Asmus Puhl Finance Blog

Colfax (NYSE: CFX) announced that it has sold all 9’200’000 shares of its public offering at $68.75!

According to the prospectus filed pursuant to rule 424 this amounts to proceeds for Colfax of $610.363 mil before expenses.

As Colfax agreed to acquire Victor Technologies for $947 mil in cash they are now able to finance about 2/3 of the deal by equity.

Well done Colfax!

As the acquisition includes the assumption of debt this guarantees a balanced debt/equity financing of the whole deal!

A transformative year!

That’s the expression Tom Gayner, Chief Investment Officer of Markel Corp. (NYSE: MKL) used in his introduction to the conference call discussing the FY and Q4 2013 results of the company.

But those results are not only “transformative”, they are impressive!

With the acquisition of Alterra Markel roughly doubled the size of the insurance business.

In 2013, gross written premiums increased 56% to $3.9 billion, primarely due to the inclusion of $1 billion of premium from the Alterra segment.

Book Value per share, the most important metric in the insurance business, increased 18% to $477.16 from $403.85 at the end of 2012. Over the last 5 years the compound annual growth in book value per common share outstanding was 17%!

The combined ratio was 97% in both 2013 and 2012. This is more impressive than you might think because the 2013 combined ratio includes Alterra’s 118% combined ratio which itself includes transaction and other acquisition-related costs of $75.1 million, or 9% on the combined ratio and $25.5 million, or 3% of underwriting loss related to catastrophes that occurred during 2013.

Furthermore the combined ratio was unfavorably impacted by applying Markel’s more conservative loss reserving philosophy to Alterra’s loss reserves.

Revenues from Markel Ventures in 2013 were $686 million compared to $489 million in 2012, but the net margin of this segment is still a rather low 3.5%!

Invested assets jumped 89% to $17.6 billion at December 31, 2013 from $9.3 billion at December 31, 2012. Thanks to Alterra this is the new capital available to be invested by Tom Gayner and his team.

The return of their equity portfolio in 2013 was 33.3% similar to the S&P 500 which actually is very good considering the conservative nature of their portfolio.

Markel’s stock yesterday traded at $ 563.06 or 1.2 price/book. Rather cheap for a company which still has integration work to do but given its excellent history of building shareholder value looks a bit “forgotten” by the market.

If the market only would apply a more normalized price/book ratio of 1.5 to Markel the stock would jump to $715, an increase of 27% from today’s level.

This looks like a “strong buy”, doesn’t it?

Interest in the common stock offering of Colfax (NYSE: CFX) must be huge!

Yesterday Colfax announced the upsizing of the common stock offering to 8,000,000 shares together with a green shoe option of additional 1,200,000 shares.

Watch the price! Shares are offered at $ 68.75, that’s not cheap!

Management reassured investors that the transaction will be immediately accretive to adjusted EPS and free cash flow, excluding year one fair value adjustment amortization expense and transaction expenses.

The market believed that and pushed shares of Colfax higher than the price of the public offering. Yesterday Colfax stock ended the day at an all-time high of $ 69.71

Watch the success story of Colfax as it continues to unfold!

This company is restless.  Just some days ago Colfax Corp. (NYSE: CFX) released its FY 2013 earnings results.

Today they announced another major acquisition to complement the ESAB business. They are buying Victor Inc.,  a pre-eminent global manufacturer of cutting, gas control and specialty welding solutions.

The seller agreed to sell Victor for $ 947 million in cash. 

At the same moment BDT Partners has converted its preferred shares of Colfax to common stock.

As a part to finance the deal Colfax announced a public offering of its own common stock.

So once again busy times are ahead for the integration and optimization expert team of Colfax applying their Colfax Business System “CBS” tools!

This company remains a buy on any weakness!

Markel Corp. (NYSE: MKL) released its FY 2013 results!

This is the link to the press release!

Colfax (NYSE: CFX) released its Q4 and FY 2013 Earnings the 6^th february and hold its conference call the same day. As always Seeking Alpha published the transcript.

The numbers are good news! Colfax is marching forward by its plan!

Q4 net sales increased 14.0% (10.2% organically) to $1.171 billion. The company experienced a record backlog of $1.6 billion in the gas and fluid-handling business, which was driven largely by recent acquisitions.

Operating margins increased to 10.6% in the fourth quarter, as compared to 8.7% in the prior year.

The Charter acquisition has been successfully integrated.

And thanks to the continued adoption and deployment of CBS tools across the whole organization free cash flow jumped 260% compared to 2012!

On the conference call CEO Steve Simms highlighted one great example of a CBS tool. During the first quarter of 2013, the newly created strategic sourcing team was able to implement a world class „Spend Analytic system“:

„With this new system we are now able to classify and analyze our spend data across 150 different sites, in over 50 countries, with over 30 languages and currencies with each of our vendors. This has been an enabler in our ability to apply our CBS strategic sourcing Kaizen methodology to optimize our global spend in areas like motors, castings, steal, travel and energy.“

Colfax confirmed its 2014 guidance provided in Dec 2013 on the Annual Investor Day:

Total revenue will be within the $4.5–$4.625 billion range and GAAP earnings per share will be between $ 2.14 and $ 2.34 .

This translates into a p/e of 29 for FY 2014 earnings for a company which analysts estimate to grow by 25% annually for the next 5 years.

Thanks to the strong cash flow improvement the price/2013 free cash flow ratio is lower and stands at only 22.

Expect this company to march steadily forward and so will do the stock price!

Build up your position on weak days!

Colfax Corp. (NYSE: CFX) just released its Q4 and FY 2013 Earnings!

They beat analyst earnings and revenue estimates for the quarter as well as for the full year!

We will listen to the conference call: management seems rather upbeat for 2014!