My 27 investments for 2016
Over the years I found it quite helpful to list my current investments at the end of each year and try to explain (to myself) the investment case in a few sentences.
Compared to last year, Sberbank, Gronlandsbanken, Cranswick, Trilogiq, KAS bank and Energiedienst were sold, the Depfa LT2 matured. New positions bought in 2015 are Aggreko, Partners Fund, Lloyds Banking, Gagfah, Pfandbriefbank and Greenlight Re. With 27 stocks, the portfolio is still maybe a little bit too diversified, my preference would be to have not more than 25 positions. Interestingly, only 5 stocks of the 2013 list are still in the portfolio, so there has been some turn around.
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 11% in 2014. The stock performance in the last year lacked a little bit as the market did not allow multiple expansion. Last quarter they surprised with a profit warning but for me still a long-term position with limited downside
Belgian, family owned company providing Coffee workplace services and plastic packaging. Plastics division seems to profit from low oil prices. Slow and steady grower, doing small acquisitions along the way.
3. TFF Group
Another initial investment from 5 year ago. Family owned oak barrel manufacturer. Has grown well over the past years due to Asian demand for oak aged french wines and opportunistic acquisitions. Demand for French wine in China seems to have stopped growing, but long-term I think the company is attractive. Currently, Whisky barrels are booming and driving growth.
Small French company specialized in aluminium appliances. surprisingly resilient. Still one of the cheapest quality stocks in Europe. Downside well protected via large net cash position.
5. G. Perrier
French small cap, specialist for electric installations with a strong position in Nuclear maintenance. Good growth despite economic headwinds. Cheap (ex cash) despite attractive, capital light business model.
6. IGE & XAO
Small french software company, controlling the French market for electrical CAD software. Steady growth, highly attractive margins and still reasonably priced.
Thermador is a French based construction supply distribution company. Distinct “outsider style” corporate culture. Despite headwinds in French economy still doing well. Reasonably priced, “outsider” style management.
8. Van Lanschot
Dutch based private bank, turn around story with new management. Some more progress in 2015. Still well below book value but it needs to be seen if capital will produce adequate returns.
9. 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. Capital intensive competitors have raised capital in 2015.
“Outsider style” direct internet insurance. Uk base, large cost advantages but difficult part of the insurance cycle. Several growth projects on the way. Insurance cycle seems to have turned for now in UK car market.
IT consulting company from Norway. Stock price hit hard by oil decline, Statoil is the largest client. Has performed well despite the hit to Norwegian economy due to low oil prices.
Contrarian investment into global leader providing “temporary electricity solution”. Hit hard by lower activity in mining. However in my opinion durable business model and cheap compared to the quality of the business. Could profit by any “Black Swan” event with regard to natural catastrophes. However some caution with regard to the many changes in management is justified.
13. Partners Fund
An investment into a fund run by a close friend. Mathias is a “Munger style” investor with a relative concentrated portfolio of “moat” companies, many of them from the US. I think it is a good complimentary exposure for my investment style.
14. Koc Holding
Family owned conglomerate, dominating Turkey’s economy. Low oil price should benefit Koc in several ways. Clearly influenced by current issues in Turkey but company has survived much more severe crisis.
Specialist Emerging Markets asset management company. 2015 was again 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.
16. Depfa 0% 2022 TRY
Combined Emerging market investment (Turkish Lira) and bet on Spread tightening for DEPFA. Hasn’t worked very well yet as Turkish currency really performed badly even against the weak EUR. Will need to check if I switch into higher Koc Holding exposure which has a “built-in” currency hedge.
First part of my bet on a Romanian recovery . Extremely cheap producer and distributor of natural gas. Could profit from recent privatisation and efficiency gains, pays solid dividend. Stock price hit by drop in commodity prices despite having no direct impact on profit. 2014 better than expected, 2015 lower sales volumes. Overall still within my original plan.
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. However regulatory environment remains volatile. Stil a very good risk/return profile for the long term-
19. Drägerwerk Genüsse
Capital structure “arbitrage”. Price of Genußscheine still far below the fundamental value which should be 10x the Draeger Pref shares
20. HT1 Funding
Still a “safe spread” subordinated bond with 5% yield until 2017 where it will be most likely called by Commerzbank. Risk for non-call if Commerzbank cannot refinance cheaper.
21. MAN AG
“Squeeze out speculation” with guaranteed dividend. Fight for higher compensation now in next round. Pretty “bond like” exposure. However the likelyhood for more upside has significantly decreased.
22. NN Group
“Forced IPO” from ING Group. Still relatively cheap. Less “guarantee” exposure than German Insurance company. Prime target for M&A activity.
23. Citizen Financial
“Forced IPO” from RBS. Valuation below US peer group, could profit from higher interest rates.
Special situation speculating on a squeeze out under Luxemburg Law. If everything goes according to plan, the minorities will be squeezed out in early 2016.
25. Lloyd’s Banking Group
Having been hit hard by the financial crisis and miss selling scandal, Lloyds in my opinion is the best of the big 3 UK banks. The stock price has been held down by continuous open market sales of the UK Government which are now coming to an end. With out any fines etc. Stock would be very cheap (7-8 times Earnings). One of the positions which I might increase.
“Rushed IPO” by German Government. Portfolio cleaned up and enough capital to grow. Very cheap.
27. Greenlight Re
Mean reversion bet, both on valuation and investment performance of David Einhorn who had a horrible 2015.