Sibo Value Fund

Hi,

My name's Serko and I have a big interest in share dealing, or I should say investing as I try and keep my trades to a minimum. I subscribe to the Warren Buffett school of investing, which is typically a buy and hold startegy. It's all about buying the right businesses at the right price though. You should note that I said businesses instead of shares, that is another one of Buffett's philosophies, you invest in a share of a business, not just in a ticker symbol. Therefore the underlying business must be sound and well managed. I currently have the following shares in my portfolio; Camec(CFM), Eros(EROS), Goldenport(GPRT), Interserve(IRV), Kazackmys(KAZ), Lonrho(LONR), Stobart(STOB), Vodafone(VOD), White Young(WHY), Waterman Group(WTM). I will go through this portfolio and explain for each share my rationale for buying, please be aware though that I am not tipping these shares as in some cases the value that I initially saw isn't there anymore. Either due to new information or the fact that the shares have already risen significantly and there is now no margin of safety anymore in buying them.

Camec (CFM) bought at 3.15p per share. This company is a Mining company with operations in Africa, their main production facilities are in the Democratic republic of Congo, where they produce Copper and Cobalt. They also have various exploration assets all over Africa. However I won't delve too much into this company as they are about to be taken over by ENRC at 20p per share. This share has gone up over 500%

Eros (EROS) bought at 77.85p per share. This company is an indian media company with it's main focus on bollywood films. They have a catalogue of over 1200 films, which in my opinion is the backbone of this company. Less than 1/3 of their revenue comes from Cinema releases. The rest comes from digital(DVD, VOD, music downloads, etc) and their most important segment is TV syndication. Furthermore they have a 51% stake in Ayngaran which is a similar business, but in the Tamil langauge section instead of Bollywood. They also have a 51% stake in Eyeqube a visual effects company and a 24% stake in B4U a company that runs a bollywood movie channel and a bollywood music channel. The Indian market is one that I really like and the fact over 66% of the revenue comes from their catalogue means there is a strong margin of safety in this stock especially as the stock is only on a p/e of less than 7 and it has strong growth prospects.

Goldenport (GPRT) bought at 106.11p per share. This share is a play on the world economy it is in the shipping sector which saw big drops due to the economic crisis. In my view this share was oversold and there is significant scope for future rises as the economy improves. They operate with little debt in releationship to their assets and a lot of their ships are contracted on long term deals. They're trading at 2.5x the 2008 price earnings ratio and although the results this year are expected to be a lot worse they are still profitbale. Should they be able to get back to the same profitability in the next few years as in 2008 then this will be a real bargain share.

Interserve(IRV) bought at 188.57p per share. This share is in the construction and facilities management services market. They have significant presence in the Middle East as well as the UK. I bought these as they have a high yield over 7% and a low pe ratio of just over 5. They have long term contracts in the facilities management side of the business, which gives a certain degree of visibility over future revenue. Although the construction industry is expected to suffer a downturn I beleive Interserve will be able to pick up more facilities management business as customers look to outsource. They also have a strong equipment rental business, which is operating at high margins and is very active in the Middle-East and the Middle-East is expected to invest heavilly in infrastructure over the coming years so there is a big scope to increase revenue over the medium term.

Kazachkmys (KAZ) bought at 270.17p per share. Kazachkmys is a miner based in kazahkstan with it's main emphasis on Copper. The reason I like this share is that it has a large stake in ENRC, which is also a kazach based miner, but it gives exposure to different commodities. Apart from Copper Kazachkmys also have operations in Gold, power generation and they are involved in petroleum exploration. The p/e for 2010 are expected to be around 7, which I believe offers great value.

Lonrho(LONR) bought at 8.09p per share. Lonrho is a diversified African conglomerate which operates in 5 main sectors Infrastructure, agribusiness, Support Services, Transportation and Hotels. It has operations that include a large port, an airline, a fruit and veg supplier, bottled water plants, hotels, etc and in countries as diverse as Angola, South Africa, Mozambique, Kenya, Equitorial Guinea. The reason I've invested in this share is that I see a lot of potential and I believe Africa, will become an increasingly important part of the world economy.

Stobart (STOB) bought at 114p per share. Stobart is a multi-modal logistics group, most famously known for it's Eddie Stobart truck business. However it is much more than this, it has a warehousing division, a ports division, a rail division and an air division. The warehousing division has a diverse client base, it's biggest client is probably Nestle, for who they hold 75% of their stock. The ports division is basically a muit-modal inland port, with connections to the M6 and the west coast mainline as well as a waterway port on the manchester ship canal. The rail division does enginerring work for the Stobart group as well as for external clients. Stobart has various rail operations in the UK, with Tesco being the main customer. They also recently started a 48 hour Valencia to UK chilled rail service, which supplies 30 truck loads of fresh food directly from Spain to the UK. It is expected that this will become a dialy service within the year. The air division comprises of ownership of Carlisle airport and Southend airport. Carlisle airport will become the head office and large hub for the Eddie Stobart operation. At Southend airport a new railway station is being built, that will mean there will be a 46min connection to Central London.

Vodafone (VOD) bought at 117.99p per share. I guess Vodafone doesn't need much introduction. The reason I've invested in this is that it is paying a solid dividend of approximately 6% and it is generating significant amounts of free cash flow. It also has some exposure to emerging markets in Africa and India, so there is still potential to grow the business.

White Young (WHY) bought at 11.54p. I bought this consultancy business as it was in trouble and the share price had collapsed. I felt there it had been undervalued, although a restructuring was needed. The restructuring is now taking place and existing shareholders will be left with 15% of the company. I was expecting a little less dilution, but still see an upside in the future.

Waterman (WTM) bought at 43.42p per share. This company is in a similar field to White Young, but it has managed it's debt a lot better. It is currently trading at a p/e of around 4.