Via Barron’s Ahead of the Crowd, a look at a conglomerate that has long bested Berkshire Hathaway:
Over the past two decades, French billionaire Vincent Bolloré has made a compounded 16.8% a year for investors through his investment vehicle,Bolloré SA (ticker: BOL.France) (BOIVF). That compares with 10.6% for Warren Buffett’s Berkshire Hathaway (BRK.A) (BRK.B).
Remarkably, this comes after a stretch of poor performance for Bolloré. Its shares topped 5 euros apiece as recently as August 2015, but now go for €3.32. At that price, they trade at a discount to the estimated book value of the company’s assets. Berkshire trades at close to a 50% premium. In other words, investors are willing to pay richly for Buffett’s investing prowess, but only meagerly for that of his French counterpart, who has long been more successful.
“He’s really a cross between Buffett and Carl Icahn, because he takes an activist approach,” says David Marcus, manager of the Evermore Global Value fund (EVGBX). The fund carries Morningstar’s highest rating of five stars, and has returned 17% year-to-date, ranking among the top 3% of its peers. Marcus sees value in Europe now, where shares have lagged behind U.S. ones, trade at lower valuations and could benefit from a cheaper euro, which makes exports less expensive.
“The headlines are bad, but we don’t invest in headlines,” Marcus told Barron’s this week. He favors special situations like restructurings and family-controlled conglomerates in cases where there’s a history of creating value for investors. Bolloré, he says, could double in less than three years.
Also bullish is HSBC (HSBC), which initiated coverage of the stock last month with a €4.10 price target. At the time, that implied 44% upside. Bolloré has limited analyst coverage, so a new Buy recommendation has sent the shares well higher. Now the target price implies a 23% gain.
Bolloré has a hand in global logistics and energy, two businesses that help explain its price decline since last year. A plunge in crude oil’s price cut into energy profits. And the shipping business has struggled with a surge in new ships combined with increased protectionism….