Monthly Archives: February 2017

Some notes from the Berkshire 2016 Report & Letter to the Shareholders

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To sum it upfront: In my opinion there was nothing “really new” or spectacular in Buffett’s 2016 letter.

Operationally, 2016 was not such a good year for Berkshire, operating profit was flat and book value gain lower than the S&P. Nevertheless Berkshire’s stock price outperformed the S&P 500. Comprehensive income however was very good, around 50% better than 2015 (which was not very good).

Net tangible assets declined to around 170 bn from 186 bn mostly due to the Precision Cast Part acquisition which added more than 40 bn in intangibles.

I made some notes which might be interesting to some reader (or not).

Berkshire share repurchases:

The most interesting part from my side was where he writes about share repurchases in general and Berkshire in particular. I actually know some investors who treat the “Buffett put” at 120% of NAV as a real one, assuming that the stock price can never go below that level. This is what Buffet says:

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A few thoughts on the 2017 French election & Risk Management

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Background:

One of the major “geopolitical” events this year will be the French Presidential election. The first round will be held on 23 April 2017. Should no candidate win a majority, a subsequent final election with the top two candidates will be held on 7 May 2017.

Why bother ?

Well, since I have started the blog, French stocks have been one of the cornerstone of my investment strategy. Despite the bad headline news, I found many good and cheap French companies which contributed significantly to the performance. Currently, I have around 28% of my portfolio invested in France in the following stocks (in % of the portfolio):

  • TFF Group (8,0%)
  • Installux (4,1%)
  • G. Perrier (4,4%)
  • IGE & XAO (2,4%)
  • Coface (3,1%)
  • Thermador (2,9%)
  • Dom Security (2,3%)

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Some links (06/2017)

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Charlie Munger speaks at the AGM of the Daily Journal

The “Becoming Warren Buffett” documentary (h/t Monevator)

Current trends in China (h/t marketfolly)

Great annual letter from Longcast Advisors

A great collection of spin-off reading material (Greenblatt, Munger, Klarman)

Google’s self driving car team already cashed out and left. Still no self driving cars on the road but fatal accidents are rising. I guess car insurance will stay for some time. (h/t Abnormal Returns)

Lastminute.com (ISIN NL0010733960) -cheap flights and a cheap stock ?

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Quick Intro:

The idea to look at lastminute.com came from my gocompare post, this is what I wrote back then:

Peter Wood hired the former CEO of lastminute.com, Mathew Crummack.

He seems to be a smart guy, however I haven’t seen anything from him about the future strategy yet. The new CFO of GoCompare ist the old deputy CFO from Esure. So the top managers from Esure seem to have preferred to stay.

I haven’t looked that deeply into LastMinute.com but it seems to do better since he left…(note to myself: check Lastminute.com).

As I have quite a lot of travel related companies on my ToDo list, I decided to start a kind of “mini travel” series, similar to my “Watch series”. As I like to travel myself a lot, I think this should be lots of fun to look into those companies.

The company

lastminute-group-logo

Lastminute.com is a company based in Switzerland which initially went public in 2014 under the (strange) name “Bravofly Rumbo”. They started out as a website to offer cheap flights in Italy and Spain.-

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Hastings Plc (ISIN GB00BYRJH519) – the “next Admiral” or an accident waiting to happen ?

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hastings-image-drop-in

The company

Hastings Plc, a UK-based direct insurance company was IPOed in 2015 at 1,70 GBP per share (IPO prospectus). To call Hastings a “Mini Admiral” is actually very close to the truth.

The company was founded as an underwriting Agency in 1996 by an American called David Gundlach who then sold the company 10 years later. Via a couple of more transformations (MBO etc.) Hastings then was finally brought to the stock exchange. Interestingly, according to some sources, Gundlach had worked at Admiral before so it is no surprise that Hastings looks pretty much like a 1:1 copy Admiral:

They only do direct business, reinsure significant amounts of their premiums and make their money mostly with anciliariy products and fees instead of investment returns like “classical” insurance companies. They only exception is that they don’t run a price comparison website (PCW) but they sell almost all policies via PCWs. Like Admiral, they have branched out into home insurance from

Hastings currently has a market cap of ~1.5 bn GBP and trades at an estimated 17,6 times 2016 earnings.

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A quick look at the Unicredit (deeply discounted) rights issue

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The rights issue

Those who have been reading the blog long enough might remember that Italy in general is a good hunting ground for “interesting” deeply discounted rights issues and especially Unicredit rights issues in the past were very interesting experiences.

So roughly 4 years later, Unicredit has launched another rights issue. Ex date for the subscription right has been Monday, February 6th.

The conditions were as follows:

  • 13 new shares for 5 existing ones
  • a subscription price of 8,09 EUR
  • total volume 13 bn EUR (!!!)
  • subscription rights trade under the ticker UCGAZ

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