Caffyns (CFYN)

[WickedLester]

I've recently bought a few Caffyns. They're a small car dealership trading at a significant discount to underlying asset value.

The market cap is about £15m at £5.40 a share and earnings last year were 90.1p. The dividend was 21.75p.

Now one things that I do understand is that selling new cars is a low margin and cyclical business and we may be near the top of the cycle. However Caffyns historic p/e is less than 6 so there is scope for the profits to fall quite a long way before the shares look to be on a demanding rating.

But what has really attracted me to them is the balance sheet. Net tangible asset value is over £26m and this includes freehold property with a book value of £35m. Also the freehold property portfolio has recently been revalued producing a surplus over book of nearly £10m which has not been included in the accounts so in effect they have freehold property worth £45m. Against this they have net debt of around £11m meaning the company is trading at a significant discount to the value of it's property portfolio less all debt.

The Caffyns family own a significant percentage of the shares and I think it is doubtful they will want to sell up but as a safe investment with an intrinsic value way in excess of the market cap I think it is attractive.

Lester

[muckshifter]

I've recently sold mine WickedLester, having held for a couple of years, made a small profit, and collected good dividends. My reason was that a car dealer in the South of England, heavily into German car dealership, was perhaps a bit too vulnerable to the effects of: the vw problems; sterling weakness as a result of brexit; the effects of brexit I anticipate in the financial services industry, and the general uncertainty that I expect to ensue when negotiations eventually begin. It was a dissapointing result of the brexit decision from my POV because after putting up with a share structure which gave the Caffyn family complete control, for the best part of two years, it appeared to me that that control was effectively relinquished early this year when changes were made to the voting rights of a particular class of preference share owned entirely by the Caffyn family. I expected this to make the group attractive to one of the bigger fish so that one way or the other the shares might get a boost, but then came brexit.