value and opportunity

Another part of my annual blog rituals is a short overview of all the positions I own at the end of each year with a short review of why I (still) own them.

The summaries of the previous years can be found here:

My 27 investments for 2017
My 27 investments for 2016
My 28 investments for 2015
My 24 investments for 2014
My 22 investments for 2013

Interestingly, the list for 2018 contains the lowest number of stocks so far as I tried to concentrate my portfolio a little more into my “best” ideas and kicked out a few positions where I wasn’t fully convinced anymore (Aggreko, Ashmore, Pfandbriefbank, Coface, Romgaz, Kuka, Lloyds Banking) or where the catalyst actually took place (Gagfah, Sapec, Kuka). In general, I would feel comfortable in owning up to 25 positions.

But now let’s look at the 21 stocks I own as of year end:

1. Miko (4,6% weight)

Belgian company, family owned, providing Coffee workplace services and plastic packaging.  Slow and steady grower, doing small acquisitions along the way. No reason to change anything.

2. TFF Group (10,1%)

One of the initial investments from 7 years 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. These days, Whisky barrels are booming and driving growth. This is a position I plan to hold at least 10 years.

3. Installux (3,4%)

Small French company specialized in aluminium appliances. surprisingly resilient. Still run by the founder and majority shareholder, one of the cheapest quality stocks in Europe. Downside well protected via large net cash position. It will be interesting to see how and when they profit from a real recovery in France.

4. G. Perrier (4,4%)

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. As with Installux, a French recovery could improve things a lot.

5. IGE & XAO (2,7%)

Small french software company, controlling the French market for electrical CAD software. Steady growth, highly attractive margins and still reasonably priced. Unfortunately now Schneider SA, the giant electric company has offered to acquire IGE + XAO for 132 EUR. Therefore I will be forced to sell the stock in 2018.

6. Thermador (3,3%)

Thermador is a French based construction supply distribution company. Distinct “outsider style” corporate culture. Thermador has been accelerating (small) M&A this year. Will be interesting to see how this develops. But clearly a “very long term” position for me.

7. Van Lanschot (2,5%)

Dutch based private bank, initially bought as turn around story with new management. Especially in 2017, things look a lot better. The company returned extra capital to shareholders in December (1 EUR/share) and acquired some smaller competitors in the Netherlands. Overall a solid “hold” position.

8. TGS Nopec (3,0%)

“Outsider style” seismic data company. Clearly influenced by the oil price but with strong competitive advantages against competitors due to “capital light” business model. Has weathered the storm much better than almost all other oil related stocks despite significant off shore exposure. If the oil price stays where it is now or gets more expensive, business should pick up at some point in time.

9. Admiral (5,9%)

“Outsider style” direct internet insurance company. UK based, large cost advantages, management/founders own signifcant share positions Several growth projects on the way. As other UK competitors, Admiral has been hit by the “Ogden rate” increase. Clearly more competition in UK but the international subsidiaries seem to make good progress. P/L impacted by organic growth investments. (Very) long term hold. Self driving vehicles might have an impact in the very long run but I trust Admiral to find new opportunities if necessary.

10. Svenska Handelsbanken (2,9%)

Handelsbanken in my opinion is an “Outsider” style bank which has a strong position in Scandinavia and growing quickly in the UK. Although they offer internet access, their focus is on branch based banking with full delegation of responsibility. There seem to be some concerns on real estate prices in the Nordic and Brexit is an issue for UK operations. Nevertheless Handelsbanken for me is clearly a company I want to own for the long run even if the stock looks “unsexy” in the short run.

11. Bouvet (3,5%)

IT consulting company from Norway. Stock price previously had been hit hard by oil decline, Statoil was the largest client. The business and the stock showed a strong recovery in 2016 and 2017. Although my initial target price has been surpassed and I was unsure about the stock in 2017, I will hold the stock as they seem to execute their strategy really well and IT consulting seems to be very good business in the age of digitalization.

12. Partners Fund (5,1%)

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. It has worked very well so far and I assume he will do well over the next 10-20 years

 13. Electrica (4,4%)

Extremely cheap electric grid company from Romania. Guaranteed profit increases in the core business via investment program at guaranteed returns plus extra upside if efficiency gains could be achieved. Some problems in 2017 because of the legacy utility segment where clients get a guaranteed price from Electrica but wholesale prices peaked for some reasons and Electrica had to deliver at a loss. On the positive side, the Romanian economy is growing like crazy and Electrica did buy out the minorities at a very attractive price. Still one of my favorite positions with significant long-term potential but the road seems to be more bumpy than I thought.

14. Drägerwerk Genüsse (3,3%)

Capital structure “arbitrage”. Price of Genußscheine still far below the fundamental value which should be 10x the Draeger Pref shares. Draeger as such is not a great company but i plan to hold this for the long term.

15. Silver Chef (3,4%)

Australian based financial services company which leases in a special format (rent, try , own) mainly restaurant equipment to restaurant owners. Added a second business line (GoGetta) which expands the concept to other assets. Also trying to expand into Canada, which could be big if they succeed. GoGetta problems have been bigger than initially thought, although the core business still does fine. Again, like Electrica, a much more bumpy ride than I thought. If they manage to overcome these problems, the stock would be very cheap.

16. Dom Security (4,6%)

Small French “hidden Champion” which specialises in locks and home security. Although DOM is a small player, they have good positions in Germany and France. Still run by the founder and major shareholder, the stock looks cheap despite a significant stock price increase in 2016 & 2017. Should benefit from a European recovery.

17. Majestic Wine (4,8%)

A UK-based wine retailing company. This is a “bet” on the  CEO which came on board when Majestic acquired online wine company Naked Wine. I think the underlying business is solid despite the Brexit and protects the downside at current levels and the upside lies in a continued success of Naked Wine.

18. Record Plc (3,6%)

New position bought in 2017. Small and specialized Asset management company from the UK. Unspectacular but solid business with good cash generation. Management owns significant part of the company. Business might benefit from MIFID. A typical “boring” company that I prefer to own.

19. Kanam Grundinvest (2,4%)

A special situation (liquidation) that I added in 2017. A formerly open-ended real investment trust that had been closed and moved into liquidation. Little real estate exposure left. Main risk is delay in paying out the available cash which actually materialized. Position did not perform as I initially thought.

20. Metro AG (6,1%)

A special situation (spin-off) investment that I added in 2017. Company looks cheap but P&L currently is impacted by a lot of special effects after the separation of Ceconomy. Another risk is that a significant part of profits comes from Russia and Turkey. As special situation, my time horizon on this is 2-3 years.

21. Cars.com  (4,2%)

The last special situation (Spin-off) that bought in 2017. An online classified business that has been spun off by its ailing parent Tegna. The stock looks cheap compared to other online classifieds. Very recently, an activist investor (Starboard) has taken a 10% position. Will be interesting to see what happens in 2018.