OC Business Journal

PORTFOLIO: San Clemente’s Concierge Technologies builds a Buffett-like group of investments

Seeks Holding Company Like Berkshire Hathaway

■ By PETER J. BRENNAN

Nicholas Gerber and an investment partner in 2015 paid $3 million to take control of San Clemente-based Concierge Technologies Inc., an over-the-counter stock that had been floundering for years.

“We wanted a money-losing, debtladen, pink sheet company with bad technology,” Chairman and Chief Executive Gerber quipped to the Business Journal.

“We created our own alternative to change its reason for being.”

Gerber is boss of one of Orange County’s more unique fast-growing publicly traded companies.

It operates a bakery and a print shop in New Zealand, a private security firm in Canada and a skincare products line in San Clemente. It’s also developing a fintech banking app.

Most of its revenue growth has come from managing exchange traded funds on Wall Street and it’s expanding into the United Kingdom.

Gerber didn’t want a KKR Inc.-type company that would sell his firm’s businesses after a few years. Instead, he decided to attempt to recreate a “mini version” of Warren Buffett’s Berkshire Hathaway.

“We buy companies and never sell them,” Gerber said. “We’ve grown book value over 20% a year. You do that a few more years and you’re not mini anymore.”

In the past year, Concierge’s shares have jumped fivefold to $3.35 for a $126 million market cap. The firm, with 116 employees, plans to uplist to the New York Stock Exchange.

The firm reported two-year sales growth of 48%, good for No. 5 on the Business Journal’s annual list of the fastest-growing publicly traded companies in the category of companies with less than $100 million in annual sales.

Penny Stock

Concierge Technologies dates to 1996 when it made software that responded to a user’s spoken command to manage e-mail traffic. It went public as a penny stock in 2002 through a reverse merger.

Over the years, it changed its business model from selling subscriptions to a wireless internet access service to distributing mobile video surveillance systems.

Gerber has a long history on Wall Street, including co-founding an investor advisory in 1995 and as a chief investment officer at a reinsurance company.

He co-founded United States Commodity Funds LLC (USCF) and served as its CEO until 2015.

Gerber and other shareholders in his index funds wanted a way to gain equity exits. He didn’t want a buyout from a private equity firm that he said would have loaded his USCF with debt.

After he took over Concierge, he dumped the company’s previous business lines. One of his first initiatives was to purchase USCF’s commodity indexes for $42.5 million in 2016. Gerber continues to serve as vice president of USCF.

He began a strategy to build a profitable, value-oriented business that provides shareholders access to undervalued investment opportunities. Like Buffett, Gerber said he gives independence to the owners of the companies to continue managing their businesses.

“We’re going to look for a company just like us—private, profitable and for one reason or another, the owners want out,” he said. “There are hundreds of reasons that a good company wants a change of ownership.”

Gerber obtains buying tips “from all over the place.” He sticks to countries that have respect for “the rule of law and private property.”

The Portfolio

Concierge’s portfolio includes:

■ Gourmet Foods, a commercial-scale bakery that produces and distributes iconic meat pies and pastries throughout New Zealand under the brand names Pat’s Pantry and Ponsonby Pies. Concierge bought the company for $1.8 million in 2015.

Last year, Gourmet Foods bought another New Zealand firm called Printstock Products Ltd., a printer of specialized food wrappers.

■ Brigadier Security Systems, acquired in 2016 for $1.5 million and headquartered in Saskatoon, Canada, provides security to homes, businesses and government offices, throughout the province.

■ San Clemente-based Original Sprout was acquired by Concierge for $3.5 million in 2017.

Original Sprout, which produces and distributes vegan, safe, non-toxic hair and skincare products to major chains like Target and Whole Foods, recently expanded its warehouse by 30%, Gerber said.

■ Concierge started Marygold & Co. in 2019 to develop a fintech mobile banking app that will allow individuals “to send, receive, spend and save” through its app with no minimums, credit checks or fees.

The app, which is launching in a few weeks, already has a waiting list with 10,000 people, he said.

Gerber noted a similar fintech startup, N26 GmbH, on Oct. 18 received $900 million in Series E funding, gaining a $9 billion valuation, the

highest valued fintech in Germany.

In August, Concierge expanded into the United Kingdom by having its Marygold & Co. U.K unit pay $2.1 million to acquire Tiger Financia & Asset Management Ltd.

Profitable

For its fiscal year ended June 30, Concierge Technologies reported revenue jumped 49% year-over-year to $39.9 million as net income climbed threefold to $5.8 million.

It attributed the growth to an increase in assets under management (AUM) by its Wainwrigh Holdings subsidiary, the holding company for its commodity funds.

That Walnut Creek-based unit currently man ages two exchange-traded funds and eight ex change-traded products, all listed on the NYSE where assets under management had increased to $4.9 billion for fiscal 2021 from $3 billion a year earlier.

Concierge has $16 million in cash and equiv alent and “essentially no debt.”

Gerber owns 47%, or 18 million shares worth $60 million.

“It’s working out the way I planned,” he said.

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