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