FILA.MI
💎 Fila Spa presents a compelling special situation where the market value of its stake in the high-growth Indian subsidiary (DOMS) nearly equals Fila’s entire market capitalization.
📈 The core Fila business (art supplies, school materials) generates stable profits (€60-70M annually) and is essentially being valued at zero by the market.
💰 Management is actively unlocking value by selling parts of the DOMS stake to reduce debt and return cash to shareholders, highlighted by a high current dividend yield (7.8%).
@Artedeinvertir:
“Mariano says, ‘Fila Spa.’ Fila Spa is a company we recently bought for True Small Cap. This company, eh, was discovered by Daniel from Smoak Capital, who was a professor in the previous course we did in September, eh, and many people say he could be the next Warren Buffett based on his level of results in the early years in the United States, and he was exclusively for the Arte de Invertir training. I mean, he’s someone that, thanks to the contacts we have, and again, he doesn’t offer training or hardly any interviews or anything, but eh, well, he did us the personal favor because of that, well, relationship we had built, to come and do a series of trainings at the school so that people could benefit from the results this investor has, which, as you can see here, in 2024 generated 32% without having any FAANG stocks. The cumulative results he has, net of commissions, which before commissions is much more, is more than 50% annually what he’s generating, I mean, he’s literally destroying the indices, and that’s why people talk about him, and it’s already a reliable track record, he’s been doing it for almost 7 years when he was a private investor, whose returns I know, and he talked about that topic to the Arte de Invertir students, about how to generate even higher returns with little capital in a series of interviews, and he also did several practical case studies of companies that, by the way, have done quite well, and that’s why I tell you that when we do the best training sessions, right? This is much more than just me, Alejandro, and others, but it’s top-level people who come to train you and share with you periodically when you join the school, well, top-level knowledge. In fact, eh, he did several practical case studies of certain companies, well, that have done quite well in the recent months since he presented them in the last course held in September. That’s why I tell you to stay tuned for the next day. Fila eh has eh a stake in, in fact, if you look here in the annual letter, okay? You have explained the thesis of this investor who invests in very few companies, has a very concentrated portfolio. So, Fila, which should not be confused with the sports brand, eh, manufactures all kinds of pencils, eh, painting materials, decoration, especially for enthusiasts or people who buy it as a hobby, which is quite, well, a fairly stable industry. Part of the investment thesis is that it has a stake in DOMS, which is listed in India, because there’s a curious issue in India, normally you have to have local partners, or at least half of the shares in the hands of local partners. So, to get into that sector there, this company had to list this part, and thanks to the enormous growth that division has, which grows at rates, as you see here, of 25-27% annually, well, high multiples are justified. If we look at Ownership, which doesn’t show up here, well, I think it has 30%. Okay, here you can see some of the company’s products, both also for schools and such, which in the end, well, eh, is a fairly stable market, and Fila itself, which has the rest of the divisions, the commercialization of these products, well, in the United States, which is a quite powerful market for them, well, let’s say they are stable sales. People thought this was in decline or something like that, but it’s quite stable. It produces an EBITDA of 120 million a year and profits every year of about 60 or 70 million. What happens? That this stake they have in DOMS is equivalent to almost 500 million euros, which is what Fila itself capitalizes. I mean, the rest of the business that produces 60 million, they are giving it to you for free, and the good thing is that they are liquidating that stake. Recently they sold a part to eh reduce the debt they had and return money to the shareholder. In fact, here we see that the dividend yield is very high, 7.8%. And eh in the company’s finances, well, we see how eh it’s remunerating the shareholder and reducing that debt. So, well, let’s say that removing that stake in that business in India, from that division it has in India that is listed, well, the company is basically free on the stock market. So, well, these are the kind of findings that this class of top-level investors make. So, well, eh, that’s what I tell you, eh, you can access and come to the training sessions and, above all, understand where these investors find their investment ideas, how they analyze them, how they value them. Then there are subsequent follow-up classes where we give them some follow-up, and in the end, well, that has value for your training, okay? Eh, so, very interesting company. Thanks for reminding me. So, although the P/E here comes out at 10, well, it’s practically zero or P/E one or something like that.”
Watch the exact part of the video where @Artedeinvertir talks about Fila S.p.A. here:
Watch the video on YouTube
Read more articles analyzing Fila S.p.A. (FILA.MI) at the provided link. FILA.MI stock.
