ukvalueinvestment Posted February 18, 2014 Share Posted February 18, 2014 Looking through the ideas on this board, one of the things that strikes me is that most of them are large cap. We all know that there are better opportunities in the small cap world. This has been "proven" by the likes of Fama French, and the likes of Buffett and Greenblatt repeatedly say that if they had small amounts of money to run, they would be in this space. With that in mind, please see my write up for Safestyle on my blog. Would be grateful for feedback. http://ukvalueportfolio.blogspot.co.uk/ Link to comment Share on other sites More sharing options...
klarmanite Posted February 18, 2014 Share Posted February 18, 2014 Nice write-up! Interesting company. I wonder about the 9% discount rate though. Why 9%? Seems a bit low. Could you explain your thinking on this point in more detail? What's the avg FCF (in GBP) over the last say 3 or 5 years? Link to comment Share on other sites More sharing options...
ukvalueinvestment Posted February 18, 2014 Author Share Posted February 18, 2014 I was making the point that if it re rates to an "average market" discount rate, there is substantial upside available. FCF has pretty much tracked Net Income for the last three years that we have financials for. Link to comment Share on other sites More sharing options...
Ham Hockers Posted February 18, 2014 Share Posted February 18, 2014 10% of the assets are 0% loans to the guys who sold their shares in the listing? That seems like a big red flag. Any concerns? Link to comment Share on other sites More sharing options...
ukvalueinvestment Posted February 18, 2014 Author Share Posted February 18, 2014 It's not ideal, that's for sure. But I assume that this relates, somehow, to the IPO, and will be swiftly repaid. If not, I will be concerned. I find it hard to believe that any shenanigans would be going on at the time when the company is most under scrutiny. I don't think it's naive to think that the lead manager wouldn't allow it. Link to comment Share on other sites More sharing options...
klarmanite Posted February 19, 2014 Share Posted February 19, 2014 Assuming 2013 1H results are annualized and that this level of net income is sustainable and roughly equal to FCF, that would mean the market is pricing in virtually zero growth at this point, no? Or am I missing something? Back of the envelope with inexact numbers: FCF 11.8 disc rate 10 % growth rate 0 % Cash 11 No shares 77.7 Fully diluted 85.47 (to account for options and warrants) Equity Value per share 1.51 A more defensive stance might use the normalized net income (assumed to be roughly equal to FCF). In that case, 4% FCF growth in perpetuity is priced in today. If you are right about the growth prospects and the low cost position is sustainable, it does look rather cheap. Thanks again for an interesting write-up. Link to comment Share on other sites More sharing options...
ukvalueinvestment Posted April 13, 2014 Author Share Posted April 13, 2014 Up about 35% since I recommended. I still think there's some value on an absolute and relative basis. Link to comment Share on other sites More sharing options...
klarmanite Posted April 17, 2014 Share Posted April 17, 2014 Congrats - good call! Link to comment Share on other sites More sharing options...
persistentone Posted May 18, 2015 Share Posted May 18, 2015 Looking through the ideas on this board, one of the things that strikes me is that most of them are large cap. We all know that there are better opportunities in the small cap world. This has been "proven" by the likes of Fama French, and the likes of Buffett and Greenblatt repeatedly say that if they had small amounts of money to run, they would be in this space. With that in mind, please see my write up for Safestyle on my blog. Would be grateful for feedback. http://ukvalueportfolio.blogspot.co.uk/ Is there a data site that has 5+ years of financials posted for SFE.L? Strangely, Reuters doesn't recognize them using that trading symbol. Link to comment Share on other sites More sharing options...
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