Volvere Share Discussion Threads

[smithie6] 09/4/2021 11:55

anyway, fingers crossed for the Indulgence part of the business, cheesecakes etc

with the pubs etc re-opening a bit more on Monday 12th April then Indulgence might see more sales, & the same for Shire as well, for pies.

[smithie6] 09/4/2021 11:52

an illiquid share

my guess is that phps the MM wants to obtain shares to balance/nett off against the £7400 of shares that he sold at 1480p

[rivaldo] 09/4/2021 11:35

Online you cannot buy a single share, whereas you can sell 2,500 shares at 1444p - above the mid-price!

Hmmmm...something in the air?

[rivaldo] 08/4/2021 23:02

A late £7,400 buy at 1480p reported just before the close is notable for being well above the 1450p published offer price.

[9degrees] 07/4/2021 14:26

intersting reveiw thanks
Volvere are a bit like IP (IPO) or Melrose (MRO) both of which invest in either start ups or companies they can turnaround

[rivaldo] 07/4/2021 12:08

FYI here's a recent write-up from a new holder here:



"Volvere

Volvere is an interesting business, quite unlike any of my other investments. It is essentially an investment vehicle that invests in small undervalued and distressed businesses and then tries to turn them around before selling them again. I’ve been aware of Volvere for a long time, have been to several investor presentations over the years and many of the other private investors I know have invested. I’ve always seen the attraction but have eschewed it up till now, preferring to stick to my favoured hunting ground in more growth-oriented quality businesses.

Volvere is very small (only £36m market cap). It owns two operating businesses at the moment, Shire Foods (Volvere owns 80%) and Indulgence Patisserie, both in food production. However, most of Volvere’s assets (about £24m) are currently held as cash. With so much of its assets in cash my normal framework for assessing the quality of prospective investments is less relevant. I see an investment in Volvere as essentially a bet on two things: a) that you are getting good value on Volvere’s existing investments and b) more importantly, that Volvere is going to invest the cash pile it is sitting on wisely.

There is not a huge amount of information to go on (at least without some serious digging), but it seems pretty clear regardless that Shire and Indulgence are collectively worth quite a bit more than the £(11-12)m of market capitalisation they account for. Shire was a beneficiary of the pandemic, growing revenues by 18% to £27.2m in 2020 and making £1.6m in profit before tax. Volvere seems to have had quite a bit of success in turning around Shire since it acquired it and its revenues have been consistently growing for several years. Profits have not been growing quite as much but it seems that this is partly due to the costs of imported ingredients being inflated by a weaker pound. This seems promising as the pound has strengthened a lot more recently. Indulgence, which is more geared towards foodservice, has suffered from the pandemic. It is much smaller than Shire with £3.6m in revenues and a loss before tax of £1m in 2020. Of course, Volvere’s business is to ‘turn around’ Indulgence and return it to profitability. I have no idea how successful Volvere will be in doing so and consequently how much Indulgence is worth but it seems that Shire on its own is sufficient to make Volvere’s overall valuation relative to its current assets seem cheap.

Assessing whether Volvere is going to do something useful with its large pile of cash is largely a question of faith in the management. This is not something I typically feel well-equipped to judge, but I am reassured by Volvere’s track record. At least I am very reassured that they are not going to do something stupid, as they have historically been very cautious in making investments. The investments they have made have have tended to be very successful. The risk is more that they are perhaps too cautious and prone to letting their cash pile accumulate dust. This is a risk I am comfortable with. Overall I think this investment gives me some safe diversification from my other investments and the outside chance of some serious upside if they find a great opportunity. The one drawback is possibly that the shares are extremely illiquid so probably suited for a long holding period (but equally this may present an opportunity for small private investors who are prepared to be patient)."

[smithie6] 23/3/2021 11:19

I wonder if the company would consider changing its name & ticker to

"Vegan"

ticker
lse:Vegy
or
lse:vegn

:-))) je je

[smithie6] 21/3/2021 10:54

ah....thanks for that info

[rivaldo] 21/3/2021 07:45

Smithie6, Iceland are one of Shire Foods' major customers, for not only their pies/meat products but also their fast-growing range of vegan products, including their No Bull vegan range (which may be made specifically for Iceland - I think differently named ranges are made for Morrisons, Lidl and Aldi from memory).

