I didn’t plan to write a series of articles about Bill Ackman. In fact, this article is mainly about Platfrom Specialty Products (PAH) instead of Mr. Ackman. But I put his name in the title just to make this look like a series. 😛
Opening Remarks: A Newsletter Recommendation
First off, I would like to promote and congratulate my friends over at http://www.gannonandhoangoninvesting.com/
They should be familiar bloggers to you. Their rebranded newsletter is officially out now. It is renamed Singular Diligence. You can find it on http://www.singulardiligence.com/
It will be the best investment newsletter you can find, especially if you are into moat, buy and hold, investing. I believe Geoff is the most Buffett-like investor I am aware of. I mean in terms of how he thinks about businesses and stock investments. Quan, of course, is brilliant as well. I have learnt so much from them. And I think you will too. Interestingly, the newsletter will now be promoted by their new publisher, Mr. Tobias Carlisle. Another name that you should already be familiar with. Doubtless, it’s pretty expensive, especially on a relative basis. But it’s of tremendous value absolutely. Trust me, you would learn a lot when you read about how they think about businesses, what they focus on, what evidence they like to gather and etc. It will be worth the money, especially if you don’t just want some good stock ideas, but also are eager to learn. (FYI, I earn nothing if you do subscribe to their newsletter. In fact, it would cost me because more competitors would be created for me!)
Platform Specialty Products
Okay, let’s now start talking about the main character of this article, Platform Specialty Products Corp. (PAH), which I believe is a stock that is worth considering as a long term buy and hold investment, even though it isn’t as attractive as I initially thought.
PAH is essentially a holding company that aims at consolidating the specialty chemicals industry. Initially founded by Martin Franklin and Nicolas Berggruen as a special-purpose acquisition company (SPAC), it later also received a substantial investment from Bill Ackman (hence the title). I will talk a little bit about these key people later.
Even though they are acquisitive, they are pretty selective in what kind of specialty chemicals companies they would buy.
To make it short, it catches my attention because of the product economics of the target companies they are after, the founders’ superior track record and the vote of approval from Mr. Ackman.
Interestingly (ironically?!), I am quite sure this won’t be a stock that interests Geoff and Quan. (I will explain why later)
Despite this not being a Singular Diligence stock, we can still basically use their checklist to think about this company. Let’s consider the following few areas: 1) Durability, 2) Moat, 3) Quality and 4) Capital Allocation, and 5) Value. We will conclude the discussion with 6) Misjudgement.
1. Durability
I am not an expert in specialty chemicals. But I don’t see how this industry will be eliminated in ten or fifteen years. This isn’t a retail business or the newspaper business facing the problem of a wholly new and different distribution method being created out of thin air, like literally. This also isn’t a faddish product. When it comes to technological change/innovation, incumbents should be in a better position to develop them given their expertise and continuous R&D investments.
Even the durability of the customers who buy such specialty chemical products from them may not be important, since basic or performance enhancing chemicals will always be needed to manufacture physical goods or for major commodity productions. Moreover, incumbents have the option to quickly adopt the new trend and create new products. An example would be how PAH’s first acquisition, MacDermid has started supplying their products to smartphone manufacturers as the old mobile phone manufacturers die off.
In a word, I do not see a huge problem with durability of the specialty chemicals industry in general.
2. Moat
Here, I think moat is the most interesting aspect to talk about with this industry, especially the kind of specialty chemicals that PAH targets. In a sense, I think it’s pretty much a dream business to be in in terms of moats.
The first thing to highlight is a general point about specialty chemicals: they are mostly pixie dust businesses. (A term learnt from Geoff)
To quote Geoff: “In a pixie dust business – the per unit cost contributed by the capital good is a small part of the cost of the finished product; however, success of the capital good results in an outsized influence on the success of the final product.” For instance, Geoff asks us to think of the slogan of BASF (the world largest chemical maker) when it comes to a pixie dust business, “At BASF, we don’t make a lot of the products you buy. We make a lot of the products you buy better.”
The beauty of a pixie dust business is the pricing power you are likely able to get. If your products are only a small cost to your customers relative to their total production cost, and at the same time are important to them, your customers won’t be as price sensitive as most other capital goods customers.
Couple this with the following that is more specific to their target companies for acquisition.
In their first annual report, CEO Daniel Leever taught us there are mainly four types of specialty chemical businesses.
