Biesse: Manufactures Woodworking Machinery Sold to Household Products Manufacturers

Philip Best and Marc Saint John Webb presented their in-depth investment thesis on Biesse (Milan: BSS) at European Investing Summit 2013.

European small and micro-caps (~5,000 out of ~8,000 total European-listed companies have a market capitalization of <€100 million). Stocks that brokers push, are the ones to avoid. Prepared to look at anything so long as the price is right.

Biesse: Manufactures woodworking machinery sold to household products manufacturers, which have been suffering due to the economic downturn. Rising order book suggests significant recovery in sales in 2014-15. Very international group (largest client: IKEA; only ~10% of revenue from Italy). #2 in fragmented world market behind German company Homag. Trades at discount to Homag. If return to peak profitability, P/E would be <3x. Gearing of 40%. A play on capex recovery at European household products companies and rising labor costs in China.

About the instructors:

Philip Best started his career as a fund manager at Warburg Investment Management in 1983, managing the Mercury European Income Fund. In 1987, he joined Enskilda Securities as a broker specialising in European small cap companies. In 1994, he established and ran the Paris office of The Europe Company Limited, a specialist research-driven European small cap brokerage (purchased by Jefferies & Co in 2000). Philip joined Argos in January 2003 and The Argonaut Fund was launched later that year. He is also a non-Executive Director of UK publicly listed investment fund Jupiter European Opportunities Trust, an investment company with assets of over £330m. Born in 1960, Philip graduated from Oxford University in 1982 and worked in London for six years before moving to Paris in 1988 and then to Geneva in 2003. He is bilingual in English and French. Philip is a founding partner and major shareholder of Argos Managers.

Marc Saint John Webb has 20 years’ experience of investing in European equities, starting out as a stockbroker for Warburg Securities in Paris in 1987. He subsequently worked as a research analyst for Schelcher Prince before moving on to small cap stockpicking at Oddo. In 1997, he joined CCF Elysées Bourse as Head of the Small Caps division, where he developed a new research product specifically for smaller companies. He oversaw a number of IPO’s and raised further capital for quoted smaller companies. In 2001, he co-founded Ixis-Rothschild Midcaps, a joint venture specialising in corporate brokerage and research on French mid-sized companies. He joined Argos Managers in 2006 as co-manager of the Argonaut Fund and launched the Family Enterprise Fund in 2007. Born in 1965, Marc studied at Aston Business School in England, Madrid Complutense in Spain and INSEAD in France. He holds the diploma of the SFAF (French analysts’ association).

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