Latticework Investor

Value Investing

Sonae Capital worth €4 – €6 a share

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Todd Sullivan at Valueplays posted about Sonae Capital in October last year.

Sonae Capital is a spin off of tourism assets and various other related businesses from Sonae Group, a large company based in Portugal.

The company now trades at €0.70 a share, up from a low of €0.42 in March 2009 and a high of €1.80 in Feburary 2008.

Talked about Joel Greenblatt and his assertion that spinoff’s:

  • Outperform market by 10% a year for 1st three years
  • Largest gain is in second year


Used Marriott (MAR) / Host Marriott International (HST) as a Case Study

  • Abandoned by institutions
  • Too small
  • Made 4x money on deal


Sonae Group (SON.LS)

  • Portugal’s largest employer
  • Head, Belmiro (country’s second richest person)is very highly regarded.
  • Spun out Sonae Capital (SONC.LS)
  • Belmiro moved from larger company to the spin company.


Sonae Capital

  • 250m share outstanding
  • Belmiro owns 55%
  • Pabrai own 7%
  • 100+ real estate portfolio. Includes fitness centers, wind farms, marina, apartments etc.


Bought Troia Resort in 1997 in bankruptcy from government for nothing but the promise to develop.

  • Has 1110 acres, Top 100 in World golf course, 18km beach, Roman Ruins, nature reserve and cleanest swimming water in Portugal.
  • 170m Euros invested in it and now worth 500m to 1b Euros.
  • One of a kind asset


Palacia Hotel

  • 35m Euro investment
  • Member if “Leading Hotels in the World”
  • Valued at 100m Euros


Aqulaz Hotal

  • 4 Star hotel
  • Worth 50m Euros


Other Real Estate worth 412m Euros
Other businesses worth 250m Euros.

Total value of 1.2 to 1.8b Euros.  Intrinsic value after debt subtracted equals 955m to 1.5b Euros.

Per share equals 3.82 to 6.20 value vs .69 markets price (all in Euros). In other words, you can buy a dollar bill here for 12-20 cents.

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Written by latticework01

June 10, 2009 at 2:11 pm

Posted in picks

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