Ocean Wilsons (holdings)... Share Discussion Threads

[royaloak] 15/3/2024 16:50

22,034 shares traded in the Auction at 1365

[last of the mohicans] 15/3/2024 08:09

flyfisher,

I think that is rather disingenuous to say the least.

I've posted for many years now about the horrendous performance of the investment portfolio. About following the index instead.

16 years of nothingness is what they've actually achieved.

LOTM

[flyfisher] 15/3/2024 06:54

Hindsight, makes it look so easy !

[last of the mohicans] 15/3/2024 02:45

To be honest I'm still getting over the shock of what I found out & wrote yesterday.

I never actually imagined it was quite that bad.

I wish I had done that research a number of years ago, it might have helped galvanise other shareholders to do something about it.

Anyway I was thinking about it a lot more yesterday & made me realise this.

The 2 families & directors got shareholders in 2007 to part with 42% of Wilson & Sons for all of $206M or $11.50 per share back then.

Today that same 42% of Wilson & Sons is valued in the market at roughly $439M (roughly $3.50 per share adjusted for the additional 6 new shares they got for every original one so effectively $24.50 per old share).

Now there needs to be some sort of adjustment for the shares Wilson & Sons sold themselves during that process to raise their own cash for investment.

But its not a pretty picture & that's before you take into account all those dividends that have paid out over the years to the 42% holders, that we could have received instead.

The group has considerable borrowing nowadays roughly $500M that is costing us around $35M a year in interest payments. That's a cost of $1 per OCN share per year.

Anyone outside of those with a vested interest in the cosy Hanseatic set-up, would have realised that this isn't working years ago & said, either Cash in the portfolio & pay down the debt or your simply going to track the index or index/FPAF instead.

That would have left the overall debt at say $200M, but at the end of year 1 you've saved $21M in interest payments. Use that to reduce the debt further, so your debt now stands at $180M, in year 2 the saving rises to $22.5M & your able to reduce the debt to under $160M. In year 3 your saving is close to $24M & you debt falls to $135M at the end of it. In year 4 your debt has fallen to roughly $9M PA compared to the original $35M PA you were paying & at the end of the year the debt's reduced to just $110M.

By the end of year 7 the debt has virtually been fully repaid & therefore shareholders are effectively close to $200M better off in NAV terms ie the NAV is up over $5 per share than it would otherwise have been.

At this point the dividend could be increased by $0.50 per share & the rest going into the bank account to cover/sustain the dividend when the next downturn in Brazil occurs & profits drop.

GLA
LOTM

[last of the mohicans] 14/3/2024 03:37

For anyone wanting some context.

In May 2007 when OCN sold off approximately 42% of Wilson & Sons it raised $206M from doing so.

By the end of 2007 that cash along with existing cash & a small existing portfolio of shares were valued at $274M.

By the end of 2008 the valuation had dropped to $212.4M.

So depending on your view you could say that in the intervening 16 years the investment portfolio has gained all of 10% to 30th June 2023, or if you want to allow for the 2008 downturn the gain over the 15 years is around 38%.

FPAF was at approximately 300 at the end of 2007 (yes it was a small part of the portfolio even back then) & dropped to @ 190 by end of 2008. Since then depending on which one you want to go by its either risen by roughly 675% or 1050%

So saying they've cost us $300M over that time might be a considerable understatement....

GLA
LOTM

[last of the mohicans] 14/3/2024 01:36

So how will the investment portfolio have performed in the 2nd half of 2023 ?

It only gained $12.7M in the 1st half of 2023 compared to the loss of $50M for the whole of 2022.

As I have said on multiple occasions, Hanseatic are not worth employing they are useless to say the least, fund selection over the years has been abysmal other than them finding Findlay Park American Fund (FPAF) which has consistently performed well.

Unfortunately at times Hanseatic has sold down part of this FPAF holding possibly because it has become such a heavyweight in the portfolio compared to all the other rubbish round about it. If they hadn't sold it down it would probably have made up around 17% of the overall fund at the end of 2021 compared to the actual holding at that time of 11.2% ($39.264M)

FPAF didn't have a good 2022 that's for sure losing 22.4% of it's value during that time (1900.9 to 1474.3 from the FPAF website).

The OCN holding dropped in value to just $24,154M that's a massive drop of 38.48% so for at least the 3rd time in our history Hanseatic has sold a significant chunk of the FPAF holding around $8.75M in value this time round.

During the 1st half of 2023 FPAF regained in value (from 1474.3 to 1708.5) that's 15.88%. In the portfolio it only gained in value to $27.754 or 14.9% so another very small sale might have taken place in between.

