Gruppo Sol Spa part 3: No decision yet –> Watchlist

In part 1 and part 2 I have analyzed Sol SpA from a variety of perspectives.

However, we still have the open question: Buy or don’t buy ?

To a large extent, I share JanHendriks comment that below book or at a single digit P/E the company would be an outright buy.

At the current 4 EUR per share, the company trades at 1.06 x book and 11.4 trailing P/E, the stock is neither really cheap nor expensive.

Additionally, I would still like to understand better the 2011 result with regard to the two segments, industrial gases and homecare.

For the time being, I will not buy the shares but put it onto my watchlist.

I will buy the shares if one of the two following conditions will be fullfilled:

1) either, the price goes down to somewhere below EUR 3.50 per share
2) we see a still strong profit growth and stable margins in the homecare segment in the upcoming annual report.

7 comments

  • Bestinver hat seinen Anteil an Sol um ca. 50% erhöht. Ist somit vor Tweedy Browne größter Einzelaktionär.

    http://it.finance.yahoo.com/notizie/sol-bestinver-sale-7-545-104600154.html

  • there are various ways to do this. As this is a “simulation” of an institutional account, I assume that oine can short any of the available ETFs. Or one simply uses the future.

    As a private investor you have to check around with different brokers. Interactive brokers usually offers the best possibility to get almost everything.

    mmi

  • I was wondering if you could give me a brief explanation (or point to one of your blogs about it that perhaps I cant find), on how you hedge your italian stocks with this “MIB hedge” that you talk about, and the philosophy behind it..
    are you buying your italian stocks and then shorting the MIB at the same time?
    It is not clear to me..

    • Hi andrew,

      yes, I try to hedge at least partially the exposure to Italian stocks with a short position in the MIB ETF.

      The reason behind this is that Buzzi, Emak and Piquadro already make up 12% of my portfolio. When I still owned Autostrada, the total Italian exposure was more than 15% so when I started buying Piquadro, I hedged the corresponding amount to avoid cumulative risks.

      However at the moment I only have a -1% short position in the FTSE MIB as I don’t have a problem with a 10% Italy exposure.

      MMI

      • And how do you hold the short position – is it something that your broker specifically provides for you, or is it an ETF? I don’t think my trading account has the option to hold short positions..

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