Monthly Archives: September 2016

Book review: “Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money”

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Knowing more about Bitcoin was one of the points on my personal “to do list” for this year. By chance I found this book on Amazon which looked like it would be a good starting point.

This book is written by a “real” journalist, so the style of writing and the pace of the narrative is very good.

It covers the story of Bitcoin from the very beginning, when a guy calling himself Sathoshi Nakamoto uploaded the original white paper on Bitcoin in 2008 and was met initially with very little feedback.

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Some links

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Why a fish market is not so different from financial markets

The ukvalueinvestor with a short case study on Chemring and the risk of M&A fueled growth

Why you shouldn’t even think about buying Spanish bank stocks (H/T to 2 of my readers, best piece of sell side research I have seen in a decade)

An interesting look at the potential total impact of Electric Vehicles on the economy

Basehit Investing about the really important items in an investment check list

The luxury industry slumps further and how Cartier’s attempt in luxury watches didn’t work out. However better times may lie ahead.

David Merkel eplains why buying stock of an indebted cyclical company is never a good idea, even if Monosh Pabrai and Guy Spier own it (Horsehead)

Finally, check out this relatively new blog GlobalStockPicking. Some pretty good content and interesting (global) stocks in the blog portfolio.

 

 

Bayer vs. Monsanto: Who is the “patsy” at the Poker table ?

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One of the highest profile merger cases at the moment is the Bayer / Monsanto case.

A quick recap:

In may 2016, Bayer made a proposal to buy Monsanto. The first offer was 122 USD per share which was rejected. Bayer increased the offer 2 times, first to 125 USD and currently to 127,5 USD.

The big question is: Why is Monsanto only trading at 107 USD (at the time of writing)? Compared for instance to the initial ChemChina/Syngenta deal spread, the Bayer case looks a lot more solid:

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Uniper/E.On Spin-off: Take one ugly duck and transform it into ….. 2 really ugly ducks ?

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Background:

Monday, Sep 12th will be the first trading day for Uniper, the E.On spin-off. E.On shareholders will get one Uniper share for each 10 E.On shares they are holding.

Just to recap: Uniper will contain all the (unwanted) power generation assets of E.on, so all the “fossil fuel” power plants, the Russian assets and the Swedish nuclear plants plus some other stuff. The German Nuclear assets (and the corresponding liabilities) will remain at E.on due to the reasons I mentioned in the last post.

Uniper is clearly an ugly Duck, maybe the “most ugliest spin-off” I have seen since I started the blog. If we look into the most recent investor presentation, it is clear that you have a problem when the 3 listed growth projects are a German Hard Coal Power plant, q Russian power plant closed due to an accident which will reopen in 2018 and some strange dealings around the North Stream gas pipeline (page 9.). It doesn’t help either that Uniper had to take a 3,8 bn EUR pre tax write down in the first 6 months of 2016.That makes the duck still uglier.

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“Luxury update” – 4 years later (Prada, Boss)

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Almost exactly 4 years ago I pondered shorting luxury stocks in 2 posts.

Part 1 – Idea Generation

Part 2- follow up

The only stock I actually shorted was Prada and I gave up 1 year later as the stock strongly went against me.

Back then, I divided (totally arbitrary) a “peer group” of luxury stocks into 2 sub groups, “tier 1” and “tier 2” brands. Let’s look how those stocks performed over the past 4 years:

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Some links

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Deep thoughts on communciation between investors and management of a company (Graham, Buffett, Bezos)

A fine wine Madoff/Ponzi scheme

The farewell post of Motley Fool’s Morgan Housel and why investing is great

How Hormel foods tries to move beyond “Spam”

A good write up on the “new” Dell /VMWare Tracking stock

Andrew Left (Citron) is done shorting Hong Kong stocks

HIGHLY RECOMMENDED: Damodaran’s valuation class starts again  on September 7th.

 

Coface SA (ISIN FR0010667147) : Ultimate death spiral or contrarian opportunity in an attractive industry ?

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Executive summary:

Coface SA  is a relatively simple contrarian “mean reversion” case:

  • the company at the moment has some specific issues which in my opinion can be solved
  • the industry as such is attractive (within the generally problematic insurance space) with significant barriers to entry and little exposure to interest rates
  • Even in a bad case, the downside at current depressed levels is small. A conservative “mean reversion case” would indicate ~75% upside without assuming any growth
  • no hard “catalyst” and fundamentally it could get worse before it gets better
  • For exposure management reasons, NN Group will be sold and replaced by Coface
  • As always the reminder DO YOUR OWN RESEARCH. THIS IS NOT INVESTMENT ADVISE !!!!

The company:

Coface SA is a French “Trade Credit Insurance” company and one of the Big 3 players of this industry which together have 80% market share.

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