In the 2nd half of 2023 FPAF increased in value (from 1708.5 to 1898.6) to virtually the same price it was at the end of 2021 a gain of 28.78% on the year (1900.9).

So instead of OCN recovering virtually all of what would have been the FPAF losses of $8.8M in 2022 (out of that $50M total loss) we're going to find out that the recovery was far less than that amount next week at around $7M.

So far in the 1st 2 months of 2024 FPAF has risen further to 2016.7 an increase of 6.22% on the December number (1898.6). That would have translated into a gain of over $2M on the 2021 valuation, but sadly we'll be seeing a lot less than that amount of gain.

Hanseatic's card is marked -

The OCN directors have cost OCN shareholders $300M+ over the years with this pathetic portfolio of mutton dressed up as lamb. Get it sold & invest the money in the index instead or happy for 15% of it to stay in FPAF & the rest in the index.

Yes the directors of OCN should get a slightly increased fee for doing this but the annual savings will amount to $5M in the fees saved that go to Hanseatic & those running all these under performing funds.

I'm also looking out for any slight of hand regarding the Wilson & Sons dividends that have already been payed to OCN but not passed on to us yet & how they might have been used to prop-up the investment performance at the tail end of 2023.

GLA
LOTM

[extrader] 13/3/2024 02:36

Hi Piedro,

You could be right- the controlling shareholders keeping their options open.

But a keen buyer (if there's competition) will 'trump' a disgruntled shareholder, unless (maybe even if?) there's lots of them.

Let's see if the results and conf call in 10 days give us a (cough) steer...

ATB

[piedro] 12/3/2024 22:58

Extrader,

My take on the presentation:

pp 12 Tecon Rio Grande
pp 13 T-RG running at 47.3% capacity
pp 20-26 justification for expansion plans pp 27

pp 28 Tecon Salvador
pp 29 T-SA running at 72.5% capacity
pp 41 expansion plans justified

pp 43 Towage
pp 45 justifications
pp 51 growing competition - they don't say how many new-builds are on order
by SAAM, Svitzer, Camorin{recently +6}, Sulnorte and others. Previously their market share was 40-50%
pp 54 - Towage expansion plans hence WSUT Chile not mentioned

pp 56 Offshore Support Vessels [WSUT}
pp 62 Finally declared the two PLSV on hire

I agree it seems to suggest "look what we've got"
but for myself as a shareholder it also suggests "please don't leave"

[extrader] 12/3/2024 17:04

Thanks for this!

Hopefully, there'll be an update shortly, to factor in the end 2023 numbers...

pp 22 and 68 list 'recent acquisitions'and seemed to suggest 'open to offers/look what we've got';

pp 54 shows geographic expansion plans (S/T Uruguay and Guyana, longer term Colombia, Ecuador, Peru). Curious that there's no ref to the J/V in Chile (?);

pp 17 and 32 show existing connections. I look at the gap across to Congo (Pointe Noire), where expansionist AbuDhabi Ports has just taken a 30 year concession and wonder if they're in the frame...

ATB and GLA

[last of the mohicans] 12/3/2024 16:38

Sadly looks like most investors here haven't even bothered to view the Presentation.

If they had then they might have a better idea as to what the yearly report is going to look like in $$$ terms

CousinIT,

I would say its their current plans, unless there owners say otherwise (current or potential). The process has certainly dragged on, although that might be a good thing given the improvements in profitability that have occurred & therefore the value of the business. Personally I think the chances of a sale are under 40% now.

There are things missing from that document, that I'm surprised that they haven't been included.

One of the shocks for me in the document is them wanting to sell a PSV, it doesn't tie in with the other things there wanting to do with tugs, new ports etc.

LOTM

[cousinit] 12/3/2024 15:33

(but does make interesting reading)

[cousinit] 12/3/2024 15:32

Is that a softener for the market if a sale doesn't complete or a sharpener for the remaining bidders ahead of the crunch round of best and final?

[last of the mohicans] 11/3/2024 23:49

Wow Wilson & Sons have just released a new presentation which is like 112 pages long with lots of expansion opportunities.

Well worth your time studying it I'd say.



Just click on the link from there.

GLA
LOTM

[cousinit] 07/3/2024 16:46

I realise that the independent board members have limited clout but I hope that they try to protect the interests of minority shareholders. I don't think a complete status quo does that, with Hanseatic having control of the investment portfolio and creaming off fees.

Changes are required even if most of the Wilson Sons stake was retained.

