Sunday, May 14, 2006

Diamonds are forever

At this year's Berkshire Hathaway's AGM, Mr Buffett introduced shareholders to his first international acquisition. It was an 80% stake in Iscar Metalworking Companies. The stake in the metal cutting tool manufacturer costs a cool US$4 billion. The Wertheimer family will continue to retain a 20% stake and run the business.

We cannot claim to be close to the greatness of the Oracle of Omaha. But this blog, Margin of Safety, had also introduced faithful readers to an Israeli company. It was about a year ago, in August 2005. The company is Sarin Technologies and is the first Israeli company listed on the Singapore Exchange. We did not provide any description of the firm but curious readers would did their homework into the red letters "SARIN SP" at the end of the blog entry would be sitting on a handsome and oversized gain today of about 120%. That may be enough to get your mum a diamond for this Mother's Day for producing the genius in you!

Sarin is a manufacturer of 3-D laser modeling systems that help optimize the cutting of rough diamonds into high-value gem stones. It also makes instruments to measure the colour and cut of stones (two of the four key quality parameters of diamond grading; others being clarity and carat, of course!). Margin of Safety was attracted Sarin as it was a unique niche business with only apparently three other competitors in the world. And its competitive strengths ought to have been crystal clear to any casual reader of its financials which exhibited fat profitability margins and high ROE!

  • Featured in 13 August 2005: S$0.49
  • Close on 12 May 2006: S$1.08