As you’d expect given the name of this publication, the vast majority of my portfolio sits in a fairly diversified set of deep value, below tangible book positions and special situations. I’m not a long-term holder, my “typical” holding period is 1-3 years. Realise value (hopefully), then move on. What you might define as classic value investing.

That said, I do reserve a small sleeve of around 10-15% of the portfolio for other things. In particular and relevant to this article, I have capital allocated to long-term stewards that I’m happy to back indefinitely. These are typically fund managers or similar structures with a proven track record. My return hurdle is lower than for my own stock picking; here I’m looking for operators I believe can compound at ~15% annually over a decade or more.

At present, I have three capital allocators in this sleeve, and I’m always on the lookout for others that might earn a place. The company below came onto my radar last week via a tweet (or whatever they’re called now), so credit to the below for highlighting it.

A quick look and I noticed the company was trading at 1st percentile decade-lows on a Price to Book basis. That got me interested.

A quick Google also revealed phrases like “Japanese Berkshire Hathaway”. That got me slightly less interested, as it’s usually the kiss of death - but the company still seems reasonably under the radar and the historic record looks promising nonetheless.

Before diving in, this is essentially a collection of notes from a few days of due diligence, pulled into a more presentable format. Having done the work, I figured it was worth sharing. It is a shallow dive, so please read it with that in mind.

The Pitch

Hikari Tsushin is a Japanese conglomerate best viewed in two halves: a recurring‑revenue services group and an investment company. The first sells essential services to SMEs and households, while the second focuses on compounding a large portfolio at attractive returns - both via public equities and private acquisitions. Very Berkshire-like.

Hikari’s earnings and book value are currently at all‑time highs. The stock price is not; having sold off quite a bit since the start of the year.

At roughly its lowest book multiple in a decade, you are being offered a high‑ROE, asset‑light compounder, backed by cash, receivables and a sizable long‑term equity portfolio that’s built on disciplined value investing.

If management continues to grow operating profits near 10% and reinvest portfolio cash at mid‑teens returns, while maintaining rational buybacks and dividends, you could own a robust Japanese compounder at a “great company, great price” entry for the next decade.

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The Business & Situation

Hikari sells fairly boring but essential services: primarily electricity, gas, telecomms, water delivery, insurance, and finance. This is mainly to small businesses and households, through a large outsourced sales network. It then channels surplus cash (and cheap long‑term debt) into a portfolio of listed equities and affiliates that has earned an 18% pre‑tax IRR over the last 9 years. The second image below gives you an idea of the various operating segment sizes and their revenue/profit contribution; Energy and Telecomms are the biggest.

Although Hikari operates in electricity, gas and telecoms, it remains an asset‑light services business. Unlike Berkshire, it does not own or run physical infrastructure like power plants, generation assets or base stations etc, but instead focuses on customer contracts, billing and sales channels. Essentially a middle-man.

There’s also a bit of historical context to frame a crazy looking chart if you zoom out far enough to capture the dot-com era. “Old Hikari” was a hyper‑growth telecom and hardware seller that rode Japan’s mobile boom in the 90s and then blew up spectacularly in the 2000 crash. “New Hikari”, rebuilt over the 2010s, is what you mostly see today. I mention this as it’s a bit relevant to draw a line in the sand when assessing historical performance.

The 15-year return for Hikari exc dividends is a 25.4% CAGR; high 20s with dividends included. And that includes the recent 24% sell-off from ATH’s which has made this an appealing entry price.

Maybe you’re now leaning forward?

Over the last five years, revenue has risen from 559b to 734.8b, operating profit from 83.5b to 116.6b, and income before tax from 108.5b to 199b. Overall, it’s probably fair to call it a compounding machine; operating profit has an impressive 15-year CAGR of 28%.

On a screener, it trades at 1.3x TBV and about a 10x PE. Sensible but not amazingly cheap on an earnings basis. However as I will come onto shortly, the numbers are a bit more attractive in reality; especially as the growth runway looks reasonable.

On the surface it certainly looks like a complex leveraged conglomerate - so it’s not for everyone, but today’s situation is not a “turnaround” or “loss‑making”. Almost the opposite.

The Asset Case (Downside Protection)

Before we turn to the earnings and growth story; let’s understand what we physically own. To state the obvious, this is no liquidation play, but the balance sheet is central to why this can work as a long‑term “great company at a great price” compounder, with a reasonable floor to the stock price.

Tangible book snapshot:

Equity: 1.2tn (Goodwill 18.4b and other intangibles 6.7b).

Tangible equity: 1.16tn (vs 1.51tn market cap) = 1.3x TBV

Made up of:

• Cash and cash equivalents: 539.9b.

• Trade and receivables: 411.5b

• Current financial assets (short‑term securities etc.): 51.7b.

• Non‑current financial assets (mostly securities): 1.37tn

• Equity‑method investments: 319.7b.

• Property, plant and equipment: 41.7b (an asset‑light business and where it differs to Berkshire).

On the other side: interest‑bearing liabilities total 1.1tn, largely in long‑dated unsecured bonds.

As rates have risen, the stated policy now is to keep net debt / EBITDA below 4x and gradually reduce leverage over the medium term, even as EBITDA grows. Leverage is up in absolute terms, but coverage and discipline are clearer. In other words, the company is more levered in size, but the combination of bigger earnings, stronger liquidity and clearly stated guardrails means that the quality of that leverage looks better. The recent earnings transcript states Hikari is in “the strongest financial position in the Company’s history”.

You are looking at a very large pool of financial assets and an asset-light operating business against which the debt is structurally funded. If the thesis is wrong on growth and earnings power, you still own a diversified set of real businesses and a securities book that has generated persistent profits for well over a decade. This isn’t a stagnant conglomerate.

Headline P/E is ~10x, but that’s on consolidated earnings from operating businesses plus a separately analysable securities portfolio. Treat the portfolio as a semi‑independent asset earning mid‑teens on cost, and the implied multiple on the core services business drifts below 10x.

Catalysts & Re‑rating Path

With my typical deep-value investing approach of buying and selling businesses within a 2-3 year timeframe, I usually have an eye on potential catalysts (although I am still happy to buy without a catalyst when things are cheap enough).

With Hikari, I am less bothered about immediate or short-term catalysts, given I am assessing this as a potential long-term indefinite hold. That being said, for this to work as a long‑term “great company at a great price”, a few things need to keep happening, and the recent results and supplementary materials mostly reinforce that path.

• Continued compounding of recurring operating profit - Management is now guiding to record 2027 revenue of 775b and operating profit of 130b (+11% YoY), even after a year in which those metrics already hit all‑time highs. With double-digit profit growth and a single-digit PE ratio, that mix is attractive. The more years they post high‑single to low‑double‑digit profit growth, the harder it becomes for the market to keep pricing this at book value and earnings multiple decade lows.

• Persistent, visible investment returns - The investment book shows an 18% pre‑tax IRR over the last nine years, with a look‑through earnings of 140b (a 16% earnings yield on cost) and 4.3% dividend yield. The combination of high IRR, rising dividend streams and regular exits at attractive prices steadily reinforces the narrative that this is a capital‑allocation engine.

• Ongoing, rational capital return - Cumulatively, Hikari has now returned 356b to shareholders over 15 years (roughly 105b in buybacks and 251b in dividends), while growing book value per share at a 19% CAGR. The 2026 dividend was lifted (15th consecutive increase), and a fresh 10b repurchase authorisation follows the current 10b programme. If they keep matching mid‑teens book and earnings growth with rising dividends and steady buybacks, the argument for the stock sitting on a depressed book multiple gets weaker with every year of compounding. (Sadly, the buyback machine can’t run forever; they can only buy another ~6.5% back before breaching the TSE 25% free‑float rules)

• Selective M&A, affiliate upgrades and balance‑sheet discipline - On the operating side, they are simplifying and upgrading the portfolio: pruning low‑return or non‑core assets, deepening high‑return partnerships and letting electricity and finance carry more of the growth. On the financial side, they are explicit about running a value‑investing playbook in the portfolio, maintaining net debt/EBITDA below 4x, and gradually reducing debt over the medium term. Each year that this discipline shows up in numbers is a positive.

It’s not a catalyst, but I also find it interesting and endearing to see the Hikari President/CEO Hideaki Wada publicly state that he has reinvested roughly 2.2x his six‑year compensation into shares and intends to “bet his life” on the company, which is exactly the kind of alignment value investors care about. His personal stake in the company is worth over $100m.

Risks & What Could Go Wrong

• Funding and market‑risk squeeze - A sharp, sustained rise in yen rates plus a domestic equity bear market would hurt both sides of the business: higher refinancing costs and lower portfolio income/marks. The balance sheet looks robust on current numbers, but this is still a levered conglomerate.

• Structural erosion of the distribution edge - If acquisition costs in segments continue to rise faster than lifetime value, or AI‑driven efficiency becomes widely commoditised, Hikari’s advantage as a sales machine could erode. Management already acknowledges that telecomm is no longer a high‑return growth engine and is treating it accordingly; if electricity, insurance and finance ever follow the same path without new engines, the growth story weakens.

Valuation & Expected Return

On a 10‑year view, this is less about a quick rerating and more about owning a business that can keep compounding book value, dividends and earnings from a depressed starting multiple. Assume:

• Book value per share compounds at 8-10% annually over the next decade, well below the pace of the last five years but still consistent with a high‑ROE, cash‑generative business with a capable capital allocator;

• The dividend continues to grow, though more slowly

• The market affords it something closer to a fair/historic mid‑cycle book multiple.

If book value compounds at 8-10% for 10 years, book value per share would 2.5x before any help from a rerating. If the stock merely moves from around today’s depressed book multiple toward 1.5-2x book over time, the return profile becomes attractive. You do not need heroic assumptions here: a combination of high‑single‑digit book compounding, a 3%ish dividend yield with annual growth, and modest multiple normalisation can still get you to a high‑teens annualised return over a decade.

Another way to think about it is through the earnings mix. At today’s market cap of roughly 1.5tn, the stock screens at around 10x earnings. While the headline P/E is 10x, the implied multiple on the core services franchise is probably lower once you give fair credit to the investment portfolio. On a plain screen the EV north of 2tn. But if you treat the listed investment book as a financial asset and net it off (even just at cost to be ultra conservative), the implied “look-through” enterprise value of the business falls into the 600bn-1.2tn range. It’s too simplistic to suddenly say the PE multiple range suddenly becomes 4-8x, because stripping the portfolio would strip a portion of earnings - but the general point is that the economic reality is likely a multiple below 10x.

In any case, similar to my book value maths above, high-single digit growth and a re-rating to a mid-teen headline PE ratio, gives you a rewarding CAGR outlook in excess of 20%.

Conclusion

I believe we have the prospect of buying a proven compounder at the cheapest book multiple the market has offered in a decade. It is a chance to buy a high‑ROE, recurring‑revenue operator with a serious investment engine at an appealing valuation.

Perhaps for once, the overused Berkshire Hathaway analogy is not a headline gimmick and actually an honest description of what you might be getting.

I leave you with this snippet, from a recent interview with the CEO.

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Disclaimer:

These write-ups aren’t month-long research reports and could omit material information, so I always welcome feedback. As always, please do your own research.

The companies discussed often involve complexity or risk, and outcomes can vary widely. Investing in small/micro-cap stocks carries a high risk of capital loss.

The author may hold a long position at the time of writing. The author may buy or sell shares in this company at any time without further notice. This post is for informational and educational purposes only and does not constitute financial advice.

LPA Group is a small UK engineering company supplying connectors, lighting, power systems and control electronics into rail, aviation, defence and industrial applications. It carries the perception of a chronically delayed, thin-margin AIM manufacturer, but the latest interim results show that the recent restructuring is now feeding through into tangible operational improvements.

H1 revenue is up 45%, and EBITDA and PBT have swung from losses to modest profit. The shares are interesting because the company still sits on meaningful tangible backing, including notable freehold property, working capital and a £4.2m pension asset.

For the thesis to work, LPA now needs to prove that H1 was not a one-off by converting backlog and demand into sustained cash generation, especially as debt has risen following a recent refinancing.

Tangible equity: £12.6m

Market Cap: £8.9m

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The Business & Situation

LPA makes the electrical hardware that helps trains, airport systems and defence equipment function reliably in harsh environments: connectors, cable assemblies, lighting units, control modules, power supplies etc, as depicted below:

The business has three fairly even product groups Electro-mechanical systems, Lighting and electronics and Value-add distribution. The segment revenue split and sector breakdown is as follows:

LPA has landed in the bargain bin because the past few years combined almost every reason investors dump small industrials: delayed projects, weak cash flow, troubled acquisition integrations, low reported margins and refinancing pressure. Shares fell as low as 36p in January.

