"With situations like this, whereby a good stock is for whatever...

"With situations like this, whereby a good stock is for whatever reasons under-appreciated and under-valued by the market for a long time, the situation can persist much longer than our patience can withstand. In other words, even if your thesis is correct, this stock might go nowhere for a few more years."


Hi Travel

Sorry if I was not clearer. I don't always explain myself too well.

I always appreciate your reflections, but I must say, in this instance I completely disagree with your sentiments, and in fact I am a little surprised. I am here talking about a business that I expect has a high likelihood of growing its book at above 15% rates, over the next several years. Even if the price-to-book does not get re-rated in that time, my share of book value will grow at quite a clip, and if I choose to take my dividend, that too will grow at substantial rates (even after the DRP dilution).

So, either I am looking at a substantial income stream, over the next 10 years, or I am looking at a good stake in quality assets after 10 years, or most likely, a bit of both. Even if the current management do nothing that catalyses a market re-rating, those assets will ultimately be of value, to someone. We are talking about quality assets here.

Whatever the market does, I think there are sound reasons for me to expect that I will be rewarded. I guess it's the fact that even dyed-in-the-wool value investors, like yourself, are expressing these sorts of sentiments, that provides the opportunity.

I think of this, as I would if I was buying a corner shop. When will I sell? Who knows? Perhaps never.

How can I sing from my "value investors pulpit" and then reject an investment on the basis that it is cheap? I hanker for the rare (oh, so rare) opportunity to own a business run by managers who have a head-down. bum-up ability to grow their book value at close to 20% annual rates, all the while not giving a toss about promotion or the " institutional imperative". Well my friend, here is such an opportunity.

The crucial point is this, if you have no intention to sell, then what the market does, from here on, is largely irrelevant. So I ask you, how is this any different to owning a stock like ARB? A stock that if ever there was a time to sell, is probably now, and yet I suspect you are not contemplating such an action. So how is the market's view of ARB influencing the value you derive from ownership of it?

Mars

PS: Just quietly, the final thing to consider, is that, as I stated in my thesis, UOS currently holds a historically high proportion of cash, which I expect will provide unusually large rewards to shareholders over the next 2, 3 or 4 years.