Asmus Puhl Finance Blog

Colfax (NYSE: CFX) today announced that it acquired a majority stake of Lima, Peru based Soldex S.A. for $ 325 million.

After the big acquisition of Charter plc Colfax doesn’t stand still and continues to acquire!

Even if Soldex is a somewhat smaller expenditure for them, the commercial logic is clearly visible: This acquisition rounds up their new cutting and welding ESAB division and strenghtens their position in the growing South American market.

Now we also understand better why the former CEO Kiefhaber became CEO of the ESAB division: the division’s importance within the group just keeps growing and growing!

… and insiders continue to buy shares … watch out!

Markel Corp. (NYSE: MKL), the so called „Mini Berkshire” released its Q1 2012 results.

The transcript of the Conference Call you’ll find here on Seeking Alpha.

Markel in 2012 is „off to a good start” as CFO Anne Waleski puts it!

Total operating revenues grew 18% to $733 million in 2012, up from $622 million in 2011. The increase is due to a 15% increase in revenues from insurance operations and a 43% increase in revenues from Markel Ventures, their non-insurance operations.

The combined ratio was 100% for 2012, compared to 112% in 2011, a significant improvement even if influenced positively by an GAAP accounting standard change.

The interesting news is certainly that the condition of the insurance market is finally improving. Markel ‘s premium volume is up and there is less aggressive pricing by other insurers.

Markel’s book value/share increased 6% to $ 373.

On the investment side Markel is „balance sheet oriented” as President Thomas Gayner points out: „We continue to believe that interest rates are unnaturally low and given that belief we continue to choose to protect the balance sheet by maintaining our bond portfolio at a lower duration than what we would naturally like.”

On the equity side, they earned a total return of 11.5% for the quarter and they continue to steadily increase their equity investment commitment which now stands at 59% of shareholders equity, up from 54% at year-end 2011.

Markel’s stock normally trades at 1.5 – 2 times book value/share as company executives pointed out at their traditional investor’s brunch just before the Berkshire Hathaway Annual Meeting in Omaha, Nebraska.

Today at $ 442 it trades at only 1.2 book value/share and the insurance market is finally improving!  Think twice about this discount!

Colfax (NYSE: CFX) one of the stocks this blog follows on a regular basis reported its 1^st quarter 2012 earnings.

The results lagged expectations but the company managed to beat the non GAAP EPS estimates by 2 cents. Margins shrank across the board.

But is this really so important at this stage of Colfax’ development?

Colfax is well funded and has one big task to accomplish: the integration of the much bigger Charter International. They need to realize synergies and to get the operating margins up to Colfax’ level.

For the quarter they reported revenues more than 5 times higher than in the same quarter of last year. This explains the mere size of that task!

But they are 100% determined to do that: Just look at the rather unusual CEO change mentioned in my last post. And they already talk about possibilities of other acquisitions in the future!

Analysts expect EPS of $ 1.55 in FY 2012 on a revenue basis of $ bil 4 . That puts the p/e at about 20.

That doesn’t seam cheap as the market expects they will get things done.

But insiders appear to think the contrary as their buying in recent months suggests.

… you problably should believe them and position yourself accordingly!

What is this?

The President and CEO of Colfax (NYSE: CFX) Clay Kiefaber steps down just to become CEO of one division of the group?

If you think this is a degradation think twice!

The division we are talking about is not just any division: It’s the ESAB division Colfax needs to integrate following the Charter International acquisition.

With this acquisition, the biggest in Colfax history so far, total revenue increased six fold from $700 million to $4 billion.

The ESAB division alone, now their biggest division, means $2 billion revenues and is much bigger than the whole Colfax has been before the acquisition.

Board member Steve Simms becomes the new CEO of the group.

This change underlines just how serious they are integrating Charter International, to realize synergies rapidly and to improve margins.

Will they be able to do that? Well, a first indication we’ll get when they release Q1 2012 results the 8^th May.

But don’t forget: If any industrial company needs an experienced board and the right management team in place, Colfax already has it!

Is Colfax share price expensive right now? Difficult to say, it depends on the progress of the Charter integration. But look what insiders are doing: They are all buying shares!