Emerging through this trouble however, FY25 began to show order book growth and early signs that the “One LPA” reorganisation has been improving operations (reorganising 3 siloed legacy divisions and an acquisition into a new operational structure, and consolidating manufacturing sites). The current situation is now better than the previous reputation, shares have re-rated up to 66p, nearly a double from the January lows.

Interims results came out last week, with H1 FY26 revenue up 45% to £13.8m versus £9.5m in the prior-year period. All three product groups grew, and the company moved from a £0.5m adjusted EBITDA loss to a positive £1m (vs market cap £8.9m). Q1 was the company’s first profitable quarter in 4 years.

The key nuance is that this is still not a fully healed business. Rail aftercare in the UK has slowed, some H2 projects have been deferred again, and working capital remains stretched, but the operating direction is now better than it was six or twelve months ago.

The Asset Case (Downside Protection)

The asset case is primarily what gets me interested in stocks. It matters because it tells you what you own if the earnings recovery stalls. At H1 2026, the position for LPA is £16.4m of equity, of which £3.8m intangible (P/B ratio of 0.54x)

Through the lens of tangible book and what I care about most:

• £0.5m cash

• £4.4m of plant and property

• £6.35m of inventories

• £8.32m of receivables

• £4.2m retirement benefit asset

Tangible equity inc pension is 12.6m (P/TB 0.7x)

Tangible equity exc pension is 8.4m (P/TB 1.05x)

Net debt has risen to roughly £5.7m after recent refinancing; a new £8.75m three‑year revolving facility secured on property and receivables, that also provides around £2m of additional headroom. Overall, liquidity has improved even though financial leverage has increased.

That is not a net-net, but it has meaningful asset backing; the business has a decent history prior to the recent downturn of trading comfortably above tangible book; as high as 2-3x through 2010-2019.

The pension asset is also quite real. Management say it is 133% funded; at a £4.2m surplus. That is not an insignificant amount given that is 47% of today’s market cap. Signs are encouraging, as management has repeatedly flagged the possibility of recouping the surplus, potentially “within a couple of years” according to a recent Investor Meet presentation. To also quote the annual report: “The government are recognising that some schemes have overfunded their pension liabilities and there are surpluses which could be more usefully used in the business to support growth and opportunity. We have such a fund and as soon as the pathway is clear we shall recoup some of our surplus funding to reduce our borrowings”.

Property may deserve more credit than usual because prior asset disposals were above book, and the current facility is secured against property and receivables, which implies lenders also view those assets as substantive.

A cautious haircut framework would be:

• Inventory at 70% of book, because some stock is specialised even if much of it supports long-lived rail and aviation programmes.

• Receivables at 90% of book, because customers are largely blue-chip but timing remains an issue.

• Property at book, based on prior evidence.

• Pension at 25-50% of book depending on conservatism.

The bottom line is that this is an asset-underpinned situation if earnings don’t come to fruition as hoped, which I will come onto now.

Catalysts & Re-rating Path

As I was digging into this business and drafting the initial write-up, the first catalyst has actually now happened: the interim results validated management’s earlier claim buried slightly in the last update, that the business had turned profitable in the opening part of FY26. That turns previous guidance into reality.

H1 gross profit doubled to £4m, operating profit reached £0.37m, and net income £0.38m vs a £0.2m loss a year earlier. That matters because the market tends not to trust microcap turnarounds until they appear in reported numbers, which they now are. FWIW, the share price has risen about 18% since the interim report was published last week (albeit there’s a lot of daily microcap volatility).

The next catalysts are more concrete than vague multiple expansion hopes. First, cash conversion: if receivables normalise and supplier settlements stay under control, reported profit can start to turn into real cash, in addition to debt reduction. The CEO states they will “focus on generating future cash profits to reduce debt levels”.

Second, product and mix improvement: management states they are hopeful of margin progression, as new products launch this spring/summer, focus on after-market services increases, and growth accelerates in the aviation segment through H2 FY26. Gross margins have recently risen from 22% (2025) to 28.7% (H1 2026), so signs are encouraging. An extension of this is also cross-selling and capability expansion. LPA is pushing beyond existing distribution, aiming to combine know-how into higher-value offers.

There is also a slower-burn capital allocation angle. Management has previously said it plans to restore the dividend in the near future, and as mentioned above, extract value from the pension surplus over time, though neither should be considered a certainty.

Another point possibly worth bridging up: Peter Gyllenhammar owns nearly 30% of the share count. Peter is widely regarded as a proactive, value‑oriented, sometimes activist investor with a long record in small European companies. He tends to be hands-on, particularly where he owns a large stake. His playbook is typically deep value, engaging with management and, if required, pushing for capital unlocking. I won’t speculate on his intentions, but it’s worth a mention.

Risks & What Could Go Wrong

The biggest risk is that H1 proves flattering rather than durable. H1 order book actually fell to £29.3m from £32.5m, even though revenue grew strongly. Management also flagged that several projects have been deferred in H2 FY26. That does not kill the thesis, but it does mean the second half matters to validate this isn’t a perennial project-slip and defer story.

The second risk is balance-sheet strain through working capital. Receivables rose to £8.3m from £6.5m and operating cash flow remained negative at £1.8m. The CFO directly remarked a primary reason for the recent refinancing was to relieve short term pressures on working capital. With it net debt has increased to £5.7m. Profit without cash is not enough for a company this small. The current ratio is 2.6x and the quick ratio 1.5x, so both are robust - but something to be mindful of.

There are also strategic risks. Rail remains almost 70% of revenue (mostly lighting and electronics), so diversification is still a work in progress. New future acquisitions could also distract management (M&A is a stated objective), or cause operational problems. A small business with thin historic margins has little room for operational slippage.

Valuation & Expected Return

The valuation is now easier to frame than it was a month ago, because there is both an asset base and a validated live recovery in earnings. A base case would value LPA at around 1x tangible book including credit for the pension asset, or on a modest multiple of normalised earnings if the H1 revenue and margin improvement broadly holds. With tangible equity of roughly £12.6m including the pension asset, that points to a ~40% upside.

A downside case would use hard tangible equity excluding most or all of the pension surplus and apply haircuts to inventory and receivables. That still suggests there is real asset support, though less than headline book value implies once debt and working capital risk are considered.

An upside case assumes revenue can move sustainably into the high £20m range (guidance is £27m) and operating margins recover towards 6%+. On that basis, LPA could generate roughly £1.3m of normalised net income, which valued at a modest 12x earnings implies a market cap in the £15.5m range. A plausible ~75% upside.

Following last week’s broadly positive results, I think LPA is now worth at least tangible book in a base case, with meaningful upside if cash conversion and margin improvements follow the H1 profit recovery. If the shares continue to trade materially below tangible book, the setup seems attractive: an asset-backed small cap with evidence of operational momentum and a credible 2-3 year path.

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Disclaimer:

These write-ups aren’t month-long research reports and could omit material information, so I always welcome feedback. As always, please do your own research.

The companies discussed often involve complexity or risk, and outcomes can vary widely. Investing in small/micro-cap stocks carries a high risk of capital loss.

The author may hold a long position at the time of writing. The author may buy or sell shares in this company at any time without further notice. This post is for informational and educational purposes only and does not constitute financial advice.

Multitude is a classic deep‑value financial at first glance: a small‑cap lender on a low single‑digit multiple, at roughly tangible book value. That snapshot misses how quickly earnings growth and business quality are changing.

Management is guiding to 30m of profit in 2026, against a market cap of 120m; and then 20% annual profit growth in 2027 and 2028. Their words appear credible, after already growing 2025 profit by over 31% and delivering or exceeding guidance for five consecutive years.

The market is valuing Multitude like a low-quality or no-growth lender. However, the company is a diversified banking platform with improving asset quality, rising fee income, and multiple internal growth engines.

The stock is reasonably attractive as a book value situation, but the stronger argument is not that the shares are cheap vs assets, but that a business compounding earnings at 20% should not be sitting on a P/E of 4, unless the guidance is implausible or the balance sheet is unsound. Evidence points the other way: credit losses are falling, deposits are rising, and the newer segments are scaling.

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The Business and Situation

Founded in Finland in 2005, Multitude is a pan-European digital financial platform serving three customer groups through three operating segments:

• Consumer Banking under Ferratum

• SME Banking under CapitalBox

• Wholesale Banking through Multitude Bank

Consumer Banking remains the cash-generative core. In 2025 the unit delivered 32.5m of EBT on a loan book of roughly 530m, while impairments fell 18.1% year on year. The mix is improving as well: management has leaned away from lower-quality higher-risk (i.e subprime) growth and toward recurring fee streams, partnerships, credit cards, and better underwriting, including launches or expansions in other countries. Guidance is 10% EBT CAGR.

SME Banking is the turnaround and scaling story. In 2025 the segment cut its EBT loss substantially, while impairments fell 14.8%. Management’s target is for single-digit positive EBT in 2026, followed by 50% CAGR(!), which means SME has moved from being a drag, to a credible source of incremental profit growth.

Wholesale Banking is an important source of re-rating potential. The business only became a standalone segment in 2024, yet loans and investments rose about 90% in 2025 and continued to expand strongly into Q1 2026, while profitability scaled faster than revenue. 2025 EBT was 2.8m, but again management is guiding to 50% EBT CAGR through to 2028(!); as it grows secured institutional lending and payment solutions. IMO, the market is underestimating how much group earnings power can expand if this segment matures as planned.

The Growth Case

The growth angle deserves to be shouted about because it is now explicit, repeated, and central to management’s communication. Across the 2025 annual report, various investor presentations, earnings calls and the Q1 2026 presentation, Multitude has reiterated 30m of profit guidance for 2026 and 20% annual profit growth for 2027 and 2028.

That guidance is backed by segment-level targets (as mentioned above) rather than vague aspiration.

On top of that, management is targeting a 40% cost-income ratio and 20%+ ROTE by 2028, which implies a business becoming both larger and structurally more efficient.

A very important thing is that growth is not being bought at the cost of worsening credit quality. Net loans grew 23.2% in 2025 to 939m, and has now reached 971m for Q1 2026, while group impairment losses fell 15.4% in 2025 and a further 18.8% year on year to Q1 2026. The company is expanding, derisking, and diversifying revenue at the same time.

Part of Multitude’s earning power also currently sits in the associate line and M&A additions, which are easy to overlook if you only focus on segment EBT.

First, the group’s 29.7% stake in Lea Bank generated 3m of associate profit in 2025 and 4m of dividends. Second, Q1 2026 added Sortter Oy, a majority-owned Finnish comparison platform in consumer and SME finance, which is expected to contribute incremental fee income while staying operationally independent, reinforcing the shift toward recurring, lower-risk revenues (2025 profits were 1.6m)

The Asset Case

The original attraction that brought me here was the book value discount. Equity stands at 249m, against a market cap today of 121m. On that basis the shares look very cheap relative to stated net assets at less than 0.5x book.

The nuance is that this is not a pristine below-tangible-book play. Reported equity includes perpetual bonds that need excluding from the equity, as well as 35m of intangibles. Once those are stripped, tangible equity sits at 126m, so we’re essentially trading around tangible book.

The margin of safety comes from a combination of reasonable balance-sheet cheapness, a deposit-funded model (i.e sticky non-wholesale), improving credit quality, and visible earnings growth rather than from pure liquidation value alone.

This is probably better labelled as an “asset-backed compounding mispricing” than as a pure bargain-bin statistical cigar-butt.

The Balance Sheet

In my view, the funding side is stronger than the market gives credit for. Customer deposits have reached 1.2bn, the main source of funding at ~90%. For a small financial, that matters: it suggests the business is not dependent on fragile capital markets access for growth.

The company also strengthened regulatory and capital through a 25 million issue in 2025 and a 70 million perpetual issue in 2026. These instruments support growth capacity and improve resilience.

Asset quality is the other balance-sheet pillar. The group impairment ratio has been trending down over several years and now reached 1.8% for Q1 (7.2% annualised). For a lender trading as cheaply as Multitude, that decline is arguably one of the single most important fundamental signals, because it weakens the bear case that low valuation simply reflects a structurally risky book.

Don’t get me wrong, this is far from Prime zone, but the downtrend is positive and expected to continue. Management lists “maintain high asset quality” as a core strategic focus and has stated and executed on intentions to reduce exposure to higher-risk products.

