Performance review 6M 2018 – Comment: “Skate to where the puck is going”

-Performance 6M 2018:

In the first 6 months of 2018, the Value & Opportunity portfolio gained +1,45% (including dividends, no taxes) against -2,88% for the Benchmark (Eurostoxx50 (Perf.Ind) (25%), Eurostoxx small 200 (25%), DAX (30%), MDAX (20%)).

Some other funds that I follow have performed as follows in Q1 2018:

Partners Fund TGV: +4.68%  
Profitlich/Schmidlin: -1,67%
Squad European Convictions +2,22%
Ennismore European Smaller Cos +1,72% (in EUR)
Frankfurter Aktienfonds für Stiftungen -0,54%
Evermore Global Value -0,39%
Greiff Special Situation -0.92%
Squad Aguja Special Situation -5,45%
Paladin One +1,8%

Performance attribution:

The top 3 performers on a weighted basis were for 6M 2018 were:

Weight 12/17 Perf ytd Attr
TGS Nopec 3.1% 54.5% 1.7%
Expedia 3.4% 22.2% 0.8%
Dom Security 4.6% 16.0% 0.7%

The worst 3 performers for 6M were:

Weight 12/17 Perf ytd Attr
Electrica 4.2% -12.9% -0.5%
Silver Chef 3.4% -35.2% -1.2%
Metro 6.1% -36.5% -2.2%

The “flop 3” clearly shows the damage done by Silver Chef (already sold) and Metro, which alone account for around -3,5% in absolute performance. On the other hand, especially TGS Nopec has been a pleasant surprise. Holding this stock now for 4,5 years, I had gone through some very rough times, but know it looks like that my patience slowly is paying off.

Portfolio transactions:

The only transaction in Q2 was the initial purchase of a 2% stake in Paul Hartmann. As Q2 is always the strongest dividend quarter, Cash is at around 13% and will increase further, as I expect another payment from the Kanam Fund and as I plan to tender my DOM shares.

The current portfolio, as always can be seen under the dedicated portfolio page.

My average holding period now has reached 3,2 years (ex cash) which I find very satisfying.



Although the major indices didn’t do much in absolute terms in the first 6 months, the spread within indices is significant. The best stock was Deutsche Börse with +20%, the worst Deutsche Bank with -42%.

It is also pretty obvious that Tech stocks are doing much better this days. Why ? I think part of that can be explained that mew tech oriented companies are disrupting one industry after the other and those “traditional” companies that do not adapt quickly enough will not survive.

A good example is for instance the current discussion that (controversial) tech company Wirecard will replace Commerzbank in the Dax. Wirecard is a company that has focused on the profitable parts of traditional banking (cards, electronic payments etc.) but skipping all the unprofitable stuff such as branches etc.

These trends can be seen in other industries: tech driven startups are focusing directly on the largest profit pools” of established industries and are attacking where it hurts most. Insurance for instance is a lot slower, but it is also happening there. The most succesful startups like Lemonade even go a step further and focus on the most profitable products AND the most profitable customers. Digital marketing allows them to target exactly the clients they want (young, aspiring people), which is something traditional players can’t or don’t want to do. In general, especially younger customers are expecting much easier interfaces and customer centric organizations than the generation before.

There are many more examples, like the recent problems of Fielmann, one of the German Smallcap super stars over many years. The company issued a fat profit warning recently and part of the problem is clearly the booming online market. I don’t know if Fielmann upgraded its IT systems but a 3 or 4 years ago they still had to Fax (!!!!) data from one branch in Munich to another because I ordered my glasses not in the original branch.

One thing that has changed in my opinion is the fact, that funding these days is not an advantage anymore for established players. Some years ago, the biggest risk even for successful start-ups was that they suddenly might run out of cash. These days however, if a start-up has a good business model, funding is almost guaranteed and thanks to Softbank, the amounts are sometimes mind-blowing. There might be some bubbles forming already, but I think start-up funding has been transformed already and will make even more difficult for the established players in the future.

What does this mean for us investors ? I think especially as value investors, “cheapness” can be actually quite dangerous. A low valuation can be either a potentially great investment or indicate that the company is attacked and maybe already losing. Clearly, over reactions in stock prices can create opportunities in the short run, but for long-term investors it will most likely pay off to stay away from these kind of investments.