“Our business model. The specialty chemical industry where we have chosen to focus is very broad. We estimate the
companies in the specialty chemical industry generate about $1 trillion in total revenues. Not all specialty chemical
companies follow the same business model. There are at least four distinct models that employ very different strategies
and styles.
1) Manufacturing Intensive, use large amounts of capital creating unique molecules where the real competitive
advantage lies in engineering and manufacturing;
2) Blended or formulated chemistry model, mixes or blends molecules supplied by others to create unique
value added formulas;
3) Distribution model, depends on a global distribution network for success; and
4) Technical development/service model, provides technical service for their differentiation”
PAH emphasises their focus on “Asset-Lite” and “High Touch” business model. In other words, a combination of type 2 and type 4. Because they mainly do blend and mix, they do not have to keep sinking money into hard assets. And due to the fact that their customers rely a lot on their technical/service help, customers are less likely to change a supplier for fear of disruption. Such an emphasis, alongside the general pixie dust nature of chemical businesses make customers generally pretty sticky. It’s just pretty damn hard to convince a customer to switch if they are not very price sensitive at the first place, and all the while needing constant help from their existing suppliers. (In fact, specialty chemicals businesses will also have the chance to innovate and create new products to serve the growing/changing needs of their customers because of their constant close contact that allows them to get up-to-date information about customer needs.)
And we still haven’t even talked about the technical difficulty of coming up with the products from scratch without years of perfecting the formula through R&D.
But there are more! In addition to “Asset-Lite” and “High Touch”, PAH also focuses on specialty chemicals businesses that operates in niche markets. The advantage of an incumbent in a niche market is that they are more likely to be enjoying scale advantage, and the small size of the market deters potential competitors from joining the party.
To add a little bit more spice into the mix, we can take a look into why Buffett bought Lubrizol. A very good and educational explanation by Pat Dorsey (author of The Little Book that Build Wealth) can be found here: http://www.morningstar.com/Cover/videoCenter.aspx?id=380620
(Pretty much a better summary of what I already wrote above)
And to get a deeper insight into the kind of companies PAH looks for, you can start with studying their first acquisition, MacDermid. Founded in 1922, it is old like most other chemical companies. It was a public company before being taken private in 2007. You can go and find their previous annual reports for both gaining a deeper insight into the business, as well as knowing more about the CEO. Or to save time you can read this excellent article from The Brooklyn Investor: http://brooklyninvestor.blogspot.hk/2013/11/platform-specialty-products.html. MacDermid’s results is roughly discussed there.
Anyhow, you will understand they make a good choice in terms of the business to start with, as well as choosing the right person to be the CEO.
I think there are enough sources of moat that make specialty chemicals a very attractive business, moat wise.
3. Quality
The above actually already highlights the quality of PAH. Here, quality concerns how much cash you can get out of the business. Cash generative and low capital investment required for growth are usually considered characteristics of high quality business. And this is exactly the kind of business PAH aims at acquiring.
In fact they have been pretty open with this. They want to target companies that only have to invest roughly 2% of sales in capex each year. And this is what MacDermid has done for a long time. The reason why they can have such low capex requirements is discussed above already. In addition, they like gross margins of over 40%, and adjusted EBITDA margins of more than 20%. With expected capex margin of roughly 2% – 3%, this results in an EBIT margins of around 17% – 18%. Pretty nice.
In fact, I believe to a certain extent, we can think of the business as something like a consultant or an investment bank. Remember, their focus is Asset Lite and High Touch. They do not invest too much in hard asset. But to keep up with the customer services/innovation, what do they really invest in? Human resources. Another point the CEO likes to highlight is they love companies that have a large proportion of their workforce working in the “bookend”, which include mainly their sales force and R&D people. And one major benefit of their acquisitions would be bringing in experienced and talent senior management.
Their moat and the capital light business model, together, then result in their high return on capital performance. (MacDermid has averaged around 20% ROC as you can see from the blog post from The Brooklyn Investor)
Nonetheless, PAH is a much different company now then it was founded. (This will be one big risk that I will refer back to below) Just during the past year PAH has already created another pillar in agrochemical businesses. I have not tried to seriously find the historical record for those three businesses they acquired this past year. (It might not even be possible because they can be closely held for the past ten years or so, like Arysta LifeScience) But reading from their latest investor presentation, it seems those three targets pretty much are in line with what they told us they would acquire. The pro forma ROIC (their definition is not the one I normally use though) of the combined business is at a respectable 19.4%. The highest among the selected group for comparison.
Yes, I think this can be considered high quality.
