Monthly Archives: March 2012

Weekly links

Great book review of “Investing in Japan” from Nate at Oddball

Interesting paper why a “long low beta, short high beta” portfolio outperforms

Interesting Q&A session with David Einhorn

Groupon: Less than 6 months after the IPO, Groupon has to restate earnings and the auditor has identified “material weaknesses”. Short candidate.

Sino forrest is finally bankrupt but sues Muddy Waters for 4 bn USD….

Edit: Although it is not a listed stock, this article about Goretex contains a lot about how to create and defend “moats”…

Track record (attention: shameless self advertisement)

When I looked through Tim du Toit’s Eurosharelab, I saw that Tim actually also shows his non-public track record since 2004.

For myself, I keep score of my track record since 2001 but I hesitate to publish this as it is not really possible to verify.

Then however I realised that I took part in the “Aktienbord Musterdepot” since 2007 with a kind of “best ideas” portfolio. In parallel, I discussed my strategy at my “home Board” Antizyklisch Investieren (only in German and you have to register).

Although the “Aktienboard” platform is not perfect (for example Dividends are not included), the performance relatively closely tracked my “real” performance. It is also an interesting way to look at how my old portfolios looked like and in what kind of stocks i was invested at that time.


2007 Performance was 34.4% plus 2,94% in Dividends.

That compares pretty well against 22.9% for the Dax 22.3 for the MDAX and +6.9% for the DJ Stoxx.

If I look at the 2007 ending portfolio, the only stock I still hold is WMF Vz. At that point in time, I held mostly German special situation stocks as I was not able to find cheap stocks anymore.


2008 Aktienboard performance ended with a loss -13.54 % before dividends of 2.70%, again quite good against -40.4 DAX, -46% MDAX and -45% DJ stoxx.

This was mostly due to avoiding any financial exposure and concentrating on low beta special situations like Biotest and other small caps which is basically still my main strategy.


“>2009 Aktienboard performance was +45.86% plus an additional 3.56% in Dividends and the absolut best year “on the record”. Again quite good compared to Dax (23.9%), MDAX (26.7) and DJ Stoxx (21%).

On the one hand, I rode the recovery story in cheap large caps, but additionally I kind of “discovered” distressed and subordinated debt which offered amazing risk/return opportunities. Subordinated bonds were also the way to inevst in financials without getting diluted through all the capital increases.


In the last “pre blog” year, the Aktienboard portfolio performed with 33.5% + 3.47% dividends (remark: I think the overview number is better than the detail page performance).

This was the only year where the “best ideas” performed better than my real portfolio by a margin of about 10%.

Benchmarks in 2010 were DAX 16.1%, MDAX 34.9% and DDow Jones Stoxx -5.35%. The 2010 portfolio contains already a significant part of the current portfolio, with AIRE, Buzzi, Hornbach, AS Craetion and EVN, 5 stocks are still relatively heavily weighted today.

Before getting to enthusiastic about this track record, one has to say that this investment style would not fully scale into a 10 mn portfolio I am trying to run virtually at the moment. Some trades, like in illiquid Depfa subordinates etc. were only possibel with double digit k EUR amounts or sometimes less.

In the last 5-6 years, I was also able to profit from the “secular” German recovery story which turbo charged German small caps plus the “once in a lifetime” opportunites in the subordinated bond area.

Going forward, it will be very difficult in my opinion to find such secular stories again. My biggest hope is that an eventual PIIGS revovery and maybe some French small caps offer comparable risk/return opportunities.

Quick news: EMAK Spa, AS Creation, Autostrada & SIAS & Impregilo

EMAK has published a new Investor presentation. Proforma 2011 P/E is around 7, P/B around 0.64. Still very cheap.

AS Creation:

The Russian JV partner has bought another 5% in AS Creation and holds now 10%. Despite the lackluster results of AS Creation in 2011, this is a very encouraging sign.

For me, this purchase should be counted as “insider transaction” as the Russian JV partner will be in the best position to judge the success potential of the Russian JV which is expected to start this year.

I am actually contemplating to fill up AS Creation to a full position (currently 3.7%) if the stock price weakens over the next few weeks.


Autostrada continues to implode. Interstingly the regulated subsidiary SIAS is doing relatively better:

In contrast, Impregilo continues to increase:

Impegrilo reported preliminary results this week with a 50% increase in earnings due to the sale of some South americen Assets. So there seems to be some real value in this company.

I am actually tmepted to get back into Autostrada at some point in time. They roughly lost 170 mn market value since the IGLI Deal, although the disdavantage dissapears with each increase in the Impegrilo share. I think when the capital increase is going to be announced, then it could be a good opportunity to get back in.

Magic Sixes Portuguese companies : Conduril (ISIN PTCDU0AE0003) – Too good to be true ???

Although my last “Magic Sixes” (P/B < 0,6, P/E 6%) Investment, Autostrada was not a runaway success, I still use the screener from time to time to see what companies are “really” cheap.

