Sahm Adrangi Long Sberbank And Varejo

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The 10th Annual New York Value Investing Congress takes place in New York on September 8th and September 9th 2014. ValueWalk will be providing coverage of the event. Below are some ideas from Sahm Adrangi.

Sahm Adrangi is the managing partner of Kerrisdale Capital Management. Kerrisdale Capital is a New York-based fundamentally-oriented investment manager that manages $265 million and focuses on long-term value investments and event-driven special situations.

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Sahm Adrangi on Misunderstood Situations, Long Sherbank of Russia

Presenting a long idea. Have been looking abroad recently.Since 2013, S&P 500 is up from 14x to 17x P/E ratio while some international markets have seen contraction or growing discounts to US markets.

Sahm Adrangi’s Long Idea – Sberbank Rossii OAO (MCX:SBER) (OTCMKTS:SBRCY)

One of favorite ideas and over 5% of fund. Trades at 5x earnings and less than 1x tangible book value with 6% net interest margins (relative to net interest margins of 2-3% in US). Sees 30% upside in the name.

Highlighted Realogy Holdings Corp (NYSE:RLGY) trading at 20x versus LSL and Countrywide PLC (LON:CWD) trading at 10x earnings in the UK.

Sahm Adrangi’s Presentation Idea – Via Varejo SA (BVMF:VVAR11) (OTCMKTS:GBXPY)

Brazil’s largest electronics retailer, home furnishing and household durables. Play on increasing urbanization and growing middle class in Brazil. Upcoming catalyst: spinning out its e-commerce platform in 2015.

Formed 2010 as part of a merger between Casas Bahia and Pontro Rio. IPO’d in 2013.

Cnova (e-commerce business to be spun-off) is growing at 20-30% rate. Offline retail business trades at 7x earnings when valuing Cnova spin at 2x sales. Retail business is growing.

Largest e-commerce players in Brazil are mostly segments of retailers as they control distribution footprints in the country.

Combining the value of the retail business and e-commerce business gets a price target of 40 compared to a current price of 25 implying 60% upside.

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