Wendel: Worth a Reevaluation?

For some reason, your sans-culottes editor is not getting invited to the Wendel et Cie. (WNDLF.PK) information days, maybe because I have written unfavorably about aspects of the foray into taking control of Saint-Gobain and some excessive self-dealing and self-rewards voted on by the Wendel board. I tried in good naive USA fashion to get a comment when some Wendel family members rebelled against the huge bonus the board voted itself, after which I think I got blacklisted.

(It may be shocking in Chicago, but in Paris the press knows that it will be penalized if it writes the wrong thing. But I am now in the USA.)

In any event, a reader got invited and participated. The key points made during the dog and pony show were that WNDLF has a long record of smart investing; that it has ample cash; that it played its cards well in 2007. The company brass think the stock should be valued more highly, not based on the net asset value of the publicly traded shares in its portfolio but based on a long-term assessment of its performance.

Naturellement, WNDLF is preaching its own book. One of the lessons I drew from the presentation e-mailed me from MD by the reader is that Stallergenes is a star in the Wendel portfolio. It is controlled by WNDLF but is rather a small holding so its stellar attributes barely impact the parent.

For the record, Wendel thinks you should revaluate its NAV because of the extreme conditions of the present market, from the lowly level it is at now, 36 euros/share. This of course represents market malaise rather than any fault in the holding company strategy. Using long term multiples, Wendel says its portfolio should be valued at 120 euros per share. Bonne chance!

Note that Deutsche Beteiligungs, another holding company, made the same argument in September, reported here. Note also that holding companies are usually discounted, even in up markets, because it is hard for outsiders to see where the bombshells or the self-dealing are hidden.

Disclosure: I own 100 shares of WNDLF, and I own 1500 share of STallergenes.