Sourcing ideas: Quick Scan Evermore Global portfolio

In the weekly links, I had linked to the Evermore portfolio. On reader commented that the fund performed badly, so why bother ?

Well, I do not know if they perform better in the future, but their philosophy which the lined out in the report looks quite OK and if they follow that then in the long run they should do OK. It is also rare that you have a “mutual fund wrapper” for a special situation fund. There are many funds where you can see the “usual” value stuff. As sourcing special situation ideas is not as easy (there is no real “screener”), having such funds and looking for ideas is quite helpful.

So as I use the blog also as my personal notepad, I wanted to quickly put down some points about their positions in order not to forget them:

Frontline Convertible
Far out of the money convertible, maturity April 2015. Currently trades at around ~50%. Situation similar to IVG. Could be interesting.

Ei Towers
Italia based operator of broadcasting “infrastructure”. At a first glance not as cheap as SIAS but more shareholder oriented.

Constantin/Highlight
Many years ago I had saved Constantin as “uninvestible”, however I do not remember why. Time to look at them again ?

AIG/Genworth
No interest here. I guess many people underestimate how catastrophic the combination of low interest rates and potentially higher inflation is for insurance companies (yes I know, Baupost owns them both, but why does Buffet not write Life Insurance policies ?)

Vivendi
Also a Baupost stock. I still believe Bougyues is the better company.

Bolore
I personally view Bolore more like a financial “juggler”. There is much cheaper stuff in France in the small cap sector

ADT
Spin-off / split off from Tyco. US company, not my cup of tea

Moduslink Global
This seems to be some sort of Asset play. Unprofitable US small cap (market cap ~140 mn USD), however half of market cap in cash.

Impregilo
Smart move, although I looked at them during my Autostrada/SIAS analysis, I didn’t figure out the stake in the Brazilian company. I don’t know when they bought but this was a very good one. The Sicilian guy Salini made a tender for 4 EUR per share and Autostrada seems to accept it at 4 EUR per share.

Exor SpA
The HoldCo of the Agnielli family for FIAT. I saw them in some other portfolios (Longleaf, Southeastern) but never had the time to look at them.

Sevan Drilling Norway
Stock price looks distressed (P/B ~0.3). However I have no knowledge about deep sea drilling. MAybe a good stock to start ?

Sky Deutschland
Nothing for my portfolio.

Ackermans & Van Haaren
Diversified Belgium company. Looks more like a potentially “boring compounder” than special situation but interesting.

Guoco Group
Hongkong based group, bid from a Malaysian company. First Eagle and Third Avenue are shareholders as well

Pulse Seismic
Seismic data licensing company. Never heard before. business model itself quite interesting

Lonrho Plc
(in)famous UK conglomerate, now seems to be reinvent itself as an African-Agricultural company. Anyone remembers Tiny Rowland ?

Summary:

I think their portfolio is quite interesting, despite the yet lackluster performance. I will keep them on my list for possibly “Stealing” some ideas. Currently, I think Ei Towers, Sevan, Pulse and Ackermans look the most interesting to me.

7 comments

  • Constantin has shown very weak performance over the past years, so unless this is an asset-play (media-rights), I think there were good reasons to not bother. Margins in normal years also quite low for this type of business. Positive: higher capex in 2012 and debt-reduction since 2008.

    I will be interested in your ideas on Ackermans. I looked at it briefly as well, but stayed away very soon after I realized that the company has an F-score of 1 (out of 9). This is due to (compared to previous year numbers, according to my screener, which could of course be wrong): negative operating cash-flow / lower ROA / cash-flow from operations lower than ROA / long term debt ratio increased / lower current ratio / slightly higher or equal number of shares outstanding / lower gross margin / lower asset turnover.
    So with the EV/EPS quite high and EPS at an elevated level I became lazy. Too lazy, maybe ­čśë ?

  • Hi, deine Aussage zu AIG/Genworth finde ich sehr interessant, vor allem da du dich quasi gegen Berkowitz und Klarman stellts. Soweit ich mich erinnere sollte AIG bei einem KBV von ca. 0,5 liegen und es ist wieder profitabel. Ist da nicht schon viel Risiko abgefangen?

    Kannst du dazu evtl. was schreiben.

    • hallo alex,

      kann schon mal passieren, dass man nicht gleicher Meinung ist wie Klarmann Bei dem funktioniert auch nicht alles ­čśë

      Ich bin einfach nicht in der Lage, AIG wirklich zu verstehen. Eigentlich sollte ich das k├Ânnen, aber es geht nicht. Rein nach Buchwert bei einem Finanzdienstleister zu investieren ist auch keine gute Idee. Wenn alle glauben dass AIG toll ist, dann k├Ânnte es funktionieren, fundamental ist das einfach eine Blackbox.

      Und Genworth ist m.M. nach pleite, auch der “Traditionelle” Teil. Bei Verischerungen merkt man das nur nicht sofort.

      mmi

  • Not a special situation but more b.o.s.s. like. Good ROE, nice growth and seems to have a stable bussines. I didin’t buy them, because in my opinion it’s not cheep enogh yet, but as far as I know, you often value that kind of company higher than I do.

  • You seem to be in need of some suggestions. Did you have a look on Zytronic PLC already? Seems to be good quality and I think it fits your style. However Zytronic is only reasonable cheap.

  • Would love to hear your thoughts on Constantin/Highlight, once you remember ­čśë

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