The Land of Pierogis and Profitable Cigar-Butts
A writeup on 4 ridiculously priced Polish net-nets.
I recently came across some interesting Polish stocks while going through my latest net-net screens. Although I rarely invest in anything mainly because of just a few quantitative metrics, in this case after getting a little bit deeper I decided that it all looks just too cheap, and I already opened a position in two of the companies covered here.
Vindexus S.A. (VIN.WA) is a debt collection agency, consistently profitable for many years now, with very little debt, trading at ~32% of NCAV and ~69% Adj. TBV. Last year the management announced an 18m PLN buyback, (up to 1.5m shares, so almost 13% of all shares), which should be financed using cash from a recently issued bond. It really feels a little bit like arbitrage at this point, considering the current undervaluation. The management is also aggressively purchasing shares on the market for themselves.
Update 16/07/2024 - I noticed I made an error in my excel formula - the correct P/NCAV was 43.6%, not 31.7%.
The company has been trading below its intrinsic value for many years now, and it seems like the management takeover is likely. On top of that, there was a 0.40 PLN dividend announced recently (~4.5% yield). Around 70% of the company is in the hands of insiders, so the incentives to unlock the value are there.
Investors today can buy its shares with a wide tangible margin of safety, plus the dividend compensating slightly for the uncertainty around the time it should take the share price to reach satisfactory levels. I own shares myself.