Columbia Wanger sold its stake in Textura Corp. (TXTR, Financial) at a price of $26.39 per share on April 30.
Columbia Wanger originally purchased 360,284 shares of Textura during the second quarter of 2014 at an average price of $20.36. Since its initial purchase, Columbia Wanger has added to its stake in Textura six times before reducing its position by 46.25% during the first quarter. Columbia Wanger then sold out its remaining shares in the second quarter for a net loss of 15% on its investment over the previous two years.
Textura has an 8/10 financial strength rating with a 3/10 profitability and growth rating according to GuruFocus.
According to Textura’s most recent 10-K its risk factors may have been decisive in Columbia Wanger selling out its stake.
We have not been profitable on the basis of accounting principles generally accepted in the U.S. (‘‘U.S. GAAP’’) during any quarterly or annual period since our formation in 2004. We incurred net losses of $16.6 million, $24.9 million and $40.3 million in the years ended Dec. 31, 2015, 2014 and 2013. As of Dec. 31, 2015, we had an accumulated deficit of $226.0 million. We expect our operating expenses to increase in the future due to anticipated increases in research and development expenses, sales and marketing expenses, operations costs and general and administrative costs. As a result of these increased expenditures, we will have to generate and sustain increased revenue to achieve and maintain future profitability.
We derive a substantial portion of our revenues from a single software solution.
We derive a substantial portion of our total revenues from sales of CPM. Therefore, any factor adversely affecting sales of this solution, including market acceptance, product competition, performance and reliability, reputation, price competition or economic and market conditions, could have a disproportionately material adverse effect on our business, financial condition, results of operations and prospects.
When a company has one stream of income, it increases the probability and variance that the company could face major setbacks and financial problems in the future. It is possible that Columbia Wanger believes that Textura is too much of a risk to hold long term because it relies heavily on sales of CPM to generate the majority of its revenues.
On April 28 it was announced that Textura had entered a definitive agreement to be acquired by Oracle (ORCL, Financial). The transaction is valued at approximately $663 million, net of Textura's cash. It is possible that Chicago-based investment firm Columbia Wanger was influenced by the fact that Textura was going to be sold, which could have potentially increased the volatility of the security if Oracle decided to shake up and make changes to the management at Textura.
Cheers to your investment success.
Disclosure: Author does not own any shares of this holding.
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