Daniel Gladiš discussed Vltava Fund’s approach to investing in the banking sector and presented his investment thesis on OSB Group (UK: OSB) at European Investing Summit 2024.
Thesis summary:
OSB Group is a leading specialist mortgage lender that focuses primarily on carefully selected sub-segments of the UK mortgage market.
The bank specializes in the buy-to-let segment, in which it has 9% UK market share. The big banks consider this market too labor-intensive and have exited it. Buy-to-let lending is less risky than mortgages to homeowners. LTVs of 65% and cost of risk of 0.25% prove this.
OSB is fully funded with deposits, has a cost-to-income ratio in the 30s and is completely focused on its niche market.
Since its IPO in 2014, book value has grown 18% per annum.
With ROEs in the mid-teens, the shares deserve a higher market valuation than a P/E of 4.5x and P/B of 0.7x, especially as shareholders enjoy regular large dividends and the benefits of below-book value share repurchases.
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About the instructor:
Daniel Gladiš, based in the Czech Republic, has amassed a market-beating track record since starting VLTAVA Fund in 2004. VLTAVA Fund is a value-oriented, research-driven investment fund focused on investing in good companies run by quality management. Previously, Daniel was Director and Chairman of the Board of Directors of ABN AMRO Asset Management (Czech) from 1999–2004. He was also Director and founder of Atlantik finanční trhy, a.s., a member of the Prague Stock Exchange. Daniel is a graduate of VUT Brno and has authored the best-selling books Naučte se investovat (Learn to Invest) and Akciové investice (Stock Investments).
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