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If H1'24 figures are anything to go by, the illustration is far far conservative for FY'24 figures. Nonetheless, it still does a good job illustrating some of the key points of consideration.

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Thank you for this piece, very interesting case study. Tons of compliments on your writing, it's always engaging and fun to read your pieces thanks to how well you articulate yourself!

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author

Thank you. I keep experimenting. Just trying to share ideas in ways that do them justice.

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Oct 13·edited Oct 13Liked by Devin LaSarre

Thank you for once again discussing one of the lesser known tobacco companies!

How well (or how poorly) are minority shareholders treated on the Athens Stock Exchange, for instance in the event of a take private transaction?

Which broker would one use in the US to buy shares on the ASE? I don't see their ticker on IBKR.

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Minorities have the protections offered by the EU securities directives, but Greece, broadly, has a culture of many multi-generationally led businesses with high insider ownership (though Karelia is on the extreme end) which aren't the most 'open.' I have thought about why this company remains public, and while there is nothing definite, the most straightforward explanation is that 1. A public mark to weigh holdings against may provide the large shareholders better access to other forms of private, personal financing. 2. While there has not been insider selling, some shares have shifted around from deaths and pass downs. Retaining the future option to trim stakes in the future might be of interest for estate planning purposes.

Unfortunately, the name is not accessible on IBKR. Fidelity's International desk offers access to the ATHEX.

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Oct 13Liked by Devin LaSarre

Yeah, I couldn’t find it on there either.

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Oct 14Liked by Devin LaSarre

Devin - I believe you are understating the net cash position as you are not accounting for long-term investments held at amortized cost (124.463M at 1H). I calculate net cash as roughly 742M, meaning enterprise value is only a touch over 200M at last quote. Normalized annual FCF is probably over 100M, so the stock is quite cheap as you imply. I enjoyed the article on this little-covered company!

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author

Thanks for bringing this up, Jason. I am indeed understating the net cash position. In my thinking, while the long-term portion is not 'essential' to the core business in the traditional sense, its nature and duration led me to view it as 'strategic' to the going concern. I did, however, reflect the stake's presence in the incremental build on the BS over the forward years. This is definitely not intuitive, nor is it clearly shown in the illustration. I will clean this up in future illustrations.

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I linked to your piece in my links collection post for today: https://emergingmarketskeptic.substack.com/p/emerging-markets-week-october-14-2024

The stock reminds me of Eastern Tobacco (EGX: EAST), the makers of the Cleopatra brand of cigarettes which apparently everyone in Egypt and parts of Africa smoke but would not be familiar to outsiders...

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What is interesting about Karelia is that it's the only Tobacco company that I know off that is growing volume. It is also operating in geographies where maybe volumes are still growing.

The problem is that rates going down will decrease interest income + the cash is not getting paid out much. I held and sold. But interesting to follow if the cash starts getting paid out.

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