ABC, DEF, GBL?

Nope…I didn’t forget my alphabet, I am writing about Groupe Bruxelles Lambert (the “GBL” above). GBL is the second largest holding company in Europe with a history going back more than one hundred years (founded in 1902, listed in 1956). 

GBL’s strategy is to invest in strong, attractive, and profitable businesses that throw off sizable dividends which it funnels to investors but also uses to make other investments in companies / situations which it believes have solid long-term prospects. Not to say that the Company just waits for dividends to flow, but it is also an active shareholder and has representation on many of the companies it has interests in.

GBL’s “strategic” investments @ 06/30/2015 were: Lafarge (construction materials; 21.0% of company capital), Total (global, integrated energy group; 2.9% of company capital), Imerys (specialty materials; 53.2% of company capital), SGS (global inspection, testing and verification; 15.0% of company capital), Pernod Ricard (global wines and spirits group; 7.5% of company capital), ENGIE (formerly GDF Suez) (international energy group active in energy, gas, and services; 2.3% of company capital), and Suez Environnement (water treatment and waste management; 0.1% of company capital). These “strategic” investments accounted for the vast majority of GBL’s total assets. GBL also has fund investments under what it labels its “Financial Pillar” and other companies with good long-term growth potential under the grouping “Incubator Investments”. Recent investments include a position in sportswear maker ADIDAS and Belgian hygiene products maker ONTEX.

GBL’s successful investing track record has seen it raise gross dividends paid to shareholders by an average of 6.1% annually since 2005 (2014 gross dividend was EUR2.72). The Company’s share price has also outperformed the CAC 40 and BEL (Belgium) 20 over the last ten years.

GBL’s share price discount to adjusted NAV per share at 09/11/2015 was 23.4% while the shares most recently changed hands at EUR67.50 (09/15/2015 YTD: -1.06%). With a sound investment strategy, top-class management, strong fundamentals (low debt, low-cost to operate, long-term shareholders), healthy (and likely to increase) yield, and a decent safety margin by way of discount to NAV, I believe GBL is an attractive long-term hold.

Happy Investing!

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