SEMUF - Siem Industries

[Packer16]

This an interesting Norwegian holding company that sells at 50% discount from NAV and has done so for years.  The YE 2012 BV = $134.36 per share versus stock price of $72.00 per share.  The firm has compounded BV by about 23% since 1989.  It is focused on the O&G construction industry and is controlled by the Siem family.  Since many on this board like this type of situation, I though it would be worth a mention.  The guys at OTC Adventures and VIC have write-ups on the firm also. 

 

Packer

[plato1976]

 

Well, I guess the first thing is to understand why it has been trading at such a deep discount for a long time,

and then identify if a catalyst can be found to narrow the discount in the near future ...

 

This an interesting Norwegian holding company that sells at 50% discount from NAV and has done so for years.  The YE 2012 BV = $134.36 per share versus stock price of $72.00 per share.  The firm has compounded BV by about 23% since 1989.  It is focused on the O&G construction industry and is controlled by the Siem family.  Since many on this board like this type of situation, I though it would be worth a mention.  The guys at OTC Adventures and VIC have write-ups on the firm also. 

 

Packer

[Packer16]

I think the lack of an exit/sale plan, the focus on O&G, the intention to pay no dividends and re-invest in the business may part of it but the rate at which BV is compounding should more than offset this.  The only other business I know of trading a discount to book with this type of compounding is MFC Industrial.  However, MFC is more of "Black box" then this company is.

 

Packer

[Hielko]

I don't own this company, but I do like it: 50% discount makes no sense imo. I don't link low liquidity and a minority position is a problem with a company with a track record like this.

[Shawn]

This looks excellent, thanks for sharing it. I'm still going through the annual reports. All my senses say to invest, but as soon as I'm done with my research I'll make a decision.

[Guest hellsten]

Thank you. Interesting idea.

[Guest hellsten]

Horizon Kinetics featured Siem in one of their Bits & Pieces articles:

Bits & Pieces, which we actually research on a formal basis

and for which we publish a monthly review, refers to the ownership by a publicly-traded

company of stakes in other public companies or marketable securities. As the three examples

below illustrate, it is occasionally possible to identify cases where, if one subtracts the market

value of the investment stakes (even when they are publicly-traded and therefore readily

verifiable), the market appears to attribute little or no value to the remaining operating

businesses. Such circumstances are akin to acquiring the core business or assets of a company

for free.

 

http://www.horizonkinetics.com/docs/Bits_&_Pieces_March_2012.pdf:

The significant discount in the price of the Siem stub may be explained by the fact that the Siem stock is rather illiquid. Indeed,

as disclosed within the company’s annual report, the free float of its traded shares is approximately 5%, or 1 million shares.

Additionally, in the current market environment, where investors seek to maintain the nominal value of their portfolios by

undertaking transactions to either raise or lower the value of their portfolios, Siem can have only limited utility. As a practical

matter, Siem is not tradable in large quantities. Thus, many of the discounts that are apparent in holding companies such as

Siem arise from issues of liquidity, not from the notion of inherent value.

[Shane]

Correct me if I am wrong, but haven't there been a number of high BV compounders in the marine services/shipping industry over the past 10-20 years?  How much of this strong BV growth is due to economic tailwinds?  How bad is the overcapacity in the industry?

 

I'm not very familiar with the industry, would like to learn more.

[netnet]

the BV versus share price is great and the compounding is tremendous.

 

Now the question is the owner shareholder friendly?

[Otsog]

Annual report posted 4/12/13:

 

DIVIDEND POLICY

The Company's policy is to reinvest available funds into the business and, consequently, the Company

does not pay dividends on a regular basis. The Board of Directors last declared an extraordinary cash

dividend in March 2008.

 

Dividend declaration 5/6/13:

 

SIEM INDUSTRIES INC. announces that its Board of Directors has declared a cash dividend of $0.20 per share for shareholders of record at the close of trading on Friday, 10 May 2013, and payable to shareholders on 17 May 2013.

 

http://www.siemindustries.com/reports/

 

 

March 2008 'extraordinary' cash dividend was $0.10/share.