Some readers might have noticed that I sold my Lloyd’s banking position (with a loss of -16% in EUR7 -8,4% in GBP) in order to partially fund the new Record Plc position.
So why did I sell Lloyd’s ? For this it makes sense to go back to the original write up in April 2015. At the core, I liked the business and the bank as such and thought that government selling and election uncertainty provided an attractive entry price:
Anyway, to me Lloyd’s banking Group looks like an interesting special situation at this time. The share overhang and selling should clear at some time, profits will most likely increase. Over 3-4 years I look for an upside of around 50% plus dividends or ~15% p.a. if my assumptions turn out to be correct.
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First hand experience of value investing in Africa (h/t qed1984)
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Disclaimer: This is not investment advice. PLEASE DO YOUR OWN RESEARCH !!!
A few months ago, fellow blogger Wexboy had a very interesting post on Record Plc, a UK based “specialty asset manager”. Go and read the whole thing, it is worth it.
I try to summarize the business & background in my own words:
Record Plc provides so-called “Currency overlay” asset management services. Currency overlays are in principle used for two reasons.
- To hedge an international investment portfolio into one single currency, usually the currency of the investor and/or
- To gain some extra yield by hedging currency exposures more “dynamically”
It is important to know that they do not manage the underlying assets, but “just” a derivative portfolio hedging the underlying assets and that they do not use their own balance sheet but act solely as an agent for the ultimate client.
Wow, that was fast. In November I looked at the stock but luckily dismissed it. This is what I wrote back then:
However for me, despite I do like financial companies, I don’t want to invest into a company which in my opinion runs an ethical questionable business. Some might argue that Lloyds Banking is not much different but I think that there is still a big difference between a well run main street bank and an aggressive subprime lender.
I do belive that in the long run, a company which takes advantage of clients has a higher probability to get into troubles than one which actually benefits the customer.
Although the “Crook” is out, the stock tanked an incredible -70% alone on Tuesday
So what happened ?
A couple of good spin-off links
Jeff Matthews doesn’t like Uber
John Huber likes Tencent a lot
Some interesting statistics from the US bond markets
Maersk and Amazon are clashing to control the container industry
Is cloud computing already a legacy technology?
Time to do another “travel series” post after the last Tripadvisor post a few months ago.
GDS – The business
The so-called “GDS” (short form of Global Distribution System) is one of the oldest “platform business” I know about.
Basically (and as far as I understand it), it is a real-time repository of available airplane seats, hotel rooms and rental cars from different suppliers (airlines, Hotels etc.). This repository can then be accessed by travel agents, OTAs etc. in order to book these offers for their ultimate clients. The GDS charge money both for access to the system and transactions. The added value comes clearly from the fact that they act as a single interface to many different back-end systems on the supplier side.
Nice portrait of legendary trader & Hedge fund manager Stanley “Druck” Druckenmiller
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Prof. Damodaran updates his Tesla valuation and wonders about the debt financing
Interesting thoughts on product pricing and gross margins
Wexboy with a portfolio update
One story which is currently making the rounds is that of Warren Buffett’s huuuuuuuuuuge cash pile or “war chest” at Berkshire.
Bloomberg had an article in May about the 86 bn “war chest” , and then 2 days ago Bloomberg said that his “cash pile” is now close to 100 bn USD.
Speculations are rampant what he could do with it for instance: