A Man's Search for Value

This is the first in a series of blogs where I’ll be sharing my analysis on Perimeter Solutions, Inc (PRM).

As this blog is primarily a learning aid for me, each post will focus on a subset of my wider due diligence on the company. I will then roll up my analysis into a final review that will ultimately guide my decision as to whether I hold, increase or sell my existing position at this time, and provide a thesis upon which to refer back to as the share price evolves over time.

In this blog I will create an overview of the company with the aim of identifying a list of key questions and topics to research further.

Here goes!

First off, PRM states its mission is to ‘help save lives and protect property and the environment by delivering quality products and exceptional services’ and that its vision is to ‘be the indisputable global leader in the fire protection and specialty products industries’. 

Questions 1 and 2:

1. Does the company sell products and services to a quality that sets them apart from their competitors? Are they truly a market leader?
2. Do the products and services (any or all) provide a competitive advantage? And if so, is this sustainable?

The company has only been listed on the New York Stock Exchange since late 2021, but its origins date back as far as 1963.

The company operates in two segments, Fire Safety and Specialty Products. The Fire Safety segment appears to have been the genesis of the company, and to this date (FYE25) accounts for 75% of annual revenue. The Fire Safety unit provides fire retardants and firefighting foams, as well as specialized equipment and services. It sells these products and services to federal, state, provincial, local/municipal, and commercial customers.

The Specialty Products segment serves non-fire safety markets, including:

• Lubricant additives (pesticide and mining chemical applications)
• Electric battery technologies
• Engineered machinery, OEM manufacturing, and automation for medical devices (e.g. catheters, guidewires, microcoils)
• Aftermarket parts, consumables, and services across these product lines

Question 3:

3. Am I able to gain insight into the product make up of each segment, and if so, which products are profitable, which are in the ascendancy and which are in decline? What does this analysis tell me about the future prospects of the company?

The leadership team is five people strong, all of whom seem relatively new to the business and have joined at the point of or after the company was listed on the NYSE.

Questions 4 and 5:

4. What ownership does the leadership team have in the company? Who are the material equity owners, why do they own the company, and what does this say about the company and its prospects?
5. Can I glean any insight into the motives of the leadership team? The majority of the team appears to have a background in investment management. Is the team operating with a truly long term mentality, and could PRM be a long-term compounder with market beating potential?

I’ve identified 5 questions above. This might not seem like a lot, but answering them will provide insight into the company’s current offerings, any existing competitive advantage and how sustainable this might be, and the quality of the leadership team. If my findings on these topics aren’t sufficiently encouraging, then any other research is superfluous. Yet should the answers be positive, I know my research will lead to more queries to follow. I’ll also be supplementing the above questions with some detailed financial analysis.

Key takeaways from this month:

• If I want to have conviction in my investments I need to go deep on a company and sector. A simple high level analysis is not sufficient when potentially deploying a material portion of my investable funds. The risk of loss and opportunity cost will be too high without adequate research into a target company.
• There is no pressure to invest, and I will capture value from my diversified fund investments, but I must be more productive and focussed in my investing efforts, specifically targeted and disciplined research.
• I don’t need a 20 point checklist of investing questions. Focusing intently on a small number of important points is enough to start, and the answers will likely qualify or disqualify any investment thesis.

As always, thanks for reading. Next up, some answers to the questions above!

P.S. – If anyone has been following to date, you’ll realise that I didn’t post in May. Life just got in the way. For me, the important thing is that I haven’t let one month turn into two, and I’m back researching and posting again. It’s ok to stumble, but it’s not ok to stop!