DIA: Proximity Retailer with A Well-Developed Franchise Offering

Dominic Fisher presented his in-depth investment thesis on DIA (Madrid: DIA) at European Investing Summit 2015.

DIA is a proximity retailer with a well-developed franchise offering. Proximity retailing is developing in many markets. DIA, with a management team that has overseen significant growth in both Spain and Emerging Markets, is currently being penalized for emerging market exposure and the lingering effects of the Spanish recession. It has the opportunity in the next few years to continue to grow and hence to attract a rating in keeping with its excellent economics and significant opportunity for deploying further capital. Assuming a market rating for its Iberian business and a reasonable appreciation of the Emerging Market opportunity suggest a 30% increase in valuation. If investors begin to value Emerging Markets for their genuine growth potential this would justify an even higher price.

Update: Punch Taverns, a recommendation from 2014, has begun the process of reducing debt and confirming the value of its public house estate with sales and steady trading. Regulatory changes have introduced some uncertainties since last year, but if anything the market for the assets themselves has strengthened. With better opportunities the discount to asset value, net assets of ~£900 million and a market capitalization of £300 million seems increasingly anomalous and should increase steadily over the next five years.

About the instructor:

Dominic Fisher started Thistledown Investment Management to invest in undervalued assets with sound finances that pay a reasonable income. He has more than 25 years of investment experience having started his career at Hambros Bank before joining Mercury Asset Management in 1992. As head of the team investing for charities he successfully resisted the dotcom mania and the pressure to invest in a ‘new era’. He joined Singer and Friedlander in 2001 but left in 2002 to run his own business for three years. He then worked at OLIM, a subsidiary of Close Brothers before establishing Thistledown Investment Management in 2009. Dominic is Chairman of the Officers’ Association, a charity that cares for ex-officers and head of the investment sub-committee of the Armed Forces Common Investment Fund. He is a director of Aberforth Geared Income Trust Plc. and a founder member of the Value Investors Special Interest Group of the Chartered Financial Analysts’ Institute (UK).

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