The Market Mispricing

Why does the opportunity exist? Most likely because Multitude screens badly or ambiguously. It looks like a small, complicated, unfollowed European lender - with a fairly small float. Not something institutions will look at.

There is also perhaps a lag between business improvement and the market’s understanding. Consumer Banking has deliberately traded some short-term revenue for better credit quality, SME is only now approaching profitability, and Wholesale is still young enough that many investors may treat it as an unknown entity.

Many investors are also allergic to banks they’ve not heard of; especially if the top line isn’t visibly growing.

Finally, the market may still be anchoring on the older view of Multitude as a risky subprime consumer lender vulnerable to regulation and credit problems. That risk is real, but the current company is more diversified by customer type, funding model, and revenue mix than the legacy Ferratum model; as evidenced by the impairment graph above.

The Asset Case vs The Growth Case

The asset case gets me interested, but the growth case is what makes the upside compelling. A bank trading around book value can stay there for years. A bank trading around book value while growing earnings 20%, improving credit metrics, and scaling new segments is much harder for the market to ignore if execution continues.

This matters because the shares do not need a heroic multiple to work, given the extremely low starting multiple.

If earnings track management’s 20% growth guidance, the valuation looks as follows (Market cap = 121m):

• 2026: 30m profit = 4x PE

• 2027: 36m profit = 3.4x PE

• 2028: 43.2m profit = 2.8x PE

Worth again mentioning that management has achieved or exceeded guidance for 5 years straight; so their words appear credible.

If the market becomes willing to reward those earnings at even a modestly increased multiple of high-single digits, the upside could be substantial.

I’ve also yet to mention the healthy dividend too, roughly 10% at today’s price. Management is signalling an ongoing commitment to distributing a substantial share of earnings to shareholders.

The Risks

The first risk is that the guidance proves too ambitious. Financial companies can look cheap right before credit issues occur, and Multitude still has exposure to consumer and SME borrowers in markets where regulation, pricing caps, or macro deterioration can hit returns quickly. Europe is hardly flourishing.

Another risk is execution in SME and Wholesale. The thesis improves materially if those segments scale as guided. But if they stumble, the group may remain cheap, continuing to be perceived primarily as a higher-risk consumer lender.

The Bottom Line

Multitude began as a balance-sheet idea when I first found it, but it became an earnings-growth mispricing, with reasonable downside protection - and a 10% dividend whilst you wait.

The company has a deposit-funded model, improving credit quality, a profitable consumer franchise, an SME business nearing profitability, a rapidly scaling wholesale arm, and explicit guidance for 20% annual profit growth going out several years.

Cheap lenders are common; cheap lenders with medium-term 20% earnings growth targets are not.

If the market starts to believe the growth path is real, the rerating could be significant.

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Disclaimer:

I review lots of companies and write up a small bunch that I find interesting. These write-ups aren’t month-long research reports and could omit material information, so I always welcome feedback.

The companies discussed often involve complexity or risk, and outcomes can vary widely. This is what puts most investors off and is why they work collectively over the long term. I do not encourage extreme stock concentration.

Nothing here is investment advice or a recommendation. As always, please do your own research.

A quick note before we start: as I was finalising this write-up, the excellent Noel Wieder published his take on Braime earlier this week. If you have already read that, I doubt you will find a great deal extra in my article. Our underlying thesis is similar and our numbers align closely. His take can be found here: A Family Business at a Bargain Price

For those who haven’t seen it, I’m confident you may like this one:

The Pitch

Braime is a family‑run niche industrial group trading below tangible book because it is tiny, illiquid and misunderstood. With improving earnings, vertically embedded franchises and a solid asset base, I believe that modest execution on cash generation and M&A integration could drive a meaningful re‑rating.

Market cap: £15.6m (note: very illiquid and can swing 20-30% per day!)

Adjusted Tangible Equity: ~£22m

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The Business & Situation

Braime has a long and illustrious history dating back to the 19th Century, with the company still led by the family today. Insiders hold nearly 60% of the shares, so to be candid, it is very difficult to buy any material amount of stock.

The business has two core units; one larger, one smaller:

• 4B, which sells components such as elevator buckets, belts, chain and safety electronics for grain and bulk‑handling equipment (~90% of revenue and profits).

• Braime Pressings; the much smaller unit, which supplies metal pressings, primarily to automotive and industrial customers.

The group’s main economic engine is supplying “goods and services for handling and processing industrial, and in particular, agricultural commodities.”

That means engineering for moving bulk materials (grain, feed, sugar, cement, coal, etc.) safely and reliably around storage and processing plants.

Over 2021-2025, group revenue grew from £36.4m to £50.9m and net profit from £0.8m to £2.7m, with operating margins approaching 9% despite tariffs, shipping disruption and inflation headwinds. Yet the shares still trade as an unloved industrial with very limited sell‑side coverage, a dual‑share structure, and a small free float; which collectively may explain why it’s in the bargain bin.

The current situation is not distress: 2025 was another record revenue year, and management has just acquired long‑term electronics suppliers Don Electronics and Synatel on a reasonable single-digit multiple to deepen 4B’s position.

Braime’s pre-deal valuation (I give my take on the adjusted numbers shortly):

• P/TB 0.64x

• PE 5.7x

Mispricing stems from neglect, structure and complexity, not collapsing fundamentals.

As below, Braime also has a long history of trading above tangible book, with a severe dislocation in the last few years.

The Asset Case (Downside Protection)

This needs a little adjusting and explaining because Braime’s recent acquisition came after the published annual report figures. At reporting date, pre-acquisition, the key tangible components:

• Property, plant & equipment: £12.5m

• Inventories: £15.5m

• Trade and other receivables: £8.9m

• Cash: £2.6m

Offset by liabilities totalling about £15m, resulting in tangible equity of £24.7m (Market cap today of £15.6m = 0.63x tangible book)

A Graham‑style haircut might trim inventories and receivables. However, I am inclined to counter-balance this with consideration that there is likely some hidden value in the properties. PPE is carried on a conservative, largely historical-cost basis. In particular, with recent capex layered on, there is a decent chance the main Leeds site and surrounding land are worth more than book.

Even with harsh marks on stock and plant, the bulk of net assets are physical and necessary to run the business. On top of this, the group disclosed a pension scheme surplus of £1.84m. It cannot be recognised as an asset under accounting rules, but has economic value that sits outside reported equity.

Onto the acquisition:

March 2026, Braime confirmed their purchase of Don Electronics and Synatel - a key supplier to Braime - and a highly specialised embedded electronics company.

• Don/Synatel bring around £9m of net assets into the group against an outlay of roughly £11.5m. Braime is paying about 1.27x book for a business generating c.£2m PBT (i.e. ~7.5x PE and ~17% ROE). Reasonable for a strategic, higher‑margin piece that should slot into 4B’s niche.

• After consideration of Don/Synatel net assets and acquisition financing and costs, a rough pro‑forma tangible equity number lands around £22m, which adjusts P/TB to about 0.71x. In exchange, Braime gets higher‑quality electronics earnings being brought “into the business”.

On a first estimate of future earnings power, one might jump to add the £2m PBT from the acquisition, but unfortunately that’s too simplistic, given that a good chunk of Don/Synatel’s historic revenue and profits came from selling directly to Braime.

We can however get a reasonable estimate on bottom-line impact. Don/Synatel has annual sales of £10.6m; to which I assess at least £9m came from Braime, operating at an impressive 18.8% PBT margin.

Braime’s Cost of Goods Sold will therefore drop by the amount of profit Don/Synatel used to make off them. Assuming £9m of the sales at an 18.8% margin, Braime was paying a markup of roughly £1.7m above cost.

While Braime “captures” that £1.7m in margin, we cannot just add it cleanly to the bottom line because the transaction itself creates immediate overhead and financial friction. My cautious assessment is the £1.7m gross margin boost likely translates to about £1m incremental PBT.

Putting it all together on the earnings side, a plausible future earnings position looks something like:

• Base: £2.7m (2025 Braime earnings, no growth) plus 70% of Don/Synatel post-tax boost of around 550k = £3.25m

• Optimistic: £2.8m (3% growth) plus 100% of Don/Synatel post-tax boost of around £750k = £3.55m

So a midpoint of about £3.4m for a fairly conservative integration assumption, results in a plausible forward PE of ~4.6x (at a full year run-rate)

If you are wrong on the earnings story a bit, you likely still land somewhere mid-single digits PE ratio, plus you still own a collection of tangible industrial assets and established niche franchises bought at around 0.7x adjusted tangible book.

Catalysts & Re‑rating Path

• Earnings mix and Don/Synatel integration: Evidence that Don/Synatel’s £2m PBT drops through at group level with captured manufacturing margin improvement for 4B. This would demonstrate that Braime can compound earnings from a higher‑quality, less cyclical part of the business.

• Normalisation of capex and better free cash conversion: 2025 free cash flow was depressed by a £2m roof redevelopment at Leeds; as this normalises, reported profits should translate more cleanly into cash, addressing a key sceptical question in value screens.

• Growth from new geographies: Recent subsidiaries in Canada, Indonesia and the Middle East are intended to exploit grain and bulk‑handling opportunities; a couple of years of visible growth and contribution from these regions should support a higher earnings base.

• Recognition of asset quality and governance: The market digests that Braime is a long‑term family‑run engineering business with conservative accounting, negligible intangibles and a pension surplus, the “cheap for a reason” stigma may fade, allowing a move from a distressed‑industrial multiple towards a more normal above-TBV range.

None of these are blue‑sky bets; they are incremental steps that have already begun, and they line up with how long‑term owner‑operators think.

It’s also worth adding, Braime’s 20-year CAGR including dividends is about 11%. This isn’t a perennial loser. It’s a solid industrial with skin in the game management.

Risks & What Could Go Wrong

• Persistent illiquidity and perpetual discount: The dual‑share structure, small free float and tiny market cap mean the stock could stay on sub‑book multiples, regardless of intrinsic value for a long time. Opportunity cost risk rather than classic value trap risk IMO.

• Working capital and inventory risk: A lot of asset value sits in inventories and receivables; 2025 saw a deliberate stock build to manage tariff/supply uncertainty, and if demand weakens or tariffs intensify, inventory might prove slower to turn than hoped, keeping free cash flow weaker than earnings.

• Integration and execution: Don/Synatel has a 40‑year relationship with Braime, but acquisitions still carry integration risk, especially as the group leans harder into Don/Synatel electronics, where development mis‑steps can be costly.

• Macro and sector shocks: Geopolitical shocks (tariffs, blocked shipping routes, grain‑trade disruption) and energy cost spikes could hit volumes and margins simultaneously, weakening both earnings and the market’s appetite for small illiquid industrials.

A thesis break would be sustained deterioration in 4B’s profitability, heavy write‑downs of stock or plant, or a highly dilutive equity raise that undermines the balance‑sheet protection.

Valuation & Expected Return

Post‑deal, both earnings power (£2m extra PBT) and tangible assets rise.

• A conservative base case is that, with continued profitability and improved cash conversion, the stock migrates to TBV over a few years. If you assume pro‑forma tangible equity in the mid 20s a few years out, that implies a market cap in the £25-26m range. Around 70% upside.

• A downside case might haircut inventories, receivables and PPE. You would still likely end up not too far from the current market cap, especially once Don/Synatel’s tangible assets are included, giving some asset‑based margin of safety.

• An upside case is essentially seeing everything in the catalyst section above become realised. Respectable growth and higher group margins justifying both an excess to book value and a low teens PE ratio (which is only a return to historical norms). In which scenario the market cap could plausibly be worth 2-3x today’s price over several years if capital is allocated sensibly.

It’s worth dropping in the charts below too, which show that Braime has a good history of trading comfortably above tangible book value (1.3-1.4x) and, although a bit more volatile, a mid-teens PE ratio:

In summary: Braime looks to be worth a good amount more than its current market cap, offering decent odds of material upside, whilst having tangible‑asset backing limiting the downside.

The small float means the stock is very volatile - only small personal accounts are likely able to build a position. A friendly reminder to always use limit orders!

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Disclaimer:

I review lots of companies and write up a small bunch that I find interesting. These write-ups aren’t month-long research reports and could omit material information, so I always welcome feedback.

The companies discussed often involve complexity or risk, and outcomes can vary widely. This is what puts most investors off and is why they work collectively over the long term. I do not encourage extreme stock concentration.

Nothing here is investment advice or a recommendation. As always, please do your own research.

