Is FirstService a Mispriced Management Stock After Fund's Strategic $8 Million Bet?

Recent institutional activity suggests the market may be undervaluing a leading provider of property management and residential services. On January 20, Jacobson & Schmitt Advisors made a significant move, increasing its stake in FirstService (NASDAQ:FSV) by purchasing 49,829 additional shares worth approximately $8.11 million. The move raises an interesting question: with a well-established management stock showing solid fundamentals, why has the market left it behind?

The Fund’s Conviction Play

Jacobson & Schmitt Advisors expanded its FirstService position substantially, now holding 144,994 shares valued at $22.55 million as of December 31. According to SEC filings disclosed January 20, the fund’s quarter-end position value climbed by $4.42 million, reflecting both the new share acquisition and underlying price movements. This represents one of the fund’s larger commitments—FirstService now comprises 3.8% of its $593.94 million reportable U.S. equity portfolio.

The decision to increase exposure suggests institutional confidence in the company’s direction, even as the broader market has been skeptical. Shares have declined 11.3% over the past 12 months and trail the S&P 500 by approximately 25 percentage points, creating a potential valuation gap that attracted this sophisticated investor.

Understanding the Business: Why Management Stock Matters

FirstService operates as North America’s leading property management solution provider, combining recurring revenue streams with branded service franchises. The company splits operations into two complementary segments:

FirstService Residential generates steady revenue through long-term property management contracts serving residential communities and homeowner associations, supplemented by ancillary services.

FirstService Brands operates and franchises specialized services—including Paul Davis Restoration, CertaPro Painters, and California Closets—extending the company’s reach into restoration, painting, and storage solutions.

This dual-segment structure is precisely what makes FirstService appealing as a management stock: it balances the predictability of recurring contracts with growth opportunities through franchise expansion and service diversification.

The Fundamental Case: Stability in Uncertain Times

The appeal of this management stock lies in its resilience. Third-quarter results, released prior to the fund’s purchase, demonstrated steady execution across both segments. Revenue grew 4% year-over-year to $1.45 billion, while adjusted EBITDA increased 3% to $164.8 million. Adjusted earnings per share reached $1.76, up 8%—reflecting disciplined operations despite weather disruptions and uneven performance in portions of the Brands segment.

The Residential division particularly impressed, posting 8% revenue growth and margin expansion driven by new contract wins and improved labor efficiency. This performance underscores why investors view FirstService as a durable management stock: the business model prioritizes steady cash generation over explosive growth, with debt levels declining and capital intensity remaining low.

As of January 20, FirstService traded at $160.92, representing a market capitalization of $7.36 billion against trailing twelve-month revenue of $5.48 billion and net income of $138.55 million.

Market Skepticism vs. Operational Reality

The disconnect between stock performance and operational results is notable. While shares have lagged over the past year, company fundamentals have not deteriorated meaningfully. The management stock continues to benefit from the same structural advantages that attracted Jacobson & Schmitt Advisors: low capital requirements, recurring revenue visibility, and exposure to essential property services that remain in demand regardless of economic cycles.

Property management demand, unlike discretionary consumer services, ties directly to the need for ongoing residential and commercial property maintenance. This reality positions FirstService’s management stock as a counterweight to more cyclical holdings in a diversified portfolio.

What’s Next

FirstService is scheduled to report fourth-quarter 2025 results on February 4, 2026. That earnings announcement could provide fresh perspective on whether the fund’s increased allocation proves prescient or merely represents a calculated long-term positioning ahead of potential multiple re-rating.

For investors evaluating management stocks in the residential services sector, the Jacobson & Schmitt Advisors move and FirstService’s underlying business stability suggest the market may indeed be overlooking value. The institution didn’t invest $8 million on a whim—it identified a property management operator trading at a potential discount to its durability and growth prospects.