Author Topic: BOL.PA - Bollore  (Read 44512 times)

frank87

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Re: BOL.PA - Bollore
« Reply #50 on: February 02, 2017, 01:11:15 PM »
I'm not sure I understand this whole share count arbitrage thesis.

If Bollore subsidiaries own a big piece of Bollore, then the value (numerator) of those subsidiaries must also be subtracted from the net asset value to get at the net asset value per share. You can't just reduce the denominator without doing anything to the numerator.


no_free_lunch

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Re: BOL.PA - Bollore
« Reply #51 on: February 02, 2017, 01:34:13 PM »
My thesis is that at the end of the day it is more or less a closed system.  So Bollore does own nearly all of the subsidiaries assets.   

I would look at the muddy waters white paper and in particular how dividends flow through the system.  The dividends go from bollore to you (shareholders), the subs, etc.  You keep your portion, but the subs are owned by bollore so they pay it back to bollore and around you go again.  In the end the dividends are filtered out by external owners (e.g. you and other shareholders) at each pass. 

None of that probably makes any sense.. I built a simple model of it in a spreadsheet.  It sounds complex but it only took an hour and the Bollore complex isn't really that difficult once you see it in action.
« Last Edit: February 02, 2017, 01:35:51 PM by no_free_lunch »

frank87

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Re: BOL.PA - Bollore
« Reply #52 on: February 02, 2017, 01:55:18 PM »
My thesis is that at the end of the day it is more or less a closed system.  So Bollore does own nearly all of the subsidiaries assets.   

I would look at the muddy waters white paper and in particular how dividends flow through the system.  The dividends go from bollore to you (shareholders), the subs, etc.  You keep your portion, but the subs are owned by bollore so they pay it back to bollore and around you go again.  In the end the dividends are filtered out by external owners (e.g. you and other shareholders) at each pass. 

None of that probably makes any sense.. I built a simple model of it in a spreadsheet.  It sounds complex but it only took an hour and the Bollore complex isn't really that difficult once you see it in action.

What I meant was: the sub's stakes in Bollore must then be subtracted from NAV to avoid double counting yes?

no_free_lunch

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Re: BOL.PA - Bollore
« Reply #53 on: February 02, 2017, 02:18:11 PM »
Yes you are correct.  I think the companies NAV already does this but to get around these complexities I just use fair value estimates I have seen.

ebdem

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Re: BOL.PA - Bollore
« Reply #54 on: February 04, 2017, 05:37:23 AM »
The reason for this kind of "messy" structure is in my eyes:
  • Bolloré created this structure for tax purposes.
  • He made buybacks whenever one of his subsidiaries had cash. So a lot of the stocks are held in this special structure.

Did someone take a look at the debt? I think the debt is consolidated in the report of Bolloré, but I am not sure.

In a presentation of David Marcus, which I can't share here, I saw a table on the aquisition and selling history of Bollorč. It is quite interesting how he made money out of nearly every deal he made.

One very interesting holding is Telecom Italia. It is held through Vivendi, which should have a fair value of 30 €. TIM is turning around recently: http://www.telecomitalia.com/tit/en/investors/presentations/2017/FY2016-preliminary-group-results-plan-update.html

Greenwood Investors do offer a quite interesting report on Bolloré and TIM.


no_free_lunch

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Re: BOL.PA - Bollore
« Reply #56 on: March 28, 2017, 11:16:37 AM »
Result came out a few days ago for Bollore.  Not great numbers but then not at all unexpected.  If you look back at their history they go through waves of contracting and then expanding BVPS.  When they start the next up-wave the BV discount should shrink considerably in addition to the actual increase in BV.  I still think there is considerable upside here.

https://globenewswire.com/news-release/2017/03/23/943719/0/en/BOLLORE-2016-results.html

Shane

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Re: BOL.PA - Bollore
« Reply #57 on: March 28, 2017, 02:45:43 PM »
Has anyone identified a clear path for the structure to be simplified?  If the structure was created to avoid tax consequences, would a simplification be possible without paying tax?

The 'share count arbitrage' thesis relies on the market figuring out this complex structure or the simplification to take place.  It doesn't seem like an obvious bet to me, curious what others think.

no_free_lunch

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Re: BOL.PA - Bollore
« Reply #58 on: March 28, 2017, 03:39:43 PM »
So hopefully someone more knowledgeable can answer but here is my take.

Don't invest on the share count arbitrage alone.  I view it as an extra lever they have available for them.  Just one example of what they can do (and did do with Havas) is to take the Bollore shares that are held by the subs and use them to buy other companies.  You don't want them to do that when the discount is large but nevertheless it is like free shares from the public shareholders perspective.  That is one way to unwind it.  In reality it is not going to completely unwind anytime soon but they can do this type of thing as needed.

So you have this lever and you have the CEO who has been a great capital allocator historically and can opportunistically use the complexities of the structure to add value.  It is a bid of a Malone situation in that the more complexity there is the more opportunities there are for him.

ebdem

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Re: BOL.PA - Bollore
« Reply #59 on: March 29, 2017, 02:53:51 AM »
Did you have this video already posted? https://www.youtube.com/watch?v=EbHYm0pa_P8

Bolloré, as no_free_lunch said, is also a very good capital allocator. He compounded better as Buffett in the recent years. The investments in Vivendi and TIM are great chances. I think the whole thing can play out very good, even if not all cataclysts are realizied.