Disclaimer: This is not investment advice. PLEASE DO YOUR OWN RESEARCH !!!
Agfa-Gevaert was on my research list for some time now. Fellow blogger Undervalued Shares than triggered my renewed interest with their post from a few days ago and one of my best “Special situations” ideas ever was a Belgian company (Sapec).
I’ll try to summarize the part of the post that deals with Agfa:
- Active Ownership, a relatively new but successful German activist fund (Stada) has build up a position (~14%] and board membership (actually the Chairman) in Agfa Gevaert, the traditional German-Belgian film / imaging company
- Despite having some interesting assets, Agfa didn’t create shareholder value over a long time
- opaque reporting and a 1 bn EUR pension liability made it unattractive to stock market investors
- In 2020, Agfa managed to sell part of its Healthcare IT segment for 975 mn EUR
- Initially, the stock went up to ~5 EUR based on the first info on the sale but hasn’t fully recovered yet
A lot has happened over the last few weeks for my 4 largest special situation investments:
Actelion / Idorsia
The original Actelion idea was very simple: Buy an M&A target at a small discount which is relatively safe and get something (the Idorsia spin-off) extra which no one seemed to have noticed.
Although the case played out exactly as I thought and Idorsia even seems to be worth more than I assumed, I only made around +4% on it. Not bad for around 5 months but not great either.
Looking back I think I made 3 mistakes:
Disclaimer: This is not investment advice. PLEASE DO YOUR OWN RESEARCH !!!
I am currently trying to build up exposure to what I expect to be a long term trend towards electrification (see the first post). As I am still learning on the way, I decided to start with a “basket” approach where I try to build a basket of (lower weighted) potentially interesting stocks and then dive deeper during the following months/years So the initial analysis will be a little bit more shallow than usual.
This should be seen as a “scientific experiment”, so it could easily be that I find out that some (or all) of the positions don’t make any sense and I will sell them.
An alternative would be to read for months/years, write down a lot of stuff and then come out with a few “conviction investments” but that path is more difficult for me to implement. I prefer to get my toes into the water early in order to remain motivated.
As the whole effort in this sector/industry is about building up the infrastructure of the future, many of the companies will have a capital intensive business model. Of course I would prefer capital light business models at super low valuations but I haven’t been able to identify any yet.
Finally I am aware that I am maybe a little bit late to the party, but my expectation is that the party will last for a long time.
Are Cables the new shovels ?
During the Wild West Gold rush, there was the famous saying that the surest way to get rich in the gold rush was not to dig for gold but sell shovels to gold diggers. The deeper meaning of this saying is in my opinion, that in a situation similar to a gold rush you can make a lot of money by selling relatively ordinary things to people who desperately need them if there is a (local) shortage of these items.
As this is the 10 year mark of the portfolio, there will be a two part performance review. This is part 1 for 2020, part 2 for the 10 year period will follow in short time.
In 2020, the Value & Opportunity portfolio gained +27.6% (including dividends, no taxes) against +4,5% for the Benchmark (Eurostoxx50(25%), Eurostoxx small 200 (25%), DAX (30%), MDAX (20%), all performance indices including Dividends).
Links to previous Performance reviews can be found on the Performance Page of the blog. Some other funds that I follow have performed as follows in 2020:
Partners Fund TGV: +28,2% (15.12.)
Profitlich/Schmidlin: +9.54% (30.12.)
Squad European Convictions (30.12.) +20,4%
Ennismore European Smaller Cos (30.12.) -10.9% (in EUR)
Frankfurter Aktienfonds für Stiftungen (30.12.) +0.83%
Evermore Global Value (30.12.) -7,0% (USD)
Greiff Special Situation (30.12.) +0.2%
Squad Aguja Special Situation (30.12.) +34,8%
Paladin One (30.12.) +30,1%
Following an annual tradition once a year I’ll try to review my current portfolio by writing short summaries/update for each individual position. This year, only 11 of the 20 companies from last year are still in the portfolio and I have 16 new positions which is a (Covid-19 driven) record in turnover. 6 of the 27 shares are part of a “basket trade” on a recovery in tourism.
The summaries of the previous years can be found here:
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
1. TFF Group (7,2%)
And again 25 more randomly selected German shares with short analysis for each one. This time, seven (!!!) candidated were worth “wacthing”.
Maybe one remark: I asked last time for suggestions for the next series. however before I move on, I will also need to thin down the watch list to an amount that I can handle going forward. At the moment, the extended watch list comprises 141 (!!) stocks which I want to slim down to something like 25 or so.
676. mwb fairtrade Wertpapierhandelsbank AG
mwb is a 33 mn EUR market cap securities trading company. For some reasons, the stock price doubled in 2020, mabye a result of overall trading activity. As I do not undertand their business model, I’ll “pass”.
677. Bayerische Motorenwerke AG
BMW is clearly one of the most famous German brands and one of the most successful car manufacturers in the world. With a market cap of ~39 bn USD, it is valued at a fraction of Tesla and the stock price is on a pretty long lasting downtrend:
Another week, another 25 randomly selected German shares. This time, I only found 3 of them to be interesting, however one stock became the biggest position in my German basket yet.
626.Pommersche Provinzial-Zuckersiederei AG
Pommersche is a 2.3 mn market cap company that is very illiquid and only releases very intransparent information. “Pass”.
627. Netfonds AG
Netfonds AG is a 63 mn EUR market cap company that could describe itself as a “Fintech” if they wanted. The company listed directly (no IPO) in 2018 and at first struggled:
carefully randomly selected German stocks.
576. TDMI AG
Zombie stock, “pass”.
577. New Work AG (XING AG)
New Work AG (former XING AG) is a very interesting company. The 1.3 bn market cap company is the German speaking version of LinkedIn. I used to be a (happy) member of XING until they began flooding me with tons of unwanted adverts. I still maintain an account there but since then have moved to LinkedIn. That’s maybe one of the reasons why the B2C side seems to be stagnating, but they compensate with increasing B2B revenues. They also run the German version of “Glasdoor” called kununu.
Disclaimer. This is not investment advice. PLEASE DO YOUR OWN RESEARCH !!!!
More than five years ago I wrote about why it could make sense to invest into other actively managed funds even if one considers oneself an active investor. I would summarize the criteria that were important to me as follows:
The interests of the manager should be long term aligned with investors and the manager should possess specific skills to complement the own portfolio as well as to enable some learning.