4. Capital Allocation
Even though a high free cash flow generative company is pretty much the prize we all look for, they do not immediately equate the right investment, even at an attractive price. This is perhaps one area that is not discussed as much as it should be.
Like anything of intrinsic value, free cash flow is only good and valuable when it is being treasured and used wisely. (Youth is a great thing, but not so much if you waste it…) As such, one of the biggest risks to owning a cash generative company is the uncertainty in future capital allocation policy.
This is why Buffett loves companies that buy back their own stock or pay out dividend. And this is why capital allocation is always a big factor that Quan and Geoff study. (If you favor moat investing, the capital allocation of the company kind of becomes even more important as compared to cigar butt/net net investing, because people do dumb things when they are awash in cash.)
Fortunately, capital allocation is another equally exciting part of this investment thesis.
One thing for sure, PAH will not be paying dividends anytime soon. It is very unlikely that they will repurchase their own shares anytime soon either. What they will do with all those excess cash will be acquisitions. Lots and lots of it.
The rewards from possible future capital allocation polices usually follow the high risk, high return pattern. If we know the company will mostly be paying out their earnings in terms of dividend, the chance of destroying value through poor capital allocation is pretty minimal. Yet, investors will have to share some of their profits with Uncle Sam or his counterparts in other countries. A share buyback would help investors stay “selfish” and thus get a higher return. But in this case, u face the danger that the company buys back all the shares it can, regardless of price. This makes the returns the second option could bring about less certain. Then finally, there is the acquisition method. Given the bad name M&A already has, I guess there is no need for me to explain why it’s risky to bet on continuous smart acquisitions. However, it is also equally unnecessary for me to explain the upside. Just think of Berkshire! (Or Valeant anyone?)
As such, to accept acquisitions to be the main future capital allocation policy, we are accepting a lot more risk than perhaps necessary. (This in fact is one of the reasons I think Geoff and Quan would not like this investment)
Unless, of course, we have a proven track record of the capital allocator. Or else you shouldn’t invest in Berkshire anyhow.
And it is here that we turn to discussing the key figures in this firm. Probably close to a dream team.
Team Captain or the Architect: Martin Franklin
Franklin is one of the founders of original the SPAC, with the title of Chairman of the Board and Executive Chairman. He is basically the capital allocator of this venture. Monitoring potential targets, the capital structure, the negotiation process and so on.
His record tells us he knows what he does. The biggest proof is his accomplishment at Jarden Corporation. He took the CEO job there in 2001, and relinquished that role in 2011. (he stayed as executive chairman) During those years, revenue rose from $300 million to $8 billion, and the stock compounded at 34.4% annually!! All he did was selling non core assets and buying things he deems interesting and cash flow generative within the consumer product space. Sound familiar?
Franklin has his Robin, Ian Ashken, as CFO in Jarden. And now he has also brought him in as another co-founder.
Point Guard or the Builder: Daniel Leever
Leever has been the CEO of MacDermid for 24 years and has been with the firm for 34 years. During Daniel Leever’s tenure, MacDermid increased revenues five times. That’s a modest 7%/year in revenue growth; 5x in 24 years = 7%/year. He increased the value of the company from $80 million to the current $1.8 billion through those years, equating to +13.9%/year since 1990. That’s pretty decent! And according to The Brooklyn Investor, this growth includes acquisitions, but no equity raises. (yes, you can get this information from the article I posted earlier)
So what we have here is an industry veteran running the show, doing the hands on work. And we have an experienced capital allocator do the job of financing for acquisition deals and planning ahead. I think such division of labor can work well.
Now, we must remember there are many different kinds of specialty chemicald businesses, and they will have more kinds of it under their roof later on. To really make the integration work, PAH will retain the management team of the companies they acquired and select the best to manage that particular group of companies. So we don’t have to worry that Leever will try to manage a agrochemicals business hands on even he only has expert knowledge in performance materials and graphics solutions.
Minority Owner: Nicolas Berggruen [http://www.businessweek.com/articles/2012-09-27/deep-thoughts-with-the-homeless-billionaire]
Berggruen is known as the “homeless billionaire”. After inheriting a sum of around $250,000. He grew that capital and became a billionaire through investments and private-equity like deals through his privately held investment vehicle Berggruen Holdings.
There are several articles about him you can find online. The most informed one is posted above. I would suggest he looks like a savvy businessmen. And he co-founded the SPAC with Franklin. He is also on the board of PAH now. Though I do not think he has any active roles, he having a stake, sitting on the board does give me certain feelings of protection.
