value and opportunity

The company:

Protector Forsikring ASA is a name that came up more often in my “stream”. It is a Norwegian “Challenger” Insurance company founded in 2007 (and IPOed in 2008) that has been growing nicely over the past years and doesn’t look expensive.

The stock price has been quite volatile but recently the stock has reached new highs and long time shareholders should be quite happy:

The high level financial indicators look very attractive: A relatively Ok valuation with an impressive ROE:

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Background:

Gaztransport & Technigaz is a company that I had looked at in early 2016 and most of what I have written back then still applies:

Imagine you could invest into a company with the following characteristics:

– Global market leader with 70-90% market share (95% new built)
– Net margins after tax of 50% or more
– business protected by patents
– almost no capital requirement, negative working capital
– a potentially huge growth opportunity
– conservative balance sheet (no debt) and “OK” management

Back then, I found the stock initially too expensive at EUR 34 per share, however I invested then at around 22 EUR but sold after a quick gain at around 31 EUR.

What did happen since then ?

Looking at the chart, I was clearly underestimating the value of the stock by a wide margin as the stock more than tripled until early 2021:

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Introduction:

At a very first glance, Tekmar Plc, a AIM listed UK company looks like a very interesting “hidden Champion”:

The company is active in a very attractive market: their main business is to provide sub sea protection systems for cables with its biggest entity providing this service to the fast growing off-shore wind farm market.

In addition, Tekmar claims to have 75% market share. the combination of a company providing an essential, relatively small ticket item to a large installation with a dominating market share makes many investors water their mouths I guess.

Even more mouthwatering looks their chart from the 2020 annual report (from August 2020):

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Disclaimer: This is not investment advice. PLEASE DO YOU OWN RESEARCH !!!

Management Summary:

Alimentation Couche-Tard (“CT”) is one of the historically best performing Canadian companies, operating gas stations and convenience stores around the world with a focus on North America.

The company currently looks like a very interesting GARP (growth at a reasonable price) stock.  Over the last 10 years, the company showed exceptionally good numbers: 23% EPS CAGR and 10 year average returns on capital  >20% (23% ROE, ~20% ROCE).  The business model is very resilient, Covid-19 actually led to an increase in margins and profits, both on the convenience store segment as well as in fuel despite declining sales.

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