Monthly Archives: November 2012

Weekly links

Good analysis of the Bulgarian economy and stock market and an interesting Bulgarian company called Yuri Gagarin.

Some top hedge fund investment ideas form a recent investment congress in Chicago

Stephan at Simple Value analyzes an interesting French plantation company (only in German)

Wexboy like two German residential property stocks especially KWG kommunale Wohnen.

Since this week, short positions for German shares of large Hedgefunds can be accessed here. Most interesting: 15% in total of Aixtron are sold short….

Boss Score: Top 25 Scandinavia

Next in my “top 25” series from the “Boss” database is now Scandinavia or the “Nordic” countries, namely Denmark, Finland, Norway and Sweden.

Again, as the process is only semi-automated, I have currently “only” about 300 Nordic companies in my database.

Let’s start with the Top 25 according to the 10 Year score:

Followed by the ranking for the 5 Year score

Finally I want to introduce something a am also looking at: A “pure” quality score without actually looking at the current market price. As some readers might recall, the Boss model first calculates a theoretical fair multiple to book value and then divides this by the market price.

If we leave out the last step, we can sort by the achieved multiple. Based on empirical experience, I use a blend of the 5y and 10y value with a double weight for the 5 year score.

After sorting the list by this criteria, we get the best “quality” companies:

Again there seem to be some interesting companies in the Nordic countries. Let’s have a quick at some of the names which I find interesting at a first glance:

B&B Tools (Sweden)

They seem to have a quite interesting business model, a servicer and supplier (without own production) of tools and consumables to industrial companies. However they seem to have some problems at the moment. Strongly declining profits, new CEO etc.

Capman OY

Finish private equity vehicle. Maybe worth a look at some point in time.

Takoma OY

Finish engineering group. However Stock chart looks like free fall. According to one of their publications, they are currently in breach of loan covenants. So a “no go” here.


Very interesting. One of the leading caravan manufacturers. Also “high quality” in my model. Maybe

Fenix Outdoor

Both, designer of outdoor products as well as operating a retail chain. Relatively expensive but high profitability.


Producer of heat pumps, boiler, freestanding fireplaces. Expensive but high quality.


Finish specialist for fishing tackle. Main competitor for Shimano in this area.


This might be an interesting special banking stock. It seems to be the ONLY commercial bank in Greenland according to Wikipedia. The balance sheet is super solid and if the Greenland natural resources story would really play out, this would be the stock to have. So a “hidden” commodity play so to say.

Summary:All in all my feeling is that the Nordic capital markets are much more efficient than for instance France. Thos companies which score well do mostly have some issues or their overall scores are not very high compared to other countries. “Quality” companies seem to be priced accordingly.

Performance October 2012 & Comments

October has been a “normal” month for the portfolio. The Benchmark (Eurostoxx 50%, Dax 30%, MDAX 20%) gained 2.5%, whereas the portfolio “only” gained 1.5%. Year to date, The portfolio now shows a gain of +30.6% against 21.1% for the Benchmark. Since inception(1.1.2011), the portfolio is up by 25.3% against 4.4% for the benchmark.

Main performance drivers in October have been Dart Group (+15.1%), AS Creation (+11.8%), HT1 (+7.5%). Main “detractors” were Cranswick (-5.1%), Vetropack (-4.9%), Bouygues (-2.2%) and Rhoen (-2.1%)

Just for fun, I calculated the Sharpe ratio based on the 22 available monthly returns, both for the portfolio and the benchmark. The sharp ratio for the Benchmark is 0.2, however for the portfolio it is an incredible 0.90. I don’t think that I will manage such Sharpe ratios over the long run but it is still interesting to see.

