Sandhill Capital Partners LLC d/b/a Sandhill Investment Management on Badger Meter, Inc.
Thesis
Sandhill initiated a position in Badger Meter after following the company on its watchlist for years. Badger is a pure-play water-technology company with a leading position in smart water meters and cellular advanced metering infrastructure, selling into an oligopoly with high switching costs and reliability-focused municipal customers. The stock pulled back after a temporary revenue air pocket caused by project timing rather than a deterioration in long-term demand. Sandhill believes the multidecade replacement cycle for aging water infrastructure and increasing adoption of smart-meter technology provide a durable growth runway, making the weakness an attractive entry point.
“the multidecade replacement cycle for aging water infrastructure, combined with increasing technology adoption, gives Badger a durable growth runway”
Key risks
- Project timing can create temporary air pockets in reported revenue growth.