Author Topic: opportunities in portugal?  (Read 11455 times)

ragnarisapirate

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 785
    • Ragnar Is A Pirate
opportunities in portugal?
« on: February 20, 2012, 08:12:05 PM »
All,

http://www.npr.org/2012/02/20/147158633/portugal-plays-by-the-rules-but-economy-slumps?sc=fb&cc=fp

It seems that with this much upheaval in Portugal, there may be opportunities for capital allocation. No?

Anybody been looking around there?


oddballstocks

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 2215
    • Oddball Stocks Blog
Re: opportunities in portugal?
« Reply #1 on: February 21, 2012, 05:49:51 AM »
Of course!!

I went through the Portuguese market A-Z about a year ago and it's probably worth going through again.  Portugal is an easy market to do this with, I think there are 65 stocks, so not a ton of work.

I ended up buying two (and selling one)
Corticeira Amorim - Cork company, they have a monopoly on cork products, a large market share in wine stoppers as well.  I bought on the thesis this is a company with a solid moat, nice ROE/ROA for a nice, EV/EBIT of 5x.  The company's since had a 40% run up, but earnings have driven it.  Still selling at about EV/EVIT of 5x or 6x.  85% of operations/sales are outside of Portugal, this got dragged in the mud undeservedly.

Novabase - A IT consulting company that was selling at EV/EBIT of 2 or 3 (don't remember exactly).  They had divested a money losing TV division which was clouding their previous results.  They were 75% domestic and 25% international.  I ended up selling because earnings dropped like a rock, margins shrunk and it the international expansion stalled out.  I misjudged demand, I had thought I was buying a company operating at trough demand, that wasn't the case.

Other interesting companies:

Brisa - Toll road operator, they're selling under book now with a 12% yield.  Tollroads are usually decent investments, traffic remains in decent range as long as there are no other roads competing.  If I remember BRISA had a monopoly on certain routes.  I was interested at 4.50 but the price was too high, now they're at 2.54 and I'll probably look again.

Conduril - Construction company that does most of their business in Algeria, Morocco, owned by the founding family.  I emailed back and forth with someone on the BOD for a while asking questions and trying to get more information.  I have their 2010 annual report if you want a copy, I'm not sure if they ever posted it on their website.

Weird thing with this stock, earnings were something like 15/share, shares were trading at 5.  Cash flow was weak, but shares still insanely cheap.  I tried for a while to get a order, very illiquid.  At one point bid 4.50 ask 85.  Looks like it's trading at 22 right now, might be worth looking into again.

This company has in the past published English statements, I was emailing the woman from the BOD in Portuguese.  I used Google Translate to build my email then ran it by a Brazilian friend.  He was amazed at Google Translate, most of the time just a few small corrections were needed.

Notes:  Here's what I did, I went to the Euronext Lisbon website and found the list of listed companies.  If you click on each one there are summary financials, a summary income statement and some balance sheet items.  I was looking for companies that were profitable and didn't have much debt.  I figured no debt would help weather the recession, and I didn't want a company losing money hand over fist (most were/are).

I will also note, a lot of company websites are in Portuguese only statements included.  Have no fear, almost all companies file with the CMVM (Portuguese SEC) in English.  Here's the website:http://www.cmvm.pt/en/Pages/default.aspx  The site is really clunky to navigate, but poking around I was able to get everything in English eventually, it wasn't obvious at first.

Here's the Corticeira Amorim Material Information page in English as an example: http://web3.cmvm.pt/english/sdi2004/emitentes/emit_fact.cfm?num_ent=%23%22%24OY%0A&ano=%24%23T%5F%5C%230%20%20%0A

Maybe others can post interesting Portuguese ideas in this thread?  I will do the same.

Nate
The ultimate edge for bank investors: http://www.completebankdata.com

racemize

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 2694
Re: opportunities in portugal?
« Reply #2 on: February 21, 2012, 06:13:14 AM »
Is it easy to trade these stocks from the US?  So far, I've only dealt with US/ADR/Canadian.

oddballstocks

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 2215
    • Oddball Stocks Blog
Re: opportunities in portugal?
« Reply #3 on: February 21, 2012, 06:16:23 AM »
racemize - I know Fidelity lets you trade international (that's who I use).  It's as simple as typing in the quote and clicking trade, just like a US stock except the hours are different 3:30am-11:30am EST.  Portugal's commission is 19 a trade I think.

