5 Comments

Great article! You probably know this already that Holcim plans to spin-off their North American division: https://fortune.com/2024/01/28/cement-giant-holcim-to-spin-off-north-america-unit-construction-boom/#:~:text=Holcim%20Ltd.%2C%20the%20world's%20largest,Gutovic%2C%20as%20chief%20executive%20officer.

One more peer to look into, although with a shorter history.

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Thanks for the feedback I appreciate this. Yes I believe Holcim is #1 cement in NA. One Lafarge cement plant is 15min from my home. Issue is the spin off - as a foreign investor in a European company - the spin off os likely to be treated as direct income. As such I have to wait for the spin off to take place before I invest - if I invest. As you said it will be interesting to see the valuation they would get when listed. There might be an opportunity on the first days of listing. On the watch list.

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As a shareholder in Monarch for about 18 months I very much appreciate your write ups on the company and its industry. They are excellent. You have expanded my knowledge considerably.

Several points to add from my perspective.

Monarch is a multi generational founder led company. i suspect they will continue to stay that way. That means they have a long term perspective in all of their actions and relationships. They indicate a win, win , win attitude in their business. Which i like. This begs the question though have you or any other readers met their leadership team? And if so what are your impressions?

Also what are the senior leadership team employment packages including incentives?

They have a sizeable share investment portfolio How skilled are they over time at investing shareholders surplus capital in the equity markets? Or should they be giving it back to shareholders through dividends ?

Thanks

Geoff

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Congrats on your timely purchase 18mo ago. The Wulf family - current chairman - owns about 10% and the Radcliff family another 12%. I like large insider holding. I actually have a preference towards management owning a large stake but still a minority holding. For example, the Yamada family owning 30% but below 50%. When management owns more than 50% or close to - I worry. I was forced to sell out with Logistec as the Paquin had a majority voting and decided to sell. Bollore is my opinion is shit show.... sorry for the cult members but he makes very bad decision for short term gain - selling jewels like the ports in Africa, selling universal music, activision, selling bollore logistics.. he is definitely not thinking long term and this is clashing with my philosophy. I am slowly moving out of all stocks with more than 50% voting for this reason. The only exception being TFF.

I am planning to attend the next assembly next year for the reasons you mentioned now that this is significant position for me.

One big problem they have is that they are generating too much money and dont know what to do with it. The solar plant is really a nice to have. If they had more opportunity they would have never invested in this. I think acquiring a cement plant nearby would be a fantastic. The ash grove owned by CRH is closeby. There is another one in Kansas city. As for equity investment, it is mostly in cement co and building materials, so they have the deep knowledge but again this equity holding is due to lack of other investment opportunity. They used to buy a lot of ready mixed business, but they thankfully stop doing this as these are sub-performing business. I think until the stock rerate to its true value, it will be difficult for them to make major buyback.

Honestly if I was in their shoe I would do a major dutch auction to buyback 10% or 20% of the share using the proceeds from the equity holding. They are probably holding in their equity the same name mention in my article which are trading at twice the evaluation of Monarch. Why not purchasing 10-20% of your share by buying your own shares at 50% premium? If I meet with them in 2025 this is what I will propose. A rerate is very likely. This is one of the reason I publish this. When I purchased a lot of Logistec in 2022 - doubling my position. valuation made no sense and the stock was highly illiquid. I decided to start this blog to point this to the investment community - Logistec was my first post.. I met with management etc based on my conversation with management, they felt the same frustration. Similar to Logistec.. I hope to contribute in a small way to the valuation rerating of monarch cement which will allow them to buy back more stocks. The dutch auction is one way.. the stock going to 20x earnings is another way to increase liquidity.

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What do you think of the trend towards using and producing recycling concrete? I think regulations will go more and more in that direction, look at the netherlands.

Investments in that direction could BE expansive.

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