value and opportunity

As every year, I will do a short summary of my portfolio for 2015 with comments on each positions. One thing that I recognized is the fact that my portfolio now has 28 positions which is on the high-end of what is manageable. So I have to put a few of them on the watch list to do a deeper review in the coming weeks. New ideas have to replace an “old stock” in 2015.

1. Hornbach Baumarkt

One of my initial positions, family owned Hornbach is a slow and steady grower, their market share in Germany for instance increased from 8,7% in 2009 to 13% in 2013. The stock performance in the last year lacked a little bit as the market did not allow multiple expansion. Very limited downside in my opinion despite hard business. Hornbach could additionally profit from the end of the Baumax chain in Austria, similar to the boost in sales in Germany after Praktiker went bankrupt.

2. Miko

Belgian, family owned company providing Coffee workplace services and plastic packaging. Plastics division could profit from low oil prices. Slow and steady grower, doing small acquisitions along the way.

3. TFF Group

Another initial investment from 4 year ago. Family owned oak barrel manufacturer. Has grown well over the past year due to Asian demand for oak aged french wines and opportunistic acquisitions. Demand for French wine in China seems to hae stopped growing, but long term I think the company is attractive. Next year will be rather unspectacular.

4. Installux

Small French company specialized in aluminium appliances. surprisingly resilient. Despite the nice stock price appreciation in 2014 (+30%) still one of the cheapest quality stocks in Europe. Downside well protected via large net cash position.

5. Cranswick

Uk based “butcher”, producing pork and sausages with a dominant market position. Despite the problems of its biggest clients, Cranswick is still doing well although the stocks are a little bit on the expensive side. This is a stock I will have to review soon.

6. Gronlandsbanken

Gronlandsbanken is the only bank in Greenland and a long bet (or hedge against) Global warming. The ice is melting in Greenland which should contribute to ecominic activity, however a lot of that is commodity related. Stock pay an attractive dividend which looks very safe.

7. G. Perrier

French small cap, specialist for electric installations with a strong position in Nuclear maintenance. Good growth despite economic headwinds. Cheap (ex cash) depite attractive, capital light business model.

8. IGE & XAO

Small french software company, controlling the French market for electrical CAD software. Steady growth, highly attractive margins and still reasonably priced.

9. Thermador

Thermador is a French based construction supply distribution company. Distinct “outsider style” corporate culture. Despite headwinds in French economy still doing well. Reasonably priced.

10. Trilogiq

A French supplier mostly to the automobile industry. Capital light business model including some consulting. However issues in 2014 due to complete change of product offering and resulting disruptions. Despite lower profits still oK priced but I will need to thoroughly review the position next year.

11. Van Lanschot

Dutch base private bank, turn around story with new management. Some progress in 2014. Still well below book value but it needs to be seen if capital will produce adequate returns.

12. TGS Nopec

“Outsider style” seismic data company. Clearly influenced by the oil price but with strong competitive advantages against competitors due to “capital light” business model.

13. Admiral

“Outsider style” direct internet insurance. Uk base, large cost advantages but difficult part of the insurance cycle. Several growth projects on the way.

14. Bouvet

IT consulting company from Norway. Stock price hit hard by oil decline, Statoil is the largest client. Will need to check if investment case still valid as a 50% drop in oil prices and the potential impact on Norway’s economy was not part of my analysis.

15. KAS Bank NV

Specialist bank from the Netherlands. Cheap but good and safe dividend yield. Would profit significantly if interest rates would go up again.

16. Energiedienst

Swiss/German Hydroelectric utility. Still suffers from renewable energy driven chaos in German electricity market. Solid cash generation, defensive position. Could profit from restructuring of the large German utility groups, although electricity prices will stay low if oil and other fossil fuel stays as cheap as currently.

17. Koc Holding

Family owned conglomerate, dominating Turkey’s economy. Low oil price should benefit Koc in several ways.

18. Ashmore

Specialist Emerging Markets asset management company. 2014 was difficult year due to EM volatility. I am still positive as EM is basically the only part of the market where there is any yield left. CEO owns significant part of the company.

19. Sberbank

Biggest Russian bank. When I bought it, I did not expect that the conflict in Ukraine would escalate as much and of course I didn’t expect the oil price go down so fast. Will need to review the case asap.

20. Depfa 0% 2022 TRY

Combined Emerging market investment (Turkish Lira) and bet on Spread tightening for DEPFA.

21. Romgaz

First part of my bet on a Romanian recovery supported by the election if the new, ethnic German president. Extremely cheap producer and distributor of natural gas. Could profit from recent privatisation and efficiency gains, pays solid dividend.

22. Electrica

Part 2 of Romanian “bet”. Extremely cheap electric grid company. Guaranteed profit increase via investment program at guaranteed returns plus extra upside if efficiency gains could be achieved. On of my favourite long-term bets.

23. Drägerwerk Genüsse

Capital structure “arbitrage”. Price of Genußscheine still far below the fundamental value which should be 10x the Draeger Pref shares

24. DEPFA LT2 2015

Tier 2 bond with good yield and low risk. Will mature in 2015.

25. HT1 Funding

Still a “safe spread” subordinated bond with 5% yield until 2017 where it will be most likely called by Commerzbank.

26. MAN AG

“Squeeze out speculation” with guaranteed dividend.

27. NN Group

“Forced IPO” from ING Group. Still relatively cheap.

28. Citizen Financial

“Forced IPO” from RBS. Valuation below US peer group, could profit from higher interest rates.