Skarbiec Holding SA (SKH): Polish fund manager stock that is too cheap to ignore
Already in 2019 I did some research on Skarbiec Holding SA. The stock of this Polish fund manager trades in Warsaw with symbol SKH. Currently the stock price is 27.3 PLN. Headquarters are also in Warsaw, Poland. Currently net assets under management is 5.8 billion PLN.
The stock is very cheap based on several metrics: P/E, EV/EBIT, EV/Revenue but not based on cash flow metrics. Multi-year metrics suggest excellent earnings quality.
Investing on the stock market, and especially investing based on statistically favorable properties, is about comparing stocks. I think this is one of the best stocks among low EV/EBIT stocks with good multi-year quality metrics. I consider this also a good stock compared to all other low EV/EBIT stocks. Moreover, this is a small stock, with a market cap of 181 million PLN (49 million USD). Compared to other microcaps with low trading volume I think this is also a good stock.
Disclosure is in Polish. My analysis depends on the readability and accuracy of software translations. I had a look into the annual report over the year ending on 30 June 2024 and also in the recent quarterly report (31 March 2025).
Subsequent event: In April 2025 the company has bought another company, Noble Securities, maybe for 31.3 million PLN, in April 2025. This is a Polish broker. More details are here.
Noble Securities was apparently bankrupt when the company bought it. I find it difficult to judge what they actually bought, and for how much. They might have bought it for 42 million PLN plus 75% of the net profit over 2024 exceeding 10 million PLN with the total capped at 46 million PLN. That would imply they expected Noble to earn at least 10 million PLN in 2024, which is not what I would expect from a bankrupt business.
I have not found any substantial repurchases or dilutions except for many years ago. The company used to pay a dividend. In 2019 it reduced the dividend to almost nothing and from 2020 it does not pay any dividends anymore.
A search on the company name and keyword “fraud” revealed an issue. What I understand, but I could be wrong, is that the company offered loans and asked a “preparation fee” to applicants. It turned out this fee was their business. See here and here. This was between 2004 and 2015. Because of this the company had to pay fines. Since then there were many management/director changes. So, I don’t think this issue is a good reason for avoiding the stock.
The balance sheet is strong with hardly any leverage, lots of cash and short-term investments and hardly any debt (only some small lease liabilities). I think the company has too much excess cash even after having spent about 40 million PLN on an acquisition.
Substantial shareholders: William Roderick Richardson (US nationality), Marconia Enterprises Limited, Perła-Browary Lubelskie S.A, Lubelski Chmiel Investment sp. z o.o and Aoram sp. z o.o., Real Estate Investment FIZAN control together 48.34%, Zbigniew Juroszek 12.51%, Quercus TFI SA 7.59%. Quercus exceeded the 5% threshold either at the end of 2020 or at the beginning of January 2021.
When I looked into the stock for the first time in 2019, I did not see Richardson or Lubelski among the list of substantial shareholders. But I could not find large shifts in shareholder ownings between 2019 and today either. What I do know is there were lots of management/director changes in 2019/2020 and in 2022/2023.
In August 2023 Lubelski Chmiel made a tender offer to acquire 18.92% of the shares for 20.35 PLN per share. I think they wanted to get up to 2/3 of the shares, and were required by financial laws or regulators to either limit their stake to at most 2/3 or buy all shares.
At least in the management opinion for this tender offer I saw the intention was to own 66%. Furthermore, according to management, Lubelski did not have any intention to make any changes to the business. Management thought the offer price did not correspond to the fair value of the shares. In this tender offer Lubelski increased its stake with 1.23 percentage point.
Related party transactions: Last financial year, when the company made a small operational loss, the company paid 2.6 million PLN to its senior management. The year before that number was 6.5 million PLN. I do not think the main shareholder, William Roderick Richardson is a member of the management boards. Therefore I do not think we need to worry about self-dealing at Skarbiec.
My take
Well managed investment business from Poland with an American controlling shareholder. This shareholder might want to buy more shares for low prices. I have not found any worrisome related party transactions or governance issues. A negative is the cash hoarding. Another negative is frequent board and management changes.
I still think this is a good stock for a small position, because it is so cheap and earnings quality seems to be high. There is some uncertainty related to the recent acquisition of Noble Securities but I suspect they bought this broker on the cheap. Moverover, this acquisition will put a substantial part of the company’s cash pile to work.
Disclosure: long Skarbiec Holdings SA