nwoodman

Cheers, I couldn’t get Spirax to work until the share price is in the range £55-65. Even then you start to make up narratives around future growth. I do like the STS and Watson-Marlow businesses but not at any price. To get near today’s price (£85.80) you start putting on some egregious sales multiples: Valuing each division separately (using 2023 revenue and a revenue multiple): Steam Thermal Solutions: 910.1m * 4 = £3,640.4m Electric Thermal Solutions: 378.5m * 3 = £1,135.5m Watson-Marlow: 394.0m * 5 = £1,970.0m Total: £6,745.9m Less net debt: 6745.9m - 763.4m = £5,982.5m Per share: 5982.5m / 73.6m shares = 8128p per share Operating Profit Margins Steam Thermal Solutions (STS): 2023: 24.6% 2022: 23.8% Change: +80 basis points Electric Thermal Solutions (ETS): 2023: 15.6% 2022: 15.6% Change: No change Watson-Marlow: 2023: 23.8% 2022: 32.8% Change: -900 basis points A crude estimate on net margins: The group's adjusted effective tax rate for 2023 was 25.5%. Steam Thermal Solutions (STS): Revenue: £910.1m Adjusted operating profit: £224.0m Estimated net profit: £224.0m * (1 - 0.255) = £166.9m Estimated net profit margin: 166.9 / 910.1 = 18.3% Electric Thermal Solutions (ETS): Revenue: £378.5m Adjusted operating profit: £59.2m Estimated net profit: £59.2m * (1 - 0.255) = £44.1m Estimated net profit margin: 44.1 / 378.5 = 11.7% Watson-Marlow: Revenue: £394.0m Adjusted operating profit: £93.7m Estimated net profit: £93.7m * (1 - 0.255) = £69.8m Estimated net profit margin: 69.8 / 394.0 = 17.7% Watchlist for this one.

Just started doing some work on Spirax. Is this still your view? It piques my interest as a quality compounder that got ahead of itself and has tracked sideways for 5 years.

Shellac’s new album,’To All Trains’ that was released 10 days after Steve Albini passed away. Was a big fan of Big Black in the day, and Steve’s vocals still hold up today, raw and intense as ever. RIP. https://pitchfork.com/reviews/albums/shellac-to-all-trains/

The Overland Track in Tasmania, South to North (Lake St Clair - Cradle Mountain). This is one of Australia’s best known thru hikes. First time I have done it in Winter but turned out to be the best weather conditions I have had out of my 5 crossings. A little cloud day 1 then bluebird for the next four days. Go figure.

A little late but EoQ rotated some MKL for DEO.

Cool, and nice reply. In hindsight my reply was saltier than intended. Probably a little protective of S&G as it was a big part of my musical discovery (exploring Dad’s album collection). Jeff Buckley’s version of Hallelujah is another case in point.

I think it is says a lot about Disturbed that their most rated song is a cover. Saw them at a Knotfest early this year, would love to get that part of the festival back. OG version all the way for me. P.S. Good to see Jeff Bezos doing some moonlighting though

No shortage of opportunities. Hopefully their project delivery and operational expertise also featured in the invite.

