Author Topic: TESB.BR - Tessenderlo Group  (Read 69454 times)

skanjete

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Re: Tessenderlo Group
« Reply #10 on: June 18, 2014, 04:31:40 AM »
He is rather public shy and prefers to work instead of sociolising or giving interviews.

Yeah! I know communication with shareholders might be time-consuming, probably a waste of time, someone would even say a promotional activity… Yet, I think that as a shareholder it is of great usefulness to me!
How could I come to understand whether I want to partner with you and to make business with you, if you don’t make the effort to explaining your strategy to me, and your means to create value for both of us? … That’s basically what I have just said in the BH thread… ;)

Gio

Well, Tack of course is in a luxury position. He doesn't need you to partner with him. So he doesn't see any need to promote himself or even the company. He just lets results speak for themselves. And people who trust him or do the extra work to get the necessary information can get rewarded for it. He has a habit of underpromising and over-delivering. Reading all the info and news on Picanol over the last 5 years can be illuminating in this regard.

In the case of Tack, there is no promotional activity, quite to the contrary.
Actually, one of the first things to go when he took control of Tessenderlo was the investor relations department. Next, the quarterly reporting. In Belgium, it's quite common for small to midcaps to report just 2 times a year, just as in the UK.

Of course, a lot of institutional shareholders, from the days Tessenderlo still was considered a big cap for Belgian standards, are uneasy with these new policies and quite a bit protested at the annual meeting.
But the sobering remark came from management : "it's no use to focus on quarter by quarter progress. A company doesn't work like that. We, as management, focus on the long term, thus you as a shareholder bettter do the same."

A shareholder asked some specific goals they wanted to achieve over the coming periods in terms of efficiencies and restructuring. The answer : "the idea that a company can take a set of measures and restructure itself in one go into an efficient operation is an idiocy. Restructuring in our case is a continuing process. Every day we need to think how we can do things more efficiently. We need to change the mindset of the company so that we can gradually evolve into an efficient operation. Therefore we can't and won't give you any specific goals. You'll read the progress from our half yearly and yearly figures and reports." Of course the investor was frustrated with the answer, also the press didn't like it, but to me, it sounded like music in my ears.

So it's true : they won't give you the investment thesis on a silver platter (although I seem to do it here). But for those who want to do the extra work, there is an abundance of direct and indirect information (public records of his private companies, Picanol, newspapers,...)  available so that one can form a balanced view.
Without Tack I wouldn't touch Tessenderlo with a bargepole. But maybe Tack can provide the necessary kiss to the frog.


ukvalueinvestment

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Re: Tessenderlo Group
« Reply #11 on: June 18, 2014, 04:34:53 AM »
Very interesting.  This actually popped up on a screen and I thought I should look into it, but never did.

How well known is this guy in Belgium and how well known is this situation?  Is it discussed much in the Belgian press?
@ukvalueinv

skanjete

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Re: Tessenderlo Group
« Reply #12 on: June 18, 2014, 04:52:29 AM »
Very interesting.  This actually popped up on a screen and I thought I should look into it, but never did.

How well known is this guy in Belgium and how well known is this situation?  Is it discussed much in the Belgian press?

A few years ago he was not known.
But now he's getting gradually getting more and more credit for what he has done at Picanol. But that is only in the Flemish press (the Dutch part of Belgium). 
The story at Tessenderlo is being followed, but there is far from any hype around his person. He wouldn't let it happen either.

The press and investment world knows of course of the Tessenderlo story, but most are very sceptical because Tessenderlo is still being associated with the fiasco's of the past.

Besides, I think a big part of the shareholder base in Tessenderlo is based abroad and I am pretty sure Tack is hardly known in the investment world outside of the Flemish part of Belgium.

As an aside : as with many things in Belgium, there is also a communal discussion. Tessenderlo is based in the Flemish (Dutch) part of the country, and Tack and Haspeslagh are Flemisch as well.
But the previous main shareholder was French as well as the previous management. So the reporting used to be in Dutch/French/English and the annual meeting mainly in French.

The new management decided to simplify some things, and from now on, there's only reporting in Dutch and English. I also heard some rumour that next year the annual meeting will simply be in Dutch, maybe with simultanious English translation. So you can imagine the reaction of some French shareholders. Some less English fluent French will simply be unable to understand what the company is doing.

So everything taken together : I know some people who invested in the situation, but I wouldn't label it well-known or much discussed.

Patmo

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Re: Tessenderlo Group
« Reply #13 on: June 18, 2014, 04:55:02 AM »
Very compelling story, thanks for sharing. Too bad my broker doesn't let me invest overseas or I would look into it :'(

giofranchi

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Re: Tessenderlo Group
« Reply #14 on: June 18, 2014, 05:09:53 AM »
Well, Tack of course is in a luxury position. He doesn't need you to partner with him. So he doesn't see any need to promote himself or even the company. He just lets results speak for themselves. And people who trust him or do the extra work to get the necessary information can get rewarded for it. He has a habit of underpromising and over-delivering. Reading all the info and news on Picanol over the last 5 years can be illuminating in this regard.

In the case of Tack, there is no promotional activity, quite to the contrary.
Actually, one of the first things to go when he took control of Tessenderlo was the investor relations department. Next, the quarterly reporting. In Belgium, it's quite common for small to midcaps to report just 2 times a year, just as in the UK.

