Category Archives: Green Mountain

Catching up: Green Mountain, AS Creation and AIRE KGaA Tender offer at 17 EUR

What a week for the portfolio ….

Green Mountain

Green Mountain imploded (again) last week after they lowered their guidance.

Green Mountain had many attributes making it a “perfect short”:

+ shady accounting as revealed early by Sam Antar at WhiteCollarFraud
+ massive insider sales
+ negative free cashflows
+ pumped up growth through expensive acquisitions
+ expiring patents in 2012

David Einhorn, now credited for “revealing” the over-valuation was actually relatively late in the game. However one has to admire his timing capabilities. I was relatively early and hat to swallow a intermediate -40% loss on the position before I got into the money.

The question is now, how low can the stock go ? If GMCR is a “real business”, then the current valuation seems to be fair. If they are a real fraud, the stock could go down much further. Also one should remember that momentum always goes in both directions. Nevertheless, as the easy money on the short seems to have been made, I will exit (cover) the short on Monday.

AS Creation

AS Creation reported surprisingly good Q1 numbers which show that at least with a certain time lag, the company does have some pricing power in its core business. The outlook is mixed as they expect losses when they ramp up the Russian JV.

Nevertheless, I think the first quarter gives credibility to the managment as they always told investors that on an annual basis they are able to pass cost increases onto clients.

AIRE KGaA Tender offer EUR 17 per share

After I was already happy that my special situation investment AIRE KgAA offered to buy back 10% of the shares at 14 EUR, suddenly AIG real estate issues an offer for 17 EUR per share for the whole company.

Luckily, I only sold relatively small amounts of AIRE at around 14 EUR. As someone said before: Sometimes it better to be lucky than smart.

What I find interesting about the offer are two things:

- first, they seem to have already 31.8% of shares under their control, so from their existing 7.85% the have bought 24% through option contracts

- second, based on the official NAV of around 21 EUR, the 17 EUR offer in theory does not leave a lot of upside for AIG. However one has to remember, that AIRE KGaA owns a lot of highly leveraged equity positions in US developements which were pretty aggresively written down to zero over the last few years. So there is lot of positive optionality in the legacy portfolio. If some of those projects are “coming back”, the NAV could be significantly higher. AIG Real estate as the previous manager should know those projects pretty well.

If I remember correctly, they were active in residential, multi tennant developements. Maybe this has to do with AIG’s decission from early April to go back into real estate investments on a larger scale. I had actually read this but didn’t really make the connection.

For the time being, I will wait for the final offering documents to decide what to do, however I will continue to sell down to 5% of portfolio weight.

As Green Mountain was the ideal short, AIRE KGaA was the ideal special situation:

+ unusual vehicle (listed, closed real investment fund, US and Asian real estate, only German listing)
+ difficult to analyse (lot of debt, but non-recourse)
+ bad name / scandal, however no direct exposure (AIG)
+ early entry of “activist” investors (Grevenkamp, Swiss guy)

From a timing perspective, I was very lucky in the portfolio, getting in at a very low point in January 2011. The chart shows that with such investments, one usually has time to analyse and invest. It doesn’t reallypay out to invest driectly after the drop:

After the big drop in 2008/2009, the stock was “sleeping” now for almost 3 years before something happened.

That is something to keep in mind for investing in such situations. I t takes some time until the value will be (hopefully) realised by someone.

Nestle M&A, Walmart Mexican bribery, SIAS

Both remaining large caps of the portfolio, Walmart and Nestle had some big news today.

WalMart

Seems to be involved in a bribery scandal in Mexico which they tried to cover up on company level.

There is very good coverage of the legal aspects at the FCPA Professor blog (part 1, part 2).

A commentator speculates that this would end in a fine of 100 mn USD, I have no idea if this is realistic or not. In any case, I will sell Wal-Mart as soon as I find something else.

Nestle

Nestle paid 11 bn USD for Pfizers baby food division, a 19.8 (!!!!) EV/EBITDA multiple after a bidding war with Danone. No doubt, Nestle is a great company, but for my taste at a current 12xEV/EBITDA, a lot of positive developement is already priced in.

So with the VWAP of today (after cashing in the dividend), I will sell the Nestle position at today’s VWAP.

Originally, this was a pair trade with Green Mountain as short psotion. For the time being I will keep the Green Mountain short open.

SIAS went ex dividend today, howver loosing some more. In order to take adavantage of the low price, I will reinvest the Dividend proceeds at today’s VWAP.