Delhi airport roof collapse highlights Modi's infrastructure challenges https://www.reuters.com/world/india/delhi-airport-roof-collapse-highlights-modis-infrastructure-challenges-2024-06-28/ Summary: 1. On Friday, June 28, 2024, a portion of the roof at Terminal 1 of Indira Gandhi International Airport in New Delhi collapsed following heavy rainfall and strong winds. The incident occurred around 5:00 am local time in the departure forecourt area, where the canopy roof and its metal support beams gave way, falling onto parked vehicles below 2. The collapse resulted in the death of one person, a taxi driver who was crushed in his vehicle, and injuries to eight others. Videos and images from the scene show the collapsed white canopy and several cars severely damaged by the fallen beams. 3. As a result of the incident, all departures from Terminal 1 were suspended, leading to flight cancellations and diversions to other terminals. Rescue operations were carried out by the Delhi Fire Services, who faced challenges in retrieving the deceased driver’s body from the wreckage. 4. Terminal 1, despite being the oldest at Delhi airport, had recently undergone renovations. The collapsed section was part of an older area, distinct from the newly expanded sections. The cause of the collapse is being investigated, with initial assessments pointing to the heavy rainfall as a primary factor. 5. The incident has raised concerns about India’s infrastructure and safety standards amidst the country’s rapid development. Opposition politicians have criticized the government’s infrastructure record, highlighting recent mishaps. In response, India’s aviation minister announced compensation for the affected families and ordered thorough safety inspections at airports nationwide. 6. The collapse occurred during a period of severe weather in Delhi, which received nearly nine inches of rain by Friday morning, the highest June rainfall in 15 years. The heavy downpour provided relief from the intense heatwave that had gripped the region since April.

Delighted to say The Bear - Season 3. https://www.latimes.com/entertainment-arts/tv/story/2024-06-27/the-bear-season-3-review

Yep, even if its a big world after all, valuation, optics, simplification for the next guy. Its probably one of the easier decisions he has to make in his nineties.

I really enjoyed William Green's interview with Bob Robotti. Transcription attached. No doubt some confirmation bias on my behalf because what he is arguing is very much where Fairfax and Berkshire are investing today. https://podcasts.apple.com/au/podcast/we-study-billionaires-the-investors-podcast-network/id928933489?i=1000659920472 1. Robotti believes we're entering a new "golden age" for value investing and active management. He argues: "The next decade is going to belong to stockholders... the indexes will not outperform selecting stocks and the ability to identify, do research, select companies that are well positioned and have valuations that are attractive." 2. He sees major structural changes happening, including: - The "evolution of globalization" as manufacturing shifts from China to Southeast Asia and India - North America becoming structurally advantaged in energy-intensive industries - A global energy crisis driving demand for both fossil fuels and renewables 3. On energy, Robotti states: "We're in a very tight supply demand balance in oil today, which I don't think is recognized at all in pricing and yet is an important backdrop." He emphasizes North America's advantage: "North America, because it has an abundance of natural gas that you can't export, has an energy cost that's disconnected from the rest of the world. And that is a persistent long-term advantage." 4. Robotti is particularly enthusiastic about opportunities in unfashionable "old economy" industries. He describes this as: "the metamorphosis of the old economy. Poor industries that have done poorly for a long time are capital deprived, have consolidated, have restructured and maybe the underlying economic environment is different where they've gone from being disadvantaged to potentially very advantaged today." 5. He provides specific examples of old economy sectors with potential, such as chemicals, building products, lumber, and energy services. Robotti highlights companies like LSB Industries in ammonia production, noting how they benefit from low US energy costs and potential new markets in energy transition. 6. On these old economy stocks, Robotti emphasizes: "These are fundamentally, structurally different businesses than they've ever been... And yet valuations are extremely modest because, oh, I know that business, it's a cyclical crappy business. It changed. It isn't what it used to be. It's a butterfly today. It's not a caterpillar." 7. He draws parallels to Warren Buffett's investment in railroads, noting how industries once considered terrible can transform into attractive investments due to changing economic conditions. 8. On indexing, Robotti predicts: "It's the restoration of the fallen stock pickers, active managers. In the next decade, I think have a bright future. And I think I'll be shocked that they don't outperform industries." 9. Robotti credits much of his success to emotional fortitude: "The successes we've had have been the ability to, the behavioural advantage, of being able to tolerate a loss." Podcast: We Study Billionaires - Richer, Wiser, Happier.pdf

Thomas Cook India and SOTC Travel see significant growth in DomesticTravel demand Impressive stuff. All filings for future reference

Definitely more engagement than in the largest shareholder go figure. Just putting it out there but can you imagine the multiples for a US based company that grew 36% in a sector growing at 14%. https://www.gicouncil.in/media/4403/flash-report-may-2024.pdf

