A promising small cap: Colfax Corporation
Let’s start right away with a very interesting and still rather unknown small cap
(only 7 analysts are following this company at the moment / source yahoo finance):
Colfax Corporation ( NYSE: CFX )
Website: www.colfaxcorp.com
Colfax was founded in 1995 in Richmond, VA, USA, and went public in May 2008.
It makes pumps, fluid handling systems, speciality valves for industrial, marine, oil and gas, and power generation markets, and for the Navy.
It has some of the best and most recognized brands in the industry worldwide and extensive engineering expertise. It works in some very attractive industrial markets. Just think of the future energy infrastructure needs especially in Asia.
Their net sales reached 605 mil $ in FY 2008.
Colfax is globally diversified:
51% of sales were in Europe, 25% in the US and Canada, and 15% in Asia and Australia, up from only 2.3% in FY 2007.
The current market capitalization is 311 $ mil.
Business Model:
Colfax works with a business model they call the Colfax Business System.
To understand this we have to look at the business model of another very successful company: Danaher Corporation (NYSE: DHR) website:www.danaher.com
Danaher was founded by Steven and Mitchell Rales in 1983. They started to acquire industrial businesses to form a conglomerate. By applying the principles of „kaizen“ the Japanese word for continuous improvement, they made the acquired companies much more efficient and profitable than they were before.
Exceed customer expectations, defining delivery performance, improvements in costs, innovation in products and services are the goals.
And they called it the Danaher Business System. They implemented this business model so well that they delivered an impressive annual return of 22% to shareholders since 1991.
Colfax follows this model and calls it the Colfax Business System. They are a serial acquirer of small complementary industrial businesses like Danaher.
Mitch Rales founded Colfax together with the actual CEO John Young in 1995.
He and his brother Steven today hold each 21% of Colfax stock.
Mitchell Rales serves as chairman of the board. Also board members are Patrick Allender, the longtime CFO of Danaher and Thomas Gayner, the chief investment officer of Markel Corp., one of the best investors in the US. Some talked of him even as a successor of Berkshire Chairman Warren Buffet.
So Colfax could evolve as a strong core business together with the implementation of its acquisition strategy, backed by the excellent expertise to value these acquisitions among their officers and board members
….continues with the financials….