value and opportunity

Following an annual tradition, I’ll try to review my current portfolio at least once a year by writing short summaries for each individual position.  14 of the 28 positions from last year are still in the portfolio and I have added 9 new positions. That tunover has been mainly driven by the events in 2022, which have changed fundamentals for quite a few of the old positions, but also opened up opportunities for new ones. A more comprehensive Performance review will follow in early January 2023.

A short user guide:

My style of investing mostly concentrates on 20-30 small/midcap stocks that in my opinion have a good return/risk profile over the next 3-5 years. Many of this stocks are not household names and are unlikely to make spectacular gains in a single year. Many of them look interesting only after the second or third glance. So if you are looking for a “Hot stock for 2023”, this post won’t help you much.

And always remember: THIS IS NOT INVESTMENT ADVICE. PLEASE DO YOUR OWN RESEARCH.

The summaries of the previous years can be found here:

My 28 Investments for 2022
My 21 (+6) Investments for 2021
My 20 investments for 2020
My 22(+1) Investments for 2019
My 21 investments for 2018
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

Let’s go:

1. TFF Group (Portfolio weight 8,1%, Holding period 12,0 years)

TFF is the “Last stock standing” of the initial portfolio from 12 years ago. It’s a family owned & run oak barrel manufacturer. Has grown well over many years due to Asian demand for oak aged French wines and opportunistic acquisitions. Whisky barrels have added to  growth. After a couple of years of organically building US operations from scratch which required significant capital outlay and no sales, the first quarter of the 2022/2023 FY saw a significant increase in sales (+67%) which explains the good performance in 2022. No reason to change much apart from some rebalancing, “Long term Hold”

2. G. Perrier (5,0%, 9,8 years)

French, family owned & run small cap, specialist for electric installations with a strong position in Nuclear maintenance. Good growth despite economic headwinds. They added a new segment in 2021 (aerospace and defence). Although top line grew significantly in the first 9M, the share price was relatively weak. Back in 2013 I bought it as a cheap stock, it turned out to be a well run, decently growing company that compounds well. “Long term Hold”.

3. Thermador (4,4%, 9,5 years)

Thermador is a French based construction supply distribution company. Distinct “outsider style” corporate culture with an emphasis on decentralized decision making and regular M&A activity. Thermador started very well into 2022, however growth slowed down a little in Q2, only to re-accellerate in Q3. Unfortunately, I failed to add in September when the share traded near 60 EUR. “Long term hold”.

4. Admiral (5,6%, 8,4 years)

“Outsider style” direct retail insurance company. UK based, large cost advantages, founders own significant share positions. Several growth projects on the way. The EU subsidiaries are making very good progress with a long growth runway in front of them. After a very resilient 2021, the stock suffered significantly in 2022 along with all other UK insurance stocks and declined by around -34%. Due to the nature of the business (1 year renewal cycle), the rapid rise in claims inflation can only be passed on with a time lag which hurt profits to some extent. Also Reinsurance might become a little bit more expensive. On the plus side, Admiral’s competitive advantages persist and even after the exit of the last founder, the company still seems to be well run.  “Long term hold”.

5. Bouvet (3,8%, 8,4 years)

IT consulting company from Norway. When I bought the stock eight years ago, the stock price previously had been hit hard by the oil price decline, Statoil was the largest client. The business and the stock showed a strong recovery since 2016. I was unsure about the stock in some years but the company kept growing. In early 2020, I sold half of the position (much too early of course). The company surprises me very year (+20% Sales and EPS in 2022) and wih Norway drowning in Oil and Gas money, thing could remain Ok for some time. Compared to the quality of the business, the stock is not too expensive. “Hold”.

6. Partners Fund (4,1%, 7,3 years)

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 and he has been ouperforming my portfolio by some percentage points per year until 2022. At the time of writing, 2022 looks like a very bad year. Other than many “Cathy Woods style” growth investors, I am 100% sure that the Partners Fund will recover and do well over the next 10-20 Years “Long term hold”.

7. VEF (formerly Vostok Emerging Finance (1,3%, 3,7 years)

This is the sister company of Vostok New Ventures (that I sold in 2020), but specializing on Emerging Markets Fintech. The fund has a large weighting in Brazil which I find very interesting. The management runs the portfolio extremely patient and only invests when they see a real opportunity. The share price got hammered in 2022 like many other “listed VCs”, thankfully less than sister company VNV. The largest position, Brazilian Fintech Creditas seems to do still relatively well. Recently I wrote about my doubts that listed Venture Capital has some structural issues. For VEF, I am still prepared to wait a year or two in order to see how this plays out. “Hold”. 

