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Value Investing Congress: Global Below Book Value Investing

This morning at the Value Investing Congress, we heard from the investing duo of David Shapiro and Evan Vanderveer of Vanshap Capital. This small investment firm manages $37 million in a focused, very concentrated fund and value focused fund.

Vanshap Capital takes a global approach to investing, seeking investments that are valued below book value. They presented two investment ideas: EGI Financial  (TSX: EFH) and Eurobank Properties (Athens: EUPRO). Here are the notes from the presentation.

 EGI Financial  (TSX: EFH) – $11.50

  • 3rd largest investment – firm owns 2.2% of company
  • Canadian property and causality insurance business
  • Stock trades at 80% of book
  • Without improvement to business, EFH is worth 125% of book
  • That’s a 60% premium to the current price
  • With improvements to the business, the stock could be worth 2x current price
  • Big market share in Canada: 16% nationwide, 32% in active markets
  • More profitable than other insurers
  • Competitor Jevco bought out last year at 1.4x book
  • 34% of stock is owned by “smart” institutional value investors
  • Stock buyback is underway – more to come
  • Vanshap Capital expects a 46% annual rate of return over the next three years

Eurobank Properties (Athens: EUPRO) – $7

  • 5th largest investment in fund
  • High quality Greek REIT
  • Trades at 63% of appraised book value
  • The current rental yield is 12%
  • Well regarding investment firm Fairfax Financial has a large stake, with a board seat
  • Property assets include commercial and retail properties – 82% in Greece, mostly in Athens
  • 92% occupancy rates
  • Class A office space
  • Long lease terms: 10.4 years, linked to CPI to reduce threat of inflation
  • CAPEX picked up by tenants
  • Clean and flush balance sheet – raised 400 million Euros at height of market
  • In Athens and Greece, there has been no new construction in five years
  • A low-priced, low risk play on economic recovery in Greece
  • In summary: Clean balance sheet, strong management, high quality properties and lots of tenants