Ackermans & Van Haaren – Mini Berkshire from Belgium ?
Ackerman’s and Van Haaren is a diversified Belgian company which was on my research pile for quite some time. Bloomberg describes the company as follows:
Ackermans & van Haaren NV is an industrial holding company. The Company’s holdings are in the contracting-dredging environmental services, financial services, staffing services, and private equity investing.
Looking onto their participations overview on the (very informative) homepage, one can easily see that this is a quite diversified company. From oil palms in Asia (SIPEF) to old age homes, port service companies, real estate investments and an Indian cement company are among the 30 or more participations.
The largest investments are however a 78.75% Stakes in Delen Investments and Private Bank J. van Breda and a 50% stake in DEME, a marine engineering Group.
The DEME stake itself shows that Ackermans is rather an active holding company. This year they surprised everyone by striking a deal with Vinci and traded their 50% stake in DEME (valued at 550 mn EUR) with a 60% stake in CFE, the listed Belgian company which owns the other 50% of DEME.
The stock itself is not really cheap:
P/B ~ 1.3
P/E 2013 ~15
Market cap: 2.8 bn
The stock gained nicely in 2013 and is trading at an ATH:
Why did I call them a potential “Mini Berkshire” in the beginning ? Well, that’s what they are showing in their latest Q3 presentation:
14.4% CAGR of book value is not bad over the last 10 years. Just for fun, I calculated Berkshires 10 Year CAGR from 2003-2012 based on the disclosure in the latest letter to shareholders:
|10 year CAGR||10.60%|
So at least for the last 10 years, AvH has clearly outperformed Buffet by almost 4% p.a. which is really a lot.
Step 1: “Quick and Dirty” sum of parts
When I look at a company like AvH, i generally try to do a quick and dirty “sum of part” analysis first. AvH makes it quite simple by providing a net cash figure at holding level which is required as the consolidated accounts include non-recourse debt as well.
The only thing I was not sure was the fact that the holding segment borrowed money from the private equity part in an amount of 120 mn EUR. I decided to play it save and deduct it from the private equity NAV.
So this is the “quick and dirty” result:
|DEME||550||Implicit valuation takeover|
|Van Laere||26||0.75 book|
|Sipef||130||market cap 482|
|van Breda||336||1.2 book|
|Financiere duval||40||at book|
|MAx Green||70||10x Earnings|
|Sofinim||255||75% of NAV minus cash to holding|
|Net cash holding||148||Q3|
The result of this exercise is higher than stated book equity of around 2.05 bn EUR, but on the other hand, significantly lower than the 2.8 bn market value.
If I haven’t made a big mistake, then even if some of the holdings like Delen are worth more than I assumed, AvH looks as it is trading at a premium. Although I think the company is a good one and can create value, I would not want to pay a premium, so one can stop at this point and move on.
Ackermans & Van Haaren seems to be an interesting company with diverse holdings and a good culture and some very good and interesting businesses. The track record over the last 10 Years looks impressive and is better than Berkshire. Nevertheless, the stock looks overvalued from a sum of parts point of view, offering no margin of safety.