Majority owner: Bill Ackman
Now we are finally here (lol): Bill Ackman. Again, he is my favorite hedge fund manager who is still active. I suppose he is the most famous one here. So no further introduction seems necessary. The interesting point is that Pershing Square has been an investor ever since the SPAC was formed. His stake is quite substantial, at around 27%. He put in more money to help the company do those acquisitions recently. Ackman is obviously very excited about the company. He thinks of PAH as an avenue to deploy a significant sum of capital with attractive returns.
And the opportunity seems large indeed. Leever told us the specialty chemicals industry has around $1 trillion in revenue. He believes 20% of that have that “Asset-Lite” and “High Touch” characteristics. And the industry is pretty fragmented. Even the potential targets are so as well. As per management’s estimation, there are hundreds of specialty chemicals companies that fall in their target end market with less than $1 billion in revenue; 50 with revenue between $1 billion and $5 billion; 10 between $5 billion and $10 billion in revenue; and 3 to 5 companies with revenue of $10+ billion. That’s a huge hunting ground considering they only have pro forma revenue at $2.9 billion at the moment.
Anyway, I think the resume of this group of investors is pretty impressive. But let’s say you are truly picky. Instead of taking the face value of their individual accomplishments, you are worried how they will work together. Fair enough. But there is, again, something more! This PAH thing is actually their second act together.
Back in February 2011, Martin Franklin, Nicolas Berggruen, and Bill Ackman founded Justice Holdings, a SPAC. The company later mergered with 3G Capital-controlled Burger King. And well… you know the rest…
5. Value
So essentially, I see this as the opportunity to partner with these three guys, alongside the proven managers/experts in the field they have chosen. That leaves one last question: On what terms are we given this opportunity? Or in other words, how much would it cost to partner with them?
5.1 Founders Preferred Shares
The first thing to highlight is the fact that the agreement the two founders (Martin and Nicolas) have with PAH makes it look quite like a hedge fund compensation arrangement. The two founders are entitled to sharing 20% of the increase in share price times the original amount of shares listed during the IPO (corrected the previous mistake of saying it’s based on share count at the beginning of every year), subject to a sort of high water mark.
Given the spectacular performance of PAH shares in 2014 (around 48% YTD and an actual increase of 120.5% relative to the initial offering stock price of $10/share), the founders will be entitled around 9,891,383 shares of common shares if the average share price of the last ten trading days weighted by trading volume is equal to that of now ($22.05/share at Dec 12th 2014) That’s a pay day of more than $218 million for two people. Quite a sum. But they did increase the value of the original equity raised from their IPO of $876 million to the current market cap of around $4 billion, even though it’s with the help of a number of equity raisings.
Whether you want to continue this blog post depends on how fair you believe this compensation is to other shareholders.
5.2 Quick and Dirty Valuation Part 1: The Acquirer Multiple
There are a number of ways to value a company, with the most popular one being a discounted cash flow model. But since I am taught not to use it, let’s just focus on a peer comparison method plus multiples method here.
We have to thank The Brooklyn Investor again with this. Through his research he found that specialty chemicals deals are usually done at…
Quoted from that article: “So anyway, this analysis includes transactions between 2004 and 2011 so includes a lot of deals. The core selected group deals were done at a mean of 8.3x EV/LTM EBITDA which looks lower than the current MacDermid deal. For all transactions, the multiple is 9.0x. Platform paid 10.0x last twelve months adjusted EBITDA so looks higher than previous deals.”
PAH would stick with that multiple of around 10.0X EV/LTM Adjusted EBITDA. Again remember they look for companies that are not capital intensive. The actual EV/Adjusted EBIT multiple is thus usually in the range of 11-13. Not bad for a moaty company with reasonable growth expectation. These guys are the expert, and they are telling you that buying an “Asset-Lite” and “High Touch” company with this multiple can work out well. Wouldn’t this multiple sound like one you can use to value a specialty chemicals company that you found with similar economics?
Unfortunately, this is where I realized it isn’t as attractive as I first thought.
Initially, I was really excited about this opportunity to partner with them because I thought their current EV/Adjusted EBITDA is around 8.65. I calcuated the estimated EV at $4.0b + $729m [interest bearing debt] + $600m[seller preferred for Arysta LifeScience]. This turns out to be very wrong. I was using their debt level as of 30 Sept 2014, but using the pro forma Adjusted EBITDA ($616 million) that reflects the integration of Arysta.