For anyone else here's the Euronext site I mentioned: http://www.euronext.com/trader/priceslists/priceslists-1800-EN.html?lan=EN&cha=1800&filter=1&mep=8628&economicGroupList=&belongsToList=market_EURLS&capitalizationList=&investmentList=&eligibilityList=

Clicking on a name, then Company Profile gets you to a brief description of the company, a list of shareholders, a summary income statement, and summary balance sheet.
The ultimate edge for bank investors: http://www.completebankdata.com

oddballstocks

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 2215
    • Oddball Stocks Blog
Re: opportunities in portugal?
« Reply #4 on: February 21, 2012, 06:17:24 AM »
The ultimate edge for bank investors: http://www.completebankdata.com

racemize

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 2694
Re: opportunities in portugal?
« Reply #5 on: February 21, 2012, 06:22:42 AM »
ah, so it is.  Last time I looked, Fidelity had some net worth requirements that I hadn't quite gotten to.

Arden

  • Full Member
  • ***
  • Posts: 153
    • linkedin
Re: opportunities in portugal?
« Reply #6 on: February 21, 2012, 06:32:42 AM »
Wow what a comment Nate! well done :)

Dunno about portugal but I have a few ideas in Europe-

RNO- Nate mentioned it in his blog- there is a discussion in the comments, basically renault holds 43 of Nissan, whose shares are also traded- and the market value of the share in nissan is worth more than RNO itself (about 14B vs 10B). on top of that - RNO owns a bank that's worth about 5B, part of autovaz and a part of volvo and daimler. RNO itself is currently making 400-500M on the auto business. Sum of the parts is about 30B ,RNO is trading for 10B.

ETI- A british pub company. 5000 pubs, 4.5B assets, Around 3B debt - 1.5B equity, 80-90m FCF, market cap- 250m. decline in the beer business in britain and a rise in beer tax made people dislike the industry which was loved back in 2007.The stock dropped more than 90%, while the Book value didn't really move- the assets are appraised yearly and the last appraisal was a 2-3 months ago, so you can trust the BV IMO. when inflation starts doing its job- real estate prices will rise with it- and even with a mild 2% inflation profits will double. The company is selling assets at BV and closing debt. I see it as being worth around BV in more normal times.
« Last Edit: February 21, 2012, 06:48:36 AM by shlomiardan5 »
Sol Arden

ragnarisapirate

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 785
    • Ragnar Is A Pirate
Re: opportunities in portugal?
« Reply #7 on: February 21, 2012, 08:18:13 AM »
Nate, I knew that you would have looked there. ;)

Good work.

JEast

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 738
Re: opportunities in portugal?
« Reply #8 on: February 21, 2012, 08:40:36 AM »
Sonae would look very interesting below 40.  They are more of a conglomerate business model with several different footprints.  The main attraction is Sonae MC and is the market leader in Portugal for food retail (groceries) with dominates locations.

http://www.sonae.pt/en/


Cheers
JEast

persistentone

  • Jr. Member
  • **
  • Posts: 87
Re: opportunities in portugal?
« Reply #9 on: February 22, 2012, 02:32:30 PM »
Of course!!

I went through the Portuguese market A-Z about a year ago and it's probably worth going through again.  Portugal is an easy market to do this with, I think there are 65 stocks, so not a ton of work.

I ended up buying two (and selling one)
Corticeira Amorim - Cork company, they have a monopoly on cork products, a large market share in wine stoppers as well.  I bought on the thesis this is a company with a solid moat, nice ROE/ROA for a nice, EV/EBIT of 5x.  The company's since had a 40% run up, but earnings have driven it.  Still selling at about EV/EVIT of 5x or 6x.  85% of operations/sales are outside of Portugal, this got dragged in the mud undeservedly.

Novabase - A IT consulting company that was selling at EV/EBIT of 2 or 3 (don't remember exactly).  They had divested a money losing TV division which was clouding their previous results.  They were 75% domestic and 25% international.  I ended up selling because earnings dropped like a rock, margins shrunk and it the international expansion stalled out.  I misjudged demand, I had thought I was buying a company operating at trough demand, that wasn't the case.

Great work Nate and thanks for putting out that list.

What I am looking for is a list of peripheral European stocks that get at least 50% of their profits from outside the periphery.     In other words I want to find strong exporters in the peripheral European countries.

My investment thesis is that when the periphery leaves the Euro - which I think is likely within three years - that these stocks will get crushed as these countries revert to historical currencies.   But if the earnings stream is largely exempted from the devaluation (i.e., 60% of the business is in dollars from North America) then those will be buying opportunities shortly after the devaluation occurs.

Can you think of any strong exporters in the periphery?