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.

Former posts can to be found here:
My 28 investments for 2015
My 24 investments for 2014
My 22 investments for 2013

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.

I have a couple of stocks on my Watchlist as well such as Handelsbanken, Swatch and Vetoquinol, but they need to replace one of my existing positions.

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

2. Miko

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.

4. Installux

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.

7. 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, “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.

10. Admiral

“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.

11. Bouvet

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.

12. Aggreko

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.

15. Ashmore

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.

17. Romgaz

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.

18. 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. 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.

24. Gagfah

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.

26. Pfandbriefbank

“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.


  • What are your thought about Van Lanschot’s strategy update? They shifted the 10%-12% ROTCE goal to 2020.
    Currently, they achieve around 5% ROTCE, which justifies their current valuation.

  • any update on gagfah?
    delisting failed as its traiding in HH still after delisting
    I expect a vonovia share trade with about 12 gagfah equals 10 vonovia
    how is now the case with gagfah dividend
    do they must pay dividend to access to gagfah money to payout vonovia shareholder?
    is “beherrschungsvertrag” still on the table?

    • Delisting was actually succesful, but someone (not Gagfah) relisted the stocks in Hamburg, You can do this without asking the company.

      I have no more information on the case right now. I think Vonovia could access the money via loans or cash pooling.

      • management fee or something would also be possible. I wish you luck. To be fair the underlying assets have not have fallen in the meantime. On the contrary with > 1 million refugees in Germany there is no possibility I can see the demand would have no effect on prices. Keep in mind Gagfahs portfolio is low quality which would fit with the budget.
        But I am no buyer here. Just have no inside and I believe if there is no squeeze out this year weaker hands will offer a lower entry price.

  • Martin, nice article.
    I was reading the memory of François Freres and it seems they allocated 63M eur to buy outstanding shares below 115eur. Taking into account the low % of outstanding shares it seems they might try to pull it out from the stock market. Does this change your opinion? I like the company but dont like this very low volume of negotiation.

    • No, I have no problem with low liquidity. I assume the “allocation” you are talking about is a general approval from the shareholders which is quite standard these days.

      If they would actually buy back shares, I would see this as a positve sign with regard to their way of allocating capital.

  • Mmi, could you detail a little bit what you see in Hornbach? This looks like an average business on the surface. Roic does not look that high. They need capital to grow. Growth is not super value add like with software companies. Or is the cash balance excess cash to be deducted? If real estate is worth more this drives roic down further. Do the newly added stores just need time and for now lower the profitability which can always be a reason for bargain in retail?

    • Martin,

      all good questions. My initial thesis was that Hornbach earns maybe 8-10% ROE p.a. plus a little growth which will earn my 10%+ p.a. with relatively little downside. Until 6M 2015, HBM was almost on track, earning me ~8% p.a., wiuth the profit warning however this doesn’t look that good any more.

      Anyway, for me it is a long term low risk / 10% p.a. investment. But of course I need to verify my thesis in the next quarters. Maybe Online is more an issue than I thought.


      • 10% p.a. sounds reasonable. They did not write this in their report but I think the 30 day preisgarantie could be a reason for lower margins. One gets an additional 10% discount if you find the same product anywhere else cheaper including on-line. On the other hand they keep sales and neutralize competitors. The guarantee may be costly in some quarters but overall this should add value. They have free Wi-Fi in stores and even encourage customer s to compare prices.

  • Thanks for sharing. Pfandbriefbank is also one of my strong buys!

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