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Tamburi Funding Companions (TIP) is type of a “secret star” within the space of European Holding corporations. I checked out it briefly inside my Italmobiliare write-up friom final week. The inventory value has carried out extraordinarily effectively particularly over a ten 12 months horizon:
TIP has been based in 2000, listed in 2005 and the historical past is effectively documented on TIP’s homepage.
TIP has a pleasant Investor presentation with numerous well-known firm logos, however some essential data, as an example how the cut up is between listed and unlisted participations, is effectively hidden:
Primarily based on their “Intrinsic worth” (extra on this later), 3/4 of the portfolio is listed, 25% is personal. The bigger a part of the listed holdings is Italian, with a give attention to “top quality” corporations, aside from perhaps Elica and OVS which look extra like “worth shares”. With Hugo Boss and rochebobois in addition they received a German and a French place.
Throughout the Non-public Investments, in addition they have a smaller allocation to Begin-ups (~50 mn EUR)
Total, for my part the funding technique is much less clear. They make investments principally in Italy, but additionally exterior (Hugo Boss, Roche Robois). Some names look actually top quality (Moncler, Interpump) some much less so (OVS, elica).
“Web intrinsic worth” definition
The place it will get fascinating is how they outline their “web Intrinsic worth”:
Right here the high quality print is related:
So simply to make this clear: For listed corporations, they don’t use the present share value however within the “conservative” model that focus on value of analysts and within the “optimistic” model some type of worth that’s even greater than that. So this chart, which I additionally referred to within the Italmobiliare write-up doesn’t present “actual” NAVs however Bloomberg estimate primarily based calculations and an excellent greater TIP estimate:
In addition they make it fairly troublesome to calculate the market worth of the listed corporations, as they don’t give % possession of the portfolio.
So one main takeaway is the next: The “web Intrinsic worth” of TIP has nothing to do with a mark-to-market NAV and it isn’t simple to calculate the “MTM NAV”.
Holding prices:
Prices are fairly substantial, in 2022 we are able to see 32 mn, in 2021 even 47 mn, principally personnel bills that are distributed amongst roughly 12-13 staff..
Wanting on the worth creation, this appears Okay, however remains to be fairly excessive. Dividend revenue from portfolio investments is comparatively small:
The annual report lastly provides some extra detailed insights into the holdings, however nonetheless makes it exhausting to construct an actual record of participations, as there are additionally some “double holding constructions” and so forth
Compensation:Curiously, the principle variable compensation part for Tamburi and his Co-founder appears to be primarily based on “Pre tax earnings, which to my understanding embody realized positive aspects but additionally non-cash earnings from at Fairness participations.
Between the three most senior guys of the corporate, they get 14% of that revenue which is adjusted for the compensation itself. A part of that’s paid in shares, most of it in money.
I discover this problematic, as that is clearly a trailing issue. Unrealized positive aspects have been created previously and might be generated roughly at will.
So theoretically one ought to deduct ~14% of whole unrealized positive aspects from NAV as this may accrue to Administration.
Different observations:
They did repurchase shares in 2020 however over the past 5 years, share rely has risen by 10% in accordance with TIKR. Treasury shares are talked about as “potential firepower” for brand new acquisitions.
Administration/Board owns an honest quantity of shares. Giovanni Tamburi round 8.3%, total board possession is round 25% in accordance with the annual report. Giovanni Tamburi, the CEO is 69 years previous, so succession may be a difficulty, though Italian CEO’s have a tendency to stay round fairly lengthy.
Abstract:
Regardless of the stellar observe file of TIP, this time I didn’t fall into one other rabbit gap. Why ? Primarily due to the next:
Sure, TIP has a stellar observe file in choosing Italian shares, however to me it isn’t clear what the “actual” NAV is, attributable to their unusual “intrinsic worth” definition. This lack of transparency is a giant subject for me.
Second, the excessive revenue share in Administration compensation primarily based on historic worth creation additionally for my part has the potential to distort alignment and must be included right into a NAV calculation.
And third, with 75% in listed corporations, in principle one might replicate the portfolio fairly simply. So with out a clear understanding how the low cost appears like, the “worth add” right here isn’t clear to me.
Total, I feel TIP is an fascinating firm to look at, as they appear to be actually good inventory pickers, however I don’t suppose it’s a significantly engaging funding proper now.
P.S: If somebody has an in depth sheet with Tamburi’s place, I might more than pleased to take a look at it in an effort to estimate a “actual” NAV.
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