Sekisui Jushi (4212) is a dull road‑safety and infrastructure supplier sitting on a fortress balance sheet that earns reasonable growing returns, yet trades below its tangible assets. With activist NAVF also pressing for continued shareholder friendly capital allocation and cross‑shareholding unwinds, investors are paid in buybacks and dividends while they wait for the gap to close.

Market cap 64.5bn
Tangible equity 82bn

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The Business and Situation

Sekisui Jushi builds the physical plumbing of modern roads, towns and logistics. It makes soundproof walls for highways/railways, lane dividers, guardrails, protective fences etc, amongst a bunch of other things like artificial turf for sports fields, and privacy fences/walls for homes and factories. There’s other areas too like plastic strapping, packaging machinery, agricultural materials and wildlife‑damage prevention products. So many things that would bore you if I list them all!

It’s a dull Japanese industrial.

The customers are institutional and commercial: national and local governments, highway and rail operators, construction firms, logistics, agricultural operators etc. They’re essentially a fixtures and safety hardware provider, with decades‑long relationships and a diverse base.

The Fundamentals

Firstly, there’s nothing particularly novel about a Japanese industrial trading below book value, however this one spiked my interest given the business seems to have turned a corner, both in terms of operational performance (after some mildly troubled M&A) and a very clear commitment to shareholder returns they are executing on.

Here is a snapshot below of the last 5 years. Sekisui has grown revenue from about 65bn to 78.1bn, as of results released this month. Acquisitions have helped drive this.

Profits have been volatile, as raw‑material, transport/energy costs spiked and management leaned into M&A and growth investments/Capex. There’s been plenty of near term margin disruption and transitional headwinds, especially through an accounting lens.

That should now be in the rear-view mirror. 2026 results, which have just come out, show a strong rebound and stabilisation, with growth now back on the agenda. Op profit came in 13% stronger, net income 12% stronger, and margins ticking up.

Operating cash flow is very solid and has increased from 6.2bn to roughly 8bn (about +29%), driven by price revisions, cost‑cutting and higher EBITDA from both existing operations and the recent acquisitions. Free cash flow before financing has moved from 2.8bn to 3.8b – a robust increase of around 35% year on year.

FY27 guidance: revenue 84bn (up 7.5%), operating profit 6.3bn (up 11%), net profit 4.4bn (up 11%). i.e. a third consecutive year of record revenue and further profit growth. Things are now going in the right direction.

Napkin maths = 6 x EV/EBITDA (EV 59b to 9.7b EBITDA). So a cheap multiple, with teen growth in profits for the foreseeable future. It also trades near decade lows from a P/S perspective as shown below (often a cleaner valuation measure to look through messy accounting).

Not bad so far, but probably not enough to make you lean forward.

The cash flows show this is a robust business, but the balance sheet and intended plans for it is what turns this from “reasonably cheap industrial” to something more attractive.

Equity stands ~101bn, tangible ~82bn, with of most interest:

• 23bn of long‑term deposits

• 17.3bn of investment securities (cross-holdings)

• 18.3bn of cash

• 22.5bn PPE

Total liabilities of 41.5bn, of which short‑term borrowings have recently dropped from 12.3bn to 5.9bn. They have issued 4.7bn of bonds and increased long‑term borrowings. That gives them ample ammunition to hit the buyback and cross‑shareholding‑reduction goals without stressing the operating business (which I will come onto shortly)

So relative to today’s market cap of 64bn, it’s priced around 0.77x TBV.

Cheap on earnings, cheap on assets.

Moving on. The key bit that matters for this pitch: management is decisively shareholder‑friendly and is executing. Three explicit pillars in particular:

To break this down:

• Dividends - The company has increased its dividend consecutively (up 14% this year) and now pays out more than half of earnings.

• Buybacks - Repurchased 16.7bn in 2024, 4.2bn worth of shares in 2025, another 2bn worth in 2026 to date and 2.7bn further planned.

• Cross-holdings - Management has committed to “further accelerate efforts to reduce cross‑shareholdings” - with a commitment to reduce by 30%; approx 5.2bn (based on 17.3bn holdings). This monetisation could be a huge windfall.

This is starting to look like a controlled self‑liquidation of non‑core financial assets over several years, overseen by activists rather than just a passive industrial.

On the recent earnings call, they explicitly state they can both fund growth and materially increase payouts without weakening the balance sheet.

On that activist point:

NAVF’s presence is an important kicker in this story, to keep the pressure on management to continue executing. It has built a meaningful stake since 2024, having publicly identified it as a classic engagement target: a solid, cash‑generative infrastructure business weighed down by cross‑shareholdings, surplus financial assets and a clumsy acquisition. In my view, NAVF are a serious outfit, as evidenced by their 24% CAGR performance since inception.

This new trajectory, from lazy balance sheet to activist‑nudged capital‑return vehicle, is exactly what makes this a live situation rather than just another cheap Japanese small cap.

What is the market missing?

The market sees a low ROE, small Japanese industrial with messy acquisition accounting and a troubled few years. It assumes it is just another capital‑inefficient conglomerate. ROE is only about 4%, weighed down by deals and a cocktail of transitional adjustments (it used to be nearer 8%). On lookback headline numbers at first glance, there is little to excite investors.

(FWIW, the 10-year CAGR including dividends is about 9%, so I wouldn’t harshly label it a melting value trap either)

What is under‑appreciated is that this “inefficiency” is precisely the ingredient that activists like NAVF are targeting; and we are seeing progress. Current profitability understates the underlying earning power once transitional headwinds pass. We are now seeing this in the 2026 and 2027 numbers, with double-digit growth in the guidance.

Sekisui is now doing all the things activists lobby for: committing to sell down cross‑shareholdings, shifting from hoarding to returning capital, and explicitly managing with an eye on cost of capital and share price.

What is my margin of safety?

The margin of safety comes from a combination of tangible assets and an emerging capital‑return machine. Investors are buying a debt‑light, cash‑rich industrial with stable public‑sector and commercial end‑markets.

On top of asset backing, shareholders are being paid out aggressively while they wait. A 100%+ total return ratio means that, absent a collapse in earnings, most of today’s earnings should come back via dividends and buybacks. For a deep value investor, that combination of tangible assets, conservative financing, and a clear capital return policy offers a wide buffer against permanent capital loss.

What gets the gap to close?

I am repeating the above, but to be succinct and clear:

• Continued execution of the buyback and dividend policy

• Visible reduction of cross‑shareholdings and long‑term investments

• Modest improvements in ROE and margins (price increases, cost reductions, and acquisition integrations/synergies)

• Pressure and public commentary from activist NAVF

What could go wrong?

This could still be a value trap. Management might talk a good game on capital efficiency yet stop short of truly slimming the balance sheet, leaving ROE stuck in the mid‑single digits and the stock perpetually cheap.

The activism angle is helpful but not decisive: NAVF is influential, not a silver-bullet.

Operationally, the risk is that acquisitions and growth projects consume more capital than they return - with planned synergies not as beneficial as hoped.

Sekisui Jushi will never be the sexiest name in a portfolio, but that is precisely the appeal. You have a niche but critical industrial, wrapped in a fortress balance sheet; run by a team that understands capital and shareholder returns.

Investors today can buy tangible assets at a discount, collect a rising stream of cash returns and wait for a more rational capital structure to be recognised. For a deep value investor willing to be patient, that is a perfectly acceptable way to compound.

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Disclaimer:

I review lots of companies and write up a small bunch that I find interesting. These write-ups aren’t month-long research reports and could omit material information, so I always welcome feedback.

The companies discussed often involve complexity or risk, and outcomes can vary widely. This is what puts most investors off and is why they work collectively over the long term. I do not encourage extreme stock concentration.

Nothing here is investment advice or a recommendation. As always, please do your own research.

Eight UK housebuilders (Watkins Jones, Springfield, Taylor Wimpey, Vistry, Bellway, Barratt Redrow, MJ Gleeson, and Crest Nicholson) now trade between 0.2x-0.7x tangible book value, levels not seen outside major crises.

These companies control finite land assets with planning permission in a market facing a persistent annual deficit. The market has priced in catastrophe while ignoring that these companies entered this downturn with stronger balance sheets than 2008, are returning capital via dividends and buybacks, and benefit from a bipartisan political mandate to build.

A return to normalised 1.2x-1.5x multiples would deliver 70%-600% upside depending on the name (broad, I know), with downside protected by land holdings that don’t spoil and planning permissions that represent genuine barriers to entry.

The chart below tells the story, which shows the P/TB ratio for the builders. The white line is a crude trend line around 0.6x.

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The Businesses & Situation

I will save you from an in-depth explanation of what housebuilders are; it’s fairly straightforward. They are fundamentally land portfolio companies disguised as construction businesses. They acquire land, shepherd it through the UK’s restrictive planning process, then build and sell homes. While business models vary (private sales, partnerships, regional exposure etc), all trade at depressed asset multiples with significant land exposure.

Why they’re in the bargain bin:

A “cyclical downturn” is probably too simplistic to say, but is directionally correct. Rising interest rates have hampered mortgage affordability. Geopolitical ongoings are impacting everything from input costs to inflation expectations. There’s also a myriad of government triggered fears around regulation, labour costs and so on too.

In my view, markets have assumed land values will crater and the structural housing shortage will somehow cease to matter.

The Asset Case (Downside Protection)

The core asset is land with planning permission which is a genuinely scarce resource in the UK’s land-constrained system. Unlike retail inventory or tech hardware, land doesn’t spoil, depreciate, or become obsolete. Planning permission itself is a regulatory moat that took years and significant capital to secure.

Key tangible book components:

• Land holdings: Historic cost accounting often understates value, as land purchased years ago is carried at cost despite planning permissions now in place

• Work-in-progress inventory: Partially completed homes

• Cash and receivables: Most builders emerged from prior downturns with stronger balance sheets and reduced net debt

The UK’s 100,000-unit annual shortfall and restrictive planning system provides a floor.

What you own if you’re wrong: At 0.2x-0.7x tangible book, you’re buying land portfolios that have already absorbed significant provisions, with embedded planning permissions that requires years to secure, in a structurally undersupplied market.

Even assuming land value impairment in a severe scenario, downside appears limited at these entry multiples. The eight I have selected are all net-nets.

Catalysts & Re-rating Path

As a basket, I think you just pinch your nose and wait out the cyclical downturn. There’s a real supply and demand imbalance which works in your favour in the medium term. Other potential catalysts include:

• Interest rate stabilisation: for improving mortgage affordability. Your guess is as good as mine on that macro call though!

• Government housing targets: Labour’s manifesto committed to 1.5 million homes over five years, a policy that favours builders

• Insider buying: Management with intimate knowledge of land values and forward pipelines are accumulating shares. 6 out of the 8 housebuilders have seen insider buying in the last 6 months.

• Dividends and buybacks already underway despite share price weakness demonstrate balance sheet confidence. Companies buying back stock at 0.2x-0.7x tangible book are acquiring their own land portfolios at massive discounts. Highly accretive even if operations remain subdued.

Construction output is a lagging indicator and by the time it turns positive, shares will have re-rated.

Historical pattern: UK builders trading at or below 1x tangible book preceded significant rallies in 2009, 2012, and 2020. Current valuations price in permanent structural impairment that contradicts the UK’s ongoing housing deficit reality.

Risks & What Could Go Wrong

Structural undersupply supports long-term demand, though near-term earnings remain governed by affordability and transaction volumes.

• Land value impairment: If UK house prices fall due to severe recession, land holdings would require writedowns. However, the sector has already taken building provisions, and land at historic cost may contain a hidden cushion.

• Interest rate dependency: Recovery assumes rates don’t spike materially higher. If inflation re-accelerates forcing sustained high rates, mortgage affordability remains impaired and transaction volumes stay depressed.

• Regulatory and political risk: The Labour government could impose additional building standards, increased affordable housing requirements, or planning delays that increase costs. Wealth taxes or land value capture mechanisms could erode margins.

• Management capital misallocation: Builders have historically been more disciplined post-GFC, but poor decision making or value-destructive M&A can never be ruled out.

What breaks the thesis: Sustained house price declines of 25%+ requiring major land impairments, combined with regulatory changes that make new development economically unviable, would eliminate the asset backing. If government abandons housing targets and planning becomes more restrictive, the political tailwind reverses too.

Valuation & Expected Return

If not obviously already, I like this as a basket, rather than taking on any particular single stock risk.

