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21
General Discussion / Re: Decision Journal
« Last post by galumay on October 29, 2019, 08:03:09 AM »
I sold about 66% of my DDR holdings last month after the share price hit $7.30, i believe this is so far beyond any value I can asign the business that it would be irresponsible to continue to hold such a large position in my portfolio. I still retain about 8000 shares so its still a reasonable position.

I have mainly distributed the realised capital into existing holdings in AER, SFC, SRG, PPH, KME & JYC.

My thinking was to increase the holding in AER to a more meaningful size as the execution appears to be on track, in the case of SRG it appeared to be the most undervalued of current positions, KME & JYC i had identified as accumulate targets following strong execution identified in the AR's, JYC i waited for a dip after it ran up, but KME I paid up for as I think the probability of it growing strongly is above 50% with only a 20% liklihood of underperformance.

SFC remains a very strong conviction and hence I increased postion size on some price weakness.

I also put a significant amount of capital into OMN which is a pure arbitrage play, the business is being wound up after the founder became very ill, and it is that rare circumstance of a net-net where the assets significantly outweigh the capitalisation. Shareholders should see a return in the order of 15% over 6 months. This is one of those rare situations where the upside is as near to 100% as possible and the downside is close to 0%.

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General Discussion / Re: Decision Journal
« Last post by galumay on October 29, 2019, 07:46:14 AM »
Looked at KPG which is basically an accounting roll up, the numbers all look good, good FCF, healthy ROIC, a pathway of growth etc. My interest was piqued by a write up by a fellow #fintwit investor, https://www.notion.so/Kelly-Partners-Group-4743627e07e14940bd8461c75c568aab

As good as the business looks and as compelling as the linked narrative is, the company is operating with significant debt, above a level I would be comfortable with so its a hard no in this case.
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Shares / Re: LBL
« Last post by galumay on October 21, 2019, 08:30:19 PM »
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Shares / SIT
« Last post by galumay on September 26, 2019, 11:34:35 AM »
I am considering taking a position in SIT, this is a company that we have a vicarious holding in through the EGPCVF where its one of the largest holdings. I have no personal analysis to rely on here, rather just the judgement of Tony Hansen in taking such a large position.

First filter, is there catostophic risk?

Yes, business is not viable in its current state.

Is there balance sheet risk?

Yes there is debt with no means to service it long term. It does not have enough cash to last another year

3rd filter history of cash flows/earnings

None

Is their poor capital management?

Possibly, share count has grown greatly over the last 10 years

Does it have a good ROIC?

No

What price is fair value?

entirely depends what probabilty is assigned to the land value being realised.

What is the thesis for investment?

That the legal action will result in payment of amounts owed and that the land value in the Philipines can be realised, creating a massive cash inflow at multiples of current capitalisation

What can go wrong?

The land doesnt sell, they dont win the legal case

What are the alternatives?

The obvious alternative is to increase position size in businesses I already own, where I think the rate of return is better. This includes businesses like KME and SFC.


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Shares / A2B
« Last post by galumay on September 26, 2019, 11:18:42 AM »
I am considering taking a position in A2B, the old Cabcharge, Australia's Taxi company. I think the market has underpriced this business, and at current prices its trading below its range of value.

First filter, is there catostrophic risk?

No, the greatest risk has been disruption and legaslative, disruption has been overrated IMO, while ride sharers have taken a piece of market share, they have only been able to do so by making ongoing, massive losses. I dont believe ride sharing in its current model is sustainable and in fact the main impact may have been to focus A2B on improving their service and introducing tech solutions pioneered by the disruptors. The legislative impacts have just about washed through, in the removal of the ticket clipping with excessive credit card fees, and probably any future legislative impacts are more likely to negatively impact the disruptors.

2nd filter, is there balance sheet risk?

There is next to no debt, NTA is 86c, book value is $1.36.

3rd filter history of cash flows/earnings

Cash flow & earnings have been positive for the last 10 years.

Is their poor capital management?

There have been no new shares issued in 10 years

Dividends have been paid every year for last 10 years, payout ratio typically round 60%

Does it have a good ROIC?

its currently lower than I would like at about 6%.

What price is fair value?

A conservative range of intrinsic value is around $1.70

What is the thesis for investment?

I think the business has been misunderstood and oversold, I believe dividends are likely to increase slowly as profits recover and this will likely lead to a rerate of the business. Even if the business remains fairly static, it throws off a lot of cash and will provide a healthy return just based on yield alone.

What can go wrong?

Probably the biggest risk is mis-allocation of capital, the cash could tempt management to make a foolish aquisition at some point in the future.

What are the alternatives?

The obvious alternative is to increase position size in businesses I already own, where I think the rate of return is better. This includes businesses like KME and SFC.

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General Discussion / Re: Things People Say...
« Last post by galumay on September 22, 2019, 07:08:38 AM »
Avoid Boring People,

3 words, 2 meanings, Jim Watson, [the scientist who discovered DNA]
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Shares / Re: FY 18-19 ARs
« Last post by galumay on August 31, 2019, 09:28:54 AM »

So far to date in the SMSF 9 good results, (+4 that report calendar year all had good 1/2y)  6 ok but not great, and 2 poor, 2 not rated (KPT & PAR) - by far the best results in the 5 years of the SMSF.
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Shares / Re: FY 18-19 ARs
« Last post by galumay on August 31, 2019, 09:25:18 AM »
ODDS & SODS

So stuff I didnt bother looking at in any detail, AHZ a suspended basket case of stupidity on my part. The lesson learnt the hard way, dont average down into biotechs especially when they dont have any profit.

PAR is a biotech play and the balance sheet is irrelevant, its a binary bet on a single product, hence a small position size.

A number of others report on the calendar year, so nothing from DDR, PPH, TNE, UOS
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Shares / Re: FY 18-19 ARs
« Last post by galumay on August 31, 2019, 09:21:36 AM »
VRS

another sad year for VRS, luckily my position is tiny and who knows, one day they might turn it around.

If you were looking for a positive, I guess its the free cash flow which was put to use in reducing debt.
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Shares / Re: FY 18-19 ARs
« Last post by galumay on August 31, 2019, 09:20:27 AM »
ICU

A bad error of judgement! This is now my worst holding. AR out very late, a loss that has increased by 2994% is impressive in scale, if nothing else! Looks like about 18 months to 2 years of cash left, slow burn and fiery death methinks! Everyone needs at least one total dog i guess.
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