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1
Shares / KOV
« Last post by galumay on September 16, 2020, 10:42:20 AM »
16/9/20

Bought 2159 KOV at $4.63

KOV is just a solid, boring, cyclical industrial company that has a couple of divisions, it runs a hot dip galvanising business, and the Industrial Products segment includes the manufacture of electrical and cable support systems , steel fabrication and access systems for heavy earth moving equipment, railways and marine. It also includes the sale, hire and repair of high torque tools used in heavy industry and mineral processing. It includes the businesses trading under the EzyStrut, Power Step and Titan Technologies names. The Industrial products division is about 10x the revenue of the galvanising division.

KOV has been a public company for 50 years.

Its not a high growth business and it is cyclical given its reliance on infrastructure and mining projects, but its also a durable business which is unlikely to be disrupted or competed away given the barriers to entry to things like galvanising and the production of specialist niche tools. Its managed to sustain a consistent reasonably high ROIIC and FCF ratio despite the cyclical nature of the business. The biggest risk to the business is a severe economic downturn with a downturn in mining in Australia, this would cause profit to drop sharply and impact share price.The balance sheet is very clean though with no debt so it should be able to weather any storm.

I paid around my calculation of fair value for the business, but this is another case where its not often going to be cheap.

Galvanising plants in Australia -

Kingfield, Vic & NT private

APG - Nth Qld 12.5m Private

Hartway WA private

Valmont Australia's largest, Vic, Qld, NSW, Tas, Public USA listed.

Furphy Vic & NSW, 8.5m Private

Cable suppports -

Ezystrut, Korvest business, All states.

Burndy - NSW, QLD, WA, TAS  private

Kounis - WA, Vic private

Starstrut WA private

Atkore Unistrut - all over Australia, Aktore listed on NYSE.



2
General Discussion / Re: Decision Journal
« Last post by galumay on September 16, 2020, 08:54:44 AM »
Bought some FFI shares, the rational for the decision is in the individual thread on the business in the Shares forum.

I am also looking at entering a position in KOV, my only reservation being that we hold some in EGP CVF, but I think its a very small position. I am also thinking about exiting some more poor positions, TGR is my lowest conviction profitable business and I would be happier with the capital elsewhere, SRV I am trapped by having paid far too much for the business and I think it will be an extremely long wait to see it come good.

LPE is a total dog that I should have sold ages ago, its just hard to realise the massive losses because of my stupidity in adding more as it fell.

SXE I dont really see the point in holding, its gone pretty much nowhere and really having NWH in the portfolio is a much better services business anyway.
3
Shares / FFI
« Last post by galumay on September 16, 2020, 08:47:40 AM »
15/9/20

Purchased a small parcel of FFI, Fresh Food Industries, a WA business that manufactures and distributes confectionary products.

Further, the company owns industrial and commercial property for investment purposes. It serves bakers and pastry cooks, and supermarkets, as well as ice cream and dairy, confectionery, chocolate, and food services industries. The company was founded in 1979 and is headquartered in Jandakot, Australia.

Its typical of the sort of company I like to uncover, deeply illiquid, owner operated, very tight registry, profitable over the long term, hidden unrealised assets. I paid up for this, probably more than my range of intrinsic value, but I think businesses like this never look cheap.

Its consistently paid a dividend for the last 10 years, has steadily grown revenue, and has had a steady and high ROE, ROC & ROIIC.

Its never going to be a fast growth business, but its hard not to see it still around in ten years, and there is the potential for significant value to be unlocked from the property portfolio. A Strawberry jam REIT!

I am struggling to think what could go wrong with this business, its recession proof, its disruption proof, its boring, its got no debt, and management seem competent. The biggest risk is probably liquidity - might not be possible to exit.

4
Shares / Re: LPE
« Last post by galumay on August 31, 2020, 07:04:45 PM »
FY2020 Another shit year for a shit business, a capital raise that destroyed the SP and had very little interest from retail holders, now my last business to report after close on the 31/8 - and a massive increase in the loss, negative OCF & FCF, just nothing to like about it. Another Tony Hansen pick, its my strongest lesson that buying other people's conviction is capital destructive. I will get out at some point and realise the massive loss on this piece of rubbish.
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Shares / Re: Investment Wisdom from Others
« Last post by galumay on August 30, 2020, 08:22:08 PM »
More Li Lu, his investment checklist,

Checklist:
Is that cheap?
Is it a good business?
Whos running it?
What did I miss?

Interesting because it starts with price.

Value investor -

Business owner mentality
Difference in time horizon
Demand huge margin of safety



6
Shares / FY 2019-2020 Results
« Last post by galumay on August 29, 2020, 12:25:14 PM »
This year i have added some commentary to each of the threads on individual companies, in summary I have listed the holdings and colour coded the results, no colour, no AR yet, or different reporting cycle, yellow - satisfactory, but impacted by Covid, Green - improved results despite Covid, Red - poor result even allowing for Covid.

Extremely happy with the results for the SMSF, portfolio has improved in quality as a result of getting out of a few of the dogs I was invested in and the new additions have all performed strongly.

SMSF

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Personal

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Shares / Re: CCP
« Last post by galumay on August 29, 2020, 12:11:09 PM »
FY2020 Obviously a business directly impacted by Covid and particularly the economic consequences of the pandemic. Management have responded responsibly and reduced the business exposure while building opportunity capacity for the other side. A good result in the circumstances.
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Shares / Re: PTB
« Last post by galumay on August 29, 2020, 10:36:28 AM »
FY2020 A good year for PTB, the acquisition already looking to be adding value, covid has had a smaller impact than maybe many expected, should have a solid year and hopefully get rid of some of the excess debt. Only red flag for me was the use of a new bullshit earnings acronym, NPBTFX
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Shares / Re: JYC
« Last post by galumay on August 29, 2020, 10:34:09 AM »
FY2020 Solid result for JYC, divested the auction business and built the balance sheet.
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Shares / Re: REH
« Last post by galumay on August 26, 2020, 07:22:36 PM »
FY2020 Results of Morsco acquisition really starting to scale in the business, a very solid year given the challenges of Covid. 100 years in business this year. One of Australia's great companies.
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