Every year, the independent asset manager Value Square conducts a study on the long-term value creation of Belgian listed companies. Melexis dominated that list for a long time, but this year Picanol suddenly comes first
Value Square swears by a traditional approach in which the intrinsic value of the company comes first. As an investor, it compares those results with the company's share price on the stock exchange. "If the price is lower than our estimate of the intrinsic value, we buy in. If the price is higher, we sell. That's essentially what it comes down to," says Petrick Step, sales manager at Value Square.
The asset manager explicitly makes a connection with the famous Berkshire Hathaway of super investor Warren Buffett. Their approach is therefore the same, although it is noted that American colleagues are increasingly investing in companies that are not listed on the stock exchange. "In any case, we have the same preference for family businesses or companies with an important reference shareholder. These entrepreneurs are more cautious with a view to long-term results. On average, these family businesses get an extra 2 to 3% return from our analyses," says Patrick Millecam, CIO and co-founder of Value Square and author of the annual study.
Petrick Step: "And it also turns out that they are coping better with crises such as the current one with COVID-19. They usually have a larger liquidity buffer (+30%) and less debt (-30%) than other organizations. As a result, they are better able to withstand those large shocks".
"In any case, we have the same preference for family companies or companies with a significant reference shareholder".
Turnaround in ten years
Luc Tack's Picanol group is thus appreciated by Value Square analysts and this time barely breaks Melexis' hegemony in creating value over a ten-year period. "Ten years ago, Picanol was in a very deep pit. The entire textile sector suffered a huge setback, the company was burdened with a lot of debt, and there was an internal fight between the family shareholders. Luc Tack was already a shareholder at the time and saved the company with a capital increase that also brought him full control. He then restructured the company and 20% of the staff lost their jobs. But after that, the company rose from its ashes like a phoenix. Picanol evolved towards structural profitability. It also had very well performing subsidiaries such as the Proferro foundry and Psicontrol, a machine control manufacturer. The company generated so much cash that it was able to look for new investments with a view to further diversification.
This was followed by the acquisition of the controlling interest in Tessenderlo. Here too, Luc Tack acted in a similar way: cutting unnecessary costs, investing in the most promising activities, refurbishing the production apparatus, all this financed with a capital increase, which also strengthened the balance sheet," says Patrick Millecam.
Tekst: Peter Ooms I Foto: GF
p. 20 • augustus-september • ondernemen 2020 • ETION