Search Results for: unicredit

A quick look at the Unicredit (deeply discounted) rights issue

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The rights issue

Those who have been reading the blog long enough might remember that Italy in general is a good hunting ground for “interesting” deeply discounted rights issues and especially Unicredit rights issues in the past were very interesting experiences.

So roughly 4 years later, Unicredit has launched another rights issue. Ex date for the subscription right has been Monday, February 6th.

The conditions were as follows:

  • 13 new shares for 5 existing ones
  • a subscription price of 8,09 EUR
  • total volume 13 bn EUR (!!!)
  • subscription rights trade under the ticker UCGAZ

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Unicredit rights issue – update

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Tomorrow will be the last trade date for the subscriptions rights. So far, the shares are doing really well. the subscription rights recovered from a low of ~0,45 cents to currently around 2,12 EUR.

This is still well below the theoretical value of 2.29 EUR ((3.09-1.943)*2).

Looking at the relative Performance:

Since the rights started trading (January 9th), Unicredit has outperformed the FTSE MIB by +35% and competitor Intesa by +25%, howver since January 1st, Unciredit has underperformed the MFTSE MIB and Intesa by ~-26%

In the last few days, some good news emerged:

– the Abu Dhabi Sovereign Wealth fund had committed to increase its stake
– Zurich Financial Services seems to be interested in buying part of the Turkish JV

So from a investment point of view, a lot of the forced selling seemed to happen in the first 2 days of the subscription right trading period. I had expected that towards the end the price would come down again but it doesn’t look like that at the moment.

Dispite the significant discount of the rights, I will not start a long/short trade, as a lot of the expected outperformance has already occured in the last few days.

Unicredit rights issue watch & correlations & some research for deeply discounted rights issues

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Unicredit:

This is not really a surprise: Today, on the first day the Unicredit rights traded separately (Ticker: UCGAA), the pressure on the stock continued.

The theoretical price of the right at the start of the day would have been 1,26 EUR, currently they are trading at ~95 cents, after hitting a low of ~85 cents in the morning. With the share at 2.44 EUR (again -7%), the theoretical price should be (2.44-1.943)*2= =0.994 EUR, so there is only a slight mispricing at the moment.
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Efficient capital markets – Unicredit rights issue edition

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In any finance course, market efficiency is one of the most important parts of the curriculum. The Therory says the following:

There are three major versions of the hypothesis: “weak”, “semi-strong”, and “strong”. The weak-form EMH claims that prices on traded assets (e.g., stocks, bonds, or property) already reflect all past publicly available information. The semi-strong-form EMH claims both that prices reflect all publicly available information and that prices instantly change to reflect new public information. The strong-form EMH additionally claims that prices instantly reflect even hidden or “insider” information.

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All German Shares Part 18 (Nr. 351-375)

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So back to the “new normal” with another episode of my German Stock series. Most of these summaries have been written before the crisis hit, so I just added a few comments here and there and updated the numbers.

351. Rhoen Klinikum AG

Rhoen Klinikum is a 1.1 bn 1.2 bn EUR market cap company owns and runs a series of clinics in Germany.  I used to own the shares some time ago but more like a “special situation” investment. The company was target of a take-over battle some years ago and sold a large part of its clinics to a competitor and kept the more difficult ones. The stock did quite well for some time but the started to decline with no end in sight:

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Special situation update: Innogy, Osram, PNE AG, AGROB & Comdirect

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Innogy Tendered Shares

A quick update on this “cheap option play”:  To a small extent this has developed better than I intitially thought as I had mentioned in the comments. My initial expectation would have been a small loss. However, E.On now has increaesd the price for the tendered Innogy shares voluntarily to 37.59 EUR which, inclding the dividend of 1,40 will lead to a small profit (before taxes and cost) . However the ultimate upside, if there is a lawsuit, will be smaller as the E.On shares dropped to 9 EUR and the theoretical value of the tendered shares is now 4.371*9= 39,34 EUR.

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Position review: Van Lanschot (SELL) plus some thoughts on Unbundling /Rebundling in Banking

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Background:

Having this blog is nice because I can look back at what my original ssumptions were. I bought Van Lanschot in 2013, almost 5 1/2 years ago.

This was how I “valued” Van Lanschot back then:

Valuation:

A simple, “Berkowitz style” valuation would be: Book value

With ~0.51 times book value, Van Lanschot is one of the cheapest banks in Europe. Even Greek Banks like Piraeus Bank trade higher. The current valuation is on a level with „quality banks“ like Unicredit, