Trainers' House - Sarasvuo's third renaissance

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It seems there isn’t a thread for Trainers’ House here yet, so I’ll open one.

The company is very strongly owned by its founder, Jari Sarasvuo, with a 34.17% stake. Other major owners can be found here: https://www.trainershouse.fi/sijoittajalle/osake/suurimmat-rekisteroidyt-omistajat-2/

In the TOP5, there are still The Orange Company (Hyökyvaarat), Thomasset Oy (Jouhkit), Azaliya Sungatullina, and CFO Saku Keskitalo, who received a large portion of Sarasvuo’s shares last year and significantly added more at the 0.50€ level.

CEO Arto Heimonen is the company’s 10th largest owner.

The company states on its website that it is a change company: “Trainers’ House is a change company. Our clients use us to implement their strategies faster, more effectively, and with a higher probability of success. Our clients trust our skilled and customer-centric people, our effective tools, and modern methods. Our work is measured by the results achieved by our clients. Verifiable results are best achieved when the company culture supports the goals.”

The customer cases include a significant number of major Finnish companies and their personnel, whose business TH states it has helped. The company’s recruitment pages provide a more detailed picture of the roles available at the company: https://vuosi2020.trainershouse.fi/#rekry

Among the most visible reforms has been Sarasvuo’s return as a talk show host through the acquisition of Mojo Studio. Through this, individuals who have progressed elsewhere through the company’s Growth Academy, the company’s own personnel, and interesting characters have been highlighted, e.g., the Anna Kontula discussion was excellent.

Outwardly, the most visible aspect is the coaching activity aimed at change, which includes the ongoing monthly subscription-based Fight Club and one-time coaching purchases.

Marketers book leads for client companies for meetings, seemingly well and effectively generating results for client companies.

I myself jumped in to learn about the company in the autumn of 2019 based on the numbers, when the valuation multiples were in place for a company that had made a turnaround. Then came the corona, and the company’s value was 4 million euros, with 2 million in cash. I refueled.

Now, after strong gains, I’m wondering if this story has already played out or if I should still keep the pot in my portfolio.

My investment mentor’s recommendation for this company back in the day was this: “You should absolutely not invest a single penny of your own money in kiosks of this kind, where everything depends on the main owner’s daily condition.”

On the other hand, Jari seems to be in good form, and TH bought Stronghold Sukses as part of the company last year. It looks like the main owner still wants to see TH rise to become a more successful company.

Perhaps it’s worth being involved?

A dividend of 0.02€ has been proposed to the annual general meeting, and the board has been authorized to distribute an additional 0.03€ during 2021, depending on the situation. Business has turned profitable, and the numbers still look good to my eye, provided the basic operations continue to function reasonably well.

(The opening of this thread does not in any way contain investment recommendations.)

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The company is a cash flow machine that, at its best, rakes in huge profits. At its worst, it falls sharply, and there’s nothing but cash on the balance sheet. Goodwill was heavily cleaned off the balance sheet last season, which I think is a healthy sign of self-reflection.
Sarasvuo has a strong track record of the company being truly profitable when successful. Yet, his career also includes inexplicable misses.
Has the old dog learned new tricks now? Perhaps the thirteenth time’s the charm.
Fortunately, Sarasvuo doesn’t have to be the CEO; there are other professionals in every leadership role.
The company has been trying to break away from being personality-driven for years, but it still relies on Sarasvuo. Not as much as in the past, though.

I own a small slice and will be observing the company’s progress. TH gets a fair amount of media coverage, but actual press releases about its operations are very rare.
The current market value is on par with a hot dog stand, but if the effort pays off, it will fly far. Sarasvuo has never aimed for mediocrity.
At best, this could yield nice returns; at worst, a good laugh.

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Sarasvuo hasn’t been heavily involved in daily operations for a long time. His name is still synonymous with Trainers’ House and vice versa, but daily management is already in the hands of others. He handles some client accounts and coaching.