Summary of the CC. Go Digit General Insurance had a gross written premium (GWP) of ₹9,016 crore in FY2024, representing a 3.1% market share in total insurance and 6% in motor insurance. Key performance indicators showed strong growth in GWP, net earned premium, profit after tax, and assets under management compared to prior years. The combined ratio increased slightly to 108.7% in FY2024. The GWP mix shifted towards more motor own damage and health/travel/personal accident, while motor third party declined as a percentage. Overall growth was strong across segments. Investment leverage increased as assets under management grew faster than net worth. The investment portfolio is predominantly in sovereign and high-rated corporate debt securities. Loss ratios increased in health, fire and engineering segments but decreased in core motor segments. The company absorbed ₹69.4 crore of losses from natural catastrophes and large claims. The company is leveraging technology and API integrations to automate processes and improve efficiency to support future growth. Q&A Summary: Retail health insurance is a small portion of the health portfolio which is dominated by group insurance. This is a challenging but important segment the company is collecting data on to improve underwriting. Solvency ratio will improve to over 200% after the recent capital raise post-IPO. Exact number will be disclosed later. The company looks at combined ratios more holistically rather than targeting specific channel or product mix. It aims to be adequately reserved and profitable, and will avoid consistently loss-making segments. IFRS earnings were provided showing a reconciliation to Indian GAAP profits. IFRS-17 insurance accounting standards will have some impact on reported earnings. In general, the company is focused on calibrated, profitable growth rather than providing specific guidance or targets. It remains agile to market conditions and opportunities across products and channels. I think Kamesh did a great job of fielding the questions and providing enough color on the opportunities and the challenges. Definitely gave the impression that they are only interested in profitable book and will simply walk if it doesn’t make sense. Lots of questions and could have easily run longer than the hour allotted. Find attached the world’s worst transcription, unfortunately my software did not play nice but attached anyway. cc pres also attached. GO DIGIT GENERAL INSURANCE LTD Results Call_otter.ai.txt investor-analyst-presentation_q4fy24.pdf

Digit CC is later today, may be of interest. No mention, that I could find, of a replay or transcript being available afterwards. Following rego they provide a list of toll free numbers for most countries for dialing in. https://www.godigit.com/content/dam/godigit/general/investor-relations/stock-exchange-disclosures/intimation_pursuant_to_reg_30_earnings_call.pdf

Digit Earnings for Q4 (31st March 2024). Attached coverage from the Economic Times and the Digit release, USD conversions (assuming an exchange rate of 1 USD = 82 INR): Net Profit (Q4): Rs 53 crore (approx. $6.46 million) (up 104% YoY from Rs 26 crore (approx. $3.17 million)) Gross Written Premium (Q4): Rs 2,336 crore (approx. $284.88 million) (up 19% YoY from Rs 1,955 crore (approx. $238.41 million)) Net Profit (FY 2023-24): Rs 182 crore (approx. $22.20 million) (up 405% YoY from Rs 36 crore (approx. $4.39 million)) Gross Written Premium (FY 2023-24): Rs 9,016 crore (approx. $1.10 billion) (up 24.5% YoY from Rs 7,243 crore (approx. $883.41 million)) Premium Retention Ratio (FY 2023-24):85.8% (previous year: 81.6%) Premium Retention Ratio (Q4): 89.9% (previous year: 88.3%) Assets Under Management (as of March 31, 2024): Rs 15,764 crore (approx. $192.24 million) (up 24.4% YoY from Rs 12,668 crore (approx. $154.49 million)) Combined Ratio: 108.7% FY24 vs 107.4% FY23 & 108.8% Q4 24 vs 102.6% Q4 23 Currently trading about 3.5 x's GWP Go Digit Q4 Results PAT jumps 104% YoY to Rs 53 crore; gross written premium up 19% - The Economic Times.pdf press-release-q4fy24.pdf

True albeit with a financing component and +/- cash flow implications. As long as the price direction is correct then you also get the use of the cash in excess of interest payments on the way through. It becomes a bit of a virtuous circle when that cash gets used for buybacks below IV. The Ensign swaps demonstrated that the process can be as simple as Fairfax fronting up with the cash based on the days closing price. The counterparty doesn’t have to dump shares back into the market etc. they get surety of price and Fairfax gets a swag of shares. No epiphany but good to see it can be done this elegantly.

