Jacquet Metal Service: Owner-Operated Leader with M&A Upside

Raphael Moreau of Amiral Gestion presented his in-depth investment thesis on Jacquet Metal Service (France: JCQ) at Best Ideas 2020.

Thesis summary:

Jacquet Metal Service is a specialty steel distributor Raphael had presented at MOI Global’s European Investing Summit 2012. The stock price has done relatively well since then (+143% total return) but is down 47% since its peak in April 2018. The story is the same as in 2012 and the valuation similar.

The company operates in a sector with low barriers to entry, but its size and execution disciplines provides it with strong competitive advantages. Company founder and main shareholder Eric Jacquet is also very strong at restructuring exercises, as it has brilliantly shown every couple of years for a decade. As in 2012, the stock price trades below book value, the latter being comprised mostly of working capital (inventories) and real estate (warehouses), hence offering limited economic downside.

The upside is significant on a standalone basis but even more if you incorporate future M&A value creation, that has a good probability of happening.

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About the instructor:

Raphael Moreau joined Amiral Gestion in 2008, right after completing his Master at ESSEC Business School. Passionate about stock investing and Warren Buffett since his teenage years, Amiral was a natural choice given its strong value investing philosophy and focus on long-term performance. Raphaël focuses on European Small Caps, and has a strong bias towards quality business models in underappreciated areas of the stock market. Today he is the coordinator of the Sextant PME fund and is also active in most funds managed by Amiral Gestion.