The cardboard packaging company Smurfit Kappa (LSE:SKG) was listed at 16.50 euros per share by mid-March 2007 after an IPO. From then on, the listing price began a downward spiral of 93% to hit a record low of 1 euro per share by the end of October 2008. We began building the position in 2007 and continued buying even at less than 1 euro. At this moment, the company had 237 million outstanding shares, resulting in a market cap of nearly 250 million euros compared with the 3.9 billion that it had on the date of the IPO. This share price descent was the result of an EBITDA that had fallen from 1,000 million euros at the end of 2007 to 740 million in 2009 and a debt in balance of approximately 3 billion euros. During such a delicate juncture for SmurfitKappa, the company’s CEO Gary McGann maintained his resolve to defend the interests of the shareholders and not to destroy value by avoiding a capital increase at all costs. Today, 10 years later and after having weathered the worst financial crisis in the past 50 years, the company still has the same number of shares outstanding, which are listed above 34 euros, thus entailing an upside of over 3,000% since the record low in 2008 and capitalising over 8 billion euros. We sold our last shares at 8 euros per share. Aryzta’s current chairman is Gary McGann.
From Francisco Garcia Parames' second quarter 2018 shareholder letter.
