value and opportunity

Following an annual tradition, by the end of the year, I review my portfolio by writing/updating very short summaries for each individual position.  16 of the 23 positions from last year are still in the portfolio and I have added 7 new positions. That turnover has been partially driven by exits/take-overs (Schaffner, Logistec) and by finding new ideas. A more comprehensive Performance review will follow in early January 2024.

A short user guide:
My preferred style of investing is a bottom up approach, focusing on 20-30 small/midcap stocks that in my opinion have a good return/risk profile over the next 3-5 (or more) years. Many of these stocks are not household names and are unlikely to make spectacular gains in any single year. Many of them look interesting only after the second or third glance and are rather boring, which is exactly what I am looking for. So if you are looking for a “Hot stock for 2024”, this post won’t help you much.

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

As a special service and to offer something “fresh”, I have created a new portfolio overview chart based on holding periods which I proudly present here:

The summaries of the previous years can be found here:

My 23 Investments for 2023
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 7,4%, Holding period 13,0 years)

TFF is the “Last stock standing” from the initial portfolio 13 years ago. It is the world leading, family owned & run oak barrel manufacturer. Their official motto is “Time is on your side”. Has grown well over many years due to Asian demand for aged French wines and opportunistic acquisitions. Whisky barrels have added to  growth. After a couple of years of organically building US operations (Bourbon) from scratch, which required significant capital outlay and no sales, sales have increased significantly in the previous business year and also Q1 2023/2024 looks promising. No reason to change much apart from some rebalancing, “Long term Hold”

2. G. Perrier (5,1%, 10,8 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). Even in a difficult 2023, they managed to grow revenues with the Defence segment leading. 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 (4,6%, 10,5 years)

Thermador is a French based, specialist construction supply distribution company with a focus on pumps and anything connected with water circulation. Distinct “outsider style” corporate culture with an emphasis on decentralized decision making and regular M&A activity. 2023 started well but the growth slowed down quite dramatically with the construction sector. I added a little to the position during the year. “Long term hold”.

4. Admiral (6,5%, 9,4 years)

A direct retail insurance company. UK based, cost advantages, founders still own share positions, however have now left the company for age reasons. The EU subsidiaries are still making good progress with a long growth runway in front of them. After a bad 2022, the stock has rebounded and it could be that 2023 was the bottom of the instance claims cycle. I have been “re-underwriting” Admiral some time ago, but there are also some aspect that I like less than in the past, especially the increasing UK cost ratios and inability to solve the US problem with the loss making subsidiary there.   “hold, but watch”.

5. Bouvet (3,8%, 9,4 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 every year, again with double digit (organc) growth in 2023. Compared to the quality of the business, the stock is not too expensive. “Hold”.

6. Partners Fund -MSA Capital (4,0%, 8,3 years)

An investment into a fund run by a very good friend. Mathias is a “Munger style” investor with a concentrated portfolio of “moaty” 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. After a bad 2022, the fund price has recovered recently. Other than many “Cathy Woods style” growth investors, I am 100% sure that the Partners Fund will continue to do well over the next 10-20 Years “Long term hold”.

7. Sixt AG Preference shares (4,1%, 3,9 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.

2023 saw a rebound after a significant loss in 2022. The current P/E of 8 doesn’t give any credit to the quality of the company. What I will never understand is the fact, that the Pref shares trade at such a discount to the common shares. “Long term hold, potentially add”.

8. Chapters Group (1,0%, 3,8 years)

Chapters is the new name of Mediqon and 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 a few platforms through which they acquire small business. The company again managed to sell shares to new investors at high share prices. Jan, the CEO did a very good podcast this year that brought some publicity. With a market cap of 280 mn EUR, the company now also might attract more investors. “Long term hold”.

9. AOC Fund (4,1%, 2,4 years)

The second fund investment. This time into an “activist fund”, most famous because of its successful campaign on Stada some years ago. They take a pretty concentrated long term approach and actively work with/in company boards. Besides te really great ong term performance, a goal is also to follow and trying to learn from them. After a very strong 2022, 2023 so far looks like a weak year year in absolute and relative terms as a couple of the psotions (AGFA, PNE Wind) were struggling. The long term track record is still outstanding. “Long term Hold”.

10. Alimentation Couche-Tard (4,9%, 2,9 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) almost 3 years ago. The company is famous for its decentralized, entrepreneurial culture and excellent capital allocation. After a failed bid for Carrefour, ACT had 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”.

11. BioNTech AG (1,1%, 2,8 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. 2023 was very bad, with the stock down -40%, but luckily I sold around 1/3 of the position close to peak prices. I still 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. To be honest, it is more a “Collector’s corner stock” than a core position. “Hold”.

12. Solar Group A/S (3,3%, 1,6 years)

Solar Goup was 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. In 2023, the company experienced a slow down with the rest of the construction industry, but in my opinion managed quite well. The stock price however is down -22%, valuing in the company at 5x 2023 earnings. A couple of peers have already recovered in the past few weeks, so maybe 2024 will be a better year.  “Hold”.

