TLPFF - Tweedy Browne - Teleperformance: Insiders Bullish Despite AI Concerns

2024-05-11 11:30:00 ET

Summary

• Investors previously considered Teleperformance to be a reliable secular growth company, but many now believe that artificial intelligence will materially disrupt its business.
• The CX industry has always experienced automation, yet has continued to grow as customers outsourced more of their activities, and we believe that trend should continue.
• Insiders, including the Deputy CEO and several directors have purchased shares.
• We believe AI will also benefit Teleperformance as it has the potential to improve customer service agents' productivity.

The following segment was excerpted from this fund letter.

Teleperformance ( OTCPK:TLPFF , France)

A strong, if not predominant, factor driving new idea generation in our managed account portfolios over the last year continued to be material insider buying in companies that, at purchase, were trading at significant discounts to our estimates of their underlying intrinsic value. We have always felt strongly that purchases of shares by knowledgeable insiders at times when their company stock is trading at low prices in relation to metrics such as book value, earnings and/or cash flow can be a powerful clue to possible future outperformance of their companies' shares. Empirical evidence supports this view. As a reminder, the term "insider buying" refers to legal purchases of shares in their own company by corporate "C suite executives," corporate directors, and large shareholders. We also take an interest in studying companies that are buying back their shares, particularly when they appear to be undervalued....

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