(SMJ) J Smart & Co

3 Asset Plays For The Long Haul
BY
Maynard Paton
Published in Investing on 14 June 2011
http://www.fool.co.uk/news/investing/2011/06/14/3-asset-plays-for-the-long-haul.aspx?source=ufwflwlnk0000001


Plus two more names with asset-rich books and first-class records.
I don't know about you, but I've always liked the simplicity and safety that solid 'asset plays' can often provide.
As I see things, such investments should come with limited downside if their market caps are already supported by balance sheets loaded with cash, investments and property. Meanwhile, my upside potential could be very respectable if the firm already has a good history of expanding its asset base -- and can extend that record even further.
So I've scoured the market for interesting asset-backed opportunities and unearthed a trio of possibilities for you to consider. The three all operate with healthy net cash positions and have each increased the value of their balance sheets over the long run. Let me quickly go through them one by one.
1. Lower-risk way into commodities
The first of my trio is Anglo Pacific (LSE: APF), a FTSE 250 mining royalty specialist.
Anglo doesn't do any digging itself -- instead the firm invests in various mining projects in return for a small percentage of revenues from whatever is later extracted and sold. Two-thirds of Anglo's royalties come from a single Australian coal mine, with the balance delivered by iron, gold and uranium mines in Brazil, Canada and Spain.
At the last count, Anglo's balance sheet contained assets with a book value of £351m or 322p per share -- a fraction ahead of the recent £336m market cap at 309p.
The major entry in the books is the £197m accorded to the discounted future cash flows of that Aussie coal mine. Other royalty assets have a £70m value, while an equity mining portfolio has a £123m value and cash in the bank stands at £22m.
Anglo's track record certainly encourages me about any potential investment, as the firm's balance sheet has grown ten-fold since 2002 on the back of the commodity boom.
2. Basket of blue sky
Now to IP Group (LSE: IPO), which invests in a wide range of biotech, chemical and energy blue-sky ventures through agreements with twelve universities.
The firm's latest results revealed stakes in 63 companies, most of which are private although a few are traded on AIM. Quoted investments include Proximagen (LSE: PRX), Modern Water (LSE: MWG) and Oxford Advanced Surfaces (LSE: OXA).
IP's accounts have been complicated a little by a recent share offer, but it seems to me the current £179m market cap at 50p can in return provide net assets of £227m or 64p per share. Key entries on the balance sheet here include a £106m investment portfolio and cash of £75m, although there is also some £20m of 'intangible' university contracts, the actual cash value of which I'm not entirely sure of.
Still, IP claims to have generated a 27% internal rate return from its investments since 2001 and I'd like to think a fair few multi-baggers can one day provide much excitement within IP's portfolio.
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3. Property at a discount
Finally we have Smart (J) & Co Contractors (LSE: SMJ), a commercial property landlord in Scotland that has sidelines in house building, civil engineering, plumbing and pre-cast concrete slabs.
I should add that Smart is one of the market's old-fashioned family-run firms, whereby members of the Smart family control more than 50% of the share base and run their comp

Yes fair comment.It was fine in the summer when the shares had a mid market price in the low 300s pence.They were absurdly cheap as a long term hold.At the moment unless the spread narrows I will not be adding.

Agreed, but look at that spread!

Reasonable performance in difficult market.NAV around £9 per share,all property 100% owned with net cash at bank.