Altus SA: an undervalued Polish fund manager
Altus SA manages investment funds. I have owned this stock for almost three years. In August 2024 I investigated the company again and bought more shares. Then I had a look at the annual report over 2023 and the subsequent quarterly report. My analysis depends on the accuracy and readability of software translations.
The stock trades with symbol ALI in Warsaw. On 6 February 2025 the stock price was 2.06 PLN. That corresponds with a market cap of about 21 million USD. Trading liquidity is low. Furthermore, the stock price is more volatile than the stock price of many other nanocaps but it is not extremely volatile.
The stock is cheap based on several metrics, most importantly P/E, cash flow multiples and P/Tangible Book. This is also a netnet with NCAV/Market cap approximately equal to 1.4.
Key audit matters were the going concern assumption and valuation of financial assets.
In this business fixed costs are high. In 2023 fixed costs were almost equal to the revenue. So, while the gross margin is close to 100% the profit margin EBIT/revenue is small. Most expenses are described as (Google translation) “Financial penalty of the Polish Financial Supervision Authority”.
These costs could be recurring and could be for the costs the government incurs for supervising this company. However it is also possible these costs are for real fines for misbehavior. I think the company received favorable decisions about reduced fines from this Polish Financial supervisor in November 2024 and January 2025.
The company is involved in complex litigation. At stake might be 135 million PLN. This would be compensation for selling overvalued shares of EGB Investments SA to GetBack SA. The company sold these shares together with 10 investment funds to GetBack SA. The company is trying to get this claim dismissed. It says GetBack SA bought the shares after due dilligence for market price.
Substantial shareholders: Piotr Osiecki 37.66% (47.31% voting), FIP 11 Closed-End Investment Fund of Non-Public Assets 6.71%, Quercus Investment Fund Company Joint Stock Company 8.05%.
Piotr Osiecki is chairman of the Supervisory Board. He also owns 9.99% of Rockbridge TFI SA, which is the main operating unit. Another but different, Piotr is the CEO. The vice-chairman of the Supervisory Board, Mr. Jakub Ryba, owns 687,163 shares, which is worth about 400k USD. BTW, Jakub Ryba is also vice president at the company’s operating subsidiary, Rockbridge TFI SA.
Because the chairman of the Supervisory Board owns 9.99% of the operating subsidiary the company is more expensive than it seems to most investors. In fact one should add 10% of the market cap to the enterprise value to compute a correct EV/EBIT number. But even after this correction the enterprise value would be negative resulting in a negative EV/EBIT multiple.
In the annual and the quarterly report the company says there were no significant related party transactions. Only management of subsidiary Rockbridge TFI SA gets substantially paid. The CEO of that subsidiary earned about 150k USD in 2023. Three other managers earned about 100k USD in 2023.
The balance sheet is strong with lots of financial assets (mainly treasury securities), some cash and no debt.
My take: Extremely cheap Polish investment company with negative enterprise value a strong balance sheet and good multi-year quality metrics. Unfortunately the company is involved in complex litigation which could, in theory, wipe out all assets of the company. I have not found any governance issues. I think this is a good stock for a small position.