Portfolio recap 2022, some thoughts, relaunching French Hidden champions substack

Here is the portfolio as it stood at the end of 2022.

Main movements during the year was the scaling down of the Malteries Franco-Belges (MFB) position (with the attack on Ukraine by Russia) to build ownership in new companies as valuation got interesting (LVMH, Dior) or towards new companies which seem to be focusing on value creation for shareholders (Explosifs et produits chimiques)

As a reminder MFB has one factory in Russia and one in Ukraine.

Compagnie de l’Odet and Financière Moncey were also reinforced as they offer a very interesting risk reward and with a very good capital allocator at its head: Vincent Bolloré. The Bolloré Galaxy is now full of cash following the sell of BAL to MSC. It will be interesting to see what they will do with the cash. Timing of the BAL sale was perfect and shows the ability to reinvent the group but it is also done to make sure Vincent Bolloré’s children are interested in the activities. A nice way to improve implication and dedication of the new generation. If decisions remain as good as in the past some good things should happen. Possibilities are numerous (galaxy simplification, investments in logistics (capex light), media or something else). In any case it is the right moment to have cash as multiples should be lower for future acquisitions.

Mastering tax implications is also important and I have been quite weak on that front in the past. 2022 showed some improvements. Some Stef shares were sold as well as the Topicus holding as I was at a loss and had some realised gains in 2022. STEF and Topicus will probably come back quickly in the portfolio.

My expertise is in french companies so I have been reallocating cash towards France. This is were is my moat. The other moat is the holding period. I can wait a lot and my responsabilies go towards my family. We are here for the long run. I am trying to build a portfolio which can be easily followed and with top notch managers. Skin in the game (high insider ownership, family ownership, employee onwernship) is important for me.

Company culture is also paramount bu requires time and investigation to evaluate it. Samse has probably the best compnay culture I have seen. Management is great, humble, transparent. I am impressed. Yes the company is cyclical but maybe not that much and the balance sheet is rock solid with some hidden assets.

Precia is also one of my long time favorites. Management team is great, pragmatic and has a clear plan. I wanted to thank René Colombel (the previous CEO who retired last year). A great person, humble, hard working and always explaining things clearly. The new CEO is good and the CFO is solid and clear.

I will be trying to relaunch the French Hidden Champions substack. Moving forward I will give my feedbacks of financial analyst meetings and writing straigth to the point analysis of companies which I think are interesting.

I wish to thank my mentors who like to remain discret but will put forward Philippe Luchesi who is doing a great job and who is a friend. Give him a follow on twitter (@LuchesiPhilippe) you won’t waste your time and I always learn a lot from him.

All the best and only the very best to you and your loved ones! And health being the priority!

Cheers!

Jeremy

In the meantime, thanks again for signing up and feel free to talk to your friends / fellow investors about the French Hidden Champions Substack. You can also reach out by email or by DM on Twitter @FoxCastlehold.

Disclaimer: The above article constitutes the authors’ personal views and is for entertainment purposes only. It is not to be construed as financial advice in any shape or form. Please do your own research and seek your own advice from a qualified financial advisor. The authors may from time to time hold positions in the aforementioned stocks consistent with the views and opinions expressed in this article. Disclosure – I hold positions in the different companies which have been discussed about in this post at the time of publishing this article (this is a disclosure and NOT A RECOMMENDATION).