Wasn’t that yesterday’s closing price? It seems rather than have the swaps counterparty dump the shares onto the market,they have purchased them directly from the counterparty that arranged the swaps. I haven’t followed this closely but a Perplexity search offered the following: Equity Ownership In April 2022, Fairfax converted C$11.05 million of convertible debentures into 6,314,286 common shares of Ensign, increasing its ownership stake to 12.87% of outstanding shares at the time. In June 2020, Fairfax entered into cash-settled total return swap contracts for 4,557,600 notional common shares of Ensign, representing 2.79% of outstanding shares. On June 10, 2024, Fairfax terminated total return swaps over 7,787,600 Ensign common shares and agreed to purchase those shares at C$2.34 per share, representing 4.24% of outstanding shares. After the June 2024 transaction, Fairfax's beneficial ownership and control in Ensign increased to 29,588,486 common shares, or approximately 16.10% of all outstanding shares. Major Shareholder Along with Murray Edwards (approximately 23% ownership), Fairfax is one of the largest shareholders in Ensign Energy Services. As major shareholders, Fairfax and Murray Edwards have the ability to provide capital to support Ensign's operations and potential refinancing needs. Looks like they must have added to the swaps position after the initial setup in 2020. My quick search doesn’t show this. What I find interesting is that Fairfax purchased the share position from the swap counterparty. Might provide some color around how they intend to eventually wind up the FFH TRS position.

I am no expert but there are times in a countries economic development that you need a strong leader with a mandate in order to get stuff done. I wouldn’t call that a dictatorship but perhaps a “necesssary evil’. The risk here is that we go back to horse trading and India loses some of its momentum. An issue in terms years but irrelevant in the context of decades. Taking a glass half full perspective, perhaps it is “the pause that refreshes’ and it results in a better outcome long term. The market thinks otherwise.

@glider3834 that is good news. Importantly is there any provision to shake out Demetra Holdings and Logicom (25% between them)? I am reading between the lines but it almost appears to be an ideological reticence to sell. I guess everyone has their price but hopefully €2.56 is getting close.

@Parsad really sorry you have to put up with that kind of crap. The paywall is a low bar and I could just imagine old mate with 10 different usernames wreaking havoc otherwise.

Ouch, what a shitshow. Railway stocks tank 20% as election trends diverge from exit polls https://economictimes.indiatimes.com/markets/stocks/news/railway-stocks-tank-13-as-early-election-trends-diverge-from-exit-polls/articleshow/110693788.cms Download Economic Times App to stay updated with Business News - https://etapp.onelink.me/tOvY/135dde21

Unfortunately I think this is the case. Ben comes across as a pretty sharp cookie. If he gets on the front foot and cements his place as a competent chair and an articulate advocate for the company then there could be upside to both FIH and FFH. I was probably a little naive in my thinking about India a few years back, it is a tough nut to crack and you have some seriously entrenched players….Adani I am looking at you. On the flip side, I wonder if Prem can sniff some upside post election, you would hardly put your son in a position to fail.

Looking good for Modi and the BJP India Stocks, Bonds Set to Gain as Polls Show Landslide Modi Win Indian stocks, bonds and the rupee are poised to climb on Monday after exit polls indicated a resounding victory for Prime Minister Narendra Modi’s party in general elections that concluded Saturday. The polls suggest the Bharatiya Janata Party-led alliance will clinch substantially more seats than the 272 required for a majority in the 543-seat lower house of parliament, with most pollsters predicting the group will win between 350 and 400 seats in total. In 2019, the alliance won 352. The votes will be counted on Tuesday.