frontier is a tiny video game developer in the UK sitting on a depressed multiple due to profitability. I think coming around the corner we could see profitability inflect producing a higher multiple. The company has a solid balance sheet, good IP, a great track record in developing games, and high insider ownership. I think profitability will inflect around 2025 and if not I will need to reevaluate.