Tuesday, March 26, 2013

Barron's Feature: "Betting on the Buffett of Barges" (CKH) Special Bonus: A Case Study in Financial Brilliance

From Barron's:
Charles Fabrikant has built Seacor Holdings into a major operator of work boats—and a consistent friend of investors. How he's catching the wave as Gulf drilling picks up.

To Charles Fabrikant, business is all about capital allocation—how to mix and match assets and when to buy and sell. Even the paint used on his company's many vessels is subject to his cost-conscious eye. That became clear 24 years ago when Fabrikant bought a small shipping outfit called Nicor and set out to give it a more nautical name. He hit on Seacor, he has said, "primarily because it was less costly to paint over two letters than the entire name."

Seacor Holdings (ticker: CKH) has since become a major operator of cargo ships, work boats for oil rigs, tugboats, and barges—both in the U.S. and beyond. Nearly two-thirds of his 189 vessels now operate in foreign waters. Further afield, he manufactures fuel-grade ethanol and a form of alcohol used in hand sanitizers. In all, annual revenue is running at $1.5 billion, up fourfold from 10 years ago.

Fabrikant, 68, has constructed this portfolio deliberately and shrewdly, making the most of industry trends and insisting on good prices. His annual letters to shareholders, peppered with homespun investment wisdom, are eagerly awaited by his fans. Is all of this starting to sound familiar? Meet the Warren Buffett of barges.

"Charles Fabrikant is probably the best CEO/investor nobody's ever heard of," says Steven Roge of Roge Partners Fund, who holds the stock. Seacor's book value has compounded at about 8% a year over the past decade, approaching the 10.6% recorded by Buffett's Berkshire Hathaway. Seacor's shares often trade at a 25% premium to book value, but at $71.83, they're now about 20% below book. Roge, for one, sees that as a classic buying opportunity for long-term investors....MORE
For a high level look at what a master allocator/manager can accomplish see:
Professional Asset Allocation: Henry Singleton of Teledyne (TDY)
Updated--Leon Cooperman: "A Case Study in Financial Brilliance: Dr. Henry E. Singleton of Teledyne Inc."