In my initial post for Dom Security, I lined out why the Commercial Lock business is very attractive in my opinion. As a result, most businesses enjoy nice margins.
Kaba, the Swiss company was always the number 3 with some distance to market leader Assa Abbloy and allegion.
However in 2015 Kaba finally managed to merge with he German family owned Dorma in order become a much larger and diversified Group. In theory Dorma was a great fit for Kaba as they were specializing more in building access systems which should compliment Kaba’s locking systems nicely.
Looking at the stock price, investors liked the merger until end of last year:
As I mentioned in the comments a few days ago, I sold my complete Metro position at around 12,30 EUR /share. Including a 0,70 EUR dividend, this translates into a -26,6% loss and is a new entry into my “flop 10” list.
For me the main take-away of this story is two fold:
One the one hand, listed equity markets are not the best place to raise equity capital once you are listed. It is OK to raise equity once when you IPO but after that, a company should only pay dividends and buy back stock. Part of the reason that Tesla is shorted so much is the expectation that they will need to raise equity which clearly shows the dilemma of public equity markets these days. Personally, I do think we will see more “Softbank style” large private vehicles which will specialize in providing capital to growing companies and save them the troubles of public equity markets until the company is mature enough. Unfortunately this will lead to the shift of a large part of value creation away from public markets and out of the reach of many “Normal” investors.