Ocean Wilsons (holdings)... Share Discussion Threads

[eezymunny] 22/12/2023 10:29

If you look at the company's releases they seem to be awarding the directors and management c. £27m in 2024(if my numbers correct). Nice work...

Whether Bradesco's interpretation is correct remains to be seen! All seems very latino to me :)

[last of the mohicans] 24/11/2023 23:51

You can use the link



to download the latest Investor presentation (22nd November) which is all about Tecon Salvador

LOTM

[last of the mohicans] 20/11/2023 23:58

flyfisher,

You were on about shipyards the other day.

The plan they had was to build a 3rd ship yard only this time at RG on the opposite side of the river to the container terminal (more than double the size of the current 2 at Guaruja in the port of Santos), but that fell through I'm not sure if they didn't get planning permission or if the cost was to high along with all the other expansions they were doing at the same time, or the bottom fell out of the shipbuilding market for PSV's etc.

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Something else worth noting is the fact that 2024 is the last year of big borrowing repayments, $56M is due then (with $60M being paid back in 2023). After that its down to $34M in 2025 & under $30M per year after that. Now it will change as they expand different parts of the business over time.

But they should have a lot more free cash-flow to dish out when they don't see anything worthwhile investing in.

LOTM

[last of the mohicans] 19/11/2023 14:09

No problem both flyfisher & riskvsreward

riskvsreward well OCN went from like £0.65 to £10 during that time (2000 to 2010) so Hansa by extension had to have a good performance !

LOTM

[riskvsreward] 19/11/2023 12:22

Thanks LOTB, indeed I meant Hansa trust. All you said are true and I think that is why Hansa has permanently been traded on huge discount. It did have a good run of performance in the decade of 2000 though.

[flyfisher] 19/11/2023 12:09

Thanks, i didn't know of the extensions.

[last of the mohicans] 19/11/2023 11:46

flyfisher,

None off the 2 Tecon leases was up for renewal, they both had 25 year initial periods with 25 year extensions built into them.

Only the extensions meant having to spend money to right size them.

LOTM

[last of the mohicans] 19/11/2023 11:40

riskvsreward,

You mean Hansa trust.

First of all - it isn't OCN that's possibly being taken over its it's subsidiary Wilson & Sons.

Second there is no guarantee whatsoever that were this sale to occur that OCN will pay that money out to its shareholders in the short to medium term. That's up to the 2 families to decide & they may want to continue OCN as a sort of investment trust (which virtually all minority shareholders wouldn't want to happen but have no say over)

3rd, lots of investors over the years have looked at OCN and then at Hansa Trust's holding & thought Hansa was the better route to go because of the significant discount that it trades at to NAV.

The problem with that, is you expose yourself to a couple of problems!

A) 60% or so of the fund invests in the same things that the OCN portfolio does! (I've already highlighted at great length's how poorly it has done in comparison with how it could have done if it simply mirrored the Index they talk about in the annual reports)

B) What yield do you get on Hansa shares each year compared to owning OCN ? yes you've guessed it a lot lower one, so with each passing year the amount you've missed out compounds.

C) Tied in with B, you are paying yet more fees & bonuses to the families & there friends simply for them constantly holding the OCN shares!

& that's got nothing to do with how OCN is performing or has performed in the past, its simply part of the unique controlling structure the 2 families build up decades ago, so that they control OCN & they have the cheek to charge Hansa Shareholders for doing so.

Performance-wise OCN has never been near its 2011 (I think it was) high of over £17 a share. So you can just start to imagine the drag that's had on Hansa's performance since then. Normally a fund manager would have bailed out years ago on such an under performer, but Hansa can't it is caught meeting the needs of the family not the other investors (especially the "A" shareholders) in the fund.

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If Wilson & Sons were sold & OCN did pass on the proceeds to its shareholders, there's no guarantee that Hansa won't carry on as it is & just invest the proceeds in other things. So they'll still get there fees/bonuses only on a large amount of assets under management & the shares would still then trade at a significant discount to NAV !

But at the end of the day you pays your money & takes a chance.......

Good Luck

LOTM

[flyfisher] 19/11/2023 10:52

Many years ago, they tried to expand the shipyard operation and added 1000 new staff, it proved to be unsuccessful and they had to lay off workers as orders declined.
I also have a recollection of expanding the logistics operations, but don't know how it went.

In 2018 they ran a sales process and apparently had several interested parties, but at that time the local economy was in a downturn and one of the port leases was coming up for renewal. We then ran into Covid, which stopped most M&A.

Now the brazil economy is looking a little better and i think the port lease has been extended. So perhaps a more appropriate time for M&A.

Whilst WILSON SONS has scope for expansion, i am not sure that the family would want the increased capex, perhaps it is time for it to be moved on.

