Kerrisdale Capital Management
Hedge fund manager, long/short equity, value, special situations

Lindsay Corp.: Irrigating The Emerging Markets With A Modest Valuation

We are long shares of Lindsay Corporation (NYSE:LNN), a global irrigation business headquartered in Omaha, Nebraska. Lindsay owns a world-renowned brand name (Zimmatic), sells into an under-penetrated market and benefits from the secular trends of increasing global food scarcity and rising protein consumption. Given this long-term growth opportunity, a robust capital efficiency profile (ROIC of 25%+), and the stock trading at 13.7x net-cash P/E on trough FY 2014E earnings, we believe LNN shares are more than 50% undervalued.

The mechanized irrigation business is a global duopoly, with Lindsay and Valmont Industries (NYSE:VMI) combining for about 75% of the global market share. During the 1970's there were over thirty domestic manufacturers of center pivot irrigation...

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