value and opportunity

Editorial stuff:

While I was away (without access to my account) some people complained that their comments were not shown while other comments went through. The reason is the WordPress commenting system. If you comment for the first time, I need to manually approve this first comment. Once you are approved, further comments appear automatically if you login and comment the same way than you had done for the first time. So for anyone who commented for the fist time in the last 2 weeks, the comments were still in the “to be approved queue”.

Admiral Plc

Last week, Henry Engelhardt the founder CEO and largest shareholder of Admiral announced that he will step down in one year and co-founder and current COO David Stevens will take over from then on.

This was clearly a surprise as with currently 57 years, one could have expected him to stay on for quite some couple of years more. Losing a highly succesful charismatic CEO is of course bad news.

On the other hand, one rarely has the situation that there is a co-founder available to run the company who also owns a significant company, is younger (currently 51) and clearly knows how Admiral works. It remains to be seen if the former number 2 will be a good number 1. He clearly isn’t as charismatic as Engelhardt, on the other hand I do think that he exactly knows what he is doing and that there is little risk that he doesn’t obtain the same level of authority as the old CEO.

So all in all, for me for  the time being the investment case doesn’t change. Oh, and by the way watch the official video until the very end. then you know why Admiral is different and hopefully remains so ;-

Lloyds Banking

The timing of my Lloyds investment was indeed lucky. The stock got a second boost after the election as Cameron seems to be the better choice for bank investors than his opponents.

The conservative government reiterated their plan to sell the whole stake in the next 12 months. In the meantime, the percentage has fallen below 20% already last week, and the sale of TSB to Sabadell has been approved by European authorities last week as well.

All in all good news for the stock.

Cranswick

Cranswick was my biggest holding until January this year when I sold because I expected lowerresults going forward and found the stock as too expensive.

Last week, Cranswick came out with preliminary annuals for 2014/2015 (FY March to March). On the first look everything went up and the stock market seemed to like it and the stock was up almost 10% over the last few days:

At a second glance, things do not look so god however. Profits only went up on an “adjusted” basis, unadjusted, profit fell by -6% and without acquisitions, sales would have been lower as well. The core business, fresh pork was down by a hefty -10%.

ROE decreased further to 12,9%. Still OK but in my opinion this does not justify a P/E of almost 19. However so far, the market does not seem to be concerned and is granting Cranswick a further multiple expansion.