[riskvsreward] 19/11/2023 10:34

Isn’t it a better option to buy Hanson trust shares to benefit from a takeover of Ocn if it comes to fruition? Considering Han itself is on a huge discount and has Ocn accounting for about over 30% of its nav.

[extrader] 19/11/2023 08:57

Hi Piedro,

AIUI, OCN hasn't undertaken a strategic review for 4 years, so your definition falls at the first hurdle.

And surely the current 'strategic review' is reactive to an approach/approaches. Indeed, they acknowledge as much :

Having told us on 12 June (after the initial bid approach rumour) that it's appointed BTG Pactual as adviser

.." Ocean Wilsons also confirms that BTG Pactual has received a number of indicative non-binding offers for its indirect investment in OWOIL and in Wilson Sons.

As the strategic review process remains ongoing, there can be no certainty as to its outcome and the indicative non-binding offers received by the Company are highly conditional. The Board continues to evaluate all potential strategic options and will update shareholders further in due course..."

This is an M and S 'strategic review', AFAICS.

ATB

[piedro] 19/11/2023 06:05

Oh dear!!
You are still of the idea that WSON and OCN were putting themselves up for sale.

I suggest you look up the meaning of " strategic review"
Here is one interpretation from the web ...

"What is Strategic Review?
The Strategic Review is a process that is used to identify and prioritize the most important business objectives. It takes place in an organization at least annually to ensure that the organization has a clear understanding of its strengths, weaknesses, opportunities and threats. ..."


... there are plenty of others to choose from.

The sensational press have 'pumped' the sale notion and you have all fallen for it.
Nowhere have the companies spoken of selling up.

AIMO BWDIK

[last of the mohicans] 18/11/2023 23:24

Hi jane deer,

Thanks for that.

Wilson & Sons shares were also listed in Luxembourg until 22nd October 2021 (which ties in with the move to Novo Mercado date)

hxxps://www.marketscreener.com/quote/stock/WILSON-SONS-LIMITED-6499744/news/Wilson-Sons-Press-release-Delisting-Notice-36756079/

Actually in 2018 / 2019 they looked at selling off the container terminal and logistics assets at that time.

hxxps://markets.ft.com/data/announce/full?dockey=1323-14160478-5J1RVH0F9FGNLTH1H0AQCSFBRB

They were trying to build a really big logistics business back then but gave up on it. I don't think the margins were anywhere near what they had hoped to achieve with scale.

LOTM

[jane deer] 18/11/2023 22:26

LOTM

My understanding is that the requirement for any purchaser of OCN's holding in Wilson Sons to also bid (at the same price) for the minorities follows on from the restructuring of Wilson Sons done in October 2021. This was the transaction that moved the shares onto the Novo Mercado and in so doing minority holders switched from holding depositary receipts into holding ordinary shares. This coincided with the switch in ticker for Wilson Sons from WSON33 to PORT3.

The 2021 move did lead to an increase in the Wilson Sons' share price, as you would expect as minority shareholders got more rights. But if I am right about the rules, this would indicate that in 2021, OCN had little interest in selling Wilson Sons at the time - as OCN would have been able to obtain a bigger share of any bid premium for Wilson Sons for itself (at the expense of minority shareholders) before the Novo Mercado listing.

[extrader] 18/11/2023 14:29

Got it- thanks!

[last of the mohicans] 18/11/2023 13:50

Extrader,

I see where your coming from, but I don't think it would apply in Wilson & Sons case for MSC, but might for other potential offeree's.

MSC are a major shipper in Brazil & have a lot of the ship container market as it is, so buying a stake in a major shipping competitor narrows competition (ie Log-in).

I'm not aware of MSC being involved in any tug fleets, PSV's in Brazil, nor do I know of them owning container terminals themselves (Although I could be corrected on that assumption by others). In which case there not affecting competition within any of these industries.

Also worth noting there are only 1 Tecon at each of the 2 ports unlike say Santos where there are several & if you owned one or more there already & Wilson & Sons had one there as well you might affect competition & be required to sell one of them to someone else to get the transaction approved.

Hope that clarifies things a bit for you.

LOTM

[extrader] 18/11/2023 13:26

Might there be some regulatory push-back to outright takeover, though ?

MSC's earlier transaction could be relevant here too :

.."The earlier corporate activity by MSC in Brazil was to acquire a controlling interest, whilst maintaining a public listing. Possibly because of the target's 'strategic' nature?

.."MSC asked Brazil's competition regulator, the Administrative Council for Economic Defense (CADE), for permission to purchase up to 67 % of Log-In's shares.

The acquisition would happen through a public offer process, and MSC said at the time that it would tender an initial offering price of $4.73 per share - a 67% premium over Log-In's share price..."

hxxps://container-news.com/msc-on-an-acquisition-spree-log-in-logistica-approves-takeover-bid

.."MSC made its move to buy at least 62% and at most 67% of Log-In's total issued and outstanding shares in September, offering US$4.79 per share in a bid valuing the Brazilian company at over US$500 million.

