Author Topic: CNDUF - Conduril  (Read 25003 times)

writser

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Re: CNDUF - Conduril
« Reply #50 on: April 05, 2017, 10:20:37 AM »
2016 AR has been published a few days ago (not yet in English): http://www.conduril.pt/grupoprestacaocontas.php . Looks like they sold some of the Angolean bonds (not sure - cash flow statement is not very helpful). The 80m due guaranteed by the Portuguese state has unfortunately not been delivered yet but they (still) expect the money to arrive soon. During the year they delevered the balance sheet and made a small profit despite problems in Africa. Backlog is slightly up compared to last year.

This might not be the best company in the world but the market cap is now ~65m euro.  If shares double it is still cheap.
When you are dead, you do not know you are dead. It's only painful and difficult for others. The same applies when you are stupid.


writser

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Re: CNDUF - Conduril
« Reply #51 on: April 03, 2018, 07:32:25 AM »
2017 AR has been released, Portuguese only so far. Major news: COSEC guaranteed amount of 83m should have been settled as of March, 21.  Pro-forma balance sheet is more or less debt-free and interest savings should improve profitability significantly in 2018. A friend wrote a small blog post about it here. Still one of the cheapest stocks I know and one of my largest positions.
When you are dead, you do not know you are dead. It's only painful and difficult for others. The same applies when you are stupid.

rolling

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Re: CNDUF - Conduril
« Reply #52 on: May 17, 2018, 03:16:29 PM »
2017 AR has been released, Portuguese only so far. Major news: COSEC guaranteed amount of 83m should have been settled as of March, 21.  Pro-forma balance sheet is more or less debt-free and interest savings should improve profitability significantly in 2018. A friend wrote a small blog post about it here. Still one of the cheapest stocks I know and one of my largest positions.
I finally entered Conduril. At a premium to recent valuations. It is now my 3rd biggest position at a little over 10% (exited Davita for that).

The oil price spike played an important role. I had a small hedge on oil (by exposure through Angola) through Ibersol and as I saw oil rising bought another hedge through BPI (well managed portuguese bank with an almost 50% position in an highly profitable Angola bank), but got bought out (they are taking the company under) in 2 weeks at an 18% gain.

Even while paying a small premium I still am paying less than half last reported book. Currency devaluation has certainly erase a decent chunk from book but it is still at a discount. If you add that debt should have gone significantly down by now, then things are likely to go right (even if oil prices go down yet another time, which would be good news for the majority of my portfolio).
My usual portfolio: Highly concentrated (up to 3 or 4 positions) in smallcaps and microcaps.

Jurgis

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Re: CNDUF - Conduril
« Reply #53 on: May 17, 2018, 04:13:00 PM »
Just for fun: this has gone nowhere for the last 4-5 years. How you guys think this is going to work out and why? What are you guys thinking about the opportunity cost? What are you going to do if it goes nowhere for another 4-5 years? Is the expectation that it goes nowhere for a while and then suddenly it goes 3x which still results in OKish annualized return? (2x won't cut it for a good return if you bought in 2014...)

(Yeah, there were some trading opportunities, and clearly someone who bought last year in $30s is up a bit).

Disclaimer: Yeah, you can ask similar questions for quite a few of my stocks...  8)
"Before you can be rich, you must be poor." - Nef Anyo

rolling

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Re: CNDUF - Conduril
« Reply #54 on: May 17, 2018, 04:39:37 PM »
Just for fun: this has gone nowhere for the last 4-5 years. How you guys think this is going to work out and why? What are you guys thinking about the opportunity cost? What are you going to do if it goes nowhere for another 4-5 years? Is the expectation that it goes nowhere for a while and then suddenly it goes 3x which still results in OKish annualized return? (2x won't cut it for a good return if you bought in 2014...)

(Yeah, there were some trading opportunities, and clearly someone who bought last year in $30s is up a bit).

Disclaimer: Yeah, you can ask similar questions for quite a few of my stocks...  8)
Angola suffered a lot with the oil crisis and Conduril stagnated as a result: receivables piled up and debt surged to cover those receivables. Even a few months ago I doubted this was going anywhere: you couldn't count on those receivables to actually be received.


Now,
- a big shunk of those receivables have been paid in March through a portuguese exports insurance, which allows an almost clearance of the debt.
- Angola changed government and unexpectedly their new president actually looks like he will part ways with the prior regimen and seems to be trying to solve their problems
- oil is going up, which, if maintained, will help make sure things go right
- Portugal-Angola relations improved a lot through a court decision last week: Angola's prior vice president (or something similar) is on trial for corruption in Portugal. There was a prior agreement that this kind of cases should be judged in Angola (or Portugal if the opposite happened) but that wasn't happening. Current Angola president saw that as a lack of trust in Angola judiciary system and a breach in the agreement. Portuguese courts now decided that the trial should be in Angola and political relationships (which were going through a very rough path) seem to be going back to normal
My usual portfolio: Highly concentrated (up to 3 or 4 positions) in smallcaps and microcaps.

writser

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Re: CNDUF - Conduril
« Reply #55 on: May 18, 2018, 02:03:55 AM »
Just for fun: this has gone nowhere for the last 4-5 years. How you guys think this is going to work out and why? What are you guys thinking about the opportunity cost? What are you going to do if it goes nowhere for another 4-5 years? Is the expectation that it goes nowhere for a while and then suddenly it goes 3x which still results in OKish annualized return? (2x won't cut it for a good return if you bought in 2014...)