It might not be a big surprise that some Portuguese companies are among those “cheapies” now. As of today, the following Portuguese Companies are “magic Sixes”:

P/B P/E Div Yield
Ramada Invest 0.380 2.68 10.45%
Orey Antunes 0.440 5.11 15.48%
Grupo Soares 0.400 3.30 7.48%

Ramada is a steel company, Orey a shipping company and Soares a construction company.

As discussed before I also run a “Magic Sixes light” screener with slightly relaxed rules (P/B < 0.7, P/E 5%).

Here we get an additional 5 companies:

P/B P/E Div Yield
Corticeria Amorim 0.67 6.78 7.09%
Sonae 0.66 0.66 7.39%
Sonaecom 0.67 0.43 5.71%
Conduril 0.66 1.50 6.82%
Espirito Santo 0.47 3.44 5.28%

One has to keep in mind that only around 65 Portuguese companies are actually listed, so 8 “dirt cheap” out of a total 65 is quite significant.

A relatively well known problem of most Portuguese companies is their relatively high debt load. With Portuguese banks in trouble (not to speak of the Government), it is intersting to look at debt levels. I usually look at nebt debt / market cap in combination with EV/EBITDA:

Net debt per share Share price Net debt/Marcet cap EV/EBITDA
Ramada Invest 3.03 0.67 452% 6.52
Orey Antunes 0.55 1.15 48% n.a.
Grupo Soares 4.87 0.29 1679%  
Corticeria Amorim 1.01 1.41 72% 4.35
Sonae 0.62 0.45 138% 4.33
Sonaecom 0.76 1.23 62% 3.38
Conduril -33.8 22 -154% 0.55
Espirito Santo 313 5.3 5906% n.a.

Ratios above 100% are very critical in my opinion, because then a capital increase to “save” the company needs to be above current market cap which is highly unlikely.

Based on this list, Conduril looks like a ” bad data” input.

A P/E of 1.5, EV/EBITDA of 0.55 and Net cash above current market cap must surely be a mistake or ?

However a quick look into Conduril’s 2010 annual report shows an amazingly profitable company.

In 2009 and 2010, the company earned net margins 13-14% and ROEs of 30-40%. .

So how comes ? The answer seems to be relatively easy: Conduril is very active in the “hot” African markets Angola, Mozambique and Botswana. I only have 2009 figurtes, but of the 250 mn EUR sales in 2009, 167 mn were in Angola and only 45 mn or less than 20% in Portugal.

Of course doing business in those countries will be quite risky, but nevertheless it is a very intersting case.

Trading seems to be relatively strange. As far as I can see, 1000 shares are traded most of the days at 22 EUR per share, the chart doesn’t really look like a stock chart:

However it is definitely a stock I want to research deeper.

It might also make sense to look at the other less indebted comapanies at some point in time. If one wants to bet on a Portuguese Non-default, those stocks might be more interesting than Portuguese Govies.

Praktiker update – Loss 2011 and result of first vote of “voluntary bond haircut”

Praktiker, the troubled DIY chain has issued a preliminary earnings release yesterday evening.

They managed to book a total loss of 554.7 mn EUR, which translates into -9.56 EUR per share. So most of the 2010 book value of around 14 EUR has now dissapeared within a year.

Very strange (at least for me) was the following passsage:

– So führte die erstmalige Anwendung einer neuen Bewertungssystematik für Warenvorräte zu einer Wertberichtigung des Vorratsvermögens (69,8 Millionen Euro).

So inventory was written down by 70 mn EUR due to a new “method”. This is almost -10% of the 800 mn inventory they showed in Q3 2011. I would be really curious what kind of “method” they used before.

Voluntary Bond haircut

For some reason, I only found the results of the first bondholder praktiker 27.03.2012“>vote through the Luxemburg exchange and not through Praktikers homepage.

So within the process described in a previous post, less than the required 50% have voted in the first round.

However, in the second round only 25% of the bondholders have to vote. So let’s wait and see if those 25% are already “in the bag” and if in the second round more bondholders participate.

It would be really interesting to know, who voted in the first round but as a non-participant I don’t have access too this file on Praktiker’s homepage.

Banca Civica – Take over Spanish style

A couple of months ago I looked at Spanish “Thrift conversions”, especially Banca Civica which was a potential take over candidate.

Now, the take over was finally announced by Barcelona based Caixabank, however with a significant discount to the prevailling market price:

The share valuation for Civica in the transaction is 27 percent lower than the 2.70 euro-per-share price of its initial public offering in July, in which it raised 600 million euros. CaixaBank has a market value of 12.1 billion euros

The offered 1.97 EUR is a 11% discount to the previous day closing price and equally an all time low for the Banca Civica stock since its IPO.

So this is something to keep in one’s mind: You can basically do takeovers/tender offers in Spain well below current market prices.

Weekly links

Great post why market timing based on “expert advice” is a sucker’s game

Must read: Damodaran’s 2012 update on equity risk premiums

Interesting analysis of Warren Buffet’s stock picks after they are made public

Must see: Great (and very funny) speach of Jim Simmons, founder of one of the most succesful hedge funds ever, RenTec.

The strange story of the flash crash of BATS, a stock exchange operator, on its own stock exchange a few minutes after its IPO. Very very strange.

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