Introduction

I first took notice of Sarine Technologies (“Sarine”) in early 2014. What captured my attention, aside from its skyrocketing share price ($0.10 in 2009 to $3.20 in 2014), was its stellar financial performance ever since the company changed its business model in 2009 from one-time sales to one that is more recurring in nature. However, like what Warren Buffett famously said, “Price is what you pay, value is what you get”. Sarine was trading at S$2.80 (32x P/E) which valued the business at about S$1bn. It was quite clear that most of the future growth prospects of the company was already priced in. I placed Sarine under my watchlist and kept a close eye on the company, hoping that one day something bad (but temporary) would occur and allow me to own a stake in the business at a much fairer price. As soon as decided not …