Schibsted (OSL:SCHA, Financial) (Norway) is a global media group that operates the largest media and classifieds business in the Nordics via several business segments, including Nordic marketplaces, news media, and financial services and ventures. Over 90% of Schibsted’s business value stems from classifieds, which we view as a sticky, network-effect business, marked by robust long-term pricing power and compelling economics. Our research suggests leaders in the industry tend to benefit from these factors, and Schibsted has a very strong position within the industry relative to its peers. We also believe that customers’ increasing comfort with online transactions will benefit the company as these transactions can potentially generate greater monetization and unlock previously untapped profit pools. The company’s current margins are depressed due to its investments in these growth opportunities; however, we believe there is a clear path toward payoff. Given the current complex macro environment, we appreciate that Schibsted’s classifieds segment is resistant to inflationary pressures due to its pricing power, high margins and asset-light nature. We also believe the volumes in the motors vertical are currently held down by the lack of new vehicle supply. However, this pressure should also subside over the course of our investment horizon.
From David Herro (Trades, Portfolio)'s Oakmark Intl Small Cap (Trades, Portfolio) Fund second-quarter 2022 commentary.
