Aggreko: U.K.-Listed Rental Equipment Provider for Power and Temperature Control

Matthias Riechert presented his in-depth investment thesis on Aggreko (London: AGK) at Wide-Moat Investing Summit 2013.

The Bottom Line: U.K.-listed rental equipment provider for power and temperature control, available at a share price that is reduced due to: (1) accounting earnings are lower than true economic (owner’s) earnings; (2) order intakes fluctuate and are currently at the lower end. Despite revenue and trading profit increasing at a compound growth rate of 15% and 23%, respectively, since 2003 (incl. some contribution from acquisitions) Aggreko shares trade at a modest forward multiple of 15x based on Riechert’s estimate of owner‘s earnings for FY2012, which are depressed. Aggreko’s moat is based on both supply (protected technology, learning curve, economies of scale) and demand side (search and switch costs) barriers to entry. Investors should benefit from Aggreko’s ability to reinvest at high returns on incremental capital.

About the instructor:

Matthias Riechert is co-founder and portfolio manager at Polleit & Riechert Investment Management, an investment firm dedicated to significantly increasing the wealth of its clients, adjusted for inflation. Prior to co-founding the firm in 2012, Matthias worked at Citigroup, including as head of investment products Germany, from 2001 to 2010. Previously, he was an equity and options trader at Van der Moolen. Matthias holds an MBA from Columbia Business School and London Business School.

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