Wilson Sons and Ocean Wilsons: Undervalued Play on Brazilian Infrastructure

Adam Sues of Yacktman Asset Management presented his in-depth investment theses on Wilson Sons (Brazil: WSON33) and Ocean Wilsons (London: OCN) at Best Ideas 2018.

Wilson Sons is a Brazilian infrastructure company, with operations in port terminals, towage, OSVs, shipyard, and logistics. 90+% of EBITDA from core terminals/towage business, where WSON33 has key advantages as the #1 tugboat operator with ~50% share of harbor maneuvers and monopoly-like position on container trade in two ports via long-term concessions. Deep economic downturn in Brazil and recently completed capex cycle means WSON33 is under-earning versus potential, yet it trades at less than 10x depressed earnings. Earnings can double on recovery with high incremental margins and little growth capex, backed by ample FCF and 50% payout ratio.

Another way to invest is via Ocean Wilsons, a holding company for the Salomon family who invested in WSON33 back in the 1950s. OCN trades at ~35% discount to its NAV made up of (i) 58.25% stake in WSON33 and (ii) a fund-of-funds investment portfolio managed over the long term. Backing out portfolio, paying less than 5x look-through earnings of WSON33.

About the instructor:

Adam Sues is a Portfolio Manager at Yacktman Asset Management. He joined the firm in 2013, and is portfolio manager for the AMG Yacktman Special Opportunities Fund. From 2010-2013, he was the founder and author of Value Uncovered, an investment website focused on value-oriented stock research and fundamental analysis. Adam holds a B. A. in Business Administration from Mount Union College and an MBA from the University of North Carolina Kenan-Flagler Business School.

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