Christian Olesen of Olesen Value Fund presented his thesis on Macfarlane Group (UK: MACF) at European Investing Summit 2026.
Thesis summary:
Macfarlane Group is a value-added protective packaging distributor and manufacturer, its manufacturing mostly light design and assembly. Founded in Glasgow in 1949 and listed since 1973, it holds about 25% of the UK protective packaging niche, by far the largest share. At 81.8p on October 20, 2026, a £126m market cap, the shares trade at 11.2x adjusted trailing EPS and, by Christian’s estimate, 7.6x mid-cycle EPS, depressed by what he sees as temporary headwinds.
Distribution brings 76% of sales but 60% of LTM EBITA; manufacturing, where every product is bespoke, brings 24% of sales and 40% of EBITA. About 70% of distribution products are bespoke too, sold mostly to industrial customers (80% of revenue) with high-value or fragile goods. Packaging is a small share of product cost but drives damage, returns and transport costs, lending some pricing power. Customers spending over £250k a year provide 60% of revenue, and the largest is about 2% of sales.
Christian credits CEO Peter Atkinson, who arrived from outside in 2003 after years of poor execution, with a back-to-basics turnaround and margin gains almost every year since. From 2014, Macfarlane made 21 acquisitions, mostly small UK distributors, always at 5-6x EBITDA with earn-outs, below its own depressed 6.6x. Christian argues it is more than multiple arbitrage: purchasing and distribution scale and site consolidations drove an 11% EBITA CAGR from 2007 to 2025 and a 13.3% compounded ROE since 2008.
Christian sees a confluence of temporary headwinds: an April 2025 payroll tax increase, a 22% minimum wage rise over three years and weak UK and European demand, squeezing a business with limited pricing power. An October 2025 fatal accident at recently acquired Pitreavie added costly disruption. EBITA fell from £27.4m in 2024 to £19.4m LTM. Management has paused acquisitions, cut staff, consolidated sites and is buying back stock while holding a dividend yielding 4.5%. Net debt is 0.8x LTM EBITDA.
The shares are down about 35% since mid-2024 and trade at 1.08x book, near the bottom of their 20-year range, and 10.5x estimated adjusted 2026 EPS. Assuming a 9% mid-cycle EBITA margin, Christian puts the stock at 7.6x normalized adjusted EPS; a 13-14x multiple, discounted for low liquidity (about £275k a day), implies about 75% upside. He watches for price increases to stick. Risks include a severe downturn among industrial customers, an aggressive new competitor, and succession beyond the roughly 69-year-old CEO.
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