Henrik Andersson of Didner & Gerge presented his in-depth investment thesis on Bunzl (London: BNZL) at Wide-Moat Investing Summit 2018.

Thesis summary:

Bunzl is a family company in disguise. It has set a high bar in how a corporation slowly but steadily, with the highest ethical standards, year in and year out keeps expanding its business one well-served customer at a time. It is a grand example of what is today known as a “compounding machine”.

At the face of it, Bunzl is a distributor of goods typically not for resale; to food stores, restaurants, large corporations, health care operations – the list goes on. It is the brooms to clean the stores, the kitchen disposables, the napkins in conference rooms, the first aid kits in offices, and the protection gloves in factories.

But as with all great business models, Bunzl provides something more in its daily operations. By managing customers’ working capital, solving complex logistics with a 98% fulfillment rate, being just-in-time, providing consultancy around procurement and providing push-through cost savings, Bunzl is one of these businesses that provides essential services that aids an entire operation but at a very small cost. It is like an iceberg – what you see above the water (i.e. Bunzl´s fee/margin) is a fraction of its true impact.

The company is governed by outstanding people, in a strong corporate culture with lots of responsibility and decentralization — words such as modest, hard-working, long-term, steadfast come to mind.

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About the instructor:

Henrik Andersson has worked within a framework of investing in quality franchises in a concentrated portfolio setting since the early 2000s. After five years as an assistant fund manager and analyst at Handelsbanken Asset Management, in 2003 he launched a discretionary portfolio named European Quality with 15 holdings, inspired by Peter Cundill’s approach of “never shoot into the broom”. That later branched out to a family of funds named the Selective Funds. In 2011 he joined Didner & Gerge, an employee-owned asset management boutique, to launch a Global Equity Fund together with a colleague. D&G Global is now applying these same principles in trying to identify sustainably great companies with an appealing valuation starting point. Over the years, an increased emphasis has been put on corporate leadership with a clear preference for owner-operated companies with a history of outstanding operations.