Insight Enterprises (NASDAQ:NSIT) is a value added reseller and servicer of hardware and software. The company assists large corporations, and state and federal governments on Information Technology issues such as designs and implementation of networking, data storage practices, disaster recovery, and hardware and software technologies. It distributes products from large vendors such as Cisco, Dell, Hewlett Packard, Apple and Microsoft, selling everything from tablets to network servers to software licensing.
While distribution is a thin margin business, transactions are not based solely on price. The “value-added” characteristic requires the gaining of confidence from technology vendors to be an approved seller as well as from the IT professionals at the clients to be on the first-call basis. This relationship erects barriers to entry and creates recurring sales.
Technology is an ever changing industry. Products and software change, get upgraded, or replaced with new standards. Insight should benefit from growing trends in mobile devices and computing infrastructure moving into the cloud. The company continues to operate well, generating about $75 million free cash flow per year, or about 9.6% of its market value.
From the Third Avenue Value Fund 1st quarter 2016 letter.
