This article is excerpted from a letter by MOI Global instructor Mark Walker, Managing Partner at Tollymore Investment Partners, based in London.
Wonderful Sky (WSFG) stock continued to strongly underperform global markets in 2019. In each of the last two years its quoted price has lagged the MSCI ACWI by more than 40% in GBP. Throughout our ownership of the business we have purchased additional shares at lower prices. WSFG is comfortably the largest detractor from Tollymore’s cumulative results. In our two-year ownership our average purchase price was 1.22 HKD, vs. the current share price of 0.65 HKD. We haven’t sold any shares.
Before we delve into the investment merits, a thought experiment: what should the enterprising business investor be willing to pay for a simple owner-operated business which has a long history of dominating its niche; has generated 19% annualised revenue growth over the last decade to c.600mn HKD today (a majority of which is recurring in nature); and average net income margins of c.35%?
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Disclaimer: The contents of this document are communicated by, and the property of, Tollymore Investment Partners LLP. Tollymore Investment Partners LLP is an appointed representative of Eschler Asset Management LLP which is authorised and regulated by the Financial Conduct Authority (“FCA”). The information and opinions contained in this document are subject to updating and verification and may be subject to amendment. No representation, warranty, or undertaking, express or limited, is given as to the accuracy or completeness of the information or opinions contained in this document by Tollymore Investment Partners LLP or its directors. No liability is accepted by such persons for the accuracy or completeness of any information or opinions. As such, no reliance may be placed for any purpose on the information and opinions contained in this document. The information contained in this document is strictly confidential. The value of investments and any income generated may go down as well as up and is not guaranteed. Past performance is not necessarily a guide to future performance.
About The Author: Mark Walker
Mark Walker is the Managing Partner of Tollymore Investment Partners, a private investment partnership investing in a small number of exceptional businesses to compound clients’ capital over the long term. Prior to founding Tollymore Mark was a global equity investor for Seven Pillars Capital Management, a long-term global value investing firm based in London. Mark joined Seven Pillars from RWC Partners, where he was part of a two-person team managing a newly launched, long term global equity fund. Prior to that Mark worked as an investment research analyst for Goldman Sachs and Redburn Partners. He is a qualified chartered accountant, and graduated from Edinburgh University with a First Class MA Honours degree in Economics, graduating first in his class.
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