Marco Lanaro

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Marco Lanaro  

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07:27 on April 10 2010

Advisor SICAV Quality and Value

The case for investing in Marfin Investment Group

Marfin Investment Group is an investment holding company based in Greece and is traded on the Athens Stock Exchange.
The purpose of today's blog is to try to find if MIG (Marfin Investment Group) is a value trap or is a classical case in which market panic, due to the macro-economic situation in Greece, has caused MIG's stock price to fall well below its intrinsic value leaving the investor with an opportunity to be taken.
My opinion based on some facts is:
  1. MIG is off the radar of many investors and is not closely followed by analysts so it makes it somewhat obscure, which is fine to me. Most obscure and not followed companies hide the most intrinsic value.
  2. Net asset value is 3.5 billion euros, compared with a market capitalization of 1.2 billion euros, the margin of safety is wide and allows for many mistakes in my analysis.
  3. MIG has liquidity of around 641 million euros which is about half of market capitalization and gives a lot of freedom to take advantage of the many opportunities that arise in an economic crisis and this one in particular present many opportunities for a company that is as opportunistic as MIG.
  4. As a demonstration of management's confidence in their opportunities for success they just announced a stock dividend of 0.10 euro per share which gives a yield of 6.25% at current stock prices.
  5. Debt is very low, the company is not leveraged.

To summarize I believe that MIG is not a value trap, it has a very strong balance sheet which means that is able to survive a tough economic environment and with cash on hand is flexible enough to buy when everybody else is forced to sell giving the company the upper edge in any deal.
Management seems seasoned and able to perform in opportunistic environments and as a plus it seems that it has a sizable commitment in the company through direct ownership of the company's stock.
Results for the year 2009 have been much less than spectacular but it was a particular difficult year and I prefer to look at the balance sheet than at the income statement for this particular year. The income statement will be important later on in the business cycle to validate the business model.
I welcome readers to criticize and improve my analysis.

Y disculpen que lo he puesto en ingles pero es de mi otro blog y para alcanzar el mayor numero de lectores lo escribi en Ingles,



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