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3 years ago, yellow pages was what what many would call a potential target for private equity firms. After all, private equity firms have been scooping up old, matured businesses such as yellow pages. Usually old, matured stable businesses like Global Yellow pages no longer appeal to the investors. Besides it being a matured business and non-exciting one, i see it as a business that produces very stable cashflows.It has low capital expeditures and it also has a certain competitive advantage in that it is one of a few advertising mediums for business listings in Singapore and it is a trusted brand at what it does. The problem essentially is compared to other public listed firms, it is a "no to slow growth" type of a business. However, its business is non cyclical which is the reason why many would say that is has got potential for a private equity buyout.
While the previous argument may hold that it is definitely one to look at in terms of a private equity buyout, 3 years ago, there was 97.8 million of net debt on their balance sheet.While debt on their balance sheet does not deter private equity firms from looking at it, this time round, they have managed to clear their debt such that they have virtually zero net debt position. Looking at its balance sheet now, it makes even more sense for private equity firms to buy it out for private equity firms often like to leverage up their positions with debt and place it on the balance sheets of their target company.
So while previously, Global Yellow pages had little debt capacity i might argue, currently it has a debt capacity of approximately 65 million on their balance sheet. That means that the company has no problems puting 65 million in debt on their balance sheet considering that i calculated that free cashflow as 16.4 million, the lowest of its 4 year range, if it can pay an interest of 3.28 million comfortably, this company should be able to raise debt of approximately 65 million and put it on its balance sheet.
If one were to look at its approximate free cashflow of 16.4 million and put an undemanding 10 mulitple to it, the business is worth 164 million while its market capitalisation is 99.8 million.
Another way is to look at it and say, maybe this company can pay 5 million in dividends a year. If we value this stream as a perpetuity at 4%, then that 5 million per year is valued at 125 million.
Either way, coupled with its debt capacity and the fact that is can pay dividends annually to make you sit and wait, i think that it is a good proposition for an investor to think of it as undervalued and to buy it with the view that it might be a takeover target. If it eventually isn't a takeover target, at least one is sitting on a company that can appraise in value over time.
Best regards,
Lucas
Wednesday, September 15, 2010
Wednesday, November 19, 2008
Buffett's Israel Unit Iscar Seeking More Acquisitions
Nov. 18 (Bloomberg) -- Warren Buffett's Iscar Metalworking Cos., the Israeli toolmaker that agreed to buy Japan's Tungaloy Corp. in September, is seeking more acquisitions and sees the global financial slump as a buying opportunity, Chairman Eitan Wertheimer said.
``I've learned from my guru to be greedy when others are fearful,'' Wertheimer said in an interview in Jerusalem, echoing a statement frequently made by Buffett. Iscar is part of Buffett's Berkshire Hathaway Inc., which made two acquisitions in October and has comitted $8 billion to buying stakes in General Electric Co. and Goldman Sachs Group Inc.
Iscar, based in Tefen, northern Israel, makes cutting gear for industries ranging from aerospace to auto manufacturing, for clients including Toyota Motor Corp. Berkshire paid $4 billion two years ago for an 80 percent stake in Iscar, which competes with market leader Sandvik AB. Iscar is looking for industrial companies that are in the same business, according to Wertheimer.
``We like to stick to basics,'' he said. ``If you sleep on the floor, you can't fall out of bed.''
Iscar agreed Sept. 21 to buy a 71.5 percent stake in Japan's Tungaloy, a manufacturer of tools for cars and airplanes. The deal was for $1 billion, Haaretz reported.
Iscar is ``Gillette on steroids'' in the metal-cutting tools industry, said Shai Dardashti, managing partner of New York-based Dardashti Capital Management. The Berkshire shareholder cites Iscar's ``tremendous innovation'' and its commitment to research and development.
Read Article Here
``I've learned from my guru to be greedy when others are fearful,'' Wertheimer said in an interview in Jerusalem, echoing a statement frequently made by Buffett. Iscar is part of Buffett's Berkshire Hathaway Inc., which made two acquisitions in October and has comitted $8 billion to buying stakes in General Electric Co. and Goldman Sachs Group Inc.
Iscar, based in Tefen, northern Israel, makes cutting gear for industries ranging from aerospace to auto manufacturing, for clients including Toyota Motor Corp. Berkshire paid $4 billion two years ago for an 80 percent stake in Iscar, which competes with market leader Sandvik AB. Iscar is looking for industrial companies that are in the same business, according to Wertheimer.
``We like to stick to basics,'' he said. ``If you sleep on the floor, you can't fall out of bed.''
Iscar agreed Sept. 21 to buy a 71.5 percent stake in Japan's Tungaloy, a manufacturer of tools for cars and airplanes. The deal was for $1 billion, Haaretz reported.