Portfolio as of 31.10.2012:

Name Weight Perf. Incl. Div
Hornbach Baumarkt 4.7% 5.1%
AS Creation Tapeten 4.3% 21.6%
WMF VZ 3.8% 49.4%
Tonnellerie Frere Paris 5.0% 25.4%
Vetropack 4.5% -7.6%
Total Produce 5.3% 26.8%
SIAS 6.0% 39.4%
Installux 3.0% -0.1%
Poujoulat 0.8% -4.6%
Dart Group 2.8% 28.2%
Cranswick 4.8% -6.4%
April SA 3.4% 20.9%
Bouygues 2.4% -4.5%
KAS Bank NV 5.1% 12.6%
Drägerwerk Genüsse D 10.1% 104.6%
IVG Wandler 3.5% 9.5%
DEPFA LT2 2015 3.0% 45.1%
HT1 Funding 4.6% 29.4%
EMAK SPA 5.0% 26.9%
Rhoen Klinikum 2.5% 0.5%
Short: Focus Media Group -1.0% 2.4%
Short: Prada -1.1% -6.1%
Short Lyxor Cac40 -1.3% -0.5%
Short Ishares FTSE MIB -2.2% -2.9%
Terminverkauf CHF EUR 0.2% 4.9%
Tagesgeldkonto 2% 15.9%  
Value 60.9%  
Opportunity 28.7%  
Short+ Hedges -5.4%  
Cash 15.9%  

Following the “autumn cleanup” post, I have already sold down all the “low conviction” positions, as the two last days of the month were “up days”. I increased only IVG and Rhoen so far.

In detail, the following positions were closed:

EVN, total return -4.87%
Mapfre +44.75%
Short Kabel Deutschland -52.87%
OMV -3.92%
Fortum -24.17%

Apart from the hedges, the portfolio has now 23 “single names” which is something I consider within the optimal range considering the amount of time I can spend on the portfolio.

The other announced position increases will be executed in November and as a general rule only on “down days”.

Comment & Outlook

One fascinating aspect of the current stock market is in my opinion the obsession of many money managers with the US Fed and the ECB and low interest rates in particular. Just as an example, one could read for instance the latest publication from Steve Romick (FPA) which argues quite strongly against the current policy of Fed Chairman Ben Bernanke.

The argument more or less goes as follows: The low interest rates inflate asset prices (Bonds, real estate, stocks) which distorts capital allocation and will in the medium to long run create even bigger problems than today’s problems.

I have to admit that I can only partly follow this logic. It is true, that interest rates are relatively low and maybe artificially so for certain segments. On the other hand we see a lot of deflationary developments for instance within the Euro zone.

However, I find it strange that many people relate the level of the stock market directly and exclusevily to the interest rate level. Interest rates are one of many factors in valuing stocks. Although many people make their living in trying to explain on CNBC or Bloomberg why the stock market has moved up or down, obviously no one knows the reasons, otherwise they all would be rich and counting their money from successfully predicting the market.

Many people seem to think that stocks should be cheaper because of “macro uncertainty”, although in my opnion this is wrong. There is always macro uncertainty, for me it seems that only the majority of commentators seems to forget about that sometimes.

Going back to Steve Romick: I guess his commentary might have something to do with the recent underperformance of his flagship fund which has missed out a significant part of the rally. Although I really like those guys, this comment sounds a little bit like a lame excuse to blame the “market bubble” for the underperformance.

So to make it short: In my opinion one should either ignore all those commentators which try to explain why the market is over- or undervalued based on macro factors or consider them as “entertainment”. Uncertainty and central bank intervention are part of the market since many many decades. For all those pundits who think that a “free” capital market without central banking is the answer, I would highly recommend to read some history books how markets and banks behaved BEFORE central banking had been established.

Weekly links

Classic article from Charles D. Ellis against “Diworsification”

Good presentation from Katsenelson on investment process

Very interesting Tim McElvaine (Peter Cundill disciple) video interview about Japanese companies and investing (mental note: run screen as mentioned: Stock down 2/3, below tangible book and market cap > 1 bn )

Nate from Oddball is more into Japanese Net nets.

Does “catching the falling knife” maybe work on a sector level ?

David Einhorn is short Iron ore. Jim Chanos had this idea already 1 year ago.

Expecting Value about Severfield-Rowen, a stock on my Boss score UK top 25

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