[varies] 07/3/2024 11:53

I cannot help feeling that Messrs Salomon and Townsend would have done a deal by now if they wanted to and that we shall soon be told of an amicable decision by all concerned to terminate the discussions. Such news might come with the results due, so it seems, by 22 March.
Bearing in mind the substantial liability to CGT that longstanding shareholders might incur, perhaps we should limit our expectations to an increase in the dividend.

[last of the mohicans] 06/3/2024 22:30

Hi meanreverter,

I'm sure then that Mirabeau will have pointed them out to the said person, to put them right.

-----------------------

February's Wilson & Sons numbers are now out, yes there is an extra day to take into account for the month with it being a leap year, but a very health set of numbers, especially for the container terminals (+32% or +25% average for 2 months) & towage (+10.6% or 7.8% for 2 month average) which are the big 2 when work done gets converted into $$$ earned.

Not long now until March 21st / 22nd & year end results.

LOTM

[meanreverter] 27/2/2024 08:05

LotM: Your comments should be addressed to Mark Watson-Mitchell, whose piece Mirabeau was simply quoting.

[last of the mohicans] 26/2/2024 20:46

Hi Mirabeau,

Well a couple of points for you to pick-up on ......

Wilson & Sons have already paid out 2 dividends for the current year (to end Dec 2023) Which OCN haven't passed on to their shareholders yet. Each OCN share effectively owns just over 7 Wilson & Sons shares (currently priced at over 17 Real per share with just under 5 Real to the $, so 120 Real in total or a value of $24 per OCN share simply for its Wilson & Sons holding onto which you need to add the value of the Investment portfolio) .

Wilson & Sons had a very good 4th Quarter in business terms which will show up in the financial results on 21st March. They will also no doubt announce another dividend at the same time.

On 22nd March when OCN makes its annual results known, it will announce a dividend in excess of the $0.70 your expecting, I'd say the number is more likely to be around $0.90 per share.

You also haven't highlighted how poorly the Investment (fund management) side of the business has performed for many years now.

Nor the fact that 2 family's control over 51% of Ocean Wilsons, making everyone else minority shareholders. Important points for your followers whoever they maybe to know, yet missed in your narrative.

LOTM

[mirabeau] 26/2/2024 19:03

Wading ‘In Play’ In Overseas Waters

Today I am going international with a feature on an undervalued group with a London and a Bermudian quote – Ocean Wilsons Holdings (LON:OCN).

On the face of it I believe that the shares of this £472m capitalised group are trading well below their value at the current 1335p – yes unusually for me a heavier market capitalisation with a very heavy share price – but it looks cheap to me, which readers will identify in due course.

With results due within the next month, it is expected to report a 10% uplift in 2023 revenues to £372m, with a 178% better profit of £84m.

For this year that could rise by another 10% in turnover to £411m, with a 27% increase in pre-tax profits £107m.
The Business

The company’s principal activities are the management of a diverse global investment portfolio and the provision of maritime and logistics services in Brazil.

In outlining its Purpose and Strategy the company robustly states that its objective is, through its investments, to create long-term capital growth without pressure to produce short-term results at the expense of long-term value creation.

It operates through two primary investments – Ocean Wilsons (Investments), an actively managed investment fund, and Wilson Sons, a Brazilian maritime services company.

The maritime services segment provides towage and ship agency, port terminals, offshore, logistics and shipyard services in Brazil.

The investment segment holds a diverse global portfolio of international investments with an investment strategy of a balanced thematic portfolio of funds and is a Bermuda based company.
Ocean Wilsons (Investments) Limited

The investment strategy for its managed portfolio is to generate real returns through long-term capital growth, whilst emphasising preservation of capital without respect to short-term moves in equity markets.

Its investment portfolio is invested in both publicly quoted and unquoted assets in diversified components.

Working alongside expert managers in specialised sectors or markets allows it to have access to the best opportunities to achieve its strategy.

This longer-term view directs an OWIL investment strategy that its investments are made in a balanced thematic portfolio of funds which leverage long-standing relationships.
Wilson Sons SA

Wilson Sons is one of the largest providers of maritime services in Brazil with activities including towage, container terminals, offshore oil and gas support services, small vessel construction, logistics and ship agency.

The Wilson Sons strategy is to grow the business on the basis of its skills and existing assets, strengthening the businesses and looking for new opportunities in the maritime and transport sector, focusing on Brazil and Latin America.

