Performance review October 2013

Performance October 2013

October 2013 was the best month for the Benchmark (50% Eurostoxx, 30% Dax, 20% MDAX) since January 2012 with a gain of 5.9%. The portfolio increased only by 3.1% resulting in an underperformance of -2.8%. YTD 2013, the portfolio is up 30.5% against 24.4% for the benchmark.

Clearly the ~20% cash position explains almost half of the underperformance. Other underperfomers were Sol Spa (-9.4%), Cranswick (-8.6%). On the plus side was EMAK (+27%), Installux (+11.8%), Tonnelerie (7.6%).

Portfolio transactions

October was a “normal” month with regard to portfolio transactions. I entered into one new position, Van Lanschott and sold half of my EMAK position. Additionally I increased my MIKO position. Unfortunately, i was not able to increase to a ful position yet as trading volume was too low.

In the wake of the EMAK sale (at ~0.92 EUR with a total gain of 101% incl dividends, I also closed out my short FTSE MIB position. With a remaining weight of ~11% in Italian stocks (SIAS, Sol, EMAK), I think this kind of protection is not necessary any more. I also closed out my Swiss Francs hedge with a small gain of 7%. This was meant to hedge the Vetropack position but I think the danger of a weakening Swiss Franc is rather remote.

Portfolio as of 31.10.20113

Name Weight Perf. Incl. Div
Hornbach Baumarkt 3.8% 8.9%
Miko 3.3% 7.0%
Tonnellerie Frere Paris 6.2% 114.8%
Vetropack 3.7% 6.6%
Installux 3.0% 38.2%
Poujoulat 0.9% 26.1%
Cranswick 4.8% 30.9%
April SA 3.7% 36.5%
SOL Spa 2.6% 40.7%
Gronlandsbanken 2.0% 28.2%
G. Perrier 3.9% 60.2%
IGE & XAO 2.2% 24.7%
EGIS 3.1% 32.1%
Thermador 2.7% 13.3%
Trilogiq 2.3% 8.4%
Van Lanschot 2.8% 10.5%
KAS Bank NV 4.8% 47.7%
SIAS 5.3% 84.2%
Drägerwerk Genüsse D 7.8% 164.6%
DEPFA LT2 2015 2.5% 70.0%
HT1 Funding 4.1% 54.8%
EMAK SPA 2.8% 99.7%
Rhoen Klinikum 4.8% 21.3%
Short: Prada -0.9% -17.7%
Short Lyxor Cac40 -1.1% -20.4%
Cash 19.0%  
Core Value 50.9%  
Opportunity 32.1%  
Short+ Hedges -2.0%  
Cash 19.0%  

To dos

In the next few weeks, I will again do my “autumn cleaning”, which means walking through my positions in order to decide if I have still a high level of conviction or not. Last year it was a very good exercise, so I will try to do that every year.


  • buy stocks of … software technology 😀

  • Thank you for your response. I thought about that myself, and deducted half of film investions from cashflow for my calculations. But even if you only look at earnings they appear really cheap at a KGV of 6.5.
    I am not really sure how i can define my circle of competence. Do i know something about the film business only because i often watch movies? Or do i know how Procter&Gamble works because i use their products? Because if both answers are no, i can really only buy stocks of , which is a little small circle of confidence. 🙂
    I currently have only very little understand of how banks and insurances work, but i am trying to understand how they earn money and where the risks are. But i would never say that belongs to my circle of competence. How much knowledge is necssesary?

    • this is a question which you can only answer yourself…….

      If your are a mechanical investor, you might not need to know a lot about a company. If you are a real “stock” picker than you should be familiar.


  • I am not really an Analysis Prof, but have you looked at Splendid Medien? They are trading at book value, which is growing at around 15% the last 4 years and have a price/cashflow of under 2. Book value consist mainly of film rights, but looking at the cashflow this looks very cheap to me. But i am not an expert so can you have a look at it? 🙂

    • #frommi,

      i do not know a lot about this business, but I guess one needs to be careful how they account for the movie rights purchases. I would deduct them from Free cf.

      Other than that those kind of stocks are not really my “circle of competence”.

  • Congratulations also from my side.

    Seems that also the Rhön Klinikum opportunity deal works perfectly – currently trading around 20.50€. I was negative about it, because the sold part of the business earned 3/4 of the EBITDA with a margin of around 12%. The continued business has currently EBITDA margin of 7%, so the touted “goal” by the management achieving 15% margin by 2015 on the new Rhön Klinikum seems unrealistic to me, as the overhead has increased and economies of scale should be worse, not better. Of course, they can downpay their debt, but this is not sufficient to boost profitability like that. What do you think about it and do you see any catalysts which double profitability?

    Second question: what do you think about re-insurance companies? Hannover Rück recently had an investors day and explained very detailed their business and their approach how to withstand the low yields on capital markets and pressure on margins. What catched my eye was how good they did since 2009 in increasing book value per share and dividend payouts (page 103 of link). Their focus on stabilising net income and lowering the combined ratio seems to pay out and make the business more profitable in any case. I see the opportunity, that Mr.Market may change its perception and be willing to pay a higher risk premium for them.
    Any comments?

    Best regards

    • four remarks on reinsurers:

      – the increased book value is a consequence of lower interest rates and transforms in lower earnings in the next few years
      – Reinsurance is a very competive market with few barriers to entry. I would not pay significantly more than book value for those companies
      – the business is also extremely cyclical. 2013 was a great year, because premiums were high and damages low (no US hurricanes). This will change.
      – as with many cyclical stocks, one should by them if P/Es are high or even negative, not when tehy are low

    • for Rhoen: I am not a turn aorund investor. The investment case for me was that Rhoen is worth around 22 EUR per share. Onec it reahces that level, i will sell.


  • “YTD 2013, the portfolio is up 30.5% against 24.4% for the benchmark.”
    Congratulation. Especially as your depot is constructed to perform better in weak times of the stock exchanges, and actually we have a quite strong stock exchange.
    As I suppose the next year may get more challenging, at least in Germany, your depot may show its qualities next year even more.

    “In the next few weeks, I will again do my “autumn cleaning””
    Is there a reason you do that in November?
    I usually do it in January (New Year, new check) or in May (as the summer months are offen weaker one).
    I wouldn’t do it in autumn, as for me the last two months were offen among the strongest months of the year. Especially some shares with a good run in the year can get a “Year End Fonds Bying Favourites Fever” (Jahresendfondseinkaufsfieber der Favoriten, to hommage to the great german one-word-bulding qualities. :-)).
    So in autumn I usually don’t try to enlarge my free cash.

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