Short Cuts: Flughafen Wien, Alstom, Trilogiq, Sberbank

Flughafen Wien

A quick update on my “Christmas-special situation” investment Flughafen Wien:

82,2% of the tendered shares have been accepted at the offer price of 82 EUR. With the current share price of ~ 77,5 EUR, the overall return results (pre costs and taxes) are :

(0,822*(82-79,25) + 0,178*(77,50-79,25))/79,25= +2,46% For the portfolio I assume that I would be able to close the position (sell the rest) at 77,50 EUR. Privately my broker DAB was not yet able to “release” the tendered shares.


Back in August this year, I looked at Alstom as a potential “sum of parts” play following the GE deal announcement. One open point was the issue of pending corruption charges. I had written the following:

A second big issue is that at the moment no one knows exactly how much of the liabilities will get transferred to GE. Especially with regard to operating leases (nominal ~830 mn EUR), litigation liabilities (528 mn EUR) and pension liabilites (gross 5,2 bn) there is no definitive answer how much will be transferred to GE and what remains at Alstom. In a sum of part calculation, any of those remaining liabilities will have to be deducted from the extra assets as they are economically equivalent to debt.

I had some discussion and the consensus was that litigation liabilities would be transferred to GE, although I was sceptical. It turned out that I was right in this case. Alstom pleaded guilty and agreed to pay 772 mn USD fine. For the valuation, the most important sentence is this one:

In June, Alstom agreed to sell most of its energy business to General Electric. The French company said it would not be able to transfer its fine over bribery allegations to G.E.

Due to the strong dollar, in EUR the fine is actually 100 mn USD higher han the reserves. Overall, for anyone assuming GE taking over those liabilities, this reduced the value of Alstom by 2 EUR per share.. It will be interesting to see how the transport business is actually doing once Alstom publishes annual results. So far, I do not see any reason to buy the stock from a fundamental point of view.


A few days before Christmas, Trilogiq reported 6m figures (30.09.2014). For some reason, the report is not on Trilogiq’s homepage, so one has to look at secondary sources like this one. Sales were slightly lower, gross margins more or less equal to last year. Net income was significantly lower but still positive.

They attribute the lower result to special marketing expenses and new hires:

la hausse de 13% des autres achats et charges externes, notamment du fait de la multiplication des actions marketing destinées à faire connaitre la nouvelle gamme GRAPHiT à travers le monde, l’augmentation de 12% des charges de personnel qui ont été grevées par d’importantes indemnités de départ et par de nouveaux recrutements

Cash is till around 22 mn EUR or 6 EUR per share. If Trilogiq manages to return at leat to 2/3 of the old profitability, (earnings were between 1,45 EUR per share and 1,75 EUR from 2008 to 2013), the stock would be priced at 6-8 times earnings. It remains to be seen if the temporary effects are in fact temporary. A friend forwarded me this equity research piece on Trilogiq where they expect 1 EUR EPS in 2016/2017 which to me looks quite conservative. Nevertheless, I think the further fundemental downside for Trilogiq at the current stock price is rather limited.


Over the holidays, I decided that I will exit my Sberbank position still within the old year at today’s prices. In the private account this also leads to “tax loss harvesting”. For the portfolio it became clear to me that my investment decision now has been invalidated 2 times. First, I estimated that the Ukraine conflict would be over quickly which was clearly wrong. Secondly, I did not account for the drop in oil prices and the ruble. I have honestly no idea how exposed Sberbank is directly or indirectly to oil and the ruble, but the prudent decision is to sell now and look at the stock (and the Russian market) again next year.

It might look very pro-cyclical selling near the low, on the other hand, if an investment case has deteriorated as much as in this case one should better exit before “behavioural biasis” such as “breaking even” etc. kick in.


  • Have you ever looked at Sberbank again? Impressive how they cam through the Russian crisis and they are a still cheap.

  • Hi memyselfandi,

    Sberbank is a contrarian play betting on Politicians acting positively and an increasing oil price at some point -The latter appears to be likely and the first one somehow unlikely. You should be happy about your decision considering that your thesis has proven partly wrong (Putin acting positively).

    Keep up your fantastic work next year!

    • Hi Milud,

      it is clearly a special situation. But is it worth an investment ? I don’t know. I haven’t looked at this. The upside is around 10%, the downsdide (undisturbed) around -20%. hmmm. I don’t know enough about the case.


  • Concerning Sberbank: Tax loss harvesting is a good idea, but I think from a macro perpective the stock could be a brilliant investment in the long term. Basically there a two scenarios: The situation with Ukraine/Russia and pressure on the ruble/oil price gets worse or its gets better. In the first scenario stock markets could crash globally like in 2000-2003 with a overall stock portfolio loss of 70 percent or even more. The Sberbank investment would be quite worthless but we’d have other problems then. If somehow the situation normalizes then stock prices in Russia can easily double or triple. I think this scenario in the long run has a higher probability though tensions could increase in the near future. So protecting the current portfolio level with puts, betting on a relief in Eastern Europe in parallel in going long for russian stocks and keeping a big portion of powder dry in USD could be the best strategy to handle the situation.

    • #MArcheso,

      I am not sure if sberbank is the best candidate to bet on a Russian rebound. The issue with banks is often that after a crisis they will dilute shareholders via capital increases in order to rebould the capital base. So for a rebound speculation, a broader Russian index might be better.

      • Of course, a broader Russian index fund offers the better chance/risk-profile at the moment if someone bets on a rebound. I still think that in the long run your original investment hypothesis for Sberbank is still intact. Sure: If oil prices and the political situation won´t recover stock prices will continue to fall. But I doubt that this will go on forever unless we see a real game changer or black swan arising that would send down stock prices down globally. So let´s stay at the sidelines…

  • regarding sberbank, think its the right move. Inventory in oil is already building before the seasonally surplus has begun (jan-mar), and us production will keep on increasing until mid 2015 – which of course doesnt have to translate to lower prices, but the threat is very real, and that would of course put russia in an even worse situation.

  • Concerning Trilogiq: Having in mind that the product portfolio will be totally renewed (from steel to graphit) I think it is a good sign that sales and gross margin are more or less stable. So I remain positive for the future of this company.

    Guten Rutsch!

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