8. Sixt AG Preference shares (4,0%, 1,9 years)

Sixt is a company I have been admiring for a long time but never managed to “pull the trigger” to buy. Finally, during the dark days of Covid-19, I managed to build up a position in the cheaper pref shares.

2022 was not a good year for the stock price, the stock lost-36% despite an increase in ~40% in sales and +60% in EBT. Sales and profits are now significantly above pre-Covid levels. This translates int ~8x 2022 P/E. Even assuming that 2023 will be a tougher year, I still think that Sixt is attractve at this level. What I will never understand is the fact, that the Pref shares trade at such a discount to the common shares. I added to the postion during my year end rebalancing. “Long term hold”.

9. Mediqon AG (0,8%, 2,8 years)

Mediqon is one of the  remainders of my “German Basket” attempt. The company tries to position itself as something like a “Mini Constellation” or “Mini Danaher” and has established two platforms over which they acquire small business. The company again managed to sell shares to new investors at high share prices, one of the investors is actually one of the Rayles brothers who founded Danaher. With a market cap of 200 mn EUR, the company now also might enjoy some scale effects. “Hold”.

10. AOC Fund (4,7%, 2,4 years)

My second fund investment. This time into an “activist fund”, most famous because of its successful campaign on Stada. They take a pretty concentrated long term approach and actively work with/in company boards. Despite the fantastic historic performance I am also trying to learn from them. 2022 so far looks like a very strong year in relative terms, supported by one of their large positions, PNE Wind which mor than doubled in 2022. “Long term Hold”.

11. Alimentation Couche-Tard (4,5%, 1,9 years)

ACT entered the portfolio in 2021 as one of my very few “large cap” investments. It was the rare chance to get into a high quality compounder at a reasonable valuation (13-14x trailing PE). The company is famous for its decentralized, entrepreneurial culture and excellent capital allocation. After a failed bid for Carrefour, ACT seems to have fallen out of favor with some investors which opened this opportunity. Of course there are some issues such as the issue how EV charging will develop and certain ESG topics (Tobacco sales), but overall this is one for the long run although it needs careful watching (EV charging). “Long term hold”.

12. Meier & Tobler AG (8,1%, 1,5 years)

Meier & Tobler is one of the stocks I discovered through my “All Swiss Shares” series. The company itself runs a relatively boring service & distribution business in Switzerland, providing heating and cooling equipment and services to households and companies. The stock became cheap because they bungled a merger with one of their biggest competitors.  In 2022, the stock took off like a rocket mainly due to high energy prices and a lot of business from people who want to upgrade their heating systems 8heat pumps). I have been reducing the position already two times by 1/10 as the valuation has reached already the midpoit of my targeted range.  “Hold”.

13. Schaffner AG (4,1%, 1,2 years)

Schaffner is another Swiss discovery. It is a small company that has undergone a significant transition over the last months/years in order to concentrate on the current trend towards Electrification. The stock looks relatively cheap compared to the underlying quality and reported growth rates.  In 2022, overall numbers are still a little bit depressed because the small remaining automobile segment has been struggling, whereas the main business runs like a “swiss clockwork”. If the company would be valued like other similar Swiss stocks, they should have significant potential. “Hold”.

14. BioNTech AG (2,2%, 1,8 years)

BioNTech was an “inspiration” from the beginning of 2021. It was meant to be a “bet” both on the founders and the technology as well as a hedge against a prolonged Covid-19 pandemic. I sold around 1/3 of the position close to peak prices, but I plan to hold BioNTech for the mid-to-long term as I think that there is a decent chance that BioNTech can develop the mRNA platform also into a pipeline against other diseases, especially cancer which was the original purpose of the company. The billions in cash they made on the Covid vaccine could speed up the process. “Hold”.

15. Nabaltec (5,7%, 0,9 years)

Nabaltec is a small German Specialty Chemicals company that I added in February. The timing was clearly not optimal, as, together with almost all chemical companies, Nabaltec got hit hard be the effects of the war in Ukraine, especially with regard to high Oil, Gas and electricity prices. Interestingly, Nabaltec managed to raise prices and as a result, increased the profit forecast several times in 2022, despite some weakness in their “growth story” Boehmit, which is an essential part of EV battery packs. From what I have seen so far, Nabaltec is a conservatively run “hidden champion” that will clearly struggle with high energy prices for some time, but managed so far really well.

