Tamburi Funding Companions (TIP) is type of a “secret star” within the space of European Holding corporations. I checked out it briefly inside my Italmobiliare write-up friom final week. The inventory worth has carried out extraordinarily properly particularly over a ten 12 months horizon:

TIP has been based in 2000, listed in 2005 and the historical past is properly documented on TIP’s homepage.

TIP has a pleasant Investor presentation with plenty of well-known firm logos, however some essential info, as an illustration how the cut up is between listed and unlisted participations, is properly hidden:

Primarily based on their “Intrinsic worth” (extra on this later), 3/4 of the portfolio is listed, 25% is non-public. The bigger a part of the listed holdings is Italian, with a give attention to “top quality” corporations, excluding possibly Elica and OVS which look extra like “worth shares”. With Hugo Boss and rochebobois in addition they received a German and a French place.

Throughout the Personal Investments, in addition they have a smaller allocation to Begin-ups (~50 mn EUR)

General, for my part the funding technique is much less clear. They make investments largely in Italy, but in addition outdoors (Hugo Boss, Roche Robois). Some names look actually top quality (Moncler, Interpump) some much less so (OVS, elica). 

“Internet intrinsic worth” definition

The place it will get attention-grabbing is how they outline their “web Intrinsic worth”:

Right here the tremendous print is related:

So simply to make this clear: For listed corporations, they don’t use the present share worth however within the “conservative” model that focus on worth of analysts and within the “optimistic” model some type of worth that’s even increased than that. So this chart, which I additionally referred to within the Italmobiliare write-up doesn’t present “actual” NAVs however Bloomberg estimate primarily based calculations and a good increased TIP estimate:

In addition they make it fairly tough to calculate the market worth of the listed corporations, as they don’t give % possession of the portfolio.

So one main takeaway is the next: The “web Intrinsic worth” of TIP has nothing to do with a mark-to-market NAV and it isn’t simple to calculate the “MTM NAV”.

Holding prices:

Prices are fairly substantial, in 2022 we are able to see 32 mn, in 2021 even 47 mn, largely personnel bills that are distributed amongst roughly 12-13 workers..

Wanting on the worth creation, this appears to be like Okay, however remains to be fairly excessive. Dividend earnings from portfolio investments is comparatively small:

The annual report lastly offers some extra detailed insights into the holdings, however nonetheless makes it arduous to construct an actual checklist of participations, as there are additionally some “double holding constructions” and so on

Compensation:
Apparently, the principle variable compensation part for Tamburi and his Co-founder appears to be primarily based on “Pre tax income, which to my understanding embrace realized positive factors but in addition non-cash earnings from at Fairness participations.

Between the three most senior guys of the corporate, they get 14% of that revenue which is adjusted for the compensation itself. A part of that’s paid in shares, most of it in money.

I discover this problematic, as that is clearly a trailing issue. Unrealized positive factors have been created up to now and might be generated roughly at will. 

So theoretically one ought to deduct ~14% of complete unrealized positive factors from NAV as it will accrue to Administration.

Different observations:

They did repurchase shares in 2020 however during the last 5 years, share depend has risen by 10% in accordance with TIKR. Treasury shares are talked about as “potential firepower” for brand spanking new acquisitions.

Administration/Board owns an honest quantity of shares. Giovanni Tamburi round 8.3%, total board possession is round 25% in accordance with the annual report. Giovanni Tamburi, the CEO is 69 years previous, so succession is perhaps a problem, though Italian CEO’s have a tendency to stay round fairly lengthy.

Abstract:

Regardless of the stellar observe document of TIP, this time I didn’t fall into one other rabbit gap. Why ? Primarily due to the next:

• Sure, TIP has a stellar observe document in selecting Italian shares, however to me it isn’t clear what the “actual” NAV is, because of their unusual “intrinsic worth” definition. This lack of transparency is an enormous challenge for me.
• Second, the excessive revenue share in Administration compensation primarily based on historic worth creation additionally for my part has the potential to distort alignment and must be integrated right into a NAV calculation.
• And third, with 75% in listed corporations, in principle one might replicate the portfolio fairly simply. So and not using a clear understanding how the low cost appears to be like like, the “worth add” right here will not be clear to me.

General, I feel TIP is an attention-grabbing firm to observe, as they appear to be actually good inventory pickers, however I don’t assume it’s a significantly enticing funding proper now.

P.S: If somebody has an in depth sheet with Tamburi’s place, I might very happy to have a look at it with a purpose to estimate a “actual” NAV.