Base case (1.2x tangible book): Return to lower end of “normal” multiples as interest rate panic subsides and construction activity stabilises implies 70%-500% upside across the basket names, with weighted average return of approximately 150%.

WJG (0.5x to 1.2x): 140% upside

CRST (0.2x to 1.2x): 500% upside

GLE (0.5x to 1.2x): 140% upside

BTRW (0.6x to 1.2x): 100% upside

BWY (0.6x to 1.2x): 100% upside

TW (0.7x to 1.2x): 71% upside

VTY (0.4x to 1.2x): 200% upside

SPR (0.7x to 1.2x): 71% upside

Downside case: If severe recession forces land writedowns and multiples stay depressed, downside from current weighted average should be quite limited given assets already reflect provisions and market pessimism.

Upside case (1.5x tangible book): Return to upper end of historical range implies 150%-600% upside depending on name. As a basket, plausibly a 2-3x multi-bagger.

At current valuations, you’re buying portfolios of finite land assets with embedded planning permissions at fractions of stated book value in a market with persistent annual deficits. The market is pricing in permanent catastrophe.

This seems to represent an asymmetric risk-reward. The catalyst path doesn’t require heroic assumptions, albeit it could be very bumpy in the short term.

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Disclaimer:

I review lots of companies and write up a small bunch that I find interesting. These write-ups aren’t month-long research reports and could omit material information, so I always welcome feedback.

The companies discussed often involve complexity or risk, and outcomes can vary widely. This is what puts most investors off and is why they work collectively over the long term. I do not encourage extreme stock concentration.

Nothing here is investment advice or a recommendation. As always, please do your own research.

Expensify is an expense management software company that helps businesses collect receipts, control card spend, reimburse employees, and sync everything into accounting systems.

Upon editing my first draft of this write-up, a news release revealed plans for a Dutch auction tender. It hasn’t fundamentally changed the thesis, but has introduced a new catalyst with management repurchasing up to 30%(!!) of the float. The stock jumped up ~18% on the news. It was a net-net last week, now it’s marginally not.

Excluding the recent news, the TLDR: the market is focused on shrinking paid members, weaker margins, litigation overhang, and a Nasdaq bid-price deficiency notice. However, it is missing a debt-free balance sheet and positive free cash flow. Not only did it trade below net current asset value, the tender range itself suggests management believes the stock is worth materially more.

For the thesis to work, Expensify doesn’t need to become a fast-growing SaaS story again; it needs to stabilise, preserve free cash flow, and retire stock while sentiment remains depressed.

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The Business & Situation

Expensify automates expense management. It’s a fairly simple model to understand that most of you have probably experienced in some form in your career; photograph receipts, managers approve expenses, finance teams reimburse staff etc. Data flows into software like QuickBooks, Xero, and other household software names. It also offers a corporate card, earns income on card spend, and has built adjacent travel and bill-pay products.

Subscription fees remain the core revenue source, with card income the most important secondary stream (that is doing very well) and travel still small.

Why is it in the bargain bin? Paid members have declined from 688k 2024 to 632k in Q1 2026. Gross margin has drifted from mid 50s to 48%, while 2025 earnings were further hit by litigation and a marketing expense which more than doubled, linked to the costly F1 movie sponsorship. Then came the April 2026 Nasdaq bid-price deficiency notice: If a listed company’s share price falls below $1.00, Nasdaq will deem the company noncompliant; this can lead to delisting and relegation, i.e. to OTC.

That mix of slowing growth, ugly optics, and technical overhangs has produced the mispricing. The market is valuing Expensify like a broken small-cap SaaS, but the company still generates FCF, has no debt, and is now using capital aggressively to buy stock back at depressed prices.

The Asset Case (Downside Protection)

As of Q1 2026, Expensify has 139m equity, 66.5m of cash, and no debt. Total current assets of 158.2m against total liabilities of 52m, giving you NCAV of about 106m. On my first draft of this analysis, the stock lingered at a market cap of 93m, but has shot up to near 110m on the tender news. It’s marginally lost its net-net status but still remains very cheap on an asset basis.

It’s worth breaking down the asset credibility; not all current assets deserve full credit. Settlement assets largely represent customer funds moving through Expensify’s payment systems and should be treated cautiously. But even after being conservative, the company still appears supported by cash, working capital, and some hard assets, including property.

• Cash & cash equivalents - $66.5m

• Accounts receivable - $12.1m

• Other current assets - $21.2m

• Settlement assets - $53.6m

• Property & equipment - $12.9m

Tangible assets are just above 166m. Current assets just above 158m. Total liabilities 52m.

Market cap now is about 109m.

There is also some optionality that the balance sheet does not capture well: patents, pending applications, card infrastructure, and a broad accounting integration network. The asset case is not that this is a liquidation, it is that the stock already prices in a great deal of pessimism despite a balance sheet that remains sound.

Catalysts & Re-rating Path

• The tender offer is now a key catalyst that wakes this up a bit. Expensify has launched a $25m Dutch auction tender at $0.98 to $1.20 (stock now at $1.12). The tender expires June 10th. If fully subscribed, the company could repurchase up to 30% of shares outstanding. That is a meaningful reduction in float and a very strong signal that management sees the stock as undervalued.

• The second catalyst is business stabilisation. Management disclosed April 2026 paid members of 641k, up from 632k - with “Growth signal returning”. Card income is doing well with 10% YoY growth, and given that card income has been growing even while paid members have declined, may suggest improving monetisation mix.. Even a flat trend overall from here would help challenge the market’s assumption of ongoing decline. Management guidance is 6-9m in FCF for the year - a high single digit yield. It’s a broad range, but shows this is a healthy cash flowing business, not a busted stock.

• Third, 2025 distortions should fade. The F1 spend and litigation costs were unusual, and the underlying business still generates FCF. Q1 FCF would have been $2.5m more if not for a litigation one time payment. The Nasdaq bid-price compliance issue is an event-driven stain, not permanent issue. A reverse-split and buyback addresses this.

Risks & What Could Go Wrong

The biggest risk is structural decline. If expense management becomes a commodity feature inside larger ERP players or parallel software packages, Expensify may keep losing users and pricing power.

The second risk is overstating the asset base. Settlement balances are one example here; a superficial book-value can therefore overstate the real margin of safety.

Third, management could still destroy value through dilution or poor capital allocation. Stock-based compensation is high, although it does look like its moderating a little. If buybacks only offset future issuance, the tender will look less impressive in hindsight.

Fourth, the tender itself reduces the cash cushion. If operations worsen after the tender, that safety net is reduced given the balance sheet is less “fortress-like” than before.

The thesis breaks if paid members continue falling, free cash flow turns negative, or management resumes spending in ways that swamp the benefit of buybacks.

Valuation & Expected Return

Near term Base case, Expensify rerates toward book value as the above issues fade and the tender highlights genuine board conviction. At around 140m, that implies just shy of 30% upside, which is down from the 55% upside I’d pencilled in during my first draft of this write-up before the tender news.

A downside case should haircut receivables and treat settlement balances more conservatively. On that basis, stressed value may be around 85m, which is not dramatically below today’s market value.

The upside case is possibly more attractive now because capital allocation has become active. If the tender retires 25-30% of float and the business then merely stabilises with continued positive free cash flow, remaining shareholders could own a meaningfully larger slice of a perfectly FCF-generative platform. Under such a narrative multiple expansion could be quite dramatic.

There’s plausibly a fourth angle here too. One could buy in the open market and play this as a Special Situation over the coming month, if the price bounces between $1-1.10 range and you can tender for more. That’s a very rewarding IRR. DYOR on that one, obviously.

Overall, whilst it’s mildly frustrating to see this pop during my write-up, the new tender offer matters because it turns a passive cheap stock into an active value story.

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Disclaimer:

I review lots of companies and write up a small bunch that I find interesting. These write-ups aren’t month-long research reports and could omit material information, so I always welcome feedback.

The companies discussed often involve complexity or risk, and outcomes can vary widely. This is what puts most investors off and is why they work collectively over the long term. I do not encourage extreme stock concentration.

Nothing here is investment advice or a recommendation. As always, please do your own research.

Kelly Services is an asset‑light staffing and workforce solutions company with leading positions in education, life sciences, engineering and enterprise workforce programmes. The market is fixated on shrinking revenue and ugly GAAP losses, ignoring that the business still generates solid cash on a clean, lightly levered balance sheet. At a 354m market cap you are paying roughly 0.65x of about 550m tangible book, and ~7x normalised free cash flow in the 50–60m range. There is also a bit of a Special Situations angle, with Hunt Equity recently acquiring control from long-standing family ownership. With their refreshed steer, if management can stabilise volumes, lift margins modestly and keep repurchasing stock below book, the gap between price and asset‑backed value should close.

The Business & Situation

Kelly is a specialist middleman in the job market. It recruits, screens and pays workers, then supplies them to clients who want flexible labour or outsourced functions. They earn a spread on staffing plus fees for managing workforce programmes and projects.

Three segments matter (best depicted by the below image):

• Enterprise Talent Management (ETM)

• Science, Engineering & Technology (SET)

• Education (EDU) - a 1bn business that has tripled revenue since 2020

Why is it cheap? Revenue has drifted down from mid‑5bn to 4.25bn; although half of this is because of strategic choices, as management sold low‑margin international operations. The other half is from contract losses and organic softness due to economic cooling. There’s no doubt headline figures are poor. GAAP earnings look dreadful thanks to large goodwill impairments and a big valuation allowance on tax credits, turning 2025 into large reported losses, albeit there is positive cash flow. The business is cyclical, no doubt about it.

After a paragraph like that, you can see why most will pass on this stock.

The Asset Case (Downside Protection)

This is where Kelly fits a deep‑value, asset‑backed style. Tangible equity, what you really own, is around 550m. So against a 354m market cap you are paying 0.65x tangible book. Net Debt is modest at ~100m

Even if you take haircuts to receivables, ignore tax benefits and other balance sheet assets you still get tangible equity north of 400m versus a 354m market cap, before assigning any value to goodwill, brand, technology or franchise.

Catalysts & Re‑rating Path

• Operational improvements: Management has already driven structural savings (SG&A is down 12%), is modernising the tech stack, and is rolling out internal AI tools. As these programmes mature and revenue stabilises, it is reasonable to expect modest margin expansion. 2026 will likely be a trough year for margins (Q1 saw another modest compression, albeit management stated it is timing‑related). Management is explicitly targeting improvement from H2 onwards. Excerpt from recent earnings below.

• Mix has improved and is improving: since 2020, the portfolio has shifted. That migration towards higher‑margin, stickier work should support both gross margin and resilience.

• Capital allocation: Operating cash flow was 122.6m in 2025 on capex of 8.5m, illustrating how little investment the model needs. Debt has fallen from 239m to 130m, with the debt-to-EBITDA leverage near 1. The company deployed 158m in 2025 across debt paydown, repurchases and dividends. With 40m still available under the current authorisation and the stock below tangible book, continued buybacks at a discount to TBV can steadily compound value.

• Industry and cycle: Staffing demand is weak but not dead: underlying revenue, excluding discrete hits, is down low single digits and broadly in line with peers. Any modest cyclical upturn in hiring, particularly in manufacturing, education budgets or technical project work, would fall on a cost base that has already been trimmed, creating operating leverage.

• Governance and control: Saving possibly the best catalyst until last; a January 2026 transaction made Hunt Equity the controlling shareholder, after acquiring it’s stake from previous family ownership. We now have a financially driven owner, bought in at depressed valuations who now influences strategy and capital allocation. Since then, CEO Chris Layden (90k) and Hunt CEO James Hunt (240k) have also made sizable open‑market purchases, reinforcing alignment. Insider buying is a great sign. Over time, Hunt can push for harder cost actions, tighter capital allocation, or ultimately a strategic deal or take‑private if public markets stay indifferent.

Risks & What Could Go Wrong

• Structural value trap: If AI and automation permanently reduce demand for the roles Kelly supplies faster than it can grow higher‑value solutions, revenue could keep drifting down and margins stay thin. In that world, tangible book might be chipped away by recurring restructuring and under‑earning, and today’s discount may simply reflect reality.

• Control‑related outcomes: With Hunt’s effective control, minority shareholders have limited influence. A future take‑private or merger could occur at a low share price, crystallising some upside but well short of intrinsic value.

• Asset and working‑capital risk: The asset story is tied heavily to receivables and other current assets. A deterioration in customer quality or systemic issues would erode equity and weaken the downside cushion.

Valuation & Expected Return

A simple, asset‑anchored framework is sufficient.

