Publishing the Boss Score -Top 25 France

Following the Top 25 Germany post, let’s look at the next big Euro stock market, France:

Top 25 France 10 Year Boss Score:

Top 25 France 5 Year Boss Score

Those lists are based on a sub set of ~ 400 french stocks.

The most fascinating aspect about the French market for me is the fact that French companies look much much cheaper than their German counterparts. Of course, both list contain some “deep value” stocks like Toupargel, where a “terminal decline” might be possible.

On the other hand, there are still enough cheap “quality” companies. For instance, if we include an additional criteria like Stock Price > 1.25x book value, we still get a nice list of cheap “higher quality” companies:

For me, France is currently one of the most interesting markets for Value investments. Despite the bad press, there are many interesting and cheap companies. It reminds me a little bit about Germany and German companies 10-15 years ago, when Germany had to suffer the “reunification hangover”.

Looking back it is hard to understand why German quality companies were so cheap. I think there is a good chance that France will do its homework. One shouldn’t forget that most of the tough reforms in Germany (Hartz 4, work flexibility etc.) were actiaslly implemented under a Socialist government.


  • I like BH.PA as one of the few undervalued food stocks. Bongrain is one of the largest cheese manufacturers in Europe (Lactalid and Unibel are peers) and probably the one with the lowest profitability. However, the stock is deeply discounted (trades at around 43.5 Euro while tangible book is around 50 Euro and stated book ~80Euro) so it is actually a Graham type situation, which is very rare for a branded food company. Many of their brands are well known ( Edelweiss, Milkana, Boursin) and should have intangible value.
    My thinking is that this company is undermanaged through the founding family but it should just be a matter of time until they should do at leadt somewhat better. If they get their profit margins up to Unibel’s, that would be more than 5Euro/ share. Don’t see why this shouldn’t be doable.Holding a medium sized position in this stock.

    I think BH.PA might be of interest for you or readers of this blog.

  • @mmi: I agree that 0.8% don’t matter much, it you expect 20% return. I expect for a return of 10% for my depot and so 0.8% matter a lot.

  • I would sell and buy back only if the position is in the red or gains are not high. Because you have to balance between deferred tax on capital gains and french tax at source.

    Anyway I think there is a bilateral treaty between france and germany (DBA) to avoid double taxation. But it’s only worth the efford if the tax at source is high enough.

  • Robert Michel :

    The French withholding tax is lots higher than 10% it is 30% and it only 15% can be offset with the German Abgeltungssteuer, so you pay nearly 40% taxes on dividend. A stock like total has a dividend yield of 6% so the taxes lower you performance by 2.4% p.a. For me this is a reason to avoid at least average French stock and an exceptional stock outside of France is still better than an exceptional French stock.

    Hi Robert, at least I have to pay the German Abgelstungssteuer anyway, so the disadvantage is “only” 15%x6% = 0.8% p.a. I f your position is big enough and you have a cheap broker, you can reduce this by selling before the dividend date and buying back afterwords.


  • The French withholding tax is lots higher than 10% it is 30% and it only 15% can be offset with the German Abgeltungssteuer, so you pay nearly 40% taxes on dividend. A stock like total has a dividend yield of 6% so the taxes lower you performance by 2.4% p.a. For me this is a reason to avoid at least average French stock and an exceptional stock outside of France is still better than an exceptional French stock.

  • I try to avoid french stockes because of the high withholding tax. Do you know a way to deal with it?

    • Hi Robert,

      I care less about withholding tax. If I find an interesting stock, I usually expect something like 100% gain in 3-5 years. If the stock has a dividend of let’s say 5% p.a., I might lose (5%/10)= 0.5% p.a. or 1.5%-2.5% over the investment horizon.

      For me this is not a reason to avoid an attractive Franch stock.


    • There is a good way to circumvent that by having an account with interactive brokers via captrader. There the stocks are actually sitting in the US and the withholding tax is only 15% due to the tax treaty between the US and France:

      Although it says on the website that your country of residence determines the withholding tax, Captrader assured me that the values given on this site are general (which makes more sense, otherwise the chaos due to all the different jurisdictions for interactive brokers would be humongous)

    • Steuerrechtlich entscheidend ist auch hier der Wohnsitz.

      In den Doppelbesteuerungsabkommen zwischen Deutschland, Frankreich und den Vereinigten Staaten steht bezüglich einer grundsätzlichen Deckelung auf 15% jeweils dasselbe. Im Verhältnis zu den Vereinigten Staaten wird diesbezüglich den Banken der QI-Status (Status eines Qualified Intermediary) zuerkannt, d. h. wenn die Depotbank eine Kopie des Personalausweises erhält, brauchen nur 15% Quellensteuer abgeführt zu werden.
      Dass so etwas innerhalb Europas nicht möglich ist, sagt einiges über den Zustand der hiesigen “Union” aus.

      • Gut zu wissen, danke für die Erläuterung! Ich dachte mir schon, der Broker würde einfach alle Kunden als US-Kunden melden. Bezüglich Wohnsitz geht da wenig über die Schweiz (Dividenden steuerpflichtig, Kursgewinne nicht). Hat jemand Erfahrungen mit Captrader (Interactive Brokers)? Irgendwie hört es sich zu gut um wahr zu sein an…

  • Wow, Colas, TF1, Alstom in your Top 25, did you get your skills from the Bouygues-Management

  • TF1 schneidet besser ab als M6 (FR0000053225)?

