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Newsletter December 2013


Vanshap Investing in Greece

Evan Vanderveer, Managing Partner at Vanshap Capital in the United States, on why Vanshap believes Greece represents an attractive investment destination.

Please tell us about Vanshap Capital.
Vanshap Capital is an investment management firm that was founded in 2012 by myself, and David Shapiro, in partnership with Markel Corporation. The firm’s strategy of ‘focused global deep value investing’ is straightforward. We own parts of public companies located around the world that broadly have low levels of debt, strong management teams at the helm, and most importantly, trade at low multiples of tangible book value or cash earnings.

What has drawn you to invest in Greece?
We were drawn to Greece originally about a year and a half ago now for two reasons. The primary reason was that the stock market in Greece had declined very materially and therefore quite a few of the companies were trading at large discounts to tangible book value. In theory, this means that one could purchase shares in the business and make a profit even if the company was liquidated.

The secondary reason we are attracted to Greece is because we believe many of the problems that caused the trouble are being corrected. The public sector is shrinking, allowing the private sector to thrive, and the budget is being balanced. We also understand the red tape and bureaucracy that was historically part of doing business in the country are being reduced.

Do you believe Greece represents an attractive mid- to long-term investment destination?
Absolutely, largely for the two reasons mentioned above. Over the last five years or so, Greece has gone through something quite similar to the Great Depression in the United States in the early 1930’s. Had one invested here during that period of time, one would have done fabulously well. Famed investor Sir John Templeton purchased a host of shares on the New York Stock Exchange trading below one dollar and subsequently generated outstanding returns. We believe ‘buying Greece’ today will generate similar results as the nation continues to recover.

What are some of the areas or sectors that you find attractive in Greece?
We have invested in two different sectors so far, retailing and real estate. During the summer of 2012, we purchased shares in a large, extremely well managed Greek retailer. More recently, we have made a sizeable investment in the stock of Eurobank Properties, one of the few publicly traded real estate investment companies in Greece. We believe the management team, led by George Chryssikos, are phenomenal operators and will continue to make highly attractive acquisitions over the next few years. We are actively analyzing a variety of other companies and hope to expand into more sectors in the future.

How do you see the US market view of Greece today?  Is there a shift toward a more positive outlook following the reforms that have been carried out?
There is little question that the opinion of Greece in the U.S. has improved markedly over recent months. As the Greek stock market has partially recovered and the government bond yields have declined, the stabilization of the country’s economy is being noticed around the world. Investors are beginning to take note of the reforms, including the reduction in bureaucracy and increased level of privatizations noted above. We have begun to see the sentiment change in real time, including the appearance of several positive articles in our leading financial newspaper over recent weeks. We expect that trend to continue and even accelerate as the recovery gains steam.

The views and opinions expressed in this interview are those of Vanshap Capital and its managing members. All information provided is for informational purposes only and should not be deemed as investment advice or a recommendation to purchase or sell any specific security. This does not constitute an offer to sell or the solicitation of an offer to purchase any security or investment product.