Of course, a lot of institutional shareholders, from the days Tessenderlo still was considered a big cap for Belgian standards, are uneasy with these new policies and quite a bit protested at the annual meeting.
But the sobering remark came from management : "it's no use to focus on quarter by quarter progress. A company doesn't work like that. We, as management, focus on the long term, thus you as a shareholder bettter do the same."

A shareholder asked some specific goals they wanted to achieve over the coming periods in terms of efficiencies and restructuring. The answer : "the idea that a company can take a set of measures and restructure itself in one go into an efficient operation is an idiocy. Restructuring in our case is a continuing process. Every day we need to think how we can do things more efficiently. We need to change the mindset of the company so that we can gradually evolve into an efficient operation. Therefore we can't and won't give you any specific goals. You'll read the progress from our half yearly and yearly figures and reports." Of course the investor was frustrated with the answer, also the press didn't like it, but to me, it sounded like music in my ears.

So it's true : they won't give you the investment thesis on a silver platter (although I seem to do it here). But for those who want to do the extra work, there is an abundance of direct and indirect information (public records of his private companies, Picanol, newspapers,...)  available so that one can form a balanced view.
Without Tack I wouldn't touch Tessenderlo with a bargepole. But maybe Tack can provide the necessary kiss to the frog.

Of course, it is not Mr. Tack who needs me… It is just the other way around: I need him to let me know and understand what he intends to do and how, before results speak for themselves… because by then it is usually too late!

Anyway, yes!! What you are writing about this new investment thesis is just wonderful! I agree 100%. And those quotes from the AM are just music to my ears too!

Very interesting investment opportunity! The sort of thing I really like. ;)

Gio
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skanjete

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Re: Tessenderlo Group
« Reply #15 on: June 18, 2014, 05:29:21 AM »
Gio,
I know you like owner/operators. I was actually thinking of you when I wrote it.  ;)

Another one I think you would like is Goodwin plc. Although at current prices, it's not as interesting anymore as some years ago (currently 15 times earnings I would guess).

But this is a small British owner/operator (the family owns 55%) with a simple steel engineering operation. Since current management took over they multiplied the value of the company by about 130x in 21 years, for a compound interest of about 26%/year over 21 years!

And this is no facebook or Uber, but the same operation as when the predessors of the Goodwin family started it more than 130 years ago : steel casting. I have great admiration for this company and it's management.
Maybe I'll start a new topic on it if there is any interest from board members.

giofranchi

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Re: Tessenderlo Group
« Reply #16 on: June 18, 2014, 06:30:48 AM »
Gio,
I know you like owner/operators. I was actually thinking of you when I wrote it.  ;)

Another one I think you would like is Goodwin plc. Although at current prices, it's not as interesting anymore as some years ago (currently 15 times earnings I would guess).

But this is a small British owner/operator (the family owns 55%) with a simple steel engineering operation. Since current management took over they multiplied the value of the company by about 130x in 21 years, for a compound interest of about 26%/year over 21 years!

And this is no facebook or Uber, but the same operation as when the predessors of the Goodwin family started it more than 130 years ago : steel casting. I have great admiration for this company and it's management.
Maybe I'll start a new topic on it if there is any interest from board members.

Of course you should start a new topic on Goodwin!!

skanjete… where have you been all my life??!! ;D ;D ;D

Gio
« Last Edit: June 18, 2014, 06:45:12 AM by giofranchi »
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peter1234

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Re: Tessenderlo Group
« Reply #17 on: June 18, 2014, 07:02:05 AM »
Thank you for a very thoughtful write-up!
Reminds me a bit of Einhorn's investments in Arkema, Lanxess and most recently Evonik.
 :)

I was wondering if you found any risks, potential flags when you were researching the company?

Which is the closest competitor?

skanjete

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Re: Tessenderlo Group
« Reply #18 on: June 18, 2014, 07:25:41 AM »
Thank you for a very thoughtful write-up!
Reminds me a bit of Einhorn's investments in Arkema, Lanxess and most recently Evonik.
 :)

I was wondering if you found any risks, potential flags when you were researching the company?

Which is the closest competitor?

Well, I actually researched Lanxess as well last year (there is a cyclical dip going on), but when the opportunity of Tessenderlo came up, I switched.
The competitors depend on the type of activity. Tessenderlo has 4 main activities, and thus different competitors.
I compared to Croda, Lanxess, DSM, Arkema, Solvay, Nutreco, Macdermid (taken over by Platform Specialty products),...

Of course there are risks. There always are risks, but I think they are contained in this case because of the margin of safety (cfr. quantification of the the sum-of-the-parts value).

The first main risk I thought of was, "what is an enterpreneur from the textile sector trying to do in the chemical sector?". It's not that the chemical sector is such a great sector and I suppose the dynamics are not the same.

Then it appeared he had some activities and experience in other sectors as well. And his modus operandi in other businesses clarified some things. And further, Tessenderlo is no longer mass chemicals, but more some specialised activities. 

When I talked to them, it's not like they have any new revolutionary strategic ideas linked to the chemical part  of the story. It's more that they have some strong views on how to make the total operation more efficient. Basically as they did with Picanol.

At Picanol as well, they didn't touch the core of the business, but merely made it more efficient and cash generative. I believe they have the same game plan with Tessenderlo : operate more efficiently, and start producing tons of cash.

giofranchi

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Re: Tessenderlo Group
« Reply #19 on: June 18, 2014, 08:14:03 AM »
skanjete,
I wasn't able to find Mr. Tack's age anywhere... Do you happen to know it? ;)

Thank you,

Gio
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