Barriers to entry: Green Mountain edition

The market for single-cup coffee in the US has become more crowded:

Reuters) – Shares in Green Mountain Coffee Roasters Inc (GMCR.O) tumbled 14 percent on Friday, on fears that it may lose its near monopoly in the U.S. single-cup coffee market after partner Starbucks Corp (SBUX.O) outlined plans to launch a rival coffee and espresso machine.

Of course, Green Mountain is downplaying this:

“There is (also an) opportunity for complementary high-pressure espresso-based systems,” Green Mountain Chief Executive Lawrence Blanford said in a statement on Friday.

At current prices, Green Mountain is still valued at 14 times EV EBITDA and 4 times sales and a P/E of 30. For a company in a market where really strong competitors just can enter like this, maybe still far too expensive.

It will be interesting, how far the stock price goes down this time.

Kurze Updates: AXA Immoselect und Green Mountain

Jetzt ging es beim AXA Immoselect wirklich ganz schnell:

Per heute wurde die endgültige Schliessung des Fonds verkündet (Danke für den Hinweis an best_Choice) , immerhin gibt es auf der Homepage auch ein ausführliches Q&A Dokument.

Der Kurs hat sich heute erstmal bei 30 EUR stabilisiert, ein echter Ausverkauf hat (noch) nicht stattgefunden.

Ich glaube es bestht noch kein dringender Handlungsbedarf, der Fonds ist aber definitv ein Kandidat der Kategorie “Sondersituation”.

Green Mountain:

Nach einem Tag Ruhe ging es heute nochmal brutal runter

Inzwischen hat jetzt auch wohl der letzte Investor die Einhorn Präsentation gelesen.

Zusammen mit den bereits verlinkten von Roddy Boyd und Sam Antar zeigt sich hier doch ein recht klares Bild. Es wird sicher die ein oder andere Gegenbewegung geben. Ich würde z.B. wetten, dass früher oder später Übernahmegerüchte ins Spiel gebracht werden. Auf die nächsten Monate dürfte aber hier der Ofen aus sein.

Bis zum Breakeven des Shorts dauerts allerdings noch ein bischen ;-)

Green Mountain – Der “Einhorn Effekt”

Tja, das ist halt der Unterschied zwischen einem kleinen Blogger und einem großen Guru.

David Einhorn hat anscheinend heute auf eienm Value Kongress seinen neuesten Short vorgestellt und das ist keine andere Aktien als Green Mountain.

Der Effekt ist sehr drastisch:

Man muss wohl erst die 110 seitige (!!!) Präsentation abwarten, aber laut dem Artikel hier ist nicht wirklich was Neues dabei.

Interessant finde ich allerdings das Timing, Einhorn hat schön gewartet bis der AUfwärtstrend klar gebrochen war und auch der allgemeine Rebound keine Wirkung mehr gezeigt hat:

Das kann man glaube ich vom “Meister” lernen, erstmal “Brechen” des Ausfwärtstrend abwarten. Die Frage ist nun ob ich wie angekündigt “nachshorten” soll. Meistens geht es ja dann wie bei Netflix ganz ganz schnell nach unten.

Edit: Volle Präsentation hier

Netflix update

Sieht so aus, als wäre der nächste “MoMo” Stock jetzt dran, diesmal Netflix.

Aus dem Artikel bei Zerohedge.

Netflix, which at last check had plunged 12% to about $180 following an update from the company, in which it said it subscriber growth will come in below plan. Of course, the only ones surprised by this move, are those who are actually long NFLX (and those who bought into Goldman’s topticking upgrade which brought the stock to over $300 however briefly). We expect “value investor” of very high conviction, Whitney Tilson, who lately has been known best for shorting low and covering higher, to soon resume his bearish position in the name. And yes, we still expect that the company will very soon come to market with a dilutive equity offering to raise cash and stench the relentless real cash burn.

Insgesamt scheint man jetzt mit 1 Mio weniger Kunden zu rechnen. Eigentlich kein Beinbruch, ist ja nur 5% der Kundenbasis. Bei Aktien die aber “Priced to perfection” sind, kann das sehr viel ausmachen.

Per gestern war der Short noch mit 12% im Minus.

Psychologisch muss ich sagen ist es schon sehr schwierig bei solchen Shorts “stabil” zu bleiben. Der Green Mountain Short ist au mit -47% im Minus, ich bin mir aber sicher, dass wir hier das Gleiche erleben werden. Es fragt sich nur wann.

Vielleciht kriegt Green Mountain ja auch bald mal “die Kurve”….

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