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    South Africa One third of African GDP GDP: $555m (PPP), 25th Ranked first globally for auditing standards and financial market regulation (McKinsey 2011) two ways to make money investing: Buy a company trading at a discount to intrinsic value Buy a company where intrinsic value is increasing rapidly Idea: Taste Holdings Fast growing, vertically integrated franchise food service and jewelry system $75m market cap 400 franchised and company-owned stores in south africa.

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    South Africa One third of African GDP GDP: $555m (PPP), 25th Ranked first globally for auditing standards and financial market regulation (McKinsey 2011) two ways to make money investing: Buy a company trading at a discount to intrinsic value Buy a company where intrinsic value is increasing rapidly Idea: Taste Holdings Fast growing, vertically integrated franchise food service and jewelry system $75m market cap 400 franchised and company-owned stores in south africa.

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    90 views11 pages

    ItalianVIC Presentation

    Uploaded by

    Sean Michael
    South Africa One third of African GDP GDP: $555m (PPP), 25th Ranked first globally for auditing standards and financial market regulation (McKinsey 2011) two ways to make money investing: Buy a company trading at a discount to intrinsic value Buy a company where intrinsic value is increasing rapidly Idea: Taste Holdings Fast growing, vertically integrated franchise food service and jewelry system $75m market cap 400 franchised and company-owned stores in south africa.

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    of 11

    Value Investing in South Africa

    Sean Riskowitz

    Italian Value Investing Seminar July 2012

    Introduction
    Concentrated, long-term, long only value investments in South African equity market Midbrook Lane (Pty) Ltd
    South Africa based Berkshire-modeled investment holding company (April 2007)

    Riskowitz Value Fund LP


    US onshore hedge fund (January 2011)

    South Africa
    One third of African GDP
    GDP: $555m (PPP), 25th

    Ranked first globally for auditing standards and financial market regulation (McKinsey 2011)
    Zimbabwe

    Excellent minority shareholder rights

    51m people, 11 official languages 455 listed companies


    ~$900bn total market cap
    Namibia

    Zambia

    Financial services, manufacturing, retail services, mining & government

    Botswana

    Lesotho

    South Africa

    Sources: IMF, World Bank, McKinsey Global Competitiveness Report 2011

    Investment Approach
    Two ways to make money investing: Buy a company trading at a discount to intrinsic value Buy a company where intrinsic value is increasing rapidly

    Idea: Taste Holdings


    Fast growing, vertically integrated franchise food service and jewelry system
    $75m market cap ~400 franchised and company-owned stores in South Africa (Feb 2012)

    Taste: A Royalty Franchise Business

    High barriers to entry strong brands Very high returns on tangible capital (>70%)
    Low capex requirements

    Large, ongoing dividends Acquirer of choice Fish & Chip Co. Acquisition

    Target Market

    Extract from Taste Holdings 2012 Fiscal Year Results Presentation

    Taste Holdings: Historical Review

    41% CAGR

    24% CAGR

    We boldly aim to double our earnings by February 2014 [Feb 2012]


    Extract from Taste Holdings 2012 Fiscal Year Results Presentation

    Good Idea: Taste Holdings


    Taste
    R 4.00 R 3.50 R 3.00 R 2.50 R 2.00 R 1.50 R 1.00 R 0.50 R 0.00 Jun-10 Jul-10 Aug-10 PE: 5x Feb-11 Mar-11 Sep-10 Oct-10 Apr-11 May-11 Sep-11 Oct-11 Feb-12 Mar-12 Jun-11 Jul-11 Apr-12 May-12 Jan-11 Jan-12 Aug-11 Nov-10 Dec-10 Nov-11 Dec-11 Jun-12 Increased position Increased position Move to Main Board Declares maiden dividend (3c) Acquisition doubles store count PE: 24x (14x)

    Taste

    Established Long Position

    Declares dividend (4c)

    Lessons
    Position sizing

    Unimpaired quality businesses

    Back the right people

    Performance to June 30, 2012


    Riskowitz Value Fund LP
    2011 2012 + 68% + 24%

    Midbrook Lane (Pty) Ltd


    + 35% annualized since April 1, 2007

    Returns are subject to change. Past performance is no assurance of future result. Figures are after all fees and expenses.

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