CONS-B.ST - Consilium

[alwaysinvert]

This is another illiquid name from me.

 

After exiting their largest business last year, this company consists mainly of a large pile of cash and some small marine fire safety business (offshore is a large customer base) which they have intentions of building out further. For the time being this is subscale and moderately loss-making, especially this year. They also have some more venture like business called Optronics which is an IR-based gas detection technology due to enter the market in the second half of 2020.

 

Net cash per share is approximately 125 SEK vs share price of 78.40 as of close today. During the spring, they dividended out just below the amount of free capital that they had before rebalancing their books (about 200 MSEK) and left is about 1460 MSEK ex-dividend and paying off a bond after the close of Q1. Some minor bleeding should be expected throughout the year, though.

 

The hair on the situation is this: it is a family controlled company and the family does not give a shit about the share price or the minority. They aren't as far as I can tell crooks but the company is run as if it is completely private. Thus, they haven't said much of anything of their future plans except that they will invest some money in commercial paper and stocks and expand in the remaining business area. You can gauge the market's skepticism on this name by seeing that the stock used to trade at about 1/3 of the price that they managed to get for the sold business - in spite of the company communicating that a sale was in the cards.

 

My guess is still that there is a decent chance that significantly more cash will come out of the company in the spring, so there is a bit of waiting involved that the market has no patience for at all. The company is way overcapitalized and the family has some other business interests outside of this. There could be new bolt-on acquisitions, putting the idle cash to use.

 

There is also the chance that the new CEO (son in the family, after having an outside CEO) will be more stock market friendly as the old father retired from the chairmanship of Consilium in the wake of exiting their main business area. They could probably also just take it all private at a dirt cheap price if they wanted to. Obviously, they care about value for themselves seeing as they managed to completely top-tick the business sale with great patience and timing and from that I expect more movement, but I don't know exactly in which direction.

 

If they retain almost all the cash and turn the whole thing into an investment company of sorts with a large stock portfolio, the discount is way larger than any other of those in on the Swedish exchange.

 

Additionally, they should have some decent tax-loss carryforwards (not shown on the books since the remaincos are loss-making), hypothetically making this a candidate for rolling up real estate or something of the sort.

[Voodooking]

Thanks for posting and for your comments. Always good to have more information.

 

I recently took a small position in this, although annoyingly not within the account I'd have liked to as it doesn't settle via Crest.

 

You're right about it being illiquid, I placed a few limit orders and had them filled gradually.

 

Anyway, I also found this write-up on it and thought it might be of interest to you:

 

https://www.gurufocus.com/news/1202745/consilium-a-cash-shell-with-a-small-lossmaking-business-attached-is-trading-at-a-discount