Estonia's Trigon Capital last week sold a 4.5% stake in Hungary's listed automotive group Rába for the sake of diversification, fund manager Sami Sormunen told Portfolio.hu on Monday. He also said he continues to see a "lot of upside" in Rába, adding that he has no concrete plans with regard to the utilisation of the company's real estate portfolio. Sormunen also noted he was "very happy" with the actions the management of his other top pick, Fotex, have taken recently. "Regarding our Rába transaction, it was a way to diversify the structure of our portfolio," Sami Sormunen, manager of Trigon Capital, one of Rába's largest shareholder, told Portfolio.hu after the sale of 600,000 Rába shares on at the end of last month.
The fund manager had sold the package after telling Bloomberg before the AGM that the shares of Rába were considerably undervalued.
"We will use the money from the Rába transaction to build positions in other companies as the recent very bearish equity market development has made valuations very attractive in many cases in many different Central and Eastern European countries," Sormunen told Portfolio.hu.
2008.04.22 09:12
Hungary Rába shareholders join forces against capital increase, Trigon leads the way Sormunen declined to comment whether he would sell further stakes in the Hungarian group, but said he still sees a lot of upside in the company.
"We still see a lot of upside in Rába and we see the decisions taken by the AGM and the nomination of the new board members supporting the company in realizing its full potential."
To a question Sormunen replied that as almost every company, Rába cannot possibly be immune to the US recession, either.
"However, the value which Rába has in the real estate holdings well compensates for the adverse effects of the US recession and the weakening dollar," he added.
"[...] we would like to see Rába realizing the full value of these holdings and there is obviously different ways of doing this (inc. divesting them into a separate company)."
In its annual report, Rába estimated the market value of its real estate (held for investment purposes) at HUF 9.8 billion, local daily Napi Gazdaság reported on Monday, adding that this figure, which has also been approved by the auditor, means the Engel project only. The paper also said the buyers of the package Trigon sold last week were Hungarian institutional investors.
In November 2006, Portfolio estimated the Engel project at HUF 6.7 bn, and in this respect, the HUF 9.8 bn management calculation should not be a shocker.
The real estate assets behind Rába are immense, but the bulk of these cannot be marketed easily, which assumption is also underpinned by the fact that the company could not make any considerable steps further in the sale of these in the past one or two years.
2007.05.04 15:35
Portfolio.hu Interview - Estonian fund Trigon prefers Rába, Fotex in Hungary We have also asked Sormunen whether a similar action should be expected at Trigon's other local top pick, Fotex, given that the company has been sitting on a massive pile of cash for years without any visible intention to start new developments.
"Regarding Fotex, we are very happy with the actions, which Fotex's management has taken recently (disclosing more detailed information about real estate holdings, asset disposals, share buy-backs, etc.)," Sormunen said.
"The company has a significant amount of hidden value especially in the form of real estate holdings and we are confident that the management is taking the right steps in utilizing the yield opportunities, which this massive real estate base offers," he added.
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