Maybe I won't go back to sleep just yet!
ATB

[last of the mohicans] 18/11/2023 13:04

CousinIT

No problem & good to see others prepared to have difficult yet frank calls with the company.

Well they did invest over a $1 Billion in Brazil over about a 5 year period around 2011, so yes you'd hope to see a decent return on all that money.

The mistake was probably creating the investment portfolio in the 1st place & from the transcript the desire then by Wilson& Sons to not over pay for an asset / opportunity. Possibly reflected from selling off there part of BRASCO & then buying it & the rest of it back a couple of years later at a much higher price. Money they've never really been able to get a decent return on.

They would have been much better off paying up back then for another container terminal.

Yes them not wanting to hoard cash is good, yet there are a lot of opportunities available to them to develop RG & the waterways around it much more.

The concern is whether OCN are going to pass on these increased dividends to the minority shareholders. If they are then they should be doing at least 2 if not 4 payments a year instead of 1. The payment is starting to distort the share price even more because of the size of it, splitting it up will stop that from happening.

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Extrader,

There was a bit in the Q&A about the possible approaches, maybe not in the format you were looking for.

It was interesting to note that Wilson & Sons shareholders are entitled to the same offer price per share as OCN would get. Rather than it being treated as a totally separate thing.

I wasn't expecting that to be the case.

So any potential buyer has to effectively make provision for buying 100% of Wilson & Sons not just the 57.5% owned by OCN & by doing so could end up not getting all of it if some reject the offer.

LOTM

[extrader] 18/11/2023 12:05

Thanks CousinIT,

I'd seen those comments, wondered if there was anything more 'granular' elsewhere.
I suppose that there's only so much they can say, even if they want to, which they probably don't ;->

Back to sleep...
ATB

[cousinit] 18/11/2023 12:00

Extrader - they were in the trading announcements by PORT and OCN, I guess to avoid qu's in the call.

LOTM - I've made my points to the Board and flagged that the KID doesn't seem to fully allow for the various charging levels as PRIIPs requires. But essentially making the point that it seems unnecessarily expensive and involved.

Public statements by iNEDs don't necessarily have to completely align with how management are challenged in the confines of a Board meeting.

The transcript is interesting, thanks. Does seem to be more explicit in terms of our past investments are paying off, we won't hoard cash and you (as the market) can choose to reflect that in the share price if you wish. But we aren't in a mood to undersell the quality of the assets. Far more surefooted tone than I've seen in the past.

[extrader] 18/11/2023 11:25

Hi LoTM,

Thanks for your input and steer to the Q3 transcript.

I didn't see any Q (much less A!) re the status of approach(es?) received a few months back.

Was this addressed anywhere?

TIA

[last of the mohicans] 18/11/2023 09:58

Hi meanreverter,

If you read the transcript it would appear that higher dividends are on the way from Wilson & Sons going forward.

LOTM

[meanreverter] 18/11/2023 08:01

LotM — Your analysis is spot-on. Given the fat fees creamed off by the Family and their fund-managing mates, the question arises of how big a discount should apply to the shares. The market thinks around 50%. That is fair enough for me. I hold OCN because I like the underlying business, which helps to diversify my portfolio, and it pays a decent dividend.

If the share price got anywhere near book value, I would start to look elsewhere.

[last of the mohicans] 17/11/2023 22:16

Some of you might want to take a few minutes to go to

hxxps://ri.wilsonsons.com.br/en/publications/quartely-results/

From there select the 3rd Quarter Conference call transcript & read it - some interesting insight in there

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CousinIT,

At the moment, we pay small fees to the directors, fees & bonuses to Hanseatic, fees & bonuses to the fund managers / private equity companies etc that Hanseatic invest the money in.

I would much rather have seen the directors get higher fees & the cash invested in 1, 2 or 3 funds that match the Index quoted to us.

Those fees would be much less than we're currently paying & even increasing the fund size by 140% I doubt it would be costing us any more per year than it does now.

You would hope the independent (non family) directors would stand up for the interests of the minority shareholders. However from the public comments the Chairwoman has made to date its clear that, that is not the case.

There is No justification for the portfolio being 80 odd holdings. The smallest 40 could all double in price (which is impossible because of shorts & longs etc) & it would make very little difference to the overall portfolio value.

Its all just smoke & mirrors, to fool investors.

LOTM

[cousinit] 17/11/2023 08:26

LOTM

I have alot of sympathy with the argument. I would point out that had the investment portfolio had performed better at a gross level, a decent chunk of that would have been extracted in performance fees ;)

To some degree, this has always been an investment alongside the families with the hope that they try to generate long term value. It seems that prior generations were better at that aspect.

I would hope that the Board fees that we are contributing towards do add some independence, even if these are just nudges. In the current era of corporate governance, the potential for iNEDs to resign on principle (and be public about it) should carry some weight.