I noted last week that the stocks on my watch list for buying more shares included Lonrho and Berkshire Hathaway, and that just got pushed into action today — I’d still like to add some more Berkshire to my portfolio but haven’t rushed into that, but with the recent dip in Lonrho shares I did add to my position in that small African conglomerate.
If you don’t know Lonrho, it trades mostly in London at LONR and on the pink sheets at LNAFF (quite illiquid on the pinks). I featured them for the Irregulars about three years ago (they’re now about flat over that time, up a few percent) and have slowly built up a position over the ensuing years. They scared me for a while with their capital-intensive plans to build a pan-African airline, but now that they’ve offloaded that division into a new company (and given that new company their old swashbuckling CEO, David Lenigas, which is probably also a good thing), I really like Lonrho for it’s continuing focus on infrastructure and agribusiness in Africa. Agribusiness is their largest division, including massive peach orchards and huge fishing operations in addition to a large cold storage, transport and logistics system (as well as a few other tidbits, like some John Deere dealerships), and it’s also giving them their best growth.
No big news — they just released their “trading update” which didn’t really include much in the way of financials, but the underling businesses are growing both sales and margins very well, so I expect a solidly cash-flow-positive company in 2013 and, as we’ve heard hinted a few times before, the possibility of a dividend coming up when they do reach a consistent level of profitability. The fourth quarter is a big one for Lonrho in terms of seasonality, so we’ll know more about how the offloading of Fastjet has impacted the books and about how real profitability looks when they report, but I think the company is growing nicely, has set a good stage, and is not getting a premium price to account for their long-term growth potential.
Incidentally, the big investors continue to look to African agriculture, too — Carlyle just invested heavily in a Tanzanian company that has fingers in a lot of the same kinds of pies as Lonrho’s agribusiness, and, if you want a bigger-picture thought, recent conferences and confabs have ...