Monthly Archives: November 2020

Book review: “Lights Out: Pride, Delusion, and the Fall of General Electric”

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Lights GE

“Lights out” is a recently published book that covers the downfall of General Electric, which was in 2000 the world’s most valuable company with a market cap north of 500 bn USD and a proud history going back to Thomas Edison.

To the outside, the company led by “Neutron Jack” Welch looked unstoppable. With its famous management systems (Six Sigma and others) the company became a huge conglomerate, spanning business from their traditional light bulb and appliances business to turbines, financial, insurance and even TV and Movie studios. GE was most famous for continuous growth and an uninterrupted streak of quarterly profit increases until Jeffrey Immelt took over in 2001.

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Some Links

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Interesting post on the British Brewery stock bubble 1885-1913

Some deep thoughts on the impact of video conferencing (Zoom)  plus a very interesting feature about the founder and history of Zoom

A good pitch for Spotify and what an impact a Spotify playlist has on the music industry

Bill Gates looks back at his book “The road ahead” from 25 years ago

A critical (longread) view on the current status of the Venture Capital industry

How the COBOL programming language still rules in Financial Services

EV/TAM is the new benchmark for Electric Vehicle manufacturers (pre community expenses of course…)

Travel Series: AIrBnB – “Baller IPO” or Desperate Hail Mary (including a 3.5 bn USD accounting time bomb) ?

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Intro

Long term readers know that I have covered the (online) travel industry intensively and that I actually have build up a “post pandemic travel basket” recently. Therefore, I was really excited to look at AirBnB’s S-1 going public filing.

Airbnb is one of the most prominent Unicorns of the last decade. The company was founded in 2007 and has since then become one of the really big names in online travel. It describes itself as having established a new category of travel called “home sharing” and that all the hosts on the platform as well as the clients are a big “community” that make travel “Human”.

However the big “elephant in the room” is the question: Why do they go public now after 13 years ? Why didn’t they go public earlier or wait a few more months once the travel recovery really kicks in ?

There was already a lot of press coverage already for Airbnb in the past weeks. I think in general one could distinguish between the Bull Case and the Bear Case:

The Bull case :

  • It’s a “positive” global brand with strong growth potential and a huge TAM (all travel lodging globally ) 
  • People will rent apartments first if travel rebounds 
  • Restrictions maybe less a problem in cities after Covid-19

One of the biggest cheerleaders of the Bull case is clearly Prof. Scott Galloway who wrote a big post some days ago, putting the value of AirBnB at 120 bn USD with the following statement:

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Some Links

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Interesting feature on German “Tech Investor Wunderkind” Christian Angermayer 

A  pitch for Slack as an investment

Great post on how Social Media compares with the beginning of Television in the 1950s

Good portrait form Barron’s on car salvage company Copart

Wexboy with an epic post on Crypto Investment company KR1

A good reminder from Morgan Housel that it is very difficult to predict what happens after the pandemic

And a good write up on Multi-Chem, a Singapore based IT distributor

 

 

Short cuts: Hello (again) Magnus And Forced German Stock Delistings (Centrotec)

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Disclaimer: this is not investment research. PLEASE DO YOUR OWN RESEARCH !!!!

Play Magnus Group – Again

I really hesitated if I should keep this private but then decided against it. Believe it or not, I have again bought shares in Play Magnus. After initially buying the stock at around 16,90 NOK per share, I sold the shares at a loss at 14 NOK per share. Buying now again a 2% position at 17 NOK per share looks extremely stupid, but these are the reasons why I still did it:

  • when I bought the shares initially, I knew very little about them and I underestimated the volatility of Norwegian small caps which can easily move+-10% on a single day
  • With the stock falling so quickly and with no news, I was afraid that some people might know more about the Q3 numbers which would be the first quarterly earnings after the IPO

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Siemens Energy AG Spin-OFF – ANother Interesting Member of the “Ugly duckling Spin-off Family” ?

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Disclaimer: This is not investment advice !!! PLEASE DO YOUR OWN RESEARCH.

At first a big “health warning”: My track record with Spin-offs is awful although I dedicated significant efforts into this area. Over the last years, I missed out on several good ones (Uniper, Trisura, Osram) and I unfortunately invested in a few bad ones (Cars.com, Metro). My best spin-off investment so far was Italgas.

Siemens Spin-off history

Siemens itself is an interesting case, as under (soon to be former) CEO Joe Kaeser, and even before, they are one of the few German companies that use spin-offs more or less frequently. Over the years, Siemens has spun off for instance Quimonda (bankrupt), Infineon (has recovered quite well), Osram (taken over by AMS) and Siemens-Gamesa (very volatile but strong performance lately). Overall I would say that on average the Siemens Spin-offs did very well despite being mostly “ugly ducks” at the time of spinning off. Siemens Healthineers in comparison was not an ugly duck (despite the stupid name) and that’s why they actually IPOed it.

Siemens Energy AG Spin-off

This is the latest spin-off from Siemens, spun-off on September 28th with a first price of around 22 EUR, a lot lower than initially expected. As we can see in the chart, the shares dropped at first but now recovered to the initial level in line with Siemens AG and the DAX:

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Panic Journal Season 2 (3) – “There’s a Light”

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Just a few days ago we had a total different situation when I wrote my last panic journal entry:

Covid-19 infections went parabolic again, lock downs had already started, the US election was still in front of us, there was really bad weather and markets were in a suddenly very depressive mood.

Just 8 or 9 days later, things look different:  Joe Biden has won and The German-American Duo Pfizer-Biontech released very promising (early) results of its Phase III Study.

As I am not a vaccine/Virus expert, I’ll link to a post on how to interpret the results and try to summarize them:

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Some links

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Quants had a really shitty year so far

Prof. Damodaran with a recap of the “covid-19 stock market”

Valuesque with an interesting deep dive on how to report football broadcasting rights under IFRS (and on socks)

Some interesting facts about the pulled Ant Financial IPO

The three main global Custody banks seem to run the World’s worst oligopoly

Interesting analysis how cost of business travel (or lack of) influences global trade

A really interesting question: Which stock market is the most zombified one ?

All German Shares PArt 34 – Nr. 751-775

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At first some good (or bad) news: By going through the German stock markets once again, I detected that my initial list was already outdated and that I missed quite some new IPOs and listings, so there will be (at least) one more post with German shares after this one before I then can wrap up the series into a condensed watch list.

This time, the 25 (to a certain extent) randomly selected (and US election free) stocks resulted in seven stocks that might be in principal worth watching and/or follow up.

751. L-KONZEPT Holding AG

L-Konzept is a 2.7 mn EUR market cap real estate company that has little business and small but consistent losses. “pass”.

752. Krones AG

Krones, a 1.7 bn market cap company is often considered one of the typical “hidden champions”, being the world leader in manufacturing bottling machinery for the beverage industry. With Covid-19, the whole beverage industry is clearly negatively effected which in turn might make business more difficult for Krones. However if we look at the stock chart, we can see that the stock already peaked in 2018:

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