Samir Mohamed presented his in-depth investment thesis on Anglo Pacific Group (UK: APF) at Best Ideas 2021.
Thesis summary:
Anglo Pacific Group is a commodity royalty company. For example, the company might help finance a copper mine and in return receive a royalty on the revenue of the mine as long as the mine produces copper.
Due to ESG, many banks and institutional investors are reducing their exposure to mine financings. This reduction in competition should enable APF to achieve better financial terms in royalty deals.
Since 2014 the average annual yield on royalty deals was at least 10% while remaining mine life was typically 15-25 years. Iron ore, coking coal, thermal coal, copper, nickel, and uranium – the most important commodities for the company – have seen prices recover sharply from lows in spring-summer 2020.
If commodity prices average levels of 2019 in 2021 the company trades at a free cash flow yield above 20% or an EV/EBIT below 6x. From a sum-of-the-parts perspective, the company owns stakes in two listed companies, which are worth almost 40% of enterprise value.
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About the instructor:
Samir Mohamed started with value investing in 1999 and manages a private family fund, full time since 2016. He focuses on good businesses with temporary problems and suppressed stock prices. Samir enjoys collaborating with other value investors regularly via in-person meetings or Skype calls. He was global head of the product management teams of a 170 Mio. EUR industrial business at Siemens. He worked at Siemens for 13 years. Samir has a master’s degree in Management, Technology, and Economics and a bachelor’s degree in material science, both from ETH Zurich.
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