randomep Posted June 1, 2015 Share Posted June 1, 2015 Seems like to me this is a phenominal company. They are really taking advantage of the depreciation of the euro. my writeup: http://bovinebear.blogspot.com/2015/05/why-i-bought-karelia-tobacco.html Last week another knockout quarter: earnings up 35% yoy Link to comment Share on other sites More sharing options...
60North Investments Posted June 1, 2015 Share Posted June 1, 2015 Thanks for the writeup, looks like an interesting company. I just don't seem to have access to buy it. Do you mind sharing which broker did you use to buy KARE? Link to comment Share on other sites More sharing options...
The Falcon Posted June 1, 2015 Share Posted June 1, 2015 Had a look at this previously after you mentioned in the PM thread. Have you been able to find any reports in English? When I checked their website looked like it had not been updated for some time. Link to comment Share on other sites More sharing options...
KJP Posted June 1, 2015 Share Posted June 1, 2015 Here's a link to the 2014 report in english: http://www.karelia.gr/ftp-pdf/FinancialReports/2014/KareliaFinancialReport31.12.2014.pdf Link to comment Share on other sites More sharing options...
randomep Posted June 1, 2015 Author Share Posted June 1, 2015 Thanks for the writeup, looks like an interesting company. I just don't seem to have access to buy it. Do you mind sharing which broker did you use to buy KARE? Fidelity allows you to buy it online. Fidelity in USA. But I believe anyone can call any of the US online brokerages and they will route the trade for you through a broker assisted trade; i.e., you have to call them to make the trade and it costs more. Also there is an OTC ticker KCIGF for Karelia, but I believe it is defunct. Link to comment Share on other sites More sharing options...
Green King Posted June 1, 2015 Share Posted June 1, 2015 Thanks for the writeup, looks like an interesting company. I just don't seem to have access to buy it. Do you mind sharing which broker did you use to buy KARE? Fidelity allows you to buy it online. Fidelity in USA. But I believe anyone can call any of the US online brokerages and they will route the trade for you through a broker assisted trade; i.e., you have to call them to make the trade and it costs more. Also there is an OTC ticker KCIGF for Karelia, but I believe it is defunct. were are you getting the quarterly information ? Link to comment Share on other sites More sharing options...
randomep Posted June 1, 2015 Author Share Posted June 1, 2015 Thanks for the writeup, looks like an interesting company. I just don't seem to have access to buy it. Do you mind sharing which broker did you use to buy KARE? Fidelity allows you to buy it online. Fidelity in USA. But I believe anyone can call any of the US online brokerages and they will route the trade for you through a broker assisted trade; i.e., you have to call them to make the trade and it costs more. Also there is an OTC ticker KCIGF for Karelia, but I believe it is defunct. were are you getting the quarterly information ? http://www.reuters.com/article/2015/05/28/idUSFWN0YJ08Q20150528 Link to comment Share on other sites More sharing options...
frommi Posted June 1, 2015 Share Posted June 1, 2015 While is see that Karelia is cheap against PM or other tobacco companies, aren`t you afraid that plain packaging disrupts the industry? Even china is now doing something against smokers: http://www.ctvnews.ca/health/beijing-imposes-tough-new-bans-on-smoking-in-public-1.2400254 Link to comment Share on other sites More sharing options...
wachtwoord Posted June 1, 2015 Share Posted June 1, 2015 There's a listing in London but it seems to be traded quite thin and significantly above Athens. Link to comment Share on other sites More sharing options...
randomep Posted June 1, 2015 Author Share Posted June 1, 2015 While is see that Karelia is cheap against PM or other tobacco companies, aren`t you afraid that plain packaging disrupts the industry? Even china is now doing something against smokers: http://www.ctvnews.ca/health/beijing-imposes-tough-new-bans-on-smoking-in-public-1.2400254 Governmental repression is a constant theme in the tobacco industry. But this issue is industry wide. Plain packaging is zero sum, maybe it will help Karelia at the expense of PM. But industry as a whole is healthy, as I eluded in my writeup, worldwide consumption is increasing. Governmental talk may be just that, talk. I think the governments are getting addicted to the tobacco tax revenue. Now if plain packaging is really enforced everywhere, then I don't know how it will play out. Karelia management has said it will encourage illicit cigarettes. But what does that really mean? Criminals will sell name-brands cheap? or will they make knockoffs? but again, if these things happen governments will lose revenue.... Which is why I believe name-brand tobacco have a huge ally in the government. Every industry has its issues, but money is made stockpicking when the issues are more imagined than real. I think (or hope) that it is the case for tobacco. Link to comment Share on other sites More sharing options...
mttddd Posted June 1, 2015 Share Posted June 1, 2015 What do you all think about the 90% ownership by the founding family? I know insider ownership is often considered a plus but I always wonder if its a good thing in family dominated cases like this. Link to comment Share on other sites More sharing options...
Packer16 Posted June 1, 2015 Share Posted June 1, 2015 The float is close to 6% so the family and related parties own 94%+. This is a private company with a small amount available to the public. This is fine if management are good capital allocators and don't take too much for themselves. I haven't looked at Kerelia but I will along these dimensions. Packer Link to comment Share on other sites More sharing options...
randomep Posted June 1, 2015 Author Share Posted June 1, 2015 What do you all think about the 90% ownership by the founding family? I know insider ownership is often considered a plus but I always wonder if its a good thing in family dominated cases like this. Well, there is a good and bad side to it. The plus side is that whatever they do is probably in the interest of ALL shareholders. I mean there is no incentive to rip off the company by for example paying themselves egregious salaries because they are simply ripping themselves. This is as opposed to the BH situation where it appears to many including myself the the CEO is unfairly compensating himself in an effort to obtain majority control. The negative side is that management may not live up to their fiduciary duties in the case of an exit strategy. Suppose someone comes to the family and offers a 100% premium to buy the company. I would love that but the family probably has a emotional reason to carry on the family business nonetheless. Karelia pays a 4%+ dividend and my impression is that Greece has good corporate governance. If earnings say double in the future and dividend also doubles. They you are getting an 8%+ yield on your investment. I'd be happy to get that for perpetuity..... Link to comment Share on other sites More sharing options...
Okta Posted June 2, 2015 Share Posted June 2, 2015 In the annual report there is information about EU regulation. I would haircut cash by some millions. We are planning an extensive investment program that will enable our Company to comply with the requirements of the New Tobacco Directive, which, as of May 2016, will come into force in all EU Member States . It is unfortunate that such large investments in new machinery, worth tens of millions of Euros, will bring no added value to the Company, but are necessary solely to enable us continue the uninterrupted supply of our products to EU markets. On the other hand, the resulting added fragmentation of our production process will increase cost. In our efforts to limit these damaging effects as much as possible, we are planning the consolidation of certain production processes and raw materials in our products destined to third countries. I have looked at the company when looking at all companies listed in Athens in 2012 and they were not reporting timely information in english back then. This is a great improvement in reporting. If I remember correctly I liked the education of the family members and the transistion to the newer generation. Capital allocation is very conservative (net cash). Link to comment Share on other sites More sharing options...
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