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I’ve more than doubled my holding of Dewhurst “A” non-voting share (LSE:DWHA) (and to attend AGMs I’ve picked up a few shares with votes, LSE:DWHT). The “A” shares averaged out at £5.64, quite a jump from the £3.18 paid in April 2014. It was a bargain then, and because the company has advanced considerably since, I think it is a bargain at £5.64.
I started buying into this company because I figured it was a Warren Buffett style investment, meaning that it has a strong economic franchise; managers who are both competent and behave with high integrity toward all shareholders; good accounting numbers, and; the shares are available at a low price relative to the facts of past earnings and a reasonable expectation of future earnings.
Dewhurst “A” shares
Dewhurst voting shares (ordinary)
I have added to my Dewhurst holdings over the years: June 2014 at £3.11, December 2014 at £3.75 and November 2017 at £5.46.
On the shares bought in April 2014 the company has paid out 57.5p in dividends and so the return on those has been 95% so far.
(Previous Newsletters on Dewhurst: 12th – 22nd Dec 2014, 15th June 2015, 14th – 17th Dec 2015, 25th – 27th July 2017, 21st, 22nd Nov 2017, 3rd – 5th Jan 2018, 20th – 24th July 2018).
Brief description of the firm
This manufacturing and electrical component distribution company has been run by the same family for a century. It designs and manufactures components for lifts, ATM and other keypads, and for trains.
It also supplies handrails for escalators and various traffic products such as large bollards.
It has recently greatly expanded the distribution, wholesaling and retail selling of lift components and other electrical items, offering a range much wider than what it manufactures itself.
The two brothers currently in charge have decades of experience in this field and are supported by a stable professional team. They have grown profits both by organic means with an almost obsessive interest in design prowess and manufacturing efficiency, and by a measured acquisition strategy of companies supplying (generally) complementary products. Often these acquirees have a long association with Dewhurst as suppliers or customers.
Demand for individual product lines can be somewhat volatile from year to year, but, because they apply their core knowledge and other strengths to selling into a number of distinct markets (lifts, trains, keypads for ATMs, escalators, traffic control, petrol pumps and ticket machines) and do so all over the world, the various ups and downs generally even out to produce a history of remarkably steady progress.
A big impact acquisition was made last year. A&A Electrical Distribution was bought for a minimum of £10.5m and a maximum of £12.25m, depending on performance. It specialises in UK lift components distribution and has been a major customer of Dewhurst for many years.
Basically, Dewhurst swapped £10.5m of cash sitting on its balance sheet earning next to nothing for all the shares in a business which reported £3.3m in profits before tax on turnover of £11.4m.
Given the history of successful acquisitions by the D
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