market folly

We're posting up notes from the 2017 London Value Investor Conference.  Next up is Rhys Summerton of Milkwood Capital who pitched a long of John Menzies (LON: MNZS).


Rhys Summerton's Presentation at London Value Investor Conference

Rhys Summerton set up Milkwood Capital in 2013. Around 30% of Milkwood’s capital is Rhys’s own money.

Milkwood is highly concentrated, holding 8-10 companies. Milkwood has a mandate to invest anywhere in the world but currently the fund is 70% invested in the UK. Summerton has two areas of idea generation at the moment: 1. unloved winners 2. companies that operate in the US but are listed elsewhere.

Long John Menzies (LON: MNZS) 

In 1998 John Menzies sold its shops to WH Smith, leaving them with a distribution business. Menzies then tried their hand at a number of businesses including The Early Learning Centre. They also moved into airport services. Today John Menzies has three businesses: distribution, airport services and fuel distribution to aircraft. Menzies has recently announced that it is going to sell off the distribution business by merging it with DX Logistics.

Menzies is the second largest aviation services group in the world. Menzies operates in 209 airports. Its biggest competitor is Swissport. Seven or eight players control the market. Valuing it against other M&A deals in the industry Menzies Aviation is trading at a 50% discount. The business generates a lot of cash and does not need to borrow capital to grow. It is trading on a pre-tax P/E 8x. The company could be a beneficiary of Trump administration tax cuts.


Be sure to check out the rest of the presentations from the London Value Investor Conference.