Iscar is ``Gillette on steroids'' in the metal-cutting tools industry, said Shai Dardashti, managing partner of New York-based Dardashti Capital Management. The Berkshire shareholder cites Iscar's ``tremendous innovation'' and its commitment to research and development.
Read Article Here
Monday, November 17, 2008
Joel Greenblatt buying stocks up rabidly!
What we are seeing here is the raging market purchases of Joel Greenblatt. When normally he has a concentrated portfolio, it seems to me that this time he is taking on a more diversified approach and this is evidence that he feels that the market as a whole is undervalued. Being diversified this time as opposed to his conventional concentrated portfoliios also means that there is much more to choose from.
Read article here
Read article here
Bershire "ups" shares in ConocoPhillips
Buffett's Berkshire Boosts Stake in ConocoPhillips (Update3)
By Erik Holm, Edward Klump and Linda Shen
Nov. 14 (Bloomberg) -- Warren Buffett's Berkshire Hathaway Inc. became the largest shareholder in oil producer ConocoPhillips and took a stake in manufacturer Eaton Corp. in the third quarter as stock markets tumbled.
Berkshire had more than 83 million shares in Houston-based ConocoPhillips as of Sept. 30, compared with about 17.5 million on March 31, the company said today in a regulatory filing. Buffett also disclosed a reduced holding in Bank of America Corp. and more shares of NRG Energy Inc., the second-biggest power producer in Texas. The Standard & Poor's 500 Index dropped 8.9 percent in the three months ended Sept. 30.
Berkshire, which purchased MidAmerican Energy Holdings in 2000 and reported record profits last year from selling holdings of PetroChina Co., is betting on a long-term increase in energy demand worldwide. Global oil consumption will increase about 25 percent to 106 million barrels a day by 2030, the International Energy Agency said this week.
``Buffett is thinking decades ahead,'' said Jeff Matthews, author of ``Pilgrimage to Warren Buffett's Omaha'' and founder of Greenwich, Connecticut-based hedge fund Ram Partners LP. ``He's thinking about oil production falling and an eventual doubling of worldwide demand as countries like China reach U.S. levels.''
ConocoPhillips traded as low as $67.31 a share in the third quarter after closing 2007 at $88.30. The company slipped $1.79, or 3.6 percent, to $47.39 in New York Stock Exchange composite trading today before Berkshire's disclosure.
Waiting for Spring
Buffett, the world's preeminent stock picker, has said he's also spending his own money to buy U.S. stocks as prices decline amid the worst financial crisis in 75 years, switching holdings from government bonds. Berkshire, where Buffett is chief executive officer, spent about $3.94 billion on stocks in the quarter and sold shares for about $300 million, according to separate filings.
``Most major companies will be setting new profit records 5, 10 and 20 years from now,'' Buffett said in a column in the New York Times in October. ``If you wait for the robins, spring will be over.''
Berkshire held about 59.7 million ConocoPhillips shares as of June 30, Buffett revealed in a separate filing. Buffett, 78, won permission from regulators to omit that number from his second-quarter filing and withhold it until today to prevent copycat investing.
Looking for Stability
``Energy is an industry that has the stability that he's looking for,'' said Michael Yoshikami, the president of YCMNet Advisors in Walnut Creek, California, which manages $850 million, including Berkshire shares. ``Conoco is a huge refiner, and while refiners are certainly under some pressure, they are essentially a service-for-fee business, so they are a classic kind of stable, core business for his portfolio.''
ConocoPhillips rose $1.06, or 2.2 percent, to $48.45 at 7:10 p.m. in New York in extended trading. Bill Tanner, a spokesman for ConocoPhillips, had no immediate comment.
Berkshire increased holdings in NRG Energy by 54 percent to 5 million shares, a 2.2 percent stake. The firm was the object of a takeover offer from Exelon Corp. after the Princeton, New Jersey-based company lost half of its market value in two months. NRG's board of directors this month rejected the offer.
Buffett also disclosed a 1.8 percent stake in Cleveland- based Eaton, the maker of parts for Boeing Co. planes and Volkswagen AG cars.
Eaton Corp.
``Eaton fits exactly with his investment strategy,'' said Gerald Martin, a finance professor at American University's Kogod School of Business in Washington. ``He likes to say that he wants to invest in companies that he can understand, that he can really get his arms around, and take a look at them and project their cash flows.''
Eaton rose $1.54, or 3.7 percent, to $42.69 at 6:24 p.m. in late trading in New York. Prices for new Berkshire holdings typically jump as mutual funds and individual investors mimic the stock picks. Martin co-wrote a study in 2007 that found buying after such disclosures would have delivered annualized returns of about 25 percent over 31 years, double the performance of the S&P 500. Eaton spokesman Peter Parsons declined to comment.
Buffett cut his stake in Bank of America by almost half, while increasing his investment in U.S. Bancorp. Charlotte, North Carolina-based Bank of America, which purchased money-losing mortgage lender Countrywide Financial Corp. in July, has lost 64 percent of its market value in the last 12 months.