Normalised FCF: management’s numbers and multi‑year averages point to 50-60m per year; taking 55m as a midpoint.

• Base case: If the business stabilises and executes modestly, a 9-10x FCF multiple is reasonable for an asset‑backed, low‑leverage franchise with improving mix/margins. That gets you around 495-550m; which also aligns with tangible equity of 550m at 0.9-1x TBV. From a 354m starting point, that is roughly 40-55% upside.

• Bear case: Assume FCF normalises closer to 30-35m and tangible book effectively realises at only 0.7x after haircuts and write‑downs. That gives ~385m on an asset basis, and assuming a 7-8x multiple of FCF about 210-280m. A blended downside in the 225m range. So a downside of 35% or so.

• Bullish case: If Hunt’s stewardship and mix shift lift FCF to upper end of 65m and the market assigns 10-11x, you get 700-750m, which is roughly 100%+ upside..

On balance, I think Kelly is conservatively worth more than 500m versus today’s 354m, implying near 50% upside with tangible assets providing real downside protection. This has hair all over it, but that’s why it’s cheap. There’s a credible re‑rating path through operational improvement, disciplined capital allocation and a newly engaged control owner.

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Disclaimer:

I review lots of companies and write up a small bunch that I find interesting. These write-ups aren’t month-long research reports and could omit material information, so I always welcome feedback.

The companies discussed often involve complexity or risk, and outcomes can vary widely. This is what puts most investors off and is why they work collectively over the long term. I do not encourage extreme stock concentration.

Nothing here is investment advice or a recommendation. As always, please do your own research.

Derwent London is a specialist owner‑developer of prime central London offices, with three‑quarters of its £5.1bn portfolio in the West End and a long record of creating value through design‑led regeneration. The market is treating it like a generic UK office REIT facing structural decline, despite resilient letting, conservative valuations and a focused, high‑quality footprint. At roughly 0.52x net tangible assets and a covered ~5% dividend yield, you are paying “bad office” multiples for some of the best‑located assets in London. If Derwent executes its £1bn disposal and reinvestment plan and starts executing its earnings uplift plans, the gap to asset value should narrow.

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The Business & Situation

Derwent buys tired but well‑located buildings in nice districts and refurbishes or redevelops them. They lease on multi‑year terms to a diversified base of high quality tenants. It is not a diversified UK property trust: 75% of value is in the West End and most assets sit around prime London, giving concentrated exposure to the most supply‑constrained, talent‑dense parts of the capital. Development and regeneration are core to the model, with major current and planned schemes for key sites.

The shares are in the bargain bin because office has become a dirty word post‑COVID, higher rates lifted interest costs, and reported EPS fell from 106.5p to 98.4p in 2025 after some refinancing. Additionally, Derwent is in a capex‑heavy phase where major projects depress near‑term earnings and increase vacancy before delivering future income.

The Asset Case (Downside Protection)

Share price today is 1700p vs net assets of 3225p per share, up 2.4% year‑on‑year, underpinned by a £5.1bn portfolio valued on a 5.71% true yield.

Key asset and balance sheet metrics:

• 75% of portfolio value in the West End, ~23% in “City Borders”.

• LTV <30%, with net debt/EBITDA 9.0x and no equity raise since 2007.

• Average interest rate c.3.9%; management expects it to stay roughly stable through 2031.

• Reversionary potential is substantial: Derwent discloses £70.9m of net‑effective rental reversion, implying roughly 34% uplift from current rent to estimated rental value (ERV) in the portfolio

Even if you haircut property values by 20% to reflect a harsher outlook for London offices, the combination of modest LTV and high‑quality, income‑producing assets means the implied equity value still sits comfortably above the current market cap. In the bear case you own a basket of prime London buildings at a large discount; in the base case you also get development upside and reversion.

Catalysts & Re‑rating Path

Several tangible levers can help close the discount:

• Disposals at or above book: The group sold £216m of assets in 2025 and has already exchanged on £278m in early 2026, broadly in line with or ahead of December values. They are also in discussions on a further £120m. Management has a £1bn disposal target over three years, focused on mature or lower‑return assets, and has stressed this is not a ceiling; if liquidity and pricing remain supportive, they are willing to accelerate. Every sale near book value undermines any “inflated NAV” argument.

• Earnings inflection: For 2026, management guides to earnings 3-5% below 2025, but they expect 2027 earnings to be 5-10% above 2025 levels and guide to at least 25-30% growth by 2030, driven by rent reversion and income from completed projects.

• Capital allocation: Of the £1bn disposal plan, £500m is earmarked for project capex, leaving up to £250m of excess capital that could be deployed into buybacks. Whilst writing the first draft of this article, the May update confirmed this has evolved from being “on the agenda” to now in motion, with buybacks starting this month (£50m for now). The current 2030 earnings and total accounting return guidance assumes no buyback benefit; so this could be a plus.

In short: disposals validating NAV, visibly improved earnings from 2027, and the implementation of buybacks around 0.5x tangible book. A very credible path for the equity to re‑rate.

Risks & What Could Go Wrong

The main risks are:

• Structural office demand issues: If hybrid work, AI‑driven job cuts, or other unknown macro issues reduce demand even for prime London space, earnings may not grow at the pace guidance indicates.

• Interest rates: Rising rates could push valuation yields wider just as major schemes are delivered, reducing development returns and putting downward pressure on asset values..

• Execution and capital allocation: The strategy relies on recycling capital through multi‑year projects. All sorts of capital allocation missteps could occur, or a reluctance to use buybacks properly when attractive could hamper value realisation.

Valuation & Expected Return

At around 1700p, the shares trade at roughly 0.52x tangible book.

The healthy dividend is well covered, with guidance for a earnings temporary dip in 2026, then 5-10% growth in 2027, with 25-30% by 2030.

• Base case: In a few years the discount to book narrows to a longer term average of around 0.9x as disposals evidence values, the development pipeline de‑risks, and earnings follow management’s path. On 3225p NAV, that implies 2900p per share, or roughly 70% upside before dividends.

• Bear case: with a 20% cut to asset values and slower earnings growth, NAV might fall toward 2600p; on a 0.6x stressed multiple, the share price would be around 1550p, which isn’t that far below the current level. In other words, limited downside if the balance sheet doesn’t get obliterated, which is hopefully unlikely.

• Bull case: Derwent delivers the 30% earnings uplift guided and the market ultimately pays 1x book for a de‑risked, cash‑generative portfolio, the shares could trade above 3200p plus 5% annual dividends as an added boost. Derwent has a long history of trading above NAV before COVID.

I think this is worth around 2800p versus 1700p today. There’s a good yield, tangible asset backing, buybacks in motion and a visible earnings path.

Added kicker: the thing I always love to see - insiders have been buying in 2026. Not a mountain load but a respectable 300k across Exec roles including CEO and CFO.

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Disclaimer:

I review lots of companies each week using filters developed over years, and write up a small bunch that I find interesting. These write-ups aren’t month-long research reports and could omit material information, so I always welcome feedback.

The companies discussed often involve complexity or risk, and outcomes can vary widely. This is what puts a lot of investors off and is why they work collectively over the long term. I do not encourage extreme stock concentration.

Nothing here is investment advice or a recommendation. As always, please do your own research.

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These five books won’t appear on common “best investing books” lists, but they belong on the shelf of every serious value investor hunting for an edge.

So, first up: One Up on Wall Street by Peter Lynch… just kidding.

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1. Choose Stocks Wisely

Dr. Allen’s formula-driven guide to buying stocks below an adjusted net asset value figure, achieved a ~38% annualised return. Allen, an accounting professor, shows how to use accounting knowledge to find unloved businesses trading at deep discount, with a particular focus on solvency and liquidity. This book has had a strong influence on how I invest today.

Key learnings:

• Apply systematic screens to find stocks trading below adjusted book value

  • Adjusted = tangible book with some modifications, and consideration of next year’s earnings

• Use analysis to verify tangible asset quality and avoid weak or illiquid balance sheets

2. Tomorrow’s Gold

Marc Faber’s contrarian macro guide uses historical analysis to identify major economic shifts and undervalued regions. Written by the investor who correctly anticipated Black Monday (1987), the Japanese bubble burst (1990), and the Asian financial crisis (1997/98).

A macro focused book isn’t what you would usually expect on a value investor recommendation list, but it is more about identifying overlooked themes and honing your contrarianism mindset. Faber is also fun to listen to on the Podcasts he appears on, albeit he can be a little too doomy; so be careful not to become too perma-bearish.

Key learnings:

• Study history to identify where capital and themes (and power) are shifting

• Think independently: today’s dominant markets may not remain so tomorrow

• Look beyond Western markets for emerging deep value opportunities

3. The Net Current Asset Value Approach To Stock Investing

You may know the more well known “Net Net Stock Guide” by Evan Bleker, which itself is excellent. This is similar, with a rigorous examination of Graham’s NCAV strategy backed by 60 years of performance data. If you’re reading this Substack you probably already know all about net-net stocks, but the book adds clarity to how individual investors can achieve excellent returns.

Key learnings:

• NCAV stocks consistently outperform, providing you have the stomach for some volatility (ok maybe you know this already)

• Graham’s most conservative approach still works in modern markets - if you know where to look, despite what many say

4. Of Permanent Value: The Story of Warren Buffett

Everyone knows about the two popular Buffett biographies - they are fantastic. But this gem from Andrew Kilpatrick is barely known. It’s a 1,000+ page encyclopaedic biography that documents Buffett’s complete journey and investment evolution. What I love is how digestible it is, with over 322 bite-sized chapters, making it so easy to dip in and out. It covers everything from his first pinball machine, Berkshire’s textile origins to the elephant-sized investments of the 90’s. If you’re a Buffett fan it’s a must.

Key learnings:

• Track the granular evolution of Buffett with snippets of information you’ve probably never read or seen before

• Study specific deals and the reasoning behind each investment decision, including many lesser-known deals

5. There’s Always Something to Do: The Peter Cundill Investment Approach

While some deep value readers may know this one, it's too good to exclude. The book chronicles deep value legend Peter Cundill, who achieved 15%+ annual returns over 35 years. Cundill is a GOAT given his longevity in the game. This book is based on 45 years of personal journals and interviews. If you’re into deep value, it’s important to know everything about Cundill.

Key learnings:

• Discipline beats brilliance during rough patches and periods of doubt

• Journaling as a tool

• Stay creative and flexible; “there’s always something to do” if you look harder. Spread your wings away from the main markets or your home country.

Every investor has that one "secret" book that changed their perspective. Drop your favourite undervalued titles in the comments, I’m always looking to add to my shelf. And do share if you found this list interesting!

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Team Internet is a three-segment digital group whose Board has spent six months telling the market that they are confident they will be able to sell one of those segments for materially more than the market cap (segment sale ~£120m vs Mcap today of £81m).

Either the market is right that the sale process is fragile or unlikely, or the setup is one of the cleaner break-up arbitrages available today, leaving an investor with two segments and their combined ~$21m EBITDA “for free”.

(to keep things simple due to how TIG report, everything from hereon is in USD $)

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What do they do?

Three business segments:

• Domains, Identity & Software (DIS). The “internet plumbing.” TIG sells and renews domain names wholesale to ~21,000 resellers (GoDaddy, Squarespace etc). I won’t confuse you with technical jargon or the extra bits, but it’s akin to owning a warehouse of websites and some of the technical back-end systems that pin it all together. This is a good recurring income segment and the one up for sale that bidders want.

  • 2025 Adj EBITDA $21.4m

• Comparison. German-language price-comparison portals earning affiliate commissions from Amazon/eBay/OTTO. Real category leadership in the region.

  • 2025 Adj EBITDA $12.3m

• Search. This was TIGs darling cashcow business segment but has collapsed. TIG buys cheap social-media traffic and lands users on lightweight content pages it owns (i.e. empty parked domains), and monetises clicks via Google’s ad feed. This segment took a massive whack in 2025 with sales/EBITDA falling off a cliff, in short because of Google shifting how the monetisation of ad-clicks operates. No more clicks = nosedive in revenue. TIG learned the hard way that their search business was too dependent on Google and that current setup. Management is now explicitly guiding to stabilisation after re-engineering this process.

  • 2025 Adj EBITDA $9m (down from $56.4m in 2024)

The Bottom Line: Google inflicted a major disruption to TIG’s Search segment; the old, easy way they made money from ads - and the share price derated aggressively (today its down 83% from ATH). This kicked off a Strategic Review late 2025.

