Disclosure: I have no exposure to Grenke nor do I plan to have no exposure for the foreseeable future.
Grenke is a company I have written about quite often in this blog. My only investment had been the purchase of Grenke Bonds after the “Short Attack” in September 2020. I divested them relatively soon after the first rebound with a decent profit.
Since then a couple of things happened: The COO suddenly resigned on Feb. 8th, with an understandable explanation given only one day later. The story that was also communicated via some back channels was, that everything was fine and the main issue was that the German regulator BAFIN is over eager after the Wirecard Fiasco and there is no reason to worry. Another story is that Grenke is still an “innocent” inexperienced company and therefore communication is not so professional but the company as such is a great company with a great future.
Personally, I always had issues with Grenke. Yes the numbers always looked great, but I found the reporting very intransparent, for instance their “Free Cash Flow” definition which included debt issuance which at least in my “old school” thinking is not even close to free cash flow.
Last week now, Grenke came out with an update which at first sounded like what we in Germany would say is a “Persilschein” or a proof that everything is great. It starts as follows:
Disclaimer: This is not investment advice. Please do your own research and never believe anything from anonymous bloggers !!!!
A first a quick quick recap on what happened since the last post.
Friday’s written statement from Grenke pre press/analyst was actually pretty lame. I think they made clear that the money laundering and Ponzi issue were indeed minor issues but they didn’t shed any more light on the whole CTP issue.
Unfortunately I missed the press/analyst call. From what I have heard there was nothing new.
A quite surprising statement from Grenke on Monday was more substantial. All past M&A transaction with Franchises will be checked by an independent auditor, Grenke AG will have the option to buy the existing non-consolidated franchises and Wolfgan Grenke will (temporarily) step down from the Supervisory Board. It is also mentioned, that in the future, Grenke AG will fund new franchises.
Disclaimer: There is some real wild speculation in this post which represents an explicit personal opinion from a concerned investor and nothing else. Please don’t take this seriously and please don’t sue me !!!!
Just a very quick update on Mr. Grenke’s release that came 1 hour later than announced (when my index finger already began to hurt from refreshing the home page).
I have copied out only the “juicy” part, highlights are mine:
Long time readers of my blog know that I covered Grenke a while back and unfortunately invested instead in what I thought was the “Australian Grenke” with a pretty bad outcome.
Now Viceroy Research came out with a blazing short attack on Grenke. Viceroy seems to be the same guy that released the now famous “Zatarra Report” on Wirecard in 2016.
This post is a first attempt to look at the allegations in order to find out if they are true and how severe they potentially could be. At the time of writing, Grenke is down more ~ -20% and close to the lows from March.
1. Non disclosed related party transactions
Following my previous posts on Australian stocks and Australian leasing companies in particular, it is not a big suprise that my first Australian investment is an Australian leasing/financing company called Silver Chef.
The company / the business
Silver Chef is an Australian company which according to the website “delivers equipment funding solutions that help small businesses reach their full potential.”
The company went public in 2005. Some key figures (at 9,20 AUD/stock)
Market cap: 323 mn AUD
P/E 2014/2015: 15,2,
Div. Yield 5,7%EV/EBIT 20,2
After my post about Australian Leasing companies a few days ago, I decided to start with Silver Chef, a company I found interesting.
Negative Free cash flow at Silver Chef
As many other value investors have, I have incorporated the concept of Free Cash flow into my investment process. A company which produces great earnings but no free cash flow is often a big red flag (see for instance the Globo Plc case)
So a first look at Silver Chef seems to indicate that they have a big problem. Great earnings but negative free cash flows and increasingly so:
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%
Again, time flies. Exactly 10 (!!) years ago on December 15th, 2010, I started this blog.
As every year a very special “Thank You” goes to all readers, especially those who actively contribute either by comments or mails. I need to keep on mentioning that the interaction with readers is really driving the motivation to continue the blog in this format.
In this post I will reflect mostly on writing the blog, highlights and lessons over the last 10 years plus my 10 all time favorite book reviews. There will be a 10 Year investment/performance review in the beginning of January 2021.
|10 year stat
All in all, I managed to post ~1600 posts over these 10 years which created close to 4 mn visits. The drop of visits (and comments) in 2018 & 2019 was clearly the result of posting less due to a lack of time from my side.
So why I am still doing this ?
Back in lock down mode
Four weeks after my first post of “season 2” it is pretty clear: Wave 2 of Covid-19 is definitely here and growing.
In contrast to my assumption and the general feeling 4 weeks ago, Europe is now back in lock down mode. Certain areas in the UK, Spain, France, Italy and Belgium went into different forms of lock down already a few days ago. Here in Germany I think many Germans got the message, when the German Health Minister Jens Spahn had to announce that he got infected a few days ago.
A “lock down light” will come into force in Germany on Monday with restrictions on contacts and closure of Restaurants and Bars. Austria just announced a harder version which for instance disallows any private visits after 8 pm which in effect is a 8pm curfew under another name.
What’s different this time compared to the first lock down ?
In the first 9 months of 2020, the Value & Opportunity portfolio gained +3,7% (including dividends, no taxes) against a loss of -6.9% for the Benchmark (Eurostoxx50 (25%), Eurostoxx small 200 (25%), DAX (30%), MDAX (20%), all TR indices).
Since inception (01.01.2011), this translates into +201 % vs. 98% for the Benchmark.
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 the first 9M 2020:
Partners Fund TGV: +6,3%
Squad European Convictions +5,99%
Ennismore European Smaller Cos -19,82% (in EUR)
Frankfurter Aktienfonds für Stiftungen -6,1%
Evermore Global Value –18.37%(USD)
Greiff Special Situation -3.69%
Squad Aguja Special Situation 12.45%
Paladin One 15.94%