Sandhill Investment Management on Badger Meter
Thesis
Sandhill initiated Badger Meter after tracking the company for years and waiting for fundamentals and valuation to align. The company is a pure-play water technology provider with a leading position in smart water meters and cellular advanced metering infrastructure, operating in an oligopoly with high switching costs and reliability-focused municipal customers. The recent share-price weakness followed 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 technology adoption provide a durable long-term growth runway.
“We recently initiated a position in Badger Meter (BMI), a pure-play water technology company.”
Key risks
- Project timing can create temporary air pockets in revenue growth