TH would have been an excellent pick from the COVID-19 dip, but it just didn’t cross my mind back then.
The reason is that TH has a really strong culture that drives people to stretch themselves and thus survive. People don’t just go to work there; they live and breathe the culture—they live as they teach. For example, they were immediately offering remote training when many places were still wondering what Teams was.

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Excellent point! I believe Trainers’ House is one of the best-kept gems on the Helsinki Stock Exchange right now. There’s no analyst coverage, the company is on the smaller side, and due to its history, many avoid it like the plague. My suggestion for coloring the thread title would be “Trainers’ House – Prisoner of its reputation?”.

Why I think TH is an interesting investment:

  • The blunders are behind them, and a clear turnaround has been achieved.
  • The company managed to make a clearly positive profit during COVID-19 (see below), even though, by all accounts, this type of operation should have suffered significantly from the pandemic.
  • Jari Sarasvuo returned to work last autumn. You can think whatever you want of the guy, but his return is definitely a good thing for Trainers’ House.
  • Little birds have been singing that the company has a really good vibe and is a desirable workplace.
  • Despite the recent share price increase, the stock is really cheap compared to the general level of key figures.

A couple of highlights on pricing: Market cap €13 million. Net cash over €2 million (positive). Adjusted operating profit from last year just over a million euros. A large write-down led to a loss, but no cash flow impact. As mentioned earlier, there’s a dividend of €0.02 + €0.03 for this year (over 8% dividend yield). And these figures are from the COVID year.

I would gladly hear the forum’s views on the risks. I would highlight the sensitivity and difficult predictability of the business. Reputation is also a disadvantage in addition to a benefit. The same likely applies to Mr. Sarasvuo.

Spot on!

PS. CFO Keskitalo was stocking up quite a bit at the beginning of March.

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At a share price of 0.61 euros, Trainers’ House’s P/S ratio is 1.39. That seems quite high, as revenue decreased from 10.5 million euros in 2019 to 9.4 million euros in 2020, a decrease of -10.4%.

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But the EV/S (which is a much more sensible metric) is 1.24. I think it’s affordable, considering that the company’s operating profit margin was 11% last year. P-based multiples don’t work for TH when the company’s net debt is positive, which is quite exceptional.

Revenue dropped sharply, but that’s completely logical given COVID-19. Of course, revenue stagnated from 2019 to 2020. My own feeling (100% gut feeling) is that after COVID-19, the deck has finally been cleared, and once we get past this, a growth trajectory could be expected.

Let me also say that I don’t like the business itself at all :smiley: However, that doesn’t mean there couldn’t be an investment case here.

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I don’t make evaluations based on any single metric. Many things click into place at TH. The mere possibility of a dividend (4-10%) is strong. The business made a complete turnaround during the corona year and eventually turned a profit. The balance sheet was cleaned up. The cash situation is strong. Profitability has traditionally been good in good times, until it has, for some incomprehensible reason, hit a wall. The main owner is a volatile madman or a genius, however one wants to interpret it. Business operations are now mainly run by others than JS.

When I add everything up, I can’t be on the sidelines here. The risk is immense, but not just downwards. And hey, you only live once!

Usually, I don’t like to shout about my holdings, but since this is out there now, so be it. I’ve taken a small tracking position.

The company also has a serious reputation problem, which is why it may be unpopular with investors. What’s concerning is that some customers don’t want their names associated with Trainer’s House, even though they still gladly use the services. You could say that TH represents the pornography industry on the stock exchange; no one admits to watching it, but everyone likes it. And someone is making money on the side.

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Trainers’ House earnings per share, continuing operations: 2018 €0.01 → 2019 €0.03 → 2020 -€0.14. The €0.02 + €0.03 dividend to be paid in 2021 cannot continue in future years at this rate of earnings.

