Stefan Bernstein explains how the EU/Greenland critical raw materials partnership benefits GreenRoc. Watch the full video here.
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Particularly liked the accessibility, frankness and awareness of this comment in the boss' statement to shareholders:
The discount of our share price to our NAV per
share has remained too wide, despite our share
price increasing by 40% during 2023, and we
responded to this by buying back more of our
shares (perhaps the best investment we can be
making at the current levels of NAV discount),
and reducing leverage in the business
Been asleep for awhile!.
Another alternative would be to simply distribute the BGEO shares in specie to the CGEO shareholders.
CGEO "managing" this investment adds zero value . As far as I know they don't have a board seat so what exactly they do is beyond me.
The BGEO stake is currently worth £440m = just over £10 per share of CGEO. In theory the CGEO share price would drop from its current £13.00 to £3.00 after the distribution. So the remaining portfolio of £709m / £16.50 per share would be trading at £3. Something would have to give.
Good first post after 12 years membership!
No more than Mr. Market, I'm always very dubious about the claimed NAV per share (£24.23 at Dec '23 and will have increased as the value of BGEO has risen in Q1'24). One way to sort this out would be to sell the BGEO shares which have a current value of approx £433m. At Dec 23 CGEO had debt of £86m. This gives a net surplus of £347m after repaying the debt. CGEO has a current market cap of £562m. Do a tender offer for its shares to the value of £347m. In theory the revised market cap = £215m or £5.00 per share v the current trading value of circa £13 per share.
Per the Co's NAV statement at Q4'23 total portfolio value = GEL3,672. BGEO accounted for GEL1,226 of this leaving the remainder at GEL2,446 = £709m. This is nearly triple the revised market cap which should surely be revised upwards in due course.
All of the above are approximates but you get my drift. I suspect that there are multiple reasons for not doing this such as debt repayment covenants and timetables, restrictions on the ability to do such a a large scale tender, ability to place such a stake in BGEO, etc, etc.
However the status quo is deeply unsatisfactory. We are currently paying the management team in CGEO to mind our investment in BGEO which is possibly the biggest stumbling block to any portfolio reshaping. Only sorry that I ever divested my stake in BGEO into CGEO a number of years ago.
Dps1329; thanks your post.
'strategic' buybacks aside, the key for me is BGEO buybacks - where they continue CGEO's will, just as a function of maintaining their stated hold level. I feel no BGEO buybacks = no CGEO buybacks -.at least until the debt is cleared/ minimised.
I believe they finished the US $15mm buyback program that was announced in October. They said on the earnings call this week that they will be buying back more shares but are waiting for more info on what dividends they'll receive from Bank of Georgia.
--------------------
So the first question is from Bram Buring. With regard to the 15% over the cycle target for NCC, could you please elaborate where we are in the cycle and the implications for the larger capital returns? Will the current phase in the cycle suggest we see larger returns when NCC hits a low-teen high single-digit level?
Irakli Gilauri:
Bram, to be very short, probably that's high single-digit, that's where we will be able to see the bigger buyback in terms of the auction-type buyback. In terms of the tactical buybacks is what we've been doing. We will continue to do so. Mainly, we have not announced the tactical buyback, smaller ticket size, what we've been announcing for a number of reasons, but one of is that, Bank of Georgia, which is a main dividend provider to GCAP have not announced their dividend for 2023 due to the acquisition they had to postpone as I understand their annual results announcement. And once we know it, we will be more -- better positioned announce our tactical buyback program.
Is the share buyback program finished ? none announced this week
The share price has been moving for quite a while, but yes, plenty more upside.
Personally I'd prefer a maiden dividend. The CGEO buybacks are already accelerating not only because it's major holding BGEO is maintaining a relentless buyback ( so CGEO is selling to maintain it's % holding and thus realising cash) but because their other businesses are starting to build scale/cashflow/profitability too. Yes there are a couple of inconsequential non performing companies in the portfolio, but there are some interesting holdings here (pharmacy?) Which are all contributing to a considerable discount to NAV.
I may prefer a dividend to a buyback, but do agree, one or t'other will happen once they have further deleveraged, which they are doing at some rate.
This has been such a successful investments for me, so much so that ordinarily I would have sold out. Successful because I saw deep value here when it was ignored/out of fashion, and that value has started to shine through. Despite it's appreciation, and portfolio progress, it is still ignored/out of fashion, still offers a deep discount to NAV and deep value. So I'm staying put despite it being proportionally more than I would like.
I think a listed spin out of the pharmacy co may be the catalyst (for greater appreciation) and me moving on. I see that happening within 18 months.