After further perusing their latest 10Q and an email to the IR department, I got a reply from the CFO, confirming my estimation of approximately $3.5 billion pro forma total debt instead. Now, this changes the whole story immediately. With $3.5 billion in total debt, plus $600 million in preferred shares issued for the Arysta acquisition and the $4.0 billion in market cap, the resulting pro forma EV will be $8.1 billion. (I assume no cash left) The $616 million is pro forma FY2013 Adjusted EBITDA. Let’s conservatively estimate that it increased 5% to about $650 million for FY2014. Then the current EV/Adjusted EBITDA multiple will be 12.46. That’s quite a bit over the multiple the management would like to pay for their own acquisitions. (Even the Arysta acquisition was done at a multiple of around 12) Moreover, do not forget we haven’t even counted the aforementioned Founders’ Preferred Shares.
5.3 Quick and Dirty Valuation Part 2: The Equity Owners Earning Mulitple
PAH, due to its focus of growth through acquisitions, is likely to stay leveraged at a ratio of around 4.5 times net debt/Adjusted EBITDA. As such, given such a “fixed” capital structure, it might be more suitable to value the equity part only instead.
The current market cap is $ 4.0 billion. We will use the figures from their latest investor presentation (Citi 2014 Basic Materials on Dec 4) for the pretax owner earnings. The adjusted EBITDA for FY2013 is $616 million, with capex at $64 million. Because we should use the figure of FY2014, let’s conservatively assume a growth of 5%. This results in our adjusted EBITDA – capex figure being around $580 million. According to the CFO reply, pro forma interest bearing debt is expected to be at $3.5 billion. Assuming an average interest rate at 5%, the interest rate will be around $175 million. This results in adjusted net profits before tax at around $405 million. If tax rate is 35%, then free cash flow should be around $263 million. This actually compares well with the guidance given by the CFO during the latest conference call. He mentioned that the expected free cash flow for FY2015 to be around $300 million. (So maybe we really are conservative with the growth in adjusted EBITDA) Compared that to the market cap of $4 billion, the forward multiple is only around 13.3. That’s a leveraged free cash flow yield of 7.5%. Not bad in this low interest rate environment.
Even though the price is no where as attractive as I initially thought. The leveraged cash flow yield turns out to be not too shabby. And we again have Bill Ackman’s vote of approval here. Pershing Square bought more shares in early October through the private placement at a price of around $25.59/share. He cited it as undervaluing the company. (But PAH did subsequently issue more shares, around 10%, through a public offering) At the current share price of $22.05, I think it still looks fairly attractive.
To sum up, PAH operates in a very interesting and high cash generative industry, with an excellent management team, as well as being currently fairly attractively priced. And don’t forget the huge amount of opportunities for more capital deployment at attractive returns.
6. Misjudgement
Okay I talked a lottttttt about the upside potential. But remembering Buffett’s motto, we must really think about the downside. What could go wrong?
6a. Future Capital Structure and Equity Holders Dilution
PAH is similar to Berkshire Hathaway, but with two major differences: 1) It focuses only on one single industry, 2) It is much more willing to use debt and equity for acquisition.
The biggest risk I see is therefore excessive debt or excessive share issuance. In other words, I am worried about how the future capital structure will look like given their plan to be very acquisitive.
Addressing the leverage issue, as mentioned, Martin Franklin has imposed a maximum 4.5 Net Debt/EBITDA restriction on themselves. I feel comfortable with that level of debt given their nature of being very cash generative.
The potential problem of excessive share dilution seems more pronounced. The use of equity for acquisition is not bad per se. But it’s a very tricky tool to use. It’s hard to stay discipline and when things go wrong, it will tend to multiply the cost. Franklin and Berggruen have their skin in the game, but they are also entitled with Founder Preferred Shares, which pay them handsomely if certain performance metrics of the share prices are met. The only defense we have here is Bill Ackman. He owns around 27% of the company now. And he doesn’t own any of those Founder Preferred Shares as Franklin and Berggruen do. He is the big shareholder who pretty much have the same rights as most other retail investors, barring having more votes and having a seat on the board through one of the partners from Pershing Square. I personally trust him enough.
6b. This is NOT a Self-Replicating Business
This will be the biggest reason why this will not be on Singular Diligence. PAH’s future cannot be referenced from the past directly. When we envision the future of PAH, we are actually mostly relying on the management. This is thus a jockey stock, much more than it is an investment in the business itself. This is not Walmart from the eighties. The good thing is the current price seems to be attractive enough for the existing business alone. But of course, the dream team can disappoint us.