Did Sarasvuo sell Stronghold Suksee Oy to Trainers’ House after Suksee started to have too much “glue” in its operations, just like Iivo Niskanen after changing skis in the 50km at the Oberstdorf World Championships?
Stronghold Suksee’s equity was already lost in 2019 (solvency -28%), even before the corona pandemic. Without the sale of Stronghold Suksee, Sarasvuo would have had to capitalize on it.
https://www.finder.fi/Koulutukset+ja+koulutuspalvelut/Stronghold+Suksee+Oy/Kauniainen/yhteystiedot/3114587

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This seems to be Sarasvuo’s pet project. I don’t understand why he sold it. Sarasvuo has been able to create all kinds of content and training through that online. What could be better than billing multiple people for the creation of the same material? One of the best ways to use a desired speaker’s time.

Due to growth, it seems to be weakly profitable. At some point, there will no longer be a need to invest in growth, and the margin will immediately rise significantly.

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This is an excellent reason why you can still get on board. There’s no analyst coverage, so no one is going to chew through the numbers for you, and just looking at the summary lines will lead you astray. In 2020, the company made a write-down of €5.1 million (note the magnitude, given the company’s market capitalization is €14M), which pushed the result into a loss, but this has no cash flow impact.

I don’t have the expertise or knowledge to accurately assess the adjusted EPS, but in H2/2020, the company achieved an EPS of €0.03 with a revenue of €4.4 million and an operating profit of €0.4 million, and the full-year revenue was €9.4 million with an adjusted operating profit of €1.0 million. The write-down was therefore in H1. Would the full-year adjusted EPS then be €0.06-€0.07? The operations don’t really require investments (excluding acquisitions), so it can certainly pay a decent dividend with that.

The cash reserves are also bulging with money that can be distributed to shareholders if there are no more sensible investment opportunities.

Edit: Great title by the way :smiley:

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44% in a month and 64% YTD. Hasn’t this been hyped up quite a bit already?

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When I first picked this stock for my portfolio at a price of 0.3x€ and later more at levels of 0.21-0.23€, I calculated the fair value to be about 1€ per share based on current market valuations.

With yesterday’s closing price, the adjusted P/E was 12, which doesn’t sound very high in today’s market.

Of course, a small company has its risks, but if H1 results continue to be good and the board decides to distribute that additional 0.03€ dividend, then it’s a stock that offers a fantastic return even at the current price.

In my opinion, the acquisition of Stronghold Suksee reflects Sarasvuo’s desire to lead his dearest company “child” to prosperity one more time before retirement. If one has followed Jari’s career, there have been quite a few bumps along the way, but his comebacks have been spectacular and strong, as is the case again.

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Good stuff here. I also dug into this a bit over the weekend and took a tracking position of about 3% of my portfolio yesterday.

The valuation is very modest, the balance sheet is strong, the CFO’s previous holdings compared to quite decent top-ups in March, very strong cash flow… all in all, a lot of good.

Someone above asked about risks. I would see uncertain growth when comparing to previous years’ figures. Even before corona, there was already a down year, though before that, there had been decent growth in previous years, but I would say growth is unstable and difficult to predict, as the company itself states in the annual report when discussing risks. So, if there is no growth, the current low P/E, adjusted for last year’s large non-cash-flow-impacting write-down, is fully justified. Last year’s operating result also strongly reflected cost savings due to corona, which are not permanent.

However, I still see significantly more positive aspects here at this valuation. The dividend also provides a small cushion. This will not become a cornerstone of the portfolio, but everything mentioned above, summed up at this valuation, makes it a card worth looking at with a very modest stake.

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Trainers’ House was mentioned in Pörssipäivä (Stock Market Day), starting at around the 21-minute mark. It’s an interesting point because the guest, Veli-Pekka Kellokumpu, was clearly reluctant to discuss the stock and mentioned a moment later that he didn’t want to reveal his portfolio as he has an ongoing buying program for many stocks.

