***SharePad New Subscriber Special Offer***
Readers of my blog can claim one month of free data. Click here for details.
13 June 2024
By Maynard Paton
The email I received was intriguing:
“The numbers speak for themselves. The company has repurchased more than 75% of shares outstanding since 1999, has a decent return on equity (last financial year approximately 18%), and is trading at an EV/EBITDA of 3-4 due to £20m net cash on the balance sheet.
The market has either overlooked the stock entirely or is pricing in profits falling off a cliff, which I don’t see happening given the maximum decline of 40% after the GFC. I’d love to know what you think.”
The company in question is Colefax (CFX), a small-cap so obscure that even I — a keen investor for 30 years — had previously never heard of.
But any business that has bought back more than 75% of its shares must be worthy of further investigation. Sure enough, Colefax’s share count has reduced from a peak of 28.5 million during 1999 to 6.2 million today:
What is going on? Let’s take a closer look.
Read my full COLEFAX article for SharePad >>Maynard Paton
