Golf & Co: Leading Group of Retail Chain Stores

Ori Eyal presented his in-depth investment thesis on Golf & Co (Israel: GOLF) at Asian Investing Summit 2015.

Golf & Co — retail turnaround:

• Leading group of retail chain stores, all under the umbrella brand “Golf & Co”. Main categories: fashion clothing and home accessories. 330 stores today across all brands (198 stores: fashion clothing, 132 stores: Home accessories).
• Profitable retail chain with multiple competitive advantages: well-recognized brand; economies of scale in operations, distribution, advertising, and purchasing; excellent mall-based locations locked up.
• Operational issues in past few years: decline in operating margins; loss-making chain “Blue Bird” will be fixed or shrunk; currently losing about 10 million ILS per year; underinvestment in store base; did not keep up with competition.
• New CEO – Mizroch Eliezer: consulting background; experienced in business strategy and business development; implementing new strategic plan.
• Valuation: Value of business: 648 million ILS (8x operating income); add net cash: 150 million ILS; total fair value in 2018: 798 million ILS; recent market cap: 427 million ILS; upside to fair value: 87%; collect 8% dividend yield while we wait.

About the instructor:

Ori Eyal is Founder and Portfolio Manager of Emerging Value Capital Management, a long-short global value fund. The firm’s in-depth research explores the merits of each investment in the context of a global market. Ori worked at Deutsche Bank Asset Management, Deephaven Capital Management and Aquamarine Fund. He holds an MBA from the University of Chicago Booth School of Business and an MSc. in Computer Science from the Open University of Israel. Ori has experience investing in both developed and emerging markets. His interests include economics, strategy, logic games and puzzles, artificial intelligence, science, physics, astronomy, and futurology.

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