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Monthly Archives: October 2013

Total Produce – A Fresh Perspective

25 Friday Oct 2013

Posted by Wexboy in Uncategorized

≈ 12 Comments

Tags

activist investors, Balmoral International Land Holdings, Carl McCann, empire-building, Fyffes, Greencore Group, intrinsic value, Irish shares, Irish value investing, private equity funds, share buyback, TOT, Total Produce, Warren Buffett

…

Total Produce (TOT:ID, TOT:LN) was one of my very first blog write-ups, back in Nov-2011 at EUR 0.39. [And I’ve written about it a number of times since]. Less than two years later, we’ve enjoyed a nice double on the stock – which is now trading within spitting distance of my original EUR 0.882 fair value target. This warrants a fresh perspective… But looking back, now I remember – even then, I offered up a very specific perspective:

So we’re talking a business that really runs itself, just what I like! Particularly as I don’t have great respect for management (except if you compare them say to Greencore Group (GNC:ID) management – whose shareholders may finally be put out of their misery with a potential bid, rumoured to be coming from Dubilier Clayton & Rice). Carl McCann is Chairman, while his brother David’s in the Chairman seat over at TOT’s ‘sister’ company Fyffes (FFY:ID), and neither is really a patch on their father Neil McCann (I was sad to hear he passed away recently) who joined Fyffes in 1948. I think of the crazy worldoffruit.com online effort in the v late 90s (which ‘…received a very positive reaction from within the produce industry and looks set to dramatically change the way in which fresh fruit and vegetables are traded across the globe…’), the lack of earnings growth in the past few years, the ludicrous de-merger of Fyffes, Total Produce & Blackrock (now Balmoral Int’l Land Holdings, whose shares subsequently collapsed & are now delisted), etc.

I also look at the excessive B/S Cash of EUR 89.6 mio, and I’m bemused (and slightly alarmed) to remember a colleague telling me many years ago his impression that having large amounts of Cash on hand appeared to give management the warm and fuzzies, and they appeared to enjoy playing the banks off against each other for deposits (and perhaps even some jolly currency switching). All very well, I confess I’ve been through all that myself professionally, but always felt frustrated at having giant hoards of Cash on hand to invest – in an ideal world, I knew the best thing for shareholders and Return on Equity was to have zero Cash and just come in each day and draw down/pay down on a Debt/CP facility. With TOT, of course, the obvious answer to this Cash is frequent execution of small/medium sized acquisitions across Europe (similar to what DCC (DCC:LN) has done for years in its Energy business) – considering the nature/scope of potential business acquisitions, I think there’s a marvelous opportunity here to hoover up cos and double their operating margins v quickly through cost elimination and economies of scale.

Then of course there’s the silent but deadly fart in the room…finally figuring out it’s time to swallow their pride and reverse the Total Produce/Fyffes break-up – a nil-premium merger is the obvious way to achieve this and I imagine could easily yield 2-3 years of decent EPS growth even if the underlying business remained unchanged. But kudos to management for the 22 mio share buyback last year…! I was impressed, can you please repeat?

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Why I Read (Part III)…

18 Friday Oct 2013

Posted by Wexboy in Uncategorized

≈ 6 Comments

Tags

activist investors, autodidactism, books, Bruce Kovner, consensus, contrarianism, fear and greed, Howard Marks, investing, Isaiah Berlin, latticework of mental models, literature, Magic Eye, mosaic theory, Nosce Te Ipsum, reading, Warren Buffett

OK, back in June & July, I covered two key benefits of reading:

Knowledge, Experience & Inspiration – a constant & wide-ranging diet of non-fiction reading’s essential for any investor, and something you’ll find all the great investors practice & recommend. 

Nosce Te Ipsum – I believe reading literature’s equally important, it’s one of the few ways you can truly know thyself (& other people). And painful self-awareness & examination offer the best hope of avoiding the potentially devastating impact of fear & greed on your portfolio.

It’s been a long time coming – let’s tackle the final benefit of reading, which I call:  Magic Eye. It’s definitely the most exciting – I guess I’d classify it as offensive, versus the rather defensive nature of the other benefits. But some context would be useful – let’s first talk a little about how I actually read:

Ever since I was a kid, I’ve always found it incredible how the entire world (even multiple worlds) can be encapsulated in a single book. And there’s almost never-ending mountains of them, just waiting to be discovered! In fact, they really are never-ending: In the UK, for example, 150,000 new titles are published each year! Faced with those kinds of numbers, I’ve always felt an overwhelming sense of urgency – how can I ever bloody read quickly & widely enough to ever make a dent in such a mountain?!

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The Bedside Vigil…

11 Friday Oct 2013

Posted by Wexboy in Uncategorized

≈ 21 Comments

Tags

Alternative Asset Opportunities, CDC, Imperial Holdings, life expectancy, life settlements, mortality tables, TLI, Traded Life Interests, ZIRP

Alternative Asset Opportunities (TLI:LN) recently released their Final Results – I thought readers might appreciate a new post. To some extent, I’m reminded of my original TLI post (wow, almost a full year ago now!) – the insured, those merry little blighters, are still trying their bloody living best to live forever! But Chronos waits for no man, or woman… Here are the policy maturities TLI has enjoyed to date:

TLI Maturities

7 maturities last year was in line with TLI’s 3 year average, and represents an accelerating mortality rate (as the total number of policies held has been steadily declining). However, proceeds of $5.7 million (mio/m) – just $0.8 mio per policy maturity – was an unexpected disappointment. But we have to chalk it up to bad luck (for us, and for them – the insured!):

TLI Policy Size

Because (as of year-end) the $1.6 mio average face value (FV) of outstanding policies ($159.9 mio FV, 102 policies, 90 individual lives insured) was actually double the average policy maturity last year. And, as you can see above, at least 66% of the insured have policies which exceed $0.8 m. In fact, over 90% of the total portfolio is invested in $1.0 m+ policies. And the company has experienced a very welcome step-up in maturities since – in the first 3 months (of the new fiscal year), there’s already been 4 maturities, for a greater than expected $6.8 m (albeit with assistance from a single $5 m maturity). A pretty good harvest, and now winter’s just around the corner…

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Titanium Asset Management…What A Steal?!

01 Tuesday Oct 2013

Posted by Wexboy in Uncategorized

≈ 7 Comments

Tags

appraisal rights, asset managers, AUM, Bob Brooks, Clal Finance, Delaware law, fixed income, TAM, TAM:LN, Titanium Asset Management

My asset manager addiction knows no bounds – here’s another I own:

Titanium Asset Management (TAM:LN)

Titanium was a SPAC IPO that raised $120 million (20 mio shares at $6.00) in Jun-2007. Aah, remember the glory days..!? The investment objective was to purchase a number of asset managers – and in little more than a year, facing into the worst financial crisis since the ’30s, they acquired four companies: Wood Asset Management, Boyd Watterson, Sovereign Holdings (since absorbed into Boyd), and National Investment Services. Well…I think you can guess the rest!

Actually, I’ve never really sat down & figured out if they overpaid, experienced a client/AUM exodus, suffered integration issues, lost key personnel, etc. Maybe it was all these & more! But if we fast-forward, the legacy of those acquisitions lives on – here’s a brief summary of the last five years:

TAM 5 Year

Ewww, kinda nasty…

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