[rivaldo] 19/3/2021 07:23

Iceland are trialling a new convenience store format called Swift, which if successful "could soon start appearing in cities and towns across the UK".

The more stores the better as regards VLE:

[rivaldo] 18/3/2021 10:18

Graham Neary will have updated here about VLE yesterday since it's been his largest holding for a while from memory - anyone got access (his spelling isn't very reassuring though!)?



"Reasurringly quiet at my largest holding
Graham Neary
March 17, 2021"

[norbert colon] 17/3/2021 12:40

This is always a useful read for insights on how British businesses are doing:https://www.begbies-traynorgroup.com/news/firm-news/almost-half-a-million-businesses-in-significant-financial-distress

[zoolook] 17/3/2021 12:27

Good to have a bit of insight why the next deal is slow in coming. I thought the cash raised was for an earmarked acquisition where heads of terms were already agreed rather than generally to stock up the war chest. With hindsight the buyback was unnecessary (though I’m glad they did :-))
As always this is an investment requiring patience (my largest holding by country mile).

“ More generally the number of companies in financial distress has not been as high as we might have expected. However, we believe this is due to the continuance of government support schemes - which may soon be withdrawn. At that point, we expect there will be a greater focus on balance sheet quality. The strength of the Group's balance sheet puts it in a position to be able to exploit the opportunities that we think will arise in the coming months. In the interim, we seek to continue to deliver growth and increased profitability in our food businesses”

[eezymunny] 17/3/2021 11:42

ExV

"The things you would logically do as owner of a business". And the people doing those things are doing them salary free? I think not...

[rivaldo] 17/3/2021 09:42

The HQ expenses are unlikely to be anywhere near the full £200k. Much or most of it is likely to be a method of funds transfer, as most intercompany management charges are. I will continue to use the company's own usage of the core PBT, but won't be posting any more on this subject as it's run its course.

EDIT : ExV, apologies, our posts crossed. We seem to have come to the same conclusion though!

[exv] 17/3/2021 09:38

The question, I guess, is whether these costs are necessary to maintain Shire Foods as a stand-alone entity. I would suspect not. In private equity it's normal for the management company to suck some money out of the subisdiaries via 'management charges' and other fees. In effect these are just a way to keep the lights on at the investing company in exchange for some high level consulting services, advice on acquisitions and growth, and other fun and games. The things you would logically do as owner of a business - but now you are charging for them.

I also imagine there are tax considerations. It is probably more tax efficient for Shire Foods to pay this management fee to get money up to the parent company than via a dividend. I'm not an expert on this.

I would be surprised if this £200k was actually integral to the functioning of Shire. I suspect any potential acquirer would view the £1.8m figure as the 'true profit' of Shire, not the £1.6m. For that reason I view the £1.8m as the more realistic profit figure. I hold the shares, though, so I am biased.

[stemis] 17/3/2021 08:41

If you strip out cash then that puts Shire valued at around 6 times profit.

So the cash is a drag on the share price. Even if the markey decided to value Shire at 33% more i.e. 8 x profit, it would only lead to a 10% share price increase.

[rivaldo] 17/3/2021 06:46

EezyMunny, may I point you in the direction of what Volvere themselves say:

"Profit before intra-group management and interest charges is considered to be a relevant and useful interpretation of the trading results of the business such that its performance can be understood on a basis which is independent of its ownership by the Group."

That's because this is PBT before "intra-group" interest - which is separate from the interest paid and accounted for by Shire on their mortgage loan and is irrelevant re the accounts and to acquirors.

If you disagree with me that's fine. But you're also disagreeing with VLE as well....

[eezymunny] 16/3/2021 23:12

If Shire needs to borrow, then it must pay interest.

YOu can't harp on about the commercial property value, then ignore the interest on the mortgage, for example.

[rivaldo] 16/3/2021 09:22

There are more important things to discuss. IMO the £1.81m is the core PBT for reference - any acquiror will ignore intra-group interest and management charges. But hey, let's agree to disagree.

[eezymunny] 16/3/2021 09:13

You didn't say "core PBT was £1.81m".

PBT (which is what you said) was £1.61m. Interest and management charges are very real.