CIR & Cofide
Another stock where we have significantly increased our exposure during the year is CIR & Cofide (MIL:CIR, Financial) (MIL:COF, Financial), an Italian holding company, controlled by the De Benedetti family, which we have followed for more than 10 years. Today the company has changed significantly and is nothing like the one we knew in 2008.
At present, almost 50% of its market capitalisation is in cash and, furthermore, during 2019 there have been key changes in the company to crystallise its value. We increased the weight in our portfolios as these changes have occurred, while the stock price is yet to reflect them. Such changes include the merger of CIR and Cofide to simplify the corporate structure, and the sale of Gedi (an Italian media group), perhaps the group's worst asset, at a good price.
All these changes will result in higher visibility of what we think is the "crown jewel", the holding of approximately 60% that CIR & Cofide own in KOS, a company that manages nursing homes and geriatric hospitals in Italy and Germany. This is a recurring and growing business due to the long-term ageing of the European population, and we think that the value of KOS alone is almost enough to account for the entire capitalisation of CIR & Cofide. Everything else (> €350mn cash and ~57% Sogefi) is ours for free. The large positive net cash position makes the risk virtually zero.
From Francisco Garcia Parames (Trades, Portfolio)' Cobas Asset Management fourth-quarter 2019 commentary.