In the owner listing at the end of March, his ownership had increased by +22% from the previous month.

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The reporter had spotted my ownership from the previous month’s list (or from this column) and the question about TH came completely out of the blue. Of course, I knew that they might investigate my holdings and something might come up. The program was recorded live over the phone, and I didn’t have time to compose a more elaborate answer than that.

Regarding TH as a company, I have no mysterious insider information. Everything I know is public. I have, of course, followed it and its eccentric father figure since the HPR days, and I have made my decisions based on that.

The reason I don’t publicly comment much on my holdings is that I don’t want to argue about this or that detail at every turn. Especially since I don’t like to write. In one-on-one conversations, I’m happy to open up more. Anyway, discussion is a more natural and fruitful way to proceed than just nailing down facts.

TH is rising regrettably quickly now, but I believe it is rising despite my comments, not because of them.

I am not (perhaps) buying anymore, but I am certainly not selling.
This is just the beginning of something big. :smirking_face:

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The increases look wild again, and your interview probably didn’t bring bad publicity.

Somehow, such a rapid increase in a significant holding starts to make me consider selling. If today’s increase materializes, this will become the largest holding in the portfolio.

Still, we are right in line with the development I predicted for 2022.

Exciting times.

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Sorry, I couldn’t connect the username and the person! A million embarrassed emojis for this. This is a bit off-topic, but an excellent interview and I really liked your strategy!

I brought it up because I think it’s always interesting from a shareholder’s perspective when small companies get mentions in the media, and your thing has clearly been “rocking” over the years, so it’s not a bad sign that you’re involved either :wink:

In turnaround companies, an initial rise always seems to fuel further rises, and at the same time, discussion increases (like the opening of this thread) when the share lingers in the top 10 risers for several days, and increased discussion often boosts further rises. I don’t see this in the selling prices yet, but this kind of rise is unlikely to continue for long.

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No need to be embarrassed. On the internet, you never know who’s lurking where. I’m not a parody character myself yet.

Technically, I calculated the resistance level in TH to be around €0.75. About 5 years ago, there was significant trading at those levels, and some who bought then might be considering selling now to get their money back. It seems to have gone well above that now, but the trading volume is so small that it’s not wise to draw overly direct conclusions.

Instead of the share price, it’s essential to consider what has happened in the company to justify the share price increase, which started much earlier? The answer is likely that the direction has turned from the bottom, and on the other hand, in the short term, not much at all. Of course, they are always busy, doing their morning stretches, and master coaches are motivating their clients. The company very rarely communicates through official channels. The actual announcements come every six months, except for the positive profit warning (posari) that came before Christmas.

Instead, unofficial “posaris” leak on social media quite often. Sometimes I feel like calling Jari and instructing him on how a listed company’s communication should be handled or not handled. I have refrained so far and expect him to call me, if anything.

I’ve already intervened too much in the discussion; I should practice what I preach. Difficult.

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I bet many people don’t understand, at least not intuitively, where TH’s cash flow actually comes from. The perception might be that profit and revenue are generated from coaching and courses. In reality, Ignis—the so-called engine room, if you’ve read JS’s latest book—generates cash flow and profit for the company.

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Ignis indeed seems to be generating a nice turnover, 5.2 million euros in 2019.

Ignis performs customer contacting, arranging meetings on behalf of the client company by phone.

In the thread-starting message, Ignis’s work was referred to as follows:

The booking is done in the client company’s name, so the analysis below is indeed apt :sweat_smile:.

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Thanks to the undersigned - now I better understand what kind of art Sarasvuo’s third renaissance entails.

Outsourcing customer contact to Trainer’s House can definitely be a beneficial thing for the client company.

Let’s take a final look at how employees feel about Trainer’s House.
The overall rating is low, but of course, there are only 13 reviews.
https://www.tuntopalvelu.fi/yritys/trainers-house-oyj

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