TIG is now a much smaller company in terms of total revenue, but they are trying to rebuild using newer, more modern tools that don’t rely on that one old Google Ad product. As part of the strategic review, they are now actively looking to sell the “good” part of the business (DIS) - to which they remark there is notable interest.

What’s happened in the strategic review so far?

A clean timeline matters here (recall the current Market cap is $110m):

• Jan 2025: Two private equity firms, TowerBrook and Verdane, separately made a 125p offer (share price 33p today). Both walked by early March, likely on the news of the upcoming deterioration of Search. Shares fell 43% in one day.

• Mar-Sep 2025: Google Ad opt-out triggers a Search collapse. H1 revenue –36%. 200+ layoffs.

• Nov 2025: Formal strategic review launched. DIS for sale. Tier-1 adviser engaged. Board states any DIS transaction should be “materially in excess of £120m.”

• Jan 2026: Strategic review ongoing; “Progressing well”, “confident that any transaction would deliver a value-maximising outcome in excess of the Group’s current market capitalisation”

• Mar 2026: FY25 EBITDA lands at $42.7m (top end of forecasts). Net debt down to $87.6m. DIS sale talks “progressing well.”

• Apr 2026: Latest update (screenshot below). “Highly engaged parties” still in the room. £120million figure reiterated. Search transition substantially complete.

Translation from management-speak?:

“We are still seeing bids/interest levels that support our original valuation thesis, despite the stock falling further.”

That is exactly what you want to hear in a live asset sale; the management has now re-iterated their confidence in obtaining £120m+ four separate times.

What is my margin of safety?

The break-up math is fairly straightforward.

• Today the market cap is $110m, with an enterprise value of $196m (net debt $87m)

• If DIS sells at 8.5x its $21.4m EBITDA (the multiple paid for MarkMonitor in 2022) its $182m, which at around £134m aligns with managements “in excess of £120m” statements. At a 10x multiple (average sector multiples) it is $214m.

• So a napkin math range of $182-214m; the disposal proceeds alone roughly equal current EV ($196m)

• You then get Comparison ($12m EBITDA) plus Search ($9m EBITDA) that becomes a stub for nothing. A base case 6x multiple on Comparison ($72m) and 4x on Search ($36m) = $108m.

In short, that napkin math is about a 100% upside. Obviously, to embed more margin of safety, expect leakage, a variety of fees and slight haircuts; so a more conservative upside might be 60-80%

Worth stressing again, the Board has now repeated the “materially in excess of £120m” claim across four separate announcements. There is real director-level reputational cost if it lands materially below. They also reiterated the valuation language even after share price fell to ~£84m market cap in April 2026. That does increase signal strength.

They have also explicitly said they will return capital via a special dividend or tender offer (see Team Internet CEO on 2025 transition, Commerce Media and DIS sale )

Some cautions matter:

• The bond mandate in the latest RNS is a possible yellow flag. If a clean disposal were very imminent you wouldn’t expect to start meeting fixed-income investors (?) - or it may just reflect a desire to optimise the capital structure ahead of a potential DIS sale, rather than a sign of deteriorating leverage.

• Is Search stabilised or structurally impaired? Search transition is now substantially complete, with management guiding for more stable performance going forward. Hopefully this is the EBITDA floor.

• Comparison wobbled in FY25. The previously-unbroken growth segment looks robust, but Google AI Overviews are a real existential question for affiliate-led comparison portals.

On the balance the setup is skewed favourably. A no-deal downside is hopefully underpinned by a multiple of EBITDA near the current market cap (it currently trades ~4x EV/Adj EBITDA). Whereas, as outlined above a clean DIS sale could have a large upside 60-100%.

The below table is the forecast from Edison, demonstrating the hopeful floor in the current share price based on the low valuation. FWIW, Edison values TIG at 63–76p per share on peer-based SOTP analysis, including a standalone valuation for DIS of c.£150m (61p per share).

Time is the real cost. Every quarter without a formal commitment, key staff leave and buyer leverage grows. A possible clean catalyst ahead is audited results in late May 2026. If it lands clean, with a firm DIS bid in Q2/Q3, the rerate could be significant. If it brings any audit surprise like a goodwill writedown or covenant pressure… then who knows.

The Kestrel Partners Angle

Kestrel Partners is a key part of the story and worth highlighting explicitly. It is the company’s largest shareholder, controlling just over a quarter of the outstanding shares. Kestrel is not a passive fund: it is a specialist small‑cap technology investor, and its managing partner, Max Royde, also sits on the TIG board. This gives Kestrel direct influence over the strategic review and any eventual decision on asset sales and capital allocation. Kestrel has a track record of successfully orchestrating value-unlock exits.

Importantly, public filings and dealing disclosures show that Kestrel has been consistently adding to its stake in the 70–90p range during and after the operational setback in the Search segment. That behaviour implies a blended cost base materially higher than current levels, and a clear belief that intrinsic value is materially higher than the prevailing share price. The combination of a large, economically committed shareholder and board seat notably increases the probability that the DIS sale process is driven to a value‑realising outcome, rather than allowed to drift or be quietly abandoned.

Summary

This is exactly the kind of dislocation deep value special sits investors like:

• broken narrative stock

• earnings collapse creates forced derating

• high-quality asset for sale

• explicit monetisation catalyst

• management promotional on valuation support

• management declaring return of capital by dividend or tender

If DIS monetises anywhere near signalled levels, current equity looks materially undervalued.

Disclaimer:

I review lots of companies each week using filters developed over years, and write up a small bunch that I find interesting. These write-ups aren’t month-long research reports and could omit material information, so I always welcome feedback.

The companies discussed often involve complexity or risk, and outcomes can vary widely. This is what puts a lot of investors off and is why they work collectively over the long term. I do not encourage extreme stock concentration.

Nothing here is investment advice or a recommendation. As always, please do your own research.

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Signaux Girod is a dull, under‑followed French signage manufacturer trading as a net-net, below half of tangible book, but with positive free cash flow. You’re not buying a great business; you’re buying decent assets and cash flows at a distressed price, with a family owner quietly paying you a big dividend to wait.

Market Cap 16.4m
Cash 17m, tangible book 45m
9.2% dividend

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What do they do?

Signaux Girod designs, manufactures, installs and maintains road signs, road markings and “urban furniture”. The stuff you see everyday: speed‑limit signs, pedestrian crossings, bollards etc.

Most revenue comes from French public authorities and large public contractors who outsource signage and marking on road and rail projects. There are also international subsidiaries in Europe, North Africa and South America. The business not only makes the signs and markings, but also provides installation and maintenance. This is a regulated, replacement‑driven niche where demand is fairly steady, driven by safety rules and urban‑planning requirements.

Word of caution. This stock is extremely illiquid given its small size and high family ownership (but that does give you alignment and skin in the game)

What are the Fundamentals?

Over the last five years, the story is low growth but decent operational repair. Revenue has crawled from the high‑80s to just over 100m, with the top line flat for the last few years. There is improvement in profitability and cash generation: the group has moved from operating losses to modest but positive operating income and net profit, with EBITDA around 7m on 101m of sales (Market cap 16m). Crucially, the business has a long history of profitability.

Free cash flow has been positive for several years and has strengthened in the last few years as capex stayed modest and working capital normalised. Operating cash flow is healthy, allowing a nice dividend to return in 2024 after a brief pause for a few years; currently yielding 9.2%. Net debt is low: the group effectively sits close to net‑cash.

The balance sheet is tangible‑heavy: cash, receivables, property etc. Equity is in the mid‑50s; after deducting goodwill and other intangibles, tangible equity is around 45m vs a Market Cap of 16. Cash is 17m. PPE is carried at just over 19m. An added kicker: management commissioned an appraisal of the main French properties, which came back at 12.4m; more than its book value. There are also significant tax‑loss carryforwards.

The market cap sits around 16m. It is therefore a net-net and you’re paying roughly 0.35 tangible book and about 2.5–3x EBITDA. Returns on capital are weak in accounting terms, but the company is clearly not structurally loss‑making and is generating cash.

What is my margin of safety?

Well, it’s a net-net. The margin of safety comes from good assets (plenty of cash) and structure, not from growth. You buy:

• Tangible equity nearly treble the market cap, even before any uplift on real estate.

• A family structure with skin in the game

• A conservatively levered balance sheet

It generates positive free cash flow and pays a material dividend, implying a near 10% yield on the current share price.

Through a liquidation lens, even hair‑cutting inventories and receivables and giving only partial credit to plant and property, it is hard to get to a value as low as the current market cap, given the large amount of cash. The family’s willingness to distribute cash via dividends and buybacks is good to see, so that value is coming back to you.

What gets the gap to close?

I like to start this section with the same thing I say on every stock idea. Schloss, Cundill etc made a point of buying things nobody wanted, with no story attached, because the absence of a narrative creates a discount. When something is cheap you don’t always need to force a catalyst into the write-up, but possible things that could drive returns:

• Time and cash: If it keeps paying a large dividend and occasionally buying back shares at such a big discount to book, intrinsic value accretes

• Modest improvements could lift margins by a point or two. They hint at value-add M&A too.

• Management has already sold some non‑core property. Further restructuring could aid.

• With the family owning a dominant stake, a tender offer, squeeze‑out or even a delisting at a premium cannot be ruled out.

What could go wrong?

Returns on capital are low, growth is minimal, and the core limps along. If margins remain bleak, the stock can sit at half book value indefinitely, especially given tiny free float and negligible investor attention. You should collect a fat dividend at least however.

The customer is overwhelmingly public‑sector and politically exposed. Election cycles, budget squeezes, or shifts in spending priorities can delay projects. The asset cushion helps, but you could see periods of losses that erode book value and test patience.

For a deep‑value investor, Signaux Girod is the kind of name you buy knowing it’s unattractive, illiquid and slow - but a net-net that is an ok business will always offer a decent chance of good returns over a multi-year horizon.

Disclaimer:

I review lots of companies each week using filters developed over years, and write up a small bunch that I find interesting. These write-ups aren’t month-long research reports and could omit material information, so I always welcome feedback.

The companies discussed often involve complexity or risk, and outcomes can vary widely. This is what puts a lot of investors off and is why they work collectively over the long term. I do not encourage extreme stock concentration.

Nothing here is investment advice or a recommendation. As always, please do your own research.

MediClin is a profitable German hospital operator. The discount to tangible book has widened while operating performance has improved, exactly the dislocation famous deep value investors like Schloss looked for. Earnings are 5x since 2021, the market is pricing it like a melting ice cube, where the filings say otherwise.

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What do they do?

MediClin runs dozens of medical facilities across 11 German states: acute-care hospitals (general medicine, surgery, a heart centre), post-acute rehabilitation clinics, nursing homes and outpatient medical centres. Over 8,000 beds in total, with rehab being the dominant area.

Roughly 90% of revenue is paid by the public sector via statutory health insurance. The German pension insurance system is the single largest customer at just under half of rehab revenue.

What are the Fundamentals?

The five-year EBIT journey (green) tells the story quickly when overlaid with the price to tangible book value (blue):

With a Market Cap of 161m, operating cash flow in 2025 was 102m. After 51m capex and lease repayments/interest, free cash flow lands near 7m. This is modest, because rent eats a chunk of the cash, however midpoint guidance for 2026 is topline 5% growth and EBIT ~65m, which with operating leverage should see a mild boost to FCF. The FCF inflection should hopefully come 2027, as existing builds wind down with no new large projects.

There is a growing profitable core with improving margins. Management are also selling non-core assets; selling money-losers to bring more cash onto the balance sheet.

The balance sheet carries no net financial debt with 24.3m of net cash. Equity stands at 249.6m, mostly tangible. And look how its been growing the last few years:

What is my margin of safety?

Tangible book value = 232m vs a market cap of 161m, so it trades at 0.69x TBV.

The Schloss-style backstop sits underneath the business: net cash, real estate-backed clinics, regulated revenue from government payers, and two strategic owners (Asklepios 52.73%, ERGO 35.00%) holding 88%. There is a small free float of just 12% which could explain an illiquidity discount.

On forward earnings the multiple is roughly 4.5x and EV/EBIT around 2.5x. Cheap, however you cut it.

What gets the gap to close?

Schloss made a point of saying he was "happier" buying things nobody wanted, with no story attached, because the absence of a narrative was what created the discount.

When something is cheap you don’t always need to force a catalyst into the write-up, but possible things that could drive a re-rating:

• Hospital reform as a tailwind; there’s a policy desire to push patients into rehab earlier.