(Yeah, there were some trading opportunities, and clearly someone who bought last year in $30s is up a bit).

Disclaimer: Yeah, you can ask similar questions for quite a few of my stocks...  8)

Good questions. First, let me point out that this isn't some sort of compounder that I'm willing to hold at any price. In a few years Conduril shares roughly quadrupled, got slashed by 60% and are now up 70% again. If you bought all your shares at E84 then sure, you're not doing very well, but I'd say that is at least partially your own fault.

In hindsight I think I was too enthousiast about this company at a relatively high valuation, see for example my June 2014 post in this topic. But even so, I managed to buy most of my shares at a ridiculous valuation in 2013, sold a significant chunk in 2015 after oil prices (and Conduril results) collapsed and bought back a boatload in 2016 / 2017 when shares were trading at a super low valuation again. As of today my average entry price is around E22. And this includes some really stupid trades like buying a few extra shares at E80 in 2014 when this was already my largest position. Good investors now probably have a negative average entry price. Also, don't forget that Conduril paid out E9 in cumulative dividends since 2013. So actually I'm not doing too bad despite this stock going nowhere and me being an idiot.

Regarding the past few years, I think investors were a bit unlucky in a sense. In 2014 it was not a given that oil prices & African business would collapse and that it would take ages for Conduril to convert their receivables into cash. Had I known that I would've probably sold all my shares ..  The past few years did not turn out in the best way possible for Conduril and I don't think that that was entirely their own fault.

Quote
What are you going to do if it goes nowhere for another 4-5 years? Is the expectation that it goes nowhere for a while and then suddenly it goes 3x which still results in OKish annualized return? (2x won't cut it for a good return if you bought in 2014...)

I think these are bad questions to ponder. You are basically anchoring yourself on (to? not a native speaker .. ) stock prices / movements from the past and thinking in terms of: what if that happens again? How do I get break-even? How do I salvage a good return from this train wreck? Sunk cost fallacy .. Whether you bought at E22 in 2012 or E84 in 2014 and how the stock traded the past five years is irrelevant. Only thing that you should try to think about now is the current stock price and business outlook / valuation.

Regarding that: Conduril managed to stay profitable during the past five years, i.e. it looks like they are not completely incompetent. At this point in time, oil prices have risen substantially, the Portuguese economy is booming and Conduril finally managed to delever their balance sheet. Conduril is trading at a discount to NCAV, ~0.5x TBV, has been profitable the past decade, trades at a decent earnings multiple (especially when adjusted for interest savings), pays a nice dividend, is family-owned and has the potential for huge earnings growth.

I can't name another stock with the same characteristics. So I like this and at this point in time it is my largest position (again) and I'm happy to own it even if it goes nowhere the next 4-5 years. Especially if you mean by that that I have again the opportunity to sell it at 80, buy it back at 30 and collect a nice dividend on the way 8) . Sure, some things can (and probably will) go wrong again, but at current prices I'd say that that risk is more than priced in.
« Last Edit: May 18, 2018, 02:14:49 AM by writser »
When you are dead, you do not know you are dead. It's only painful and difficult for others. The same applies when you are stupid.

Spekulatius

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Re: CNDUF - Conduril
« Reply #56 on: May 18, 2018, 03:59:43 AM »
Just for fun: this has gone nowhere for the last 4-5 years. How you guys think this is going to work out and why? What are you guys thinking about the opportunity cost? What are you going to do if it goes nowhere for another 4-5 years? Is the expectation that it goes nowhere for a while and then suddenly it goes 3x which still results in OKish annualized return? (2x won't cut it for a good return if you bought in 2014...)

(Yeah, there were some trading opportunities, and clearly someone who bought last year in $30s is up a bit).

Disclaimer: Yeah, you can ask similar questions for quite a few of my stocks...  8)

The answer is most cases is simple - these companies are not compounded.If they were, they would be much larger than they are. So you need to strive to buy and sell them at the right time.

I do have some asset rich stocks that have gone nowhere for a couple of years, even though their intrinsic value has increased. It happens. I donít think that these stocks should be a huge part of portfolio, but a few of those are probably OK.the nice thing about thr, is that the share price has virtually no correlation to the general stock market, so if thr market turns down, you can probably use them as a source of funds to purchase stocks with more immediate potential. every once in a while, you will get a revaluation in some of these stocks, but the timing is often hard to predict.
« Last Edit: May 18, 2018, 09:30:10 AM by Spekulatius »
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Hielko

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Re: CNDUF - Conduril
« Reply #57 on: May 18, 2018, 04:37:44 AM »
If I could I would absolutely love to have my whole portfolio in stuff like this.

oddballstocks

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Re: CNDUF - Conduril
« Reply #58 on: May 18, 2018, 05:56:16 AM »
There's a difference in the company compounding vs your portfolio compounding.  Yes, Conduril will not compound, but you can absolutely compound your own portfolio holding them.  Like others said, by trading this, and through dividends, you have ample opportunities for gains.

If anyone else has non-compounders with a similar profile they're looking to unload please drop the name in this thread, I think there'd be a lot of buyers..
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Jurgis

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Re: CNDUF - Conduril
« Reply #59 on: May 18, 2018, 06:47:16 AM »
OK, thanks for the answers.  8)
"Before you can be rich, you must be poor." - Nef Anyo