Friday, December 18, 2009

Will the Lion Roar?

MOS last wrote about Lion Asiapac (LAP) in late September. Following the disposal of its entire stake in the Chinese automaker, LAP had attempted to takeover an Australian listed mining firm Polaris Resources. The bid has since fallen through after a competing bid was deemed to be more attractive by Polaris shareholders.

The failed bid raises the possibility that LAP may return more cash to shareholders in the coming year. Besides embarking on a share buyback program, shareholders are likely to demand more than the usual 1 cent per share dividend if the cash continues to sit on the LAP's balance sheet.

We estimate that the net cash per share to be approximately S$0.47. As a result of the cash laden balance sheet, buying interest has returned to the stock, leading it to close at S$0.36 today, near its 52 week high of S$0.37. LAP has doled out special dividends before. Of note was in 2006 where a payout of 5 cents was paid that financial year. Assuming a total payout of 5 cents at the current market price of S$0.36, LAP would have a dividend yield of 13.8%. Hence, expect LAP to trade substantially higher if there is more certainly of a special pay day.


Tuesday, December 15, 2009

Christopher Browne passes on

Legendary value investor and principal of value investing firm Tweedy Browne, Christoper Browne, has passed away. Barton Biggs of Traxis Partners once called him "one of the best value investors in the world". He was in his 60s when he passed away on Sunday.

In the early days, Tweedy Browne had brokered trades for Benjamin Graham and helped Warren Buffett acquire Berkshire Hathaway. Although the firm currently manages only about US$10 billion in assets, Christopher is better known as the genteel portfolio manager who brought down media baron Conrad Black. He started questioning the accounting of Black's Hollinger International in 2001. Subsequently, it was revealed that Hollinger's shareholders were bankrolling Black's lavish lifestyle including his Rolls Royce's refurbishment to the tips doled out by his wife on shopping trips.

Christopher has also authored "The Little Book of Value Investing", a book which MOS consistently recommends as an excellent introductory primer to this craft.

Our heart goes out to Christopher's family. The value investing community has lost a scion.