Monthly Archives: July 2016

Some links

Must read: Deep thoughts on changing  competitive advantages from Jan (TGV Truffle fund)

Competitive Advantages 2: How ARM did beat almighty Intel

Steve Balmers “Truth”: How Microsoft missed mobile

The guy from Punch Card Blog look into one of heir failed investments (CONN)

Chipotle and the next big thing: Burgers. Plus a look behind the Chipotle counter.

Stock picking is not dead, closet indexing most likely will be soon

Short cuts: Kuka, Swatch & Silver Chef

Kuka:

This is something that ran over the ticker today with regard to the Kuka case:

CFIUS Likely to Challenge Midea-Kuka Deal, Height Says

By Kasia Klimasinska

(Bloomberg) — CFIUS will likely challenge this deal “because Kuka has a direct relationship as a primary robotics supplier to Northrop Grumman,” Height analyst Nils Tracy says.

  • “At a minimum, we expect the transaction will face an extended CFIUS review timeline and a number of divestures”

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Some links

Recommended: TGV Partners Fund 6 month report: “Don’t be a dividend monkey”

Recommended: RV Capital 6 month report: “Is it possible to be long-term and contrarian?”

Congratulations. John Hempton (Bronte) got a full Bloomberg profile

Matt Levine on the FTC ruling for Herbalife

Buying a diet shake from a Herbalife distributor will now be harder than buying a gun; 

Why Active Asset Managers need to change their business model

A good checklist from Forager if an Acquisition makes sense (or not)

The current state of the Bordeaux WIne market (FT.com, search result)

 

Waddell & Reed (WDR): “mean reversion” opportunity or potential Value Trap ?

The company:

Waddell & Reed is a Kansas based Asset Manager (mostly listed equity) & Financial Advisory firm. The company became somehow infamous during the 2010 “flash crash” when they were initially blamed that one of their order had caused the crash. Later, the SEC blamed a guy in London for it.

W&R looks like an interesting “High quality mean reversion” type of value stock.:

Market Cap: 1,4 bn
P/E (2015): 6,9
EV/EBIT: 4,5
Div. Yield: 10,3%
10 year avg. ROE: 33,4%
10 Year avg. NI margin: 14,1%

So we have a high ROE/ROCE, high margin business with significant net cash that trades at a ridiculously cheap level (based on 2015 earnings). There is a relatively recent SeekingAlpha “long” pitch with the following summary:

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DOM Security (FR0000052839)- A Hidden Champion with a “key to unlock” higher profits ?

Executive Summary:

Dom Security is a small French company specializing in commercial lock systems. The business itself is attractive, the valuation relatively cheap, although the company is a small player. The “kicker” in my opinion is the fact that the largest subsidiary, DOM Sicherheitstechnik Germany, had significant R&D expenses over the last few years, which, if things normalize, could lead to a significant profit increase within the next 2-3 years to the extent of +40-45% which should translate into a similar upside for the stock price.

Additionally, the rebranding in 2015 could lead to better profitability in other units and in turn to potentially higher multiples, which at the moment are only a fraction of the listed larger competitors.

WARNING: This is not investment advice. Do your own research. The presented stock is very illiquid, so be extra careful.

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