April 6, 2025
Canaf Investments is a South African focused public company with four divisions:
Southern Coal – South Africa Southern Coal produces calcined anthracite, which is primarily sold as a substitute to coke in sintering processes. Southern Coal supplies world leading steel and ferromanganese producers in South Africa.
Canaf Estate Holdings – South Africa Canaf Estate Holdings is a property investment company focused on acquiring, redeveloping and renting properties primarily within the suburbs of the old Johannesburg.
Canaf Agri – South Africa Canaf Agri is exploring investment opportunities in the agriculture sector in South Africa.
Canaf Capital – South Africa Canaf Capital is an investment company focused on providing capital for short-term financing to businesses and entrepreneurs in South Africa.
Of these four divisions, Sout Africa Southern Coal is by far the largest.
Canaf Investments is a tiny company engaged in boring businesses, thus the stock is completely overlooked by most investors. But the stock is super cheap.
The market cap is $10.01 million while enterprise value is $3.16 million.
Here are the metrics of cheapness:
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- EV/EBITDA = 1.11
- P/E = 6.26
- P/B = 1.52
- P/CF = 2.37
- P/S = 0.47
Canaf’s metrics of cheapness are exceptionally low.
Insider ownership is 17.6%, which is good. ROE (return on equity) is 23.3%, which is excellent.
Cash is $8.5 million while debt is zero. And TL/TA is 20.3%, low indeed.
Intrinsic value scenarios:
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- Low case: If there’s a bear market or a recession, the stock could decline temporarily. This would be a major buying opportunity.
- Mid case: The current P/E is 6.26 but should be at least 12. That would mean the stock is worth $0.42, which is over 90% higher than today’s $0.22.
- High case: Current EV/EBITDA is 1.11 but should be at least 7. That would mean the stock is worth $0.59, which is 168% higher than today’s $0.22.
RISKS
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- As noted, if there’s a bear market or a recession, the stock could decline temporarily. This would be a major buying opportunity.
BOOLE MICROCAP FUND
An equal weighted group of micro caps generally far outperforms an equal weighted (or cap-weighted) group of larger stocks over time. See the historical chart here: https://boolefund.com/best-performers-microcap-stocks/
This outperformance increases significantly by focusing on cheap micro caps. Performance can be further boosted by isolating cheap microcap companies that show improving fundamentals. We rank microcap stocks based on these and similar criteria.
There are roughly 10-20 positions in the portfolio. The size of each position is determined by its rank. Typically the largest position is 15-20% (at cost), while the average position is 8-10% (at cost). Positions are held for 3 to 5 years unless a stock approachesintrinsic value sooner or an error has been discovered.
The mission of the Boole Fund is to outperform the S&P 500 Index by at least 5% per year (net of fees) over 5-year periods. We also aim to outpace the Russell Microcap Index by at least 2% per year (net). The Boole Fund has low fees.
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Disclosures: Past performance is not a guarantee or a reliable indicator of future results. All investments contain risk and may lose value. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission of Boole Capital, LLC.