There is also some “hidden upsides” in the business, such as a strugling US subsidiary which seems to offer now a very interesting strategic option. After reducing the position in early summer, I was lucky to increase it again at very low prices. This is clearly a position to watch, but overall I am prepared to hold this for a couple of years in order to realize th full value. “Hold”.

16. Solar Group A/S (4,8%, 0,6 years)

Solar Goup is the first result of my “all Danish Shares” series. It is a small Danish wholesale company that provides supplies for heating, cooling and other electrical focused components to craftsmen in Scandinavia and the Netherlands. After “hibernating” for a couple of years, the company has started growing in 2021 and has continued to do so in 2022. The company is growing at double digit rates with improving margins and comparable high returns on invested capital (~25%). They have raised their 2022 earnings forecast 3 times.

Maybe I am overlooking something here (knowing that there will be some negative impact of a general housing slow donw), but to me it is a complete mistery why this stock trades at only 6,8x 2022 P/E.  “Hold”.

17. DCC Plc (4,6%, 0,1 years)

DCC is the latest addition to the portfolio. At its core, DCC is a very unglamorous, mid-cap distribution company operating via 3 different platforms (Energy, “Technology” and healthcare) around the globe and could be characterized as “serial acquirer”. Despite an extremely strong 20 year+ track record, the stock fell out of favour and trades at very attractive valuation levels.

The main business, (fossile) Energy clearly has challenges, but DCC is adressing this actively in their startegy. So far, the entry point seems to have been “too early”, but this inevstment clearly needs some time in order to find out if my case works or not. “Hold”.

18. Royal Unibrew (4,4%, 0,2 years)

Royal Unibrew is the second Danish addition resulting from my “all Danish shares” series. What I liked about the company is the fact that on top of a very strong track record, they seem to have a very interesting decentralized culture and really good capital allocation skills plus top notch reporting. The business as such seems to be a vey stable on and very attractive compared to other beverage categories.

It needs to be seen if they can adjust prices as quickly as they predicted in order to neutralize their increased costs. If that would  be the case, the company would have soem significant fundamental upside from depressed 2022 level. I hope that this is a stcok that I can hold long term.“Hold”.

19. GTT Group (4,1%, 0,8 years)

GTT Group or formerly known as “Gaztransport et Technigaz” is  a French stock that I bought a second time, right after the Ukraine war started (first time in 2016). The company has a pretty unique and almost monopolistic business model in owning the patents on how to design and manufacture the interior and isolation of large LNG carriers. Normally, despite the high margins and returns on capital, the stock would have been much too expensive for my liking, however the special circumstances made me establish a “tactical” position in the stock as a main beneficiary of the unavoidable construction boom in LNG vessels. I already took some profits when the stock was up +50%, in the recent weeks, the stock price was weak due to the ongoing issues with Korean authoroties who are keen to give a bigger part of the “cake” to their native shipbuilders. As a tactical position, this is a “Hold but watch closely”.

20. ABO Wind (3,6%, 0,8 years)

ABO WInd is the sole remainder of my tactical “Freedom Energy” basket that I established right after the start of the Ukraine war. I kept ABO Wind because in my opinion, the company is still significantly undervalued. Their “develop and sell” business model makes it much harder to undertand the real value creation which in my opinion is significant.

The company is set up to create significant long term value for shareholders, although it might take some time until this is fully reflected in their P&L. Looking at market multiples, in an M&A transaction, the intrinisc value of the business would be significantly higher than the current share price. “Hold”

21. Rockwool (1,1%, 0,3 years)

Rockwool, a Danish manufacturer of insulation material based on Rock wool, is part of my “freedon insulation” basket that I started in Autumn. I decided to keep Rockwool mainly because I think it is a “quality company” and in addition has supper solid finances. It needs yet to be seen how much they will suffer from a hard real estate downturn, however in the mid term they should clearly benefit form the trend to insulate buildings and save energy. “Hold & Watch”.

22. Sto SE (1%, 0,3 years)

Sto SE, the German insulation company, is the second remaining member of the “freedom Insulation” baskat”. As Rockwool, Sto is financially really solid and the valuation is moderate. “Hold & Watch”.

23. Recticel (0,6%, 0,3 years)

Recticel is the third remaining insulation company. I added it later on when I learned that I missed out on it as an European insutlation company. Recticel underwent a significant transformation and did sell all other business segments with the exception of insulation. When all the pending transactions have closed, Recticel looks very cheap. “Hold & Watch”.