Anyone got an opinion (good or bad) on Learning Technologies (LON:LTG) ? (which I already own as a small starter holding)
For those of you not familiar, its a company that develops e-learning content, e-learning development systems and e-learning delivery systems. The companies general strategy is "buy and build" where its trying to buy up and consolidate the fragmented e-learning market.
I have some experience and insider knowledge about the e-learning industry in general and I think that the buy and build strategy here might really pay off over the long term. It is a really fragmented industry with loads of small players and building a large market leader could be a really good thing.
The thing that really made me sit up and take notice though was that they recently bought an American company called Rustici Software. Rustici are the company who produce the packaging and delivery standards that all e-learning packages get produced in.
So they "own" the standard for e-learning packages and will be at the forefront of the development of that standard and will have an inside track in getting their own software and e-learning packages to work with the latest standards.
I think this gives them a real advantage and a competative moat.
I suppose a non-technology related analogy would be like where Tetrapak invented the plastic coated paper cartons in the 1950's that we all get our orange juice in and held the technology patents for many years without challenge.
Right now it has a stockrank of 44 but because stockranks are largely focused on historical factors I think it fails to consider the purchase of Rustici and the companies recent big contract win with UK government to provide large scale e-learning solutions over the next 3 years.
The actual worth of that contract is largely still unknown though so it's difficult to really value the company or its future earnings potential. The share has come off the boil a bit over the last month of so so i'm thinking of adding but would welcome anyone elses opinion on this one.
p.s. I nearly forgot to add the MBC (Mandatory Brexit Comment - now required by law in every post :-) ) - Maybe a recession…
Hi Peter,
Guess I will have to live with holding a Momentum trap for a while longer then.
The thing with Rustici is that historically they were producing the standard for e-learning packages seperately from any larger corporation. They were seen as an unbias indy developer and so other companies trusted their packaging standard and were ok to adopt it.
I suspect that Rustici feel that being aligned with a large corporation will cause big e-learning software producers (Adobe, Articulate etc) to say "we can't trust these guys to be acting in the interest of a neutral standard any more, lets make our own alternative packaging format".
Then we the consumers end up with 6 or 7 competing "standards". This is of course what has happened in every other computing standard in history (gif vs jpeg, mp3 vs aan vs wmv, etc).
So I think its smart for Rustici to try to continue to look like they are an unthreatening indy developer who are just interested in interoperability of e-learning packages.
E-Learning is definitely on the increase in general, this is driven partly by government and legal requirements. Every year I have to do health and safety and anti-bribery and diversity and inclusion training refreshers in order to meet legislation and help my company from being sued at a later date. E-learning is perfect for that.
Then you have the general drive to mobile and online in every aspect of our lives and greater acceptance of virtual classrooms and mobile learning (unimaginatively referred to as M-learning and V-Learning).
Even if you are going to have a classroom based training event, instead of hiring a venue and the class and the tutor all travelling to the venue you just get an office in your own building and have everyone join a virtual event or have everyone join a virtual event from home. Its suprisingly effective for lots of deliveries and half the cost.
So actually there are lots of angles to learning that Learning Technologies can get a grip on:
Selling e-learning creation, hosting and delivery tools,
Production of standards based learning content,
Production of bespoke learning content,
Classroom delivery,
Virtual Delivery,
If you combine that with a more global reach then that could really be a great business over time and I don't see anyone else doing it.
Buy and build is always somewhat risky I guess due to the risk of a bad acquisition.
Another risk would be barriers of entry to smaller players. Its actually pretty easy for small talented boutique providers in all the areas I list above to pop up and provide competition in particular geographies. That said, the barriers to build to the scale of Learning Technologies to be a serious challenge are pretty significant.
So I am very positive on the company as a "story". This doesn't mean it will always be a great investment but so far its been very good for me. I bought my first lot at 20.87p and bought some more on the way up. I wish I had the conviction at the time to buy more but the lack of clarity on earnings made me hold off.
Its one of those shares that i'm permanently thinking I should top slice but holding off from doing so far has paid off for me.
