Steve Gorelik of Firebird Management presented his in-depth investment thesis on Siauliu Bankas (Lithuania: SAB1L) at Best Ideas 2019.

Thesis summary:

Siauliu Bankas is the largest locally owned bank in Lithuania. The country is one of the fastest-growing economies in EU, driven by a successful restructuring following the crisis of 2008-2009. Siauliu Bankas translates local ownership into a competitive advantage through better customer service and faster lending decisions as compared to foreign competitors. Since the consolidation of two smaller competitors in 2015, the bank’s loan book grew 28% through the end of 2017, compared to 18% growth for the Lithuanian banking sector.

The bank is highly profitable, generating sustainable ROE of 15+%, but recently traded at 8x P/E and 1x book value due to a perceived share overhang from a recently dissolved shareholder agreement. Upcoming catalysts include higher dividends from the newly approved dividend policy and potential M&A as the European Bank for Reconstruction and Development, a 26% shareholder, looks to monetize its stake in the company. Even without a re-rating, an investment in Siauliu Bankas may deliver ~25% annually over the intermediate term due to the compounding of capital.

Listen to this session:

slide presentation audio recording

About the instructor:

In addition to being Head of Research at Firebird Management, Steve Gorelik is the Fund Manager of Firebird U.S. Value Fund as well as portfolio manager of Firebird’s Eastern Europe and Russia Funds. He joined Firebird in 2005 from Columbia University Graduate School of Business while completing education from a highly selective Value Investing Program. Prior to business school, Steve was an operational strategy consultant at Deloitte working with companies in various industries including banking, healthcare, and retail. He holds a BS degree from Carnegie Mellon University as well as a CFA (chartered financial analyst) charter and a membership in Beta Gamma Sigma honor society. Steve serves on the boards of Teliani Valley (Georgia), Arco Vara (Estonia), and Pharmsynthez (Russia). He speaks Russian, English and his native Belarussian.