Read Article here
By Erik Holm, Edward Klump and Linda Shen
Nov. 14 (Bloomberg) -- Warren Buffett's Berkshire Hathaway Inc. became the largest shareholder in oil producer ConocoPhillips and took a stake in manufacturer Eaton Corp. in the third quarter as stock markets tumbled.
Berkshire had more than 83 million shares in Houston-based ConocoPhillips as of Sept. 30, compared with about 17.5 million on March 31, the company said today in a regulatory filing. Buffett also disclosed a reduced holding in Bank of America Corp. and more shares of NRG Energy Inc., the second-biggest power producer in Texas. The Standard & Poor's 500 Index dropped 8.9 percent in the three months ended Sept. 30.
Berkshire, which purchased MidAmerican Energy Holdings in 2000 and reported record profits last year from selling holdings of PetroChina Co., is betting on a long-term increase in energy demand worldwide. Global oil consumption will increase about 25 percent to 106 million barrels a day by 2030, the International Energy Agency said this week.
``Buffett is thinking decades ahead,'' said Jeff Matthews, author of ``Pilgrimage to Warren Buffett's Omaha'' and founder of Greenwich, Connecticut-based hedge fund Ram Partners LP. ``He's thinking about oil production falling and an eventual doubling of worldwide demand as countries like China reach U.S. levels.''
ConocoPhillips traded as low as $67.31 a share in the third quarter after closing 2007 at $88.30. The company slipped $1.79, or 3.6 percent, to $47.39 in New York Stock Exchange composite trading today before Berkshire's disclosure.
Waiting for Spring
Buffett, the world's preeminent stock picker, has said he's also spending his own money to buy U.S. stocks as prices decline amid the worst financial crisis in 75 years, switching holdings from government bonds. Berkshire, where Buffett is chief executive officer, spent about $3.94 billion on stocks in the quarter and sold shares for about $300 million, according to separate filings.
``Most major companies will be setting new profit records 5, 10 and 20 years from now,'' Buffett said in a column in the New York Times in October. ``If you wait for the robins, spring will be over.''
Berkshire held about 59.7 million ConocoPhillips shares as of June 30, Buffett revealed in a separate filing. Buffett, 78, won permission from regulators to omit that number from his second-quarter filing and withhold it until today to prevent copycat investing.
Looking for Stability
``Energy is an industry that has the stability that he's looking for,'' said Michael Yoshikami, the president of YCMNet Advisors in Walnut Creek, California, which manages $850 million, including Berkshire shares. ``Conoco is a huge refiner, and while refiners are certainly under some pressure, they are essentially a service-for-fee business, so they are a classic kind of stable, core business for his portfolio.''
ConocoPhillips rose $1.06, or 2.2 percent, to $48.45 at 7:10 p.m. in New York in extended trading. Bill Tanner, a spokesman for ConocoPhillips, had no immediate comment.
Berkshire increased holdings in NRG Energy by 54 percent to 5 million shares, a 2.2 percent stake. The firm was the object of a takeover offer from Exelon Corp. after the Princeton, New Jersey-based company lost half of its market value in two months. NRG's board of directors this month rejected the offer.
Buffett also disclosed a 1.8 percent stake in Cleveland- based Eaton, the maker of parts for Boeing Co. planes and Volkswagen AG cars.
Eaton Corp.
``Eaton fits exactly with his investment strategy,'' said Gerald Martin, a finance professor at American University's Kogod School of Business in Washington. ``He likes to say that he wants to invest in companies that he can understand, that he can really get his arms around, and take a look at them and project their cash flows.''
Eaton rose $1.54, or 3.7 percent, to $42.69 at 6:24 p.m. in late trading in New York. Prices for new Berkshire holdings typically jump as mutual funds and individual investors mimic the stock picks. Martin co-wrote a study in 2007 that found buying after such disclosures would have delivered annualized returns of about 25 percent over 31 years, double the performance of the S&P 500. Eaton spokesman Peter Parsons declined to comment.
Buffett cut his stake in Bank of America by almost half, while increasing his investment in U.S. Bancorp. Charlotte, North Carolina-based Bank of America, which purchased money-losing mortgage lender Countrywide Financial Corp. in July, has lost 64 percent of its market value in the last 12 months.
Read Article here
Eddie buys more of Autonation
Billionaire investor Edward S. Lampert continued to buy shares of AutoNation Inc., putting nearly $1.4 million more into the nation's largest car dealer last week.
Lampert, a former AutoNation director who was already the company's largest shareholder, bought 228,700 shares for between $5.90 and $6.15 per share on Thursday and Friday, according to a regulatory filing.
Read more here
Lampert, a former AutoNation director who was already the company's largest shareholder, bought 228,700 shares for between $5.90 and $6.15 per share on Thursday and Friday, according to a regulatory filing.
Read more here
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