value and opportunity

Performance review November:

In November, the portfolio gained +0.5% vs. +2.3% for the Benchmark (50% Eurostoxx, 30% DAX, 20% MDAX), an underperformance of -1.8% for the month. YTD, the portfolio is still ahead with +31.2% vs 27.3%.

Outperfomers in November were G. Perrier (+7.2%), Cranswick (+6.1%), IGE+XAO (+4.4%) and Miko (+3.9$). Loosers of the month were EMAK (-8.8%), April (-5.5%) and Sias (-3.9%). Most investments in the portfolio actually were more or less unchanged and did not participate in the further run up of the indices.

The cash level with around 12.8% is at the lowest level of the year although one should not forget, that EGIS will be cashed out soon via a squeeze out on December 6th, so overall cash is at 15%.

Transactions

November was actually a quite busy month, with 2 new “positions, MAN SE as a special situation and TGS Nopec as part of the “core value” strategy.

Current Portfolio as of November 30th:

Name	Weight	Perf. Incl. Div
CORE VALUE
Hornbach Baumarkt	4.1%	16.6%
Miko	3.6%	9.6%
Tonnellerie Frere Paris	6.1%	113.1%
Vetropack	3.7%	6.7%
Installux	2.9%	35.5%
Poujoulat	0.9%	23.5%
Cranswick	5.2%	41.9%
April SA	3.4%	26.8%
SOL Spa	2.6%	41.5%
Gronlandsbanken	2.1%	33.1%
G. Perrier	4.2%	72.5%
IGE & XAO	2.3%	30.6%
EGIS	3.1%	33.5%
Thermador	2.7%	13.9%
Trilogiq	2.3%	9.5%
Van Lanschot	2.8%	10.6%
TGS Nopec	2.5%	2.0%
OPPORTUNITY
KAS Bank NV	4.6%	43.0%
SIAS	5.0%	76.7%
Drägerwerk Genüsse D	7.7%	164.3%
DEPFA LT2 2015	2.6%	71.6%
HT1 Funding	4.2%	60.2%
EMAK SPA	2.5%	82.8%
Rhoen Klinikum	4.7%	20.9%
Portugal Telecom	1.0%	-7.0%
MAN SE	2.5%	0.6%
Short: Prada	-0.9%	-16.9%
Short Lyxor Cac40	-1.1%	-20.5%
Cash	12.8%
Core Value	54.4%
Opportunity	34.9%
Short+ Hedges	-2.0%
Cash	12.8%
	100.0%

For some reason, PTC was not on the October list, although I bought a 1% in October in 2 intallments at around 3.45 EUR.

Autumn cleaning

This year, the “autumn cleaning” exercise is quite late in the year. I rather enjoy this exercise because it means that I have to go through all my positions in order to think if I am still highly convinced or if there is some reason to act.

As a general rule, I also want to keep my number of positions in the 20-30 range. At the moment, including EGIS, I am at 28 which is rather at the high-end. In contrast to the last years, I will focus within this exercise only on the shares where I am not fully convinced. I will come up with a separate post about my “strong conviction” stocks later in December.

EMAK

EMAK was a special situation, I bought into 2 years ago when they did a massive rights issue. I sold already half of the position in October. I will look for an exit in the next weeks, maybe the traditional year and or January effect will lead to some higher stock prices. Overall, EMAK is not a bad company, but at current valuation levels, the risk/return relationship is not that great anymore.

Portugal Telecom

Portugal telecom is kind of an exception, as I bought the position mostly as a “reminder” to follow-up when the merger with Brazilian Telco OI actually happens. However, buying “reminder” positions is somehow counterproductive because then again the number of portfolio companies gets to large. I will therefore sell PTC again, but try to implement a more focused approach to my “Watchlist”.

Short Prada

This was a short position started on September 12th last year based on an expected slow down in China and the other BRIC countries.

That’s what I wrote more than 1 year ago:

I am currently thinking of shorting a “basket” of 5 Asian focused luxury stocks, most likely Boss, Tumi, Remy Martin, Burberry and Prada with 0.5 to 1% each.

Of those 5 stocks, Prada was the third best performer with +19% in EUR terms after Boss with +37% and Burberry with +33%. Tumi lost -5%, Remy -21%. I think I underestimated that Prada is really a “top” luxury brand which actually didn’t suffer as the rich got still richer. It would have been cleverer to bet against the BRIC down turn via stocks like Caterpillar or stocks which appeal to the “middle class” like Remy. Maybe this is the reason why Jim Chanos is famous and I am not. Anyway, I will exit the Prada short and take the loss as my initial thesis clearly didn’t play out and investors still think that Prada is worth 30 times 2013 earnings.

Short CAC 40 ETF

Finally, the CAC40 short ETF at currently around -1% is also not very relevant. So I will close out the short position. Although French stocks are around 25% of my portfolio, I think that due to the international exposure of some of them (Tonnelerie, Trilogiq), I can live with that.