6c. Franklin and Berggruen Have Made Serious Mistakes Together Before
Before Platform Acquisition Holding and Justice Holding, the pair listed three other SPACs, Freedom Acquisition Holding, Justice Acquisition Holdings and Justice International Acquisition.
Freedom merged with alternative investment firm GLG in 2007. GLG was later absorbed by Man Group in 2010 after the financial crisis hit them hard. In this three year period, the stockholders of the combined company lost more than 50%.
In 2010, Justice Acquisition Holdings merged with Prisa, a Spanish media conglomerate, infusing around $900 million of cash into the Spanish company. That hasn’t worked out well so far either, with the share price down like 80+%. (With all those assets they have, could Prisa be an interesting opportunity now?)
Those sound scary. But PAH is not the same. First, it won’t be as affected by the next global financial turmoil as GLG did. Second, the company is not a very leveraged one like Prisa. Neither is PAH very much dependent on a weakening Eurozone economy (i.e. Spain) like Prisa. Things could still go wrong, but not for the reason that GLG and Prisa did.
Moreover, the nature of this PAH venture are also very different from those before. PAH is a long term venture for the team, while the previous deals are more for reverse merger usage.
6d. 1.25 Times the Market Performance Has to Be Achieved to Equal the Market
Of course, just like any other investment funds, the actual performance of PAH has to be a bit higher than the general market returns for deducting all those management fees and performance fees to even equal the market performance. Will PAH be able to do that? We will never know beforehand for sure. But Martin did return 34.4% annually for 13 years. Even if PAH can only return 15% a year the next five to ten years, the resulting 12% ought to be more than enough to beat the market. To achieve the 15% return, PAH will have to grow at 7.5% a year annually for the next five to ten years. (7.5% in the current free cash flow yield + 7.5% in growth = 15% total return) And if we only want 10% a year, PAH only has to return 12.5% a year. In that case, we only need it to grow at 5% per year. That doesn’t seem too outrageous as they aim at double digit cash on cash returns for their acquisitions.
6e. Is the Adjusted EBITDA – Capex Provided by Management Really Reflective of Real and Sustainable Cash Flow
The figures we used for valuation are all non-GAAP. And if you just look at those EBITDA, EBIT figures from Bloomberg or Reuters, you will actually see those numbers in red. Such is the confusion and pain with GAAP accounting for an acquisitive company.
The question is whether those acquisition related costs ought to be added back or not. Perhaps it can be argued that since we expect them to keep on doing acquisitions, those related costs should be deducted. But that would be same as suggesting we take all the capex out for a fast growing company like Cabro Ceramics to come up with their owners earning.
In addition, this is not a similar situation as Valeant. Even though PAH will keep taking over companies, the management is not controversially considering doing a lot of cost cutting to make the price paid right. (I am not suggesting Valeant is destroying value though. I do not know that situation enough to comment) Moreover, MacDermid is having an historical quarter through organic growth of its own. (This is why I said a 5% increase could be conservative) There seems little doubt that the underlying businesses are doing quite well lately, unlike the accused faltering underlying businesses within Valeant.
6f. Expectation too high?
The other thing to pay attention to is not to have too high an expectation on this investment. I believe there is a good chance this will match or outperform the market over the next five to ten years. Just don’t immediately expect to get 30+% annual return. The YTD performance of close to 50% obviously is not helping you manage your expectation either. So really think about this. Do consider how much of that 7.5% growth can be realistically achieved yourself.
7. Conclusion
Just a very short recap.
Platform Specialty Products Corp., founded, managed and sponsored by a very talented and proven group of people, operates in a very attractive industry, with a hunting ground of huge potential. If they execute as planned, the expected shareholder value that can be created should be very rewarding.
The shortcomings/risks include PAH not being extremely attractively priced (as I thought initially), and is pretty much a jockey stock.
Before I got the current EV right, I basically had already decided to invest in it. Now I am less certain myself. I have to wait for another few weeks before I make a decision anyway. (Waiting for the salary to come in)
I most probably would still invest in it, albeit with a smaller allocation than planned before. I will tell you guys when I make the final decision.
Disclaimer: The above is merely for sharing purposes, and should not be considered an investment proposal/advice. Please do your own research before you make the investment decision. I currently do not hold any shares in PAH.
Substantia Investing 