Monday, August 21, 2023
HomeValue InvestingTamburi Investment Partners (ISIN IT0003153621) – NAV vs. “Intrinsic Value”

Tamburi Investment Partners (ISIN IT0003153621) – NAV vs. “Intrinsic Value”

Tamburi Investment Partners (TIP) is kind of a “secret star” in the area of European Holding companies. I looked at it briefly within my Italmobiliare write-up friom last week. The stock price has performed extremely well especially over a 10 year horizon:

TIP has been founded in 2000, listed in 2005 and the history is well documented on TIP’s homepage.

TIP has a nice Investor presentation with a lot of well known company logos, but some crucial information, for instance how the split is between listed and unlisted participations, is well hidden:

Based on their “Intrinsic value” (more on this later), 3/4 of the portfolio is listed, 25% is private. The larger part of the listed holdings is Italian, with a focus on “high quality” companies, with the exception of maybe Elica and OVS which look more like “value stocks”. With Hugo Boss and rochebobois they also won a German and a French position.

Within the Private Investments, they also have a smaller allocation to Start-ups (~50 mn EUR)

Overall, in my opinion the investment strategy is less clear. They invest mostly in Italy, but also outside (Hugo Boss, Roche Robois). Some names look really high quality (Moncler, Interpump) some less so (OVS, elica). 

“Net intrinsic value” definition

Where it gets interesting is how they define their “net Intrinsic value”:

Here the fine print is relevant:

So just to make this clear: For listed companies, they don’t use the current share price but in the “conservative” version that target price of analysts and in the “optimistic” version some kind of value that is even higher than that. So this chart, which I also referred to in the Italmobiliare write-up does not show “real” NAVs but Bloomberg estimate based calculations and an even higher TIP estimate:

They also make it quite difficult to calculate the market value of the listed companies, as they do not give % ownership of the portfolio.

So one major takeaway is the following: The “net Intrinsic value” of TIP has nothing to do with a mark-to-market NAV and it is not easy to calculate the “MTM NAV”.

Holding costs:

Costs are quite substantial, in 2022 we can see 32 mn, in 2021 even 47 mn, mostly personnel expenses which are distributed among roughly 12-13 employees..

Looking at the value creation, this looks Ok, but is still quite high. Dividend income from portfolio investments is relatively small:

The annual report finally gives some more detailed insights into the holdings, but still makes it hard to build a real list of participations, as there are also some “double holding structures” etc

Interestingly, the main variable compensation component for Tamburi and his Co-founder seems to be based on “Pre tax profits, which to my understanding include realized gains but also non-cash earnings from at Equity participations.

Between the 3 most senior guys of the company, they get 14% of that profit which is adjusted for the compensation itself. Part of that is paid in shares, most of it in cash.

I find this problematic, as this is clearly a trailing factor. Unrealized gains have been created in the past and can be generated more or less at will. 

So theoretically one should deduct ~14% of total unrealized gains from NAV as this will accrue to Management.

Other observations:

They did repurchase shares in 2020 but over the last 5 years, share count has risen by 10% according to TIKR. Treasury shares are mentioned as “potential firepower” for new acquisitions.

Management/Board owns a decent amount of shares. Giovanni Tamburi around 8.3%, overall board ownership is around 25% according to the annual report. Giovanni Tamburi, the CEO is 69 years old, so succession might be an issue, although Italian CEO’s tend to stick around quite long.


Despite the stellar track record of TIP, this time I did not fall into another rabbit hole. Why ? Mainly because of the following:

  • Yes, TIP has a stellar track record in picking Italian stocks, but to me it is not clear what the “real” NAV is, due to their strange “intrinsic value” definition. This lack of transparency is a big issue for me.
  • Second, the high profit share in Management compensation based on historic value creation also in my opinion has the potential to distort alignment and needs to be incorporated into a NAV calculation.
  • And third, with 75% in listed companies, in theory one could replicate the portfolio quite easily. So without a clear understanding how the discount looks like, the “value add” here is not clear to me.

Overall, I think TIP is an interesting company to watch, as they seem to be really good stock pickers, but I don’t think it is a particularly attractive investment right now.

P.S: If someone has a detailed sheet with Tamburi’s position, I would more than happy to look at it in order to estimate a “real” NAV.



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