    M6 finde ich deutlich interessanter als TF1

  • Are you going to do a quick check on each of the top 25 results? It´s interesting to see the filter-results, but of course there are many reasons for the “cheap” evaluations. I have looked deeper into Television Francaise (TF 1) for example. At its low this summer the price was not only interresting in itself, but also compared to other private tv-channels (I think only Berlusconi´s Mediasat was “cheaper”).
    There is a lot to discuss in this field (TF 1 – Eurosport´s remaining broadcasting rights portfolio for example after the Euro and the Olympics in London), the future of tv etc. since there are a lot of value-traps out there as well.

  • “it gschimpft isch globt gnua.” 😉

    I meant, that I was a bit surprised, that so many of my stocks also belong to the top BOSS stocks – but well, I selected them with regard to earnings stability, since the last two years or so.

    P.S. I forgot Vet’Affaires, of course. I have already looked at 15 of the 25 from the unmodified 10 years list.

  • It’s a deadly sin for a value blogger to implement a “quality” criterion such as “stock price > 1.25x book value” … – but ok, you’re also considering the Schröder-SPD as socialist 😉

    On the original list, there are some stocks I own or owned (Desjoyaux, Installux, Peugeot, Lacroix, Tipiak), and some other well-known names – a significantly greater numer than one would expect to find among 25 randomly selected stocks out of the biggest 400.

    • wow, that almost sounds like a compliment 😉

    • one more comment on this: over the years I moved more and more away from “deep value”. For my goal, to find “deadly boring” companies, a P/B around 1 is almost perfect.

      However I am aware that not every “Value” investor is a fan of that. In fact, I Don’t know anyone who is looking for such companies.

      Which i find very encouraging.

    • I don’t see why an accountant’s opinion of value should count as an objective measure of value.

      Aswath Demodaran provided a good example of overstated book values in one of his lectures. The Brazilian market looked cheap on a p/b basis, but upon closer inspection was actually valued in line with other equity markets. The reason for the overstated book values was the existence of a tax deduction based on the equity value of a business. Similar to a deduction on interest payed on debt, a company in brazil can deduct its cost of equity from the taxes it pays. This meant that whenever there was a discretionary choice, the accountant would mark-up the equity value.

      Book values contain discretionary choices and are not true measures of value. At best they are ballpark measures. I therefore understand why an investor would filter using price to book measures, but not why some arbitrary measure like p/b <1 must be sacred to a value investor.

      • Ferdinand, I am not sure what you are fererring to. I think I have outlined often enough that a book value is only a starting point.

        Howver, based on my experience, despite all shortcomings, the P/B is an interesting inidcator. P/B significantly below 1 shows almost always some degree of “distress”. A P/B of lets’s say 2 or more usually shows a lot of positive projections build into the current stock price.

        So yes, you are correct, it is defintely not an objective measure of value but for me it is an important indicator for the type of stock.

    • mmi, I was replying to Winter’s mention of “deadly sin”. I fully support using p/b as a starting point.

    • BTW, did you get a chance to look at Muehlbauer yet?

  • I would compare Hollande with Mitterrand and not with Schröder (“Hartz 4, work flexibility etc.”).
    In 1981, the Socialist Party had ‘110 Propositions for France’. One called for the “nationalization of the nine industrial groups” and another for the reduction of working time to 35 hours. The law of nationalization was enacted on 13 February 1982 and the legal workweek was reduced to 39 hours in 1982 and to 35 hours in 2000.

    In 2012, Hollande campaigned with ‘Mes 60 engagements pour la France’, including, among others:
    – Raising taxes for big corporations and banks (€29 billion).
    – Raising taxes for the wealthy (extra pay upwards of € 150,000 annual income, 75 percent of income from one million Euros).
    – Bringing the official retirement age back down to 60 from 62 (increased to 62 years under Sarkozy in 2010).*
    – Social security contributions on income from capital assets.
    – Higher taxes for companies in the low wage sector and social certification of companies over 500 employees.
    After the election in addition to that:
    – A new corporate tax on dividend payments.
    – A financial transaction tax (0.2% for companies with a market capitalization of over 1 billion €).
    – Should trade unions and employers not agree, Hollande threatened with a law as to the enforcement of the 35-hour week** (softened under Sarkozy in 2008).

    * The official retirement age is increasing in Denmark, Germany and Netherlands from 65 to 67 years, in Ireland from 65 to 68, and in Latvia from 62 to 68.
    ** This may be the lowest scheduled working week around the world.

  • Hello
    Thanks for publishing this, I recognize quite a few names here.

    I think it’s interesting to see that some companies rank very high on a 10 y basis and low on a 5 y basis. For instance U10. I wonder if there would be an additional criteria to avoid Investing on this “fallen angels”. Maybe debt/equity ratio ?

    If I understand correctly, the companies with a high and stable ROE (including dividends) and a low P/B rank well on the boss score. But for instance I wouldn’t bet my shirt on VMMA (they sell construction materials) for. Sure P/B ~ 0.4 and ~16 % average ROE, with a limited standard deviation, but lots lots of goodwill on the balance sheet. Lots of new stores acquired with debt ? What happens if the housing/construction market goes down..

    But I’m very impressed by the HQ selection, just by adding the P/B>1.25 criteria, which is quite counter-intuitive. I own some shares of 1/3rd of the companies mentioned in this list and will have a better look at the others.
    Thanks again.

  • Thanks fort his post.
    I am pleasantly surprised to see both my biggest holding Bouygues, as well as its 3 listed subsidiaries Colas (95%), TF1 (40%+) and Alstom (30%) on your list!
    It helps to reinforce my conviction.
    I think the current issues about stiff competition in its telecom “cash cow” is now well priced in.
    Who knows, maybe they’ll again buy back ca. 10% of their shares this year…

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