• The FCF bridge becomes clearer to see in the next year.

• A take-private is also not a fantasy given the ownership structure.

Instead, I prefer the idea that if things are cheap, good gains may just come from the starting valuation mean-reverting (for 17 of the last 20 years this company has traded above tangible book value).

1. Is it cheap on assets? (Yes - 0.69× tangible book.)

2. Is the business solid enough to survive? (Yes - net cash, profitable, regulated revenue, occupancy-constrained core, dual strategic owners.)

3. Is there a record of profitability? (Yes - decades of it, accelerating.)

4. Is there debt risk that could force a permanent loss? (No 24m net cash, low debt ratio)

What could go wrong?

With anything in the public sector eye, there’s always risks related to controlled pricing that is centrally provisioned. Wage inflation is also a concern. You really are a minority shareholder here too. The free float is thin. And because the dividend is symbolic, we need to be paid by a re-rating.

The business has earnings, real assets, and a few tailwinds. Probably worth holding.

Disclaimer:

I review lots of companies each week using filters developed over years, and write up a small bunch that I find interesting. These write-ups aren’t month-long research reports and could omit material information, so I always welcome feedback.

The companies discussed often involve complexity or risk, and outcomes can vary widely. This is what puts a lot of investors off and is why they work collectively over the long term. I do not encourage extreme stock concentration.

Nothing here is investment advice or a recommendation. As always, please do your own research.

Market Cap 240m
Tangible Book Value 369m

Secure Trust Bank is a UK lender that looks like a classic deep‑value set‑up after a difficult few years (more on this below). It remains profitable, conservatively capitalised, and trades at a large discount to tangible net assets.

In recent years it has delivered a stable net interest margin, rising ROE (14.3%, targeting 16%), and steady tangible book growth. Despite likely ~10% growth ahead, it trades at ~0.6x tangible book and a PE(f) of 5. A notable signal: the CEO has recently bought a meaningful amount of stock.

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What do they do?

STB focuses on high‑return niches rather than being a universal bank:

• Retail Finance: point‑of‑sale credit via retail partners, e.g. furniture, jewellery etc. (typically middle-class customers, fairly prime)

• Commercial Finance: asset‑based and working‑capital lending to SMEs (secured)

• Real Estate Finance: loans to landlords and developers secured on residential property

• Savings: deposits, fixed-term accounts, ISAs

The business has been simplified with the exit from Vehicle Finance, leaving a smaller, higher‑quality bank focused on stronger risk‑adjusted returns.

It’s a straightforward model: gather deposits and lend at higher rates. Income is driven by net interest income, supported by higher‑yield specialist lending. Costs and impairments are well controlled, with cost‑to‑income improving from 54% (2023) to 45.2% (2025). Pre‑tax profit of £59.3m (to a market cap of £240m).

Before we dive further, a quick background on why Secure Trust (and some other similar institutions) have faced share price challenges over the last few years. The TLDR:

Banks like Secure Trust have been hit by the FCA’s clampdown on historic car finance commission models, where brokers could increase customer interest rates to boost their own commission, creating a large, uncertain redress overhang that the market initially feared could become “PPI‑like” in scale. This uncertainty around the ultimate bill and potential regulatory implications drove a sharp de‑rating in these lenders with motor‑finance exposure (e.g. also see Close Brothers). As the FCA’s scheme has firmed up, the likely cost to the sector now looks painful but broadly manageable, with structured compensation boundaries suggesting an outcome materially better than market panic implied. Secure Trust has already taken provisions for motor finance redress and, alongside selling off its vehicle finance division, recently indicated that it does not expect to materially increase provisions.

The short of it: there’s a capital/earnings drag that can be absorbed and moved past, rather than a franchise‑threatening event. In my view, despite the share price being up over 100% from the lows, the market is still pricing in doubt around the motor‑finance redress, even though that now looks materially lower given the FCA’s final framework.

What are the fundamentals?

The balance sheet is steadily growing. Loans have been rising with deposits increasing in tandem. Margins are stable and efficiency improving. ROE has been 14.3%, with a >16% target and ~10% loan growth. Dividends are modest, allowing continued tangible book compounding. A bonus: they’ve just started a buyback programme.

Tangible book per share grew from £17.80 (2023) to £19.73 (2025), despite absorbing exceptional costs i.e motor finance provisions.

Despite this, the stock trades at ~0.6x TBV, with a mid‑single‑digit P/E (5x forward). The CEO has bought ~£825k of shares in the last year, including lots in Q1 2026. Big insider buys like this spark my interest.

What is my margin of safety?

It trades at significant discount to tangible book; the bank is profitable and compounding TBV. This discount works in your favour over time, assuming credit and regulatory risks remain contained. A dividend and buyback programme helps realise value.

A good bank should trade at least at book value. A bank achieving 15% ROE should trade above book value.

Why could this be big?

The stock is up ~115% over the last year, which can make it feel like you’re late to the party, but it’s merely because of a re-rating from its lows of 0.3x book. From experience it’s good to buy with momentum and wind in the sails.

This is a straightforward deep‑value banking stock. You are buying a profitable bank at a large discount to tangible equity. If it sustains mid‑teens ROE, modest TBV growth, and good dividends and buybacks, then returns look attractive even without re‑rating; which logically comes if management continues doing what they have done so far.

I repeat again: The CEO is buying hand over fist at a deep discount, and the board is signalling stronger capital returns. This is a great setup.

What could go wrong?

While the motor finance redress risk remains, signs look encouraging with the worst behind. A provision is already in place and no further increase has been signalled after recent FCA ruling; the bank appears to have adequately reserved for expected costs and capital is strong.

Of course, a cyclical downturn could also hurt the stock, but that applies to the vast majority of businesses.

Disclaimer:

I review lots of companies each week using filters developed over years, and write up a small bunch that I find interesting. These write-ups aren’t month-long research reports and could omit material information, so I always welcome feedback.

The companies discussed often involve complexity or risk, and outcomes can vary widely. This is what puts a lot of investors off and is why they work collectively over the long term. I do not encourage extreme stock concentration.

Nothing here is investment advice or a recommendation. As always, please do your own research.

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What do they do?
Bogdanka operates a single major underground hard coal mine in Poland’s Lublin Coal Basin, one of Europe’s last significant reserves of high-quality steam coal. The assumed life of mine is currently estimated to 2051. They extract raw coal, wash and process it to meet customer specs, then transport it by rail to buyers. This isn’t fancy, it’s a focused operation supplying fuel to Poland’s power and industrial backbone. The mine has been running since the 1980s but with modern upgrades that make it one of Europe’s most mechanised and efficient coal producers. Reserves are proven and mapped for years of output at 7-9 million tonnes annually.

How do they make money?
Bogdanka sells processed steam coal under multi-year contracts to power stations (like those owned by its majority shareholder Enea), cement factories, fertiliser plants, and other heavy industry users concentrated in eastern and north-eastern Poland. Proximity cuts transport costs, locking in regional dominance where over 90% of sales go to these nearby customers who value reliability over spot-market volatility. Core revenue comes from coal tonnage sold at contracted prices, with margins protected by low production costs (among the best in Europe). They also pick up income from handling mining waste, land reclamation services, and maintaining equipment for others, but that’s a smaller part. Coal is 95%+ of the pie. In a nutshell: dig cheap, sell steady, repeat.

What are the Fundamentals?
Fundamentals tell a tale of cyclical pressure but operational resilience. Revenue dipped 7% to PLN 3.7 billion in 2024 from prior peaks, reflecting softer coal prices and volumes, yet free cash flow held positive at PLN 191 million (today’s market cap is 850m) - proof the mine spits out real money even in tough times. Margins slid to the low 20’s range amid market weakness, but that’s still healthy for heavy industry - and as the image above shows, management are focused on returning to high 20’s.

The elephant: a PLN 1.17 billion non-cash impairment in 2024 tanked net profit to a loss, as management reset asset values to match a gloomier long-term coal outlook (lower prices, rising renewables). 2025 figures show revenue at PLN 2.85 billion driven by lower coal prices – enough to make investors wince at first – with a dip into negative FCF territory. But operating cash flow before tax is very strong at about PLN 662m (bear in mind the Mcap is 845m). That’s the game in these types of businesses - operations grind cash most quarters but Coal prices or Capex changes causes fluctuations. Management has said that recent and short-term very high capex is deliberate and planned, but it is expected to moderate. The key to FCF here is looking through the longer-term picture (management cut capex 26% y/y, signalling discipline) – meanwhile shareholders today buy at 0.3x tangible book – a big chunk of which is cash and physical assets already written down substantially in 2024.

Ownership is stable with Enea Group at ~65%, limiting float but aligning interests with a major Polish utility. No debt, decent liquidity, plenty of cash and capex focused on efficiency upgrades and diversification projects.

What is my margin of safety?
Post-writedown, tangible book value now embeds a conservative view of mine assets, equipment, and reserves - management and auditors have already shaved off the froth, so you’re not buying inflated balance-sheet assumptions. Near-term FCF wobbles don’t kill the asset story, but a return to normal should re-rate the stock - even without heroic coal price assumptions. As Poland’s most cost-efficient steam coal producer, Bogdanka has a moat in a shrinking pond: rivals face higher costs, giving it pricing power with locked-in regional buyers. Classic Schloss logic: it’s an “ugly business earning something” at a price notably below replacement cost. Downside capped by liquidation value of physical assets; no funny accounting or growth promises to unwind.

What is the thesis for why this could make an investor a lot of money?
The market panicked on the impairment headline and coal’s dirty reputation, pricing Bogdanka like it’s already obsolete, over-discounting to tangible book and normalised FCF. The reality is Poland still burns coal for the majority of power, transition is gradual (not overnight), and Bogdanka’s low costs/regional lock-in mean multi-year cash generation ahead.

Thesis is re-rating as further results prove no further impairments and FCF stabilises; sentiment shifts from “dying industry” to “FCF floor.” Upside in 12-18 months if coal stabilises or Enea ramps buys - pure asset arbitrage.

Risk? Faster phase-out than expected and commodity price volatility, but that’s why we buy the massive discount at 0.3x tangible book. This obviously isn’t a quality compounder – but that’s not what you’re here for.

Disclaimer:

I review lots of companies each week using filters developed over many years, and write up a small bunch that I find interesting. These write-ups aren’t months-long research reports and could omit material information, so I always welcome feedback.

The companies discussed often involve complexity or risk, and outcomes can vary widely. This is what puts a lot of investors off and is why they work collectively over the long term. I do not encourage extreme stock concentration.

Nothing here is investment advice or a recommendation. As always, please do your own research.

Often, that reaction is justified, but where others won’t go is where serious money can be made.

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My investing is heavily influenced by the greats such as Benjamin Graham, Walter Schloss, Peter Cundill, and early Warren Buffett, all who built strong long-term records by focusing on neglected, asset-backed, and deeply out-of-favour situations.

I also don’t work in the investment industry, which gives me the flexibility to focus on areas many professionals can’t or won’t: smaller, less liquid, and less conventional opportunities.

I’m particularly interested in businesses trading at substantial discounts to tangible book value, where pessimism may be excessive relative to the underlying asset base or earnings power.

This style of investing is rarely comfortable. Positions often look unattractive, sentiment is usually poor, and outcomes can take time to materialise. That discomfort is often part of the opportunity.

What I write about

My research focuses primarily on undervalued companies, with an emphasis on:

• Deep discounts to tangible book value

• Asset-backed situations

• Low market expectations

• Special situations inaccessible to institutional players

• Cases where negative sentiment appears fully reflected in price

These are rarely glamorous businesses. More often, they are messy, misunderstood, or temporarily impaired. Or just plain boring and unwanted.

That is usually where I find the most interesting opportunities.

Please do not expect 10,000+ word deep-dives constructed over months. I prefer fairly simple investment ideas that can be succinctly explained.

What I believe

Investing is not about always being right.

It is about consistently paying less than something is worth, managing downside, and allowing probabilities to work in your favour over time.

As Howard Marks puts it:

“It’s not what you buy, it’s what you pay.”

Why subscribe?

Each write-up is a look at a specific opportunity or investing concept, typically covering:

• Business quality and balance sheet analysis

• Key risks and reasons for market pessimism

• Valuation framework

• Potential catalysts or paths to rerating

The goal is not to provide stock tips, but to share a disciplined framework for assessing situations where price and value may have diverged.

Deep value can be an isolating style of investing. If you have an interest in neglected, uncomfortable, and often overlooked opportunities, you’ll likely feel at home here.

Bruce