Bollore, Telecom Italia Savings Shares: The Last Shall Be First

Steven Wood presented his in-depth investment theses on Bollore (Paris: BOL) and Telecom Italia Savings Shares (Italy: TITR) at Best Ideas 2017.

Bollore and Telecom Italia Savings Shares are two very timely ideas as we head into 2017. Both trade in markets which are hated by international investors. The world is underweight or short these markets, and Steven disagrees with this view. Yet, on their own, each company trades at historical trough valuation levels at the exact time the underlying businesses are showing tangible signs of near-term improvement. Bolloré is an investment holding company, trading at a roughly 60% discount to NAV, which consists of African ports and global logistics businesses, and controlling stakes in Vivendi and Havas, both media heavyweights in France. Run by an active value-creator with a terrific track record, Vincent Bolloré is transforming the weakest parts of Vivendi, with 2017 being a major year of stabilization and profit growth. Similarly, trade in Africa is beginning to stabilize with a stronger commodities environment, and is poised to grow significantly in the coming years of rebound. Steven believes NAV is poised to double in the coming years. Vincent is asserting similar control over Telecom Italia, through Vivendi’s 25% stake in the company, and has accelerated cost-cutting efforts, taken positive pricing actions, and is working to increase the value proposition of the company’s Telecom services. Because Telecom Italia is not only the cheapest Telecom in Europe, but also leveraged, high single-digit growth in cash flow will result in 25-30% compounded growth in Telecom Italia’s fair value, holding its trough valuation steady. With Q3 results showing the first growth in revenue in a decade, 2017 results will be building on the solid progress achieved thus far, and handily exceed a sanguine consensus.

About the instructor:

Steven Wood, CFA founded GreenWood Investors in late 2010 based on core beliefs that great returns are generated through a concentrated global portfolio of special situations and deep value opportunities, and cannot be generated by being overly concerned with month-to-month returns. We believe investors should have full transparency and liquidity and we share our research with our sophisticated investors, who in turn provide invaluable insights that help us hone our portfolio. Prior to founding GreenWood Investors, Steven worked with notable investors at Carr Securities, Kellogg Capital Group, and Aslan Capital in distressed, deep value, and special situations strategies. Through frequent marathons and by being the sole US-focused analyst in Leveraged Finance at RBC Capital Markets during the peak of the LBO boom, Steven has developed a high pain tolerance, a pre-requisite for value investing. Dissatisfied with just one view of the world, Steven received a bachelor of arts from Tulane University in Economics, Political Economy, and International Relations.

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