Volvere Share Discussion Threads

[rivaldo] 09/2/2017 12:02

Finally - an uptick after four more buys this morning. Overhang cleared?

[zoolook] 08/2/2017 17:44

I bought in again today. Im sure an IFA would be horrified how overweight I am on this one now.

[eeza] 08/2/2017 16:53

Lol !!

I bought 2 (small) lots this pm.

Seller getting more impatient.

[melf] 08/2/2017 16:39

Interesting that they've dropped the bid but not the offer. Maybe MMs fishing for stock?? A nice 35p spread!

[rhomboid] 08/2/2017 16:35

Bloody typical , I bought another slug at lunchtime!

[melf] 08/2/2017 16:27

Even more amazing Riv, the share price is down a couple of ticks. Great top-up opportunity for those in the market.

[rivaldo] 08/2/2017 16:02

Amazing - around £60,000 of net buys today and no effect on the share price.

If the seller had any sense he would surely drip their stock more slowly into the market and feed it into a steadily rising price.

[eezymunny] 08/2/2017 11:51

Indeed Rhomboid, VLE can feel a little frustrating at times as it's thinly traded, but don't forget March 17 will be the 2 year anniversary of the acqn of Impetus, so this could be the year that it is sold. I reckon £10m looks a reasonable stab at an exit price, so £8m ish to VLE. It's in the books for almost nothing, so if it's sold we should see a decent spike in the share price Patience patience.

Things at Shire and Impetus may take a turn for the worse of course, but with the downside pretty well protected the risk/reward still looks utterly fantastic to me.

[melf] 08/2/2017 11:33

Interesting discussion above - great BB.

You have to admire the Landers style. From what I understand they have had numerous approaches from potential investees and yet with a chunk of cash burning a hole in the company's pockets, so to speak, they are still waiting for the right opportunity. Their patience over time has certainly reaped impressive returns for shareholders.

[rivaldo] 08/2/2017 10:15

Rhomboid, many have posted exactly the same comments since the share price was 150p :o))

A "large" position depends on your own portfolio size and perspective. On liquid days you can usually sell perhaps £30,000 of stock, and when M&Z are finally out I suspect there will be improved demand for shares. Personally I've never sold a share yet and am happy to hold for another 100% from here.

It would be in the Landers' interests to pay a huge dividend, but that's not their ambition, which is to grow the company. Even the payment of a tiny dividend wouldn't necessarily attract dividend-hunting investment funds given the illiquidity for holdings of say £200,000+.

The situation here is therefore perfect for PIs like you and I.

[rhomboid] 08/2/2017 10:01

This has been a slightly frustrating but profitable share to hold, the reason being that is too illiquid to hold too large a position and is totally reliant on 2 people, on top of that it seems to lack an enduring catalyst for a rerating as it just drifts off after news. I keep banging on about it paying a dividend as that is easily affordable from FCF and in my view would open up a far wider universe of potential shareholders. I know it looks illogical to pay a dividend when they are achieving such impressive returns on the cash that they deploy on acquisitions but it'd certainly make me double up my holding as it'd reduce the opportunity cost of me deploying my capital here.
PS rivaldo I've sent you a message

[martinthebrave] 08/2/2017 09:48

Thanks for posting Rivaldo. Nice to have the value opportunity confirmed!

[rivaldo] 08/2/2017 09:27

Simon Thompson had some interesting views on valuations of VLE's investees in this week's IC (cheers mate).

He believes Shire is worth another £5m on top of book value. And he implies that Impetus and Sira are worth considerably more than book value (as we know), but doesn't put a figure on this. If we say a conservative £10m, against the combined £1.2m or so operating profit, that's a surplus over book of £8.3m.

The combined surplus over book value is therefore £13.3m, or around 325p per share, which added to the current 576p per share gives 901p per share of value.

Which will increase further after the last H2.

Here's the full article:

"The holding in Aim-traded investment company Volvere (VLE:530p) has performed well in the past 12 months and is likely to continue to do so. Run by Jonathan and Nick Lander, who have the respective roles of chief executive and finance director, the founders of the company have proved adept at investing in distressed and undervalued businesses with a view to turning them around and exiting at a hefty profit. They have been mightily successful as Volvere’s book value per share has increased at a compound annual growth rate of 14.3 per cent since the company was formed 13 years ago.

It’s a pretty low-risk investment. That’s because Volvere has cash and marketable securities worth £18.5m for new investments, a sum worth 452p a share, and borrowings of £2.37m are very modest in relation to the profitability of its three investment holdings. These investments are very conservatively valued at £6.5m.

For example, the Landers have been working their magic on Impetus Automotive, a provider of consulting services to the automotive sector, including vehicle manufacturers, dealerships and national sales companies. It was a well-timed and shrewd acquisition as Impetus reported underlying operating profit of £522,000 on revenue of £8.1m in the first six months of 2016, a dramatic improvement on a trading loss of £43,000 in the second quarter of 2015. In fact, Impetus has generated underlying operating profit in excess of £1m since Volvere took control in 2015, an impressive return on the £1.3m Volvere paid for its 79 per cent stake.

