Deep Dive: Macfarlane (MACF.L)

Macfarlane trades for 9.7x FCF, generates a 25% post-tax ROTC, has sustainable competitive advantages, almost no debt, and is run by an honest and competent management team. The opportunity exists because it is a boring small cap in the specialty packaging industry listed in the UK, trades £300k/day, and receives limited promotion from management or the sell-side. We see 85% upside over three years and a limited risk of permanent impairment of capital.