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Ranked at the top in my Hall of Fame - Martin Gysin

Friday 14 August 2015

The media are full of stories about top greedy managers. On the other hand, some are basking in the glow of the press with their "egos” as a supposed Masters of the Universe. As an investor, I have found over the course of many years that true heroes create sustainable value, often act unnoticed and away from the public eye.

Here's an example of an outstanding performance: Martin Gysin, former Chief Financial Officer of Bell AG in Basel ( a Swiss market leader in meat and sausages). He is ranked at the very top in my Hall of Fame. 


Martin Gysin took over the financial management of Bell AG in Basel at the age of 34 years on 1 July 1994. He held the position of chief financial officer for almost 21 years and voluntarily resigned from the post aged 55 on the 31st January, 2015. When he started in 1994 the share price of Bell was Sfrs 112,-- (adjusted for splits).

As a value investor I observed Mr. Gysin and Bell AG in 1996. I visited him in his office in Basel Elsässerstrasse from Singapore in the same year. Mr. Gysin was among the few CFOs who really took care of investors, and could clearly explain the business model of the company. The current market price has increased to around Sfrs 320.--.

Mr. Gysin explained to me how much the Bell stock was undervalued. He never , even in later years, exaggerated and stood out by his modest and discerning manner.

 

When Mr. Gysin ended his career in late January 2015, he was able to point to a steady appreciation at quite an extraordinary extent. The price of the Bell AG stood around Sfrs 2400, - (!). The market capitalization increased from Sfrs 45 million to just under Sfrs 1 billion. The dividend for 1995 covering 1994, amounted to Sfrs 3, - per share. In 2015 it was Sfrs 65, - per share was paid out for the fisca year 2014.

To bring these numbers alive just picture this. The price increase by itself for an investment of Sfrs 500,000.-- which is now valued at Sfrs 12 million.

The dividend income can be compared to receiving rent for property owned. A property investment made in 1995 generating a rental of Sfrs 3,000.-- without any work put in, now becomes a property yielding a rental income of Sfrs 65'000.-- per month. Do you know of any property

like that ? I do not. That's why I'm so happy to be a fundamental value investor, a real joy.

 

Using a "Chinese” style financial performance measure for Bell shares under the watch of CFO Martin Gysin it could be expressed as follows: An annual total return comprising share price appreciation and consistent dividends over 21 years of 17% per year!

 

Please note: We are not talking about venture capital, but an old-established company, which everyone in Switzerland knows, which deals in meat and sausages. Always the market leader. With its processing plants in Basel and trucks which can be recognized everywhere. No one gave me a tip to buy the shares. Also in all these years I cannot recall any strong buy recommendation for Bell AG. Furthermore I can not recall any strong buy recommendation from the banks.

Also talking to other value investors on the topic Bell AG, it was mostly brushed aside: Where is the growth? Market leader in Switzerland, "so what!"

The operating margins in Meat Processing are not very attractive ... etc. Meat and sausages - not a very attractive industry.

Who could have known that Mr. Gysin would come to a different conclusion. A business model that would continually increase the equity value for the shareholders every year.

 

On January 31, 2015 Mr. Martin Gysin passed the baton to his successor. He resigned quietly and modestly, almost unnoticed by the public. For me, an outstanding personality who worked for 21 years to produce this result. Martin Gysin is role model for aspiring executives. Thank you.

 

With his responsible, dedicated work in dealing with shareholders' money, he is in my "Hall of Fame " for creating value for shareholders.