Sandhill Investment Management on Badger Meter, Inc.
Thesis
Sandhill initiated Badger Meter after a sharp pullback caused by project timing rather than a deterioration in long-term demand. The company is a pure-play water-technology leader in smart water meters and cellular advanced metering infrastructure, operating in an oligopoly with high switching costs. Municipal customers prioritize reliability over price, which supports the durability of the franchise. Sandhill believes the multidecade replacement cycle for aging water infrastructure and rising technology adoption provide a durable growth runway, making the recent weakness an attractive entry point.
“the recent weakness provided an attractive entry point.”
Key risks
- Project timing can create temporary revenue-growth air pockets