I think it makes also sense for traditional Value Investors to look at what’s happening in the Venture Capital space in order to get an idea which sectors are becoming under attack. I think this approach can be best reflected by the following quote from Ice hockey legend Wayne Gretzky:

““Skate to where the puck is going, not where it has been.””

For me this means that especially value investors need to focus much more on what’s lying ahead a much less on historical numbers and potential “mean reversion” assumption.




  • Among the managers I most appreciate, 2 significant changes during this quarter: exited resp. Nestle & Berkshire…

  • It is also interesting which areas are not under attack from start-ups: pharmaceuticals (or a least there it is nothing new), construction, real estate, classical industry with factories(ok, ignoring elon musk who still might run out of money), I would say 80 percent are not in danger at all. It’s mostly finance, retail and areas where the legacy business is to have information advantage (for example travel agency, where the agent had the advantage of exclusive access to comparison information). Even I think about starting something, just because I think a process of information flow should be smoother.

    This has to do with the change in communication methods we had recently, which naturally changes the way business based on information works. This is not that new, if fundamental changes happen also businesses have to change or to be replaced… also abundant funding is not new, just think about the railroad bubble in the nineteenth century, where railroads where funded that never could be profitable…

    • Thanks for the comment but I disagree. Healthcare is an area where change is slow but a lot is coming and the same for manufacturing etc. I would say that maybe 20% are somehow “safe”.

      The railroad comparison comes often, but one major difference is that good digital business models need relativley small amounts of capital because they can scale at almost no incremental cost.

      In my personal opinion, we are still very early in this transformation.

  • Value investigator, 100% approve.

  • Value Investigator

    Interesting points on the transformation of startup-funding. And it may not only be the funding that has changed, the quality of technological disruption also seems to be on a higher level meanwhile (enabled by cloud-computing, faster computing, better/more programmers).

    For ETF investors this may be bad news. While they will still not underperform the index (by definition), the index constituents are beeing attacked, while much of the value-creation happens outside of the indices. When these new companies finally IPO, most of the growth is probably behind them.

    • LOL. I expect index investors to outperform venture capital as an asset class. Too much money chasing too few ideas, with frequent mispricings due to chasing elusive unicorns (invest in 99 fails to get one 50-bagger…)

      Besides the benefits of disruption often accrue to other stakeholders than the disruptor (as they should in a competitive market).

      • Value Investigator

        The trend is that huge private companies like Uber and Airbnb IPO later and later. Index returns would not have been the same if facebook or google were still private.

        • Value Investigator

          The point is also that this trend increases the speed of disruption. Had Uber and Airbnb already IPOed, they would have had to show profitability much earlier. As they are private and well-financed, they can first capture huge markets within a few years and focus on profitability when most of the market is captured. Many investors are having a good laugh at wework right now. I am pretty sure they will all be embarrassed in 10 years – its crazy how quick these companies are changing the world (of course at the cost of many losers / traditional companies).

        • If Über and Airbnb ever get profitable, won’t they be ripe for (ever faster) disruption? eBay for taxis and eBay for holiday rentals sounds like antique business models in internet time. Nothing new since 1995? Surely at some point a Blockchain or other decentralised and cheaper solution will annihilate old school monopolists.

        • The bulk of VC money flows to index companies anyway: a lot of startup funding ends up spent on ads and cloud hosting provided by listed companies (and you get paid by losers too, selling shovels is a great business…)

    • When a company is big enought for a SP500 entrance (around 5 – 10bn $) there is still a lot of Runway to the top of SP500.

  • Hi,
    Can I ask how you calculate your gain? Is this for a fixed portfolio – i.e. no cash additions or removals from the portfolio throughout the period? Or have you added/taken out any amounts? and if the latter, how do you then go on to calculate the % change? I ask because the IRR calculation can be quite sensitive to the timings of cashflows in/out if they are there.



    If we were to take a step back and start a fresh with what we have learned: Does Silver Chef offer a good risk/reward proposition at AUD 3?

    And 2) how did Majestic not make it in your top 3 performers?

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