Walker Crisps PLC

 Walker Crips PLC

Disclaimer: If you like the sound of this please consider seeking professional advice before investing, I am neither qualified nor authorised to give it.

I said I was planning to make some posts about stocks that I am interested in and Walker Crips is one that I am particularly interested in and have made quite a large investment in.

The rationale is based on my contrarian value approach and I think, in the right circumstances it could return a multiple of my investment.

Walker Crips - Investments, financial planning and pensions (wcgplc.co.uk)

They are a small Investment Manager with a market value of around £9m and reported profits are usually quite modest but this is not the reason I have committed so much money to buying the shares.

The investment case for these shares is what is described as 'a sum of the parts'. That is the intrinsic value in separating the cashflow from the assets on the balance sheet is far greater than the value the stock market places on the whole.

To give some detail Walker Crips has a genuine net cash and liquid asset value greater than all of its debts at around £10m.

But that is not all, as an Investment Manager they have £4.4bn of other peoples money they are looking after and charging fees on, this is where the cashflow comes from. This sum has also been falling in recent years due to people withdrawing money to live on and keep as cash as interest rates rise. This is a trend that has affected the whole industry but the market is starting to turn and hopefully these falls will start to reverse.

Investment Managers will usually charge at least 1% to look after your money; even £4.4bn is a cashflow of £44m a year, this is valuable in an industry where there are genuine economies of scale. But that is not all, there is another £10m in cash in the assets, straight away you've got a value of £55m without taking into account all the future year's cashflow. That's 6* your initial investment at least in a takeover or sale.

There has been a lot of consolidation in the sector in recent years and that trend looks set to continue.

Raymond James takeover of Charles Stanley completes - FTAdviser

Copyright ©️ Romford Rob Jackson 



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