FYI -
Meet Europe's Berkshire Hathaway
By Dale Baker (TMF DaleBaker50)
December 8, 2006
Whenever you buy a holding company, look for great management and great assets. Investors buy Berkshire Hathaway (NYSE: BRK-A) because Warren Buffett and Charlie Munger are two of the most successful investors in U.S. history, and because they own a great stable of private companies and publicly traded stocks. French holding company Wendel Investissement (OTC BB: WNDLF.PK) is no different.
Wendel reported a per-share net asset value of 107 euro (about $145 per share) at an investor presentation on Dec. 5. That's up 38% year over year, including dividends. The company's five-year NAV growth rate of more than 20% exceeded the company's own 15% goal, not to mention that of the French CAC 40 index, at only 5%.
Today, Wendel trades near $150, with a NAV of 5.84 billion euro ($7.8 billion). I was lucky enough to discover Wendel in November 2003, when the NAV was $45 and the share price only $37. Despite the run-up, it's still a good investment today.
Wendel reaches out all over Europe and beyond to find smart investments in both public and private firms. The company's style is similar to Buffett's in its broad range of holdings; energy services, building materials, publishing, and electrical connectors are just a few of the sectors in which Wendel invested more than 2.2 billion euro from 2002-2006. Today, those investments are globally diversified, with one-third each in France, the rest of Europe, and the rest of the world.
Above all, holding and investment companies like Wendel must keep building shareholder value to succeed. Remarkably, Wendel has more than tripled its intrinsic value in just four years.
Wendel's investing success paid off in its share price, which has risen 244% since December 2001. That's more than double the increase of its nearest European venture-capital competitor. Dynamic young CEO Jean-Bernard Lafonta took a stuffy old family business and made it a top venture-capital player in Europe today.
Wendel's new long-term goal is to double its NAV again by 2012, to 12 billion euro or more, with a focus on industrial concerns where Wendel management expertise can make a difference. Lafonta is seeking controlling interests in firms with market caps of more than one billion euro.
As long as Wendel's NAV keeps moving up at rates far surpassing ordinary market returns, its steady dividend keeps rolling in, and Wendel keeps making smart moves in its investment portfolio, I will remain a shareholder. Hopefully, I can follow Buffett's example and never part with my shares. That way, I can finally say that I bought a super-expensive stock way back when it was just a few bucks.
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Fool contributor Dale Baker, a private client portfolio manager and former U.S. diplomat with extensive experience in Europe and Africa, owns shares in Wendel Investissement for himself and his clients. He welcomes your questions or comments, and wishes someone had given him a share of Motley Fool Inside Value pick Berkshire Hathaway for his tenth birthday, when they were still cheap. The Fool's disclosure policy is sophisticated and continental. |