These guys are buying back 15k shares per day in a stock that does 60k average daily volume. And based on management comments on the last few calls, it sounds like they could increase the buyback significantly in 6 months after a bit more progress has been made deleveraging. The share price could start to move.
So, just saw the financials are out - haven't dug into them in depth, but they look good to me at a summary level.
I think this is the only share I own that I have been happy with these last few months!
As stated in CGEO's last update, the ongoing buybacks at BGEO are causing it to sell some of it's BGEO in order to maintain is preferred level of holding in BGEO.
Surely beyond BGEO's continued success adding to the NAV here, the necessitated sales must be adding cash to the balance sheet, as CGEO's last update suggested progress in all its investee companies. Will they use that to deleverage, or potentially a maiden dividend?
Inflation has now fallen to 5.3%.
Monetary policy Committee meeting 10th may
Had a stop loss on them. Tripped on news of svb. Maybe buy back if they continue there fall.
"I still hold a large amount of Georgia capital in my sipp"
Not anymore cought by a stop loss.
I still hold a large amount of Georgia capital in my sipp
Monetary policy committee meeting
https://nbg.gov.ge/en/monetary-policy/committee-meeting-calendar
Oops inflation fallen to 8.1%
https://tradingeconomics.com/georgia/inflation-cpi#:~:text=Clothing%20and%20footwear%3B%20hotels%2C%20cafes,15%20percent%20of%20total%20weight.&text=2%2DYear%20Low-,The%20annual%20inflation%20rate%20in%20Georgia%20rose%20to%209.4%20percent,percent%20in%20December%20last%20year.
Damofarl
if anything Georgia as a a country (and BGEO specifically) must have benefitted from inflows of capital from Russians able to seek a relatively speaking more stable governance.
Initially this pushed exchange rates and now its being held up by interest rates.
I don't think this can last.
Hence my sale BGEO, Georgia Capital.
BGEO Dividend will be effected significantly offset by increase in the dividend.
There was other reasons for me selling both of them in my isa.
Edison research issued today 08/03/23
https://www.edisongroup.com/research/nearing-deleveraging-target/32058/
I intend on holding on until till the discount has gone. Very hopeful I know. I actually intend on selling when inflation falls far enough for sovereign Bank of Georgia to reduce interest rates. They are presently 11% and the lari moved up from 32p Equals 1 lari to 33 Equals 1 lari yesterday.
I guess they will not reduce till inflation hits 8% or even lower. Presently inflation 9.4%. It is falling quite fast. The aim being to buy back as I assume the share price will fall. Although there could be a catalyst to stop that happening namely a sale of one of its larger businesses.
I sold already all my Georgia Capital and bank of Georgia in my isa. I have decent amount left in my sipp.
Minusbat; you pose an interesting question with what is the exit strategy, one I'm pondering too, albeit I don't think it is near plateauing. I think there is much value still to be realised here.
And I say that as someone who is primarily a yield investor albeit with a contrarian value bent.
Having read the recent results, the following come to mind -
Cash at hand plus BGEO stake are greater than market cap, disregarding other investments and the remaining 20% of the sold water business.
Most of the businesses are generating dividends, yes driven by BGEO, but my rough calculation put them as an effective 3% yield on mkt cap.
The ongoing BGEO buyback means they are selling down their stake, but only because it is rising but they are quite specific about retaining around 19%, which I like as believe there is more value in BGEO itself particularly as a yielder.
So I'm no clearer than you as to an exit. I think the nature of the beast means it will never pay a dividend (which I'd prefer to the buybacks here), but I can see , would quite like Ike to see, it morphing into a kind of investment trust holding minority stakes in private equity stocks it backed and floated, which like BGEO could grow and be more positive about dividends.
I don't really see the Ukraine resolution as being a consideration - if anything Georgia as a a country (and BGEO specifically) must have benefitted from inflows of capital from Russians able to seek a relatively speaking more stable governance.
There is still a large discount to NAV here, and despite rising 10% in a month, I don't think I'll form an exit strategy until this has risen another 20%, be that a month or a year.
Am interested in what other peoples exit criteria are here - when would you think "OK, it's 'plateaued, time to move on". Am thinking I will hold it until the end of the Ukraine war, as regional stability should give it a bit of a boost, but I dont have a target price or anything. What do other people do ?
Sd235; well slowly but surely it is rising. One for the patient this, but there is deep value and oppurtunity here. This may be the tortoise that catches the (BGEO) hare.....
How cheap does company have to be?
I wouldn't mind but I bought bank of Georgia at the same time it's up 100% plus.