Isaac Schwartz's Pitch on Tarkett & Halik Savings Bank: Value Investing Congress Las Vegas

We've posted up notes from the Value Investing Congress in Las Vegas and next up in the series is Isaac Schwartz of Robotti & Company who pitched Halik Savings Bank and Tarkett.


Isaac Schwartz's Value Investing Congress Presentation

•    Hidden in Plain Sight
•    Update on Kazakh Bank pitched prior – after a good performance it has declined by a third due to nervousness around the Russia/Ukraine situation.
•    Company is timely today versus last year – local investors in Kazakhstan – four primarily done by local investors buying back assets at low price to book values.


•    Idea – Halik Savings Bank – 20% ROE and trades at book value. Book value for share has doubled over the past years. •    Country supplies 3.5% of the world’s oil, and could double that. The other countries that can double output are not-stable. 


•    Tarkett is another idea. Trades in Paris and went public last fall. Leading company in global flooring. Generates 18% ROCE.
•    Poorly done IPO went public at 29 euros, trades at 26. 1.2B USD market cap.
•    Family and other shareholders like KKR and management own over 74% - 26% is free float. Family brought in KKR.
•    Thinks PE can be positive – look at the nature of private equity involvement (i.e. milk for earnings, multiple arbitrage or as a plus utilize industry contacts and plan for the long term). Family REMAINED in control so it did not utilize private equity leverage.
•    Rollup know how provided by KKR.
•    Business diversified around the world – including the former USSR countries. A lot of focus on these companies.
•    They are not in tile – they are the most global and diversified of the global flooring companies. Industry is globally consolidated.
•    Tarkett has a strong market share in Russia. Two thirds share in vinyl – the most popular category. •    A lot of renovation possibility from old soviet era buildings.
•    Barriers to entry in Russia? World’s largest vinyl factory (8x their competitor)
•    Decade to build and distribute brand.
•    Flooring is not a discretionary purchase. 
•    Trades at a big discount to peers – usually doesn’t like relative valuation. In Tarkett’s case margins are lower than competitors and a clear method to increase methods, especially North America. It has rolled up a dozen targets in 5 years.
•    North America has been a drag – but made an interesting acquisitions through Tandus. Purchased from Colin & Aikmans by Oaktree Capital.
•    After a few years, Tarkett purchased this asset from Oaktree.
•    Now they have a large scale and cross selling ability in the USA now.
•    A lot of optionality.
•    In global sports flooring – 50% market share – competes against Berkshire Hathaway (Shaw) is economically sensitive. 
•    Why is it cheap: Russia political issues, USA commercial recovery distant and sports is a bad business going off the past decade.
•    Multiple paths to 50% EBITDA growth – strong upside – good business.

Be sure to check out the rest of the Value Investing Congress presentations.

Bob Robotti's Presentation on Calfrac Well Services: Value Investing Congress

Continuing coverage, we're posting up notes from the Value Investing Congress.  Below are notes and the presentation of Bob Robotti of Robotti & Company Advisors.  His presentation was entitled 'Building an Investment Thesis.'

Calfrac Well Services (CFW)

Robotti follows classic value investing tenets.  His pitch was Calfrac Well Services (CFW) traded on the TSX.

$1.3B EV, oil services, 90% of revenue is from fracking. Says 80-100% upside on stock if natural gas demand remains flat.

Bear case is well known, low gas prices, oversupply of equipment. He gave a long presentation on the impact of cheap gas in the US, which should also help chemical companies.  (This is basically Nancy Lazar at ISI argument, very similar.)

Price target is double the current price, from $24 to $47.  Models revenue up about 53% from here.

Embedded below is Robotti's slideshow presentation from the Value Investing Congress: 




Check out the rest of the hedge fund presentations from the Value Investing Congress.

Isaac Schwartz's Presentation on Sampson Holdings, Thai Reinsurance & KazMunaiGas: Value Investing Congress

Continuing our coverage, today we're posting up more notes from the Value Investing Congress.  Below are notes and the slideshow presentation from Isaac Schwartz of Robotti and Company.  He presented three investment opportunities in Southeast Asia: Sampson Holdings (SEHK:531), Thai Reinsurance (SET:THRE), and KazMunaiGas Exploration and Production (LSE:KMG).


Sampson Holdings - Furniture company selling US, manufacturing in China, listed in Hong Kong.  $160mm EV. $423mm 2011 revenue.  Perfected manufacturing and experts on distribution side (300 commissioned sales people).  Trades different than Ethan Allen due to listing in Hong Kong.  Cheap company in out of favor industry.


Thai Reinsurance - Recently Prem Watsa comes in to buy 25% after the Thailand floods.  Remarkable 15 year track record. 20% ROE since before Asian crisis in 90's.  Has special position in industry due to knowledge.  $15 billion insured loss.  Rates of many lines have gone up over 100% since the flood.


KazMunai Gas Exploration & Production - Publically listed national oil company of Kazakhstan.  The government owns 63% of the company.  Went public in London 6 years ago.  Spending $1 billion.  $300mm share repurchased authorization and $100mm bought to date.  Dividend up 63% with only partial earnings payout.  KMG is selling at 6x earnings, 7% dividend yield, as well as $2 per barrel valuation for quality and producing assets.


Embedded below is Isaac Schwartz's presentation from the Value Investing Congress:




The above notes are courtesy of Kyle Mowery from GrizzlyRock Capital.  Be sure to click here for other presentations from the Value Investing Congress.

Bob Robotti's Presentation on Enterflex: Value Investing Congress

Continuing our coverage, today we're posting up more notes from the Value Investing Congress.  Below are notes and the slideshow presentation from Bob Robotti of Robotti & Company.  He presented the bull case for Enterflex (TSE: EFX).

He thinks natural gas will fill the hydrocarbon gap in the coming decades.  1mm ft cubic is energy of 1 barrel oil - historically interchangeable with 1 barrel of oil.  The following notes are courtesy of Kyle Mowery from GrizzlyRock Capital.

Investment Opportunity: Enterflex (TSE:EFX)

•    Installs compression and processing equipment.
•    $980MM EV
•    Decade long drilling activity 
•    Started trading in June 2011
•    Oil and gas firms are end customers
•    Service is 21% of revenues – key component to this firm.  Expected to grow to 40% of revenue in next 3 years.
•    Oil compressors – leverages due to fracking technology as fracked gas comes out of the well as low compressed volumes. 
•    Engines – Caterpillar and Waukesha was 50% (Cat been growing significantly). Waukesha bought by GE from private equity backing.  Enterflex distributor for Waukesha. 
•    2% dividend yield and share buyback.
•    Intrinsic value is $18 to $24 per share. 6.0x to 8.0x multiple on the business. 
•    Competitive advantage – engine part important (distribution system).  As Waukesha engines (Enterflex US distributor) get better from GE engineering this drives margins higher including


Embedded below is Robotti's presentation on oil versus natural gas:




Be sure to click here for other presentations from the Value Investing Congress.