I don’t always comment this frequently about the gyrations or reports from stocks that I own or have covered in the past, but since some of those old “Idea of the Month” picks have been companies that don’t make the pages of the Wall Street Journal I’ve been moved to share a couple points this week, first on NagaCorp and their big drop earlier in the week, and now on Lonrho and their annual report.

My longstanding investment in Lonrho, a stock which I also profiled as an “Idea of the Month” a couple years back, is in the news today thanks to a decent annual report and a couple tidbits that I think might be underappreciated about the company.

The thing that keeps me concerned about Lonrho is their airline, which is subject to an unusually high (even for Africa) amount of bureaucratic finagling and, like all airlines, with cost pressures — and it looks like their telegraphed plan to offload/partner the airline (Fly540) is still moving forward. The annual report today reiterated and clarified (for me) their plan, here’s a quote about the blank check company Rubicon that Lonrho’s management team set up last year:

“… in discussions with Lonrho to reverse Fly540 into Rubicon, change its name to FastJet.com and bring easyGroup, it’s founder Sir Stelios Haji-Iannou and a very senior aviation management team, into Rubicon to develop the Fly540 platform.”

The “syngergies” can easily be seen here, Haji-Iannou built easyJet into a large European discount airline, and he’s now looking for his next project. easyGroup has already partnered with Lonrho to franchise budget easyHotels across Africa over the next five years (starting in Johannesborg this year), and with Rubicon on preliminary airline plans for Africa, so it’s clear that they want to use the several years that Lonrho has spent building a small pan-African airline with several key hubs, and, importantly, the years Lonrho has spent banging their heads against walls trying to get flights approved, and leverage that with a real expert on airlines and an influx of capital. I’d be delighted to see Lonrho become a junior partner in a much larger African airline, without the risk of huge capital costs as they build, and the risk that Lonrho would try to aggressively build the airline much larger on their own, without a partner and outside financing, would be one of the ...