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Imagine if Mondelez (MDLZ) or Kraft (KRFT) had a 5.2% dividend yield and the government put tariffs on foreign companies wishing to compete. You'd probably buy it or at least watch Berkshire Hathaway (BRK.B, BRK.A) gobble it up. Such a company exists - Orkla (OTCPK:ORKLY, ORK.OL).

Orkla is a Norwegian outfit that has roots going back to the 1600s. Management is trying to get out of the conglomerate business, being a jack of all trades, and focus on marketing food.

The company is number one in the Nordics region in food, beating out giants such as Procter & Gamble (PG), Unilever (UN), and Coca-Cola (KO). Of course much help has been provided by a government that likes to slap tariffs on foreign goods. Orkla should do well as long as Norway continues to block outsiders. Not exactly what we learned in Econ 101 but a Warren Buffett like moat.

Orkla has a market cap of 48.4 billion kroner ($7.74 billion) and had a free cash flow yield, based on 2012 numbers, of almost 6%. If this were an American company, it would probably trade 80% higher. A fantastic article on Seeking Alpha back in June put the NAV at 68 billion kroner. Quite a discount to a market cap of 48.4 billion.
It takes 6.25 Norwegian kroner to buy one US dollar.

Its Sapa division is a 50/50 joint venture with Norwegian Hydro. Based on sales of 47 billion kroner, we'll put a value of 40 billion (so Orkla's share is 20 billion). This is based upon Kaiser Aluminum (KALU) which is valued at a little less than one times sales. We used Kaiser instead of Alcoa (AA) because Sapa and Kaiser are downstream, meaning making the actual aluminum products and not mining bauxite. There are other assets like real estate, hydro power, and assorted aluminum businesses.

At Barron's Art of Successful Investing, hedge fund legend Oscar Schafer, pointed out that 20% has been acquired by their CEO, Age Korsvold. Management is slimming down its non food items and its margins are between 200 and 700 basis points less than Nestle's (OTCPK:NSRGY). Schafer thinks that Orkla is worth 75 or 80 Kroner a share. Quite a rise from 47 if he's right.

Investments like Orkla are hard to find in the US. So many of our stocks have millions of eyeballs looking at them and makes it hard to find a good deal. Astute investors need to scour the globe. The items that Orkla sells are needed: frozen pizza, detergent, fish. These type of no-brainer investments have almost always performed over time and this one will probably work for you.

Source: Orkla: Norwegian Blue Chip At A Big Discount