In the Smallvalue Q3 2024 fund letter, Orsero S.p.A. (BIT:ORS, Financial) was highlighted as a new addition to the portfolio, reflecting its strong financial fundamentals and undervaluation. The company, an Italian small-cap with a market capitalization of €225 million, is controlled by Raffaella Orsero, who holds approximately 33% of the shares, indicating significant insider alignment.
"This Italian small-cap company, with a market capitalization of €225 million, is controlled by Raffaella Orsero (~33%). The company demonstrates very strong financial indicators and is currently undervalued, trading at a Price-to-Book (P/B) ratio of 0.84. This implies we are paying €0.84 for every €1 of liquidation value. Additionally, its Price-to-Earnings (P/E) ratio is 6x, significantly below the sector average of 16x. Utilizing a straightforward formula referenced by Warren Buffett (Trades, Portfolio), which multiplies the P/B ratio by the P/E ratio, we arrive at a result of 5.04—well below the threshold of 20, indicating potential undervaluation. A comprehensive valuation, based on discounted cash flow and multiple analysis, points to a target price of €29.34 per share, well above its current €12.54 level. Adjusted for a margin of error, the target is €26.40, signalling strong upside potential. After months of comprehensive analysis, I believe Orsero represents a compelling long-term investment opportunity, despite potential liquidity constraints due to its smaller size." — Smallvalue, Q3 2024 Fund Letter
Read full letter at gurufocus Smallvalue 2024 Q3 page.
Also check out:
