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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
I saw your good article on Colefax but you made one glaring mistake saying that David Greens dividend is £600,000-it’s around £100,000-you’ve awarded him £500,000 too much!!-regards John Walter
Hi John, well spotted. I think I misread my calculator and multiplied the actual £62k (then 1.13m shares * 5.5p) by 10!
Maynard