It looks to develop its businesses by maximising economies of scale and efficiency and improving the quality and range of services that it provides to customers.
Major Strategic Review Now Well Underway

On 12th June last year, the group responded to some Brazilian media speculation by stating that:

“The Board notes recent Brazilian media speculation to the effect that the Company is negotiating the sale of its 57% owned subsidiary, Wilson Sons SA.

The Company confirms that it is undertaking a strategic review involving the Company’s investment in Wilson Sons.

That review, which will consider all potential strategic options, is currently at an early stage and there can be no certainty as to its outcome.

The Company has not received any formal proposals from any third party with regard to a potential transaction involving Wilson Sons.”

The Board recognises that there are divergent views among the group’s shareholders regarding its non-correlated asset holdings.

The review is intended to provide a platform for it to optimise the asset mix, to enhance returns, and to drive growth in the longer term.

On 15th November last year, the group issued its Q3 Quarterly including an Update on its strategic review regarding its investment in Wilson Sons:

“The company has retained Banco BTG Pactual S.A. as adviser to Ocean Wilsons Overseas Limited, the holding company for the Group’s indirect investment in OW Overseas (Investments) Limited and in Wilson Sons.

The company confirmed 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.”

The Equity

There are some 35.36m shares in issue.

The larger investors include Hansa Investment Company (26.45%), ICM Investment Management (12.95%), Dynamo Internacional (4.99%), City of London Investment Management (4.94%), Unicorn Asset Management (3.04%), Menhaden Capital Management (1.02%) and Chelverton Asset Management (0.85%).

Two Board members also represent large holdings – William Saloman (13.18%) and Christopher Townsend (11.42%), both of whom are Directors of Hansa Capital.
Analyst’s Views

A consensus of analysts suggests an average Price Objective for the group’s shares is 1,675p, with the highest view seeking 1,750p a share.

Andy Murphy at Edison Investment Research has a value realisation of 2,564p per share on the group’s equity.

For the year to end December 2023 he estimates that group revenues will have risen to $472.6m ($440.01m) with a massive pre-tax profit of $107.2m ($38.5m), lifting earnings to 159.2c (loss 51.9c), while maintaining its 70.0c per share dividend.

The year now underway could see it boost revenues to $521.7m, taking profits up to $135.5m, earnings of 214.7c, enabling a 100c a share dividend.
My View – Looking For 1,600p Very Soon

Within the next four weeks or so we should be seeing the group declare its 2023 Final Results, which going on the Edison estimates should be well received.

We should also get some confirmation on just how well the current year is perceived by the group’s Management.

But of much more interest, just what is going on in terms of the ongoing Strategic Review and the number of offers that were previously mentioned for both parts of the company.

That helps to give the low p/e and healthy yielding shares, currently 1,335p, quite a bit of a sparkle valuing the company at just £472m.

Despite them having risen from 820p last June and having already seen quite a swift ascent, I now fix a Target Price of 1,600p on the shares, hoping for some early positive news.

At that time is it possible that we might also get a more enlightening detail on the strategic review and its potential outcome, especially if any of the offers have progressed?

[last of the mohicans] 22/2/2024 17:00

Hi SalvorHardin,

If you read the very top of it, you'll see the OCN board requested this rule be applied.

That was also around the time of the Wilson & Sons float.

It hadn't been in place before then that I can recall.

LOTM

[salvorhardin] 22/2/2024 15:23

The compulsory transfer rule looks to me as if it isn't a poison pill. Instead it's to protect the existing shareholders from being caught by the UK's rules on "Close Companies" if someone new buys a stake of 5% or more.

If HMRC decided that Ocean Wilsons has become a close company, this has serious tax implications for large shareholders who are UK taxpapers (such as being taxed on their share of realised capital gains made by the company which have not been distributed to shareholders). The major shareholders want to avoid that.

Ocean Wilsons doesn't need a poison pill to stop takeovers because management are the major shareholders. Poison pills are usually seen where senior management doesn't own a big stake in the company but wants to prevent someone from buying the company and sacking them.

[extrader] 21/2/2024 20:38

Thanks - I think!

';-<'

[last of the mohicans] 21/2/2024 20:32

Hi Extrader,

Its too long to post here but go to the company website, look under the investors section. Within that look at the bottom heading "Compulsory Transfer of Shares"



Good Luck
LOTM

[extrader] 21/2/2024 17:45

Hi LOTM,

Fair enough. Absent substance, go for detail...

Speaking of which :

I couldn't find the specifics of the poison pill defence that OCN has in place, if you do and could share that WOULD be a worthwhile contribution to the board :->

TIA and ATB