In short: Owned. "Best of breed" supply-chain-management software (Ottawa; Gartner top quadrant, winning "way more than they're losing" on Fortune 100/500 RFPs), sold off with all software and overhung by management turnover — a classic "two-quarter problem" / bear trap. Net cash, achieving rule of 40, new CFO announced this week, and it supersized its buyback in the spring — buying aggressively in "the high 120s and 130s" before the new management team arrived. Takeout at a ~$4B cap would not surprise him.
Kinaxis, based in Ottawa, sells software that large companies use to plan their supply chains — where to make things, how much inventory to hold, what to do when a tariff or a shipping disruption blows up the plan. Gartner, the industry rating shop, puts it in the top tier, and it wins most of the Fortune-500 bake-offs it's invited to.
So why is it cheap? Investors dumped everything software-related this year, and Kinaxis had a leadership vacuum — a CEO change, no CFO for a while (a new one was announced this week), an investor-relations head retiring. Big funds prefer to "wait and meet the new team," which leaves the shares stranded. Morrison calls this a "two-quarter problem" or a "bear trap": a temporary dislocation in a business that isn't structurally broken. His rule is that certainty is expensive — if you wait until everything is resolved you pay up — so the way to earn the return is to do the work yourself and accept a bit of unresolved risk.
The tell that management agrees: the company holds more cash than debt, hits the "rule of 40" (growth plus profit margin adding to 40%+, a software quality bar), and it went out in the spring and bought back an unusually large amount of its own stock in the high-120s/130s — before the new CFO arrived. Doing that without the executive who normally signs off on capital decisions tells you how cheap the board thought it was. At a ~$4 billion size, he wouldn't be surprised to see it acquired.
42:08But what does it take to work? — Yeah. So I think so it is a best of breed supply chain management software company. And so I think the overhang so that's — in theory in this world. — Yeah. — Should be doing incredible, — right? But if you're a large investor and you're investing in a small cap software company like this, would you like it if they change CEOs? Would you like it if they change CFOs? Would you like it if their head of IR is retiring? So, a lot of people would say, "Well, I'm going to wait to meet the new CEO. I'm going to wait to meet the new
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