Hi Diogenes,
Maybe I should have posted the below on an SDI company board - apologies if so.
Hmmm - based on what you say I am not sure he understands the business model.
Also, why would ‘operational gearing’ always be a good thing? - When revenue drops it’s definitely not a good thing! I’ve learnt that lesson! 
To me, SDI are a group of related but independent niche business with intellectual barriers to entry which result in high returns on capital, and consequently a lot of cash generated to fund similar acquisitions in the future, without material debt on the balance sheet. Rinse, repeat. That’s the business model in a nutshell. Maybe this doesn’t appeal to the man from a place called DangerCapital - too straight-forward and (hopefully) predictable!
(edit - I’ve since learnt that ‘DangerCapital’ name has an element of irony to it and the name is related to judicious risk taking - sincere apologies to Mr Simpson)
From SDI’s full year presentation:
The strength of our business model:
• Federated structure for rapid but nuanced response
• Profitable & cash-generative businesses able to
withstand external shocks
• Diverse portfolio of companies not relying on a
single sector or region
• Exposure to future-proofed sectors
• Resources to invest for organic and acquired growth
as opportunities arise
Net debt at 30/4/21 was £1.8m with free cash flow for that year of £8.7m. That’s after 13 acquisitions since 2014.
Allocation of capital has been very good by the group, in my opinion, and that seems to me to be why it has been successful. SDI don’t need operational gearing to succeed. They just need to keep returns on capital steady or increasing slightly, by making good purchases, and gaining synergies through shared central functions, if possible.
The only dubious thing about SDI’s model is that as soon as they purchase a company it becomes valued at a higher multiple as part of the whole. So value created overnight - not sure about that.
In terms of tipsters, I think each company attracts it’s own type of shareholder, through it’s actions. SDI’s shareholder register is probably less vulnerable to tipsters than, for example, an Oil and Gas exploration company’s shareholder register.
Was it Mark Simpson? In which case I am a little surprised because he usually makes sense. Maybe this company is just not his cup of tea, which is fair enough.
Regards,
anon