13. DCC Plc (5,9%, 1,1 years)

At its core, DCC is a very unglamorous, mid-cap distribution company headquartered in Ireland and 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 traded at very attractive valuation levels. The main business, (fossile) Energy clearly has challenges, but DCC is adressing this actively in their strategy. YTD 2023 has been very good for the Energy segment, whereas the other segments struggled a bit. Over the past few months, the stock recovered nicely. “Hold”.

14. Royal Unibrew (3,6%, 1,2 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.

As the rest of the alcoholic beverage industry, they had problems in passing cost inflation to customers in 2022/2023. Inititally, investors ignored that before than the stock price suffered in the second half of the year. Additionally, they have to digest a larger acquisition. For me, the long term case is still intact,“Hold”.

15. ABO Wind (1,9%, 1,8 years)

ABO WInd is one of my two German renewable stocks. Operationally, things look exceptionally good. ABO Wind is very active and profits from the speeding up of permiting in Europe as well as from projects such as Green hydrogen in Canada. Unfortunately, the founders decided that they want to transform into a “KGaA” which curtails minority investor rights. Personally, I think they are acted more stupid than evil, but investor punished the stock with a loss of -40% in 2023. However, that makes the stock extremely cheap compared to the value that is inside this company. However one needs to watch if and how Management will be able to focus on business and how capital allocation will develop. “Hold & Watch”

16. Sto SE (3,3%, 1,3 years)

Sto SE, the German insulation company, is the remaining member of the “freedom Insulation” basket”.Sto is financially really solid and the valuation is moderate. However, as other construction related stocks, Sto suffered from the decline and also regulatory uncertainty esp. in Germany. I had added to the position through the year. I do think that over a period of 2-3 years, a recovery especially in renovation is very likely. Despite guiding down their sales for 2023, they upheld their EBIT target which gives me confidence into their mid term targets. “Hold”.

17. SFS Group (3,9%, 0,9 years)

SFS Group was one of the first new addition in 2023. Swiss based SFS produces metal precision parts and also distributes tools for the machinery industry. They managed to acquire Hoffmann, a well known German tool distributor. As a global active Group with some exposure to construction (fasteners), SFS saw a slow down in 2023, but especially distribution did well. I also like the culture with a big focus on the apprenticeship system. The CEO has started his carreer as an apprentice and worked his way to the top. I hope for a very boring, but long term positive development despite a potentially dificult 2024. “Hold”.

18. Logistec (4,3%, 0,7 years)

Logistec is a Canadian Bulk terminal operator that I “discovered” in March. Run by the daughter of the founder, this looked like a great long term compounder. Luckily or unluckily, the family decided to sell to a Global Infrastructure fund. The deal will be settled in January 2024 with a decent +50% gain, that’s why it is the (+1) share that will automatically disappear early next year. I am not sure that the timing for the sale was optimal, but I can’t complain too much either. “Hold”.

19. Energiekontor (3,6%, 0,5 years)

Energiekontor is my second renewable energy company. The main difference to ABO Wind is that they also own and run renewable power plants and do have a very good capital allocation. They don’t operate as internationally as ABO Wind. Energiekontor is not as cheap as ABO Wind but still very good value and should be able to improve profits significatly, despite haveing a very good year already in 2023 with a “last minute” increase in guidance. “Hold, potentially add”.

20. Italmobiliare (4,5%, 0,3 years)

Another 2023 newcomer. Italmobiliare doesn’t deal in real estate or furniture, as a bad translation might indicate, but is a Private Equity style investor into Italian “Quality” companies, run by the current head of the founding family. At the time of purchase, the stock traded at around 50% of intrinsic value and many of the portfolio companies, especially the larger ones like Coffee brand Borbone and high end perfume maker Santa Marie Novella have very good growth prospects. “Hold, potentially add”.

21. Laurent Perrier (1%, 0,4 years)

Laurent Perrier is also an 2023 addition, a small position that I see rather as part of a “stock collection”. Laurent Perrier is a pure play Champagne company with a long history, a very good brand and based on “post Covid” numbers looked quite cheap. It needs to be seen how Champagne does through a potential 2024 recession, but Champagne is something that has been around for a long time and might stay relevant for an equally long time. “Hold”.

22. DEME Group (3,4%, 0,1 years)

DEME, a Belgian dredging and offshore wind construction company came onto my radar in 2023 when due to some (in my opinion unique and temporary) issues at Oersted, Offshore wind suddenly got a very bad reputation and DEME’s share price git hammered. DEME is one of the main global players in Offshore Wind construction and will very likely grow for many years with the industry. In addition they have a very solid dredging business and some interesting “real options”. In 2023, profitability was not as good, but I expect this to improve going forward. the company is majority owned by Ackermans van Haaren, a Belgian Holding company. “Hold”.

23. SAMSE Group (3,1%, 0 years)

SAMSE was my final 2023 addition. A french distributor of building materials that has been growing nicely for a long timeand is majority owned by the founding families and the employees. A very nice corporate culture combined with a quite cheap valuation that might reflect the uncertainties in the construction sector and a potentially difficult year in 2024. However, as a good capital allocator, SMASE might come out of this as a much stronger company, especially if they can buy competitor Herige at a decent price. “Hold”.