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.
So what went wrong ?
Looking back at my initial post, my original idea was to buy the “ugly” part of old Metro which was supposed to be Ceconomy. This was clearly influenced by missing out on Uniper when it spun off from E.On, which was a similar ugly duck but performed very well.
One observation that I made back then was the following:
Looking at the stock chart we can see that Metro didn’t create a lot of shareholder value over the last 20 years.
When the split actually happened, Ceconomy traded far above the level that I thought would be interesting:
FTAlphaville compares Turkey to Thailand and Malaysia in the 90s Asian crisis
The Canada Goose stock looks VERY expensive
Some good insights into short selling from Glenn Chan
Bill Gates recommends to read the book “Capitalism without Capital”
A deeper look into Alibaba’s “numbers salad”
Bronte’s John Hempton tires to understand why Bayer shareholders didn’t stick around after a wave of lawsuits seems to hit newly acquired Monsanto
Off topic: rest in Peace Aretha Franklin
Tesla / Elon Musk
Elon Musk’s “Tesla is somehow going private” Tweet has triggered a lot of comments and discussions (good coverage on FT Alphaville).
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.
John Hemptan from Bronte likes small business accounting software company Xero
David Einhorn still has a very bad time (Greenlight Q2 report)
The power of indices: Example Siebert Financial
10 very smart insights from a Venture Capital veteran
Big City real estate markets seem to run out of steam
33 “hacks” from Ryan Holiday on how to be a happy & productive person