The company also owns a security business generating £118,000 of annual profit. So, in effect, the combined book value of £1.7m for these two holdings equates to less than 1.5 times their annualised operating profit, a valuation that suggests the carrying value in Volvere’s accounts is far too modest. Furthermore, Volvere owns an 80 per cent shareholding in frozen pie and pasty maker Shire Foods, which is in the books at only £5m, or less than four times its underlying operating profit. True, higher raw material costs following sterling’s devaluation, and the decision of a customer to bring manufacturing in-house, are issues – but ones that are more than reflected in the modest valuation. I still take the view that the investment in Shire is worth double book value in a trade sale scenario.

I would also flag up that Volvere’s retained profit from the second half of last year will undoubtedly lift its NAV per share to another all-time high close to 600p. So, with the investment risk still skewed to the upside, and the company cashed up to make further value-enhancing acquisitions, I continue to rate Volvere’s shares a value buy."

[eeza] 07/2/2017 10:04

M&Z getting a tad impatient.

[melf] 07/2/2017 08:55

Evil's still a fan:-)



"In last weekend’s IC the stock that stood out to me was/is Volvere (LON:VLE). Here effective management is sprucing up sound acquisitions and selling them where sensible. This is a great skill and current purchasers can enter the party at a discount to tangible net asset value. Now 540p offer."

[rivaldo] 06/2/2017 15:15

EM :o)) Oh well, I always try to be helpful!

M&Z only had 241,000 shares left a year ago, and there's been a constant drip-drip of shares into all the subsequent rises, so I can't believe they have much left at all to get rid of. Unless there's another seller around of course.

[eezymunny] 06/2/2017 15:04

They had c 6% of the equity a year ago and I guess some of this has dribbled out but some left. No way to tell I'm afraid AFAICS.

Given VLE's history I'd be surprised if anything much happened b4 Shire or Impetus are sold, or cash pile put to work, but you never know.

[langland] 06/2/2017 14:56

Thank you both. I have read the thread and am aware of the investment case since I bought 2k today but it is the overhang which interests. Probably too much for me to take out!? I checked recently and there was 10k on the offer according to my broker. There is probably a lot more behind that.

[eezymunny] 06/2/2017 14:40

I think Langland is asking how much of Marks & Zimmerman's overhang is left!

[rivaldo] 06/2/2017 14:23

Langland, read back on the thread. Most recent estimates here say NAV should be a minimum of say 800p, and it could be over 1000p from memory depending on your bullishness on the prices the investee sales will eventually achieve given the values of those companies on VLE's Balance Sheet are minimal (apart from Shire Food's property and equipment assets).

After the 2016 results are out I'll update the thread header post, which is some 18 months out of date, but the calculations therein should help to point to the value here (remember that JMP Consultants was subsequently successfully sold at a very good price).

[langland] 06/2/2017 13:44

Any estimate of how much is left?

[rivaldo] 06/2/2017 13:36

...and I've been talking about VLR a great deal longer than that :o))

Welcome Graham, good to see you here. The discount to VLE's NAV, let alone the "hidden" value of all the investee companies remains ridiculous imo.

Cheers someuwin, that's good to see. We've seen almost £30,000 of net buying today with no price effect, so I assume Messrs Marks & Zimmerman are finishing selling off the rump of their holding.

Once that's gone it may be difficult to obtain shares for love or money!

[rndm355] 06/2/2017 13:11

Guys - I just want to point out I've been talking about VLE since May 2016 :)

hxxp://www.shareprophets.com/views/21085/volvere-a-great-investment-company-at-a-discount

DYOR GLA

Graham

[someuwin] 06/2/2017 10:54

EK..

"I have read the Investors Chronicle for fifty two years. It is a terrific starter course for someone wishing to kick off their investing career (prior to methodically following up leads on Master Investor of course). One reason is the small company coverage where private investors are, time and again, given terrific ideas which institutions cannot be bothered to benefit from since they cannot get size and so justify review costs over the years.

The lead proponent for this programme is Simon Thompson who has in recent years come up with value investments which are inescapably sound. By that I mean that it is virtually impossible for these shares and their prices to decline since the businesses covered are solvent and making money and yet quoted at a discount to tangible net asset value.

People forget another factor: it is always possible for such a share to be transformed into a stock which is correctly and seriously re-rated materially above tangible net asset value. The best example of this in recent years is Avesco, where patient investors were eventually rewarded by a 650p takeover and the starting off price had been 25p as reduced by a 115p cash distribution and several dividends of the order of 3p.

In last weekend’s IC the stock that stood out to me was/is Volvere (LON:VLE). Here effective management is sprucing up sound acquisitions and selling them where sensible. This is a great skill and current purchasers can enter the party at a discount to tangible net asset value. Now 540p offer."

[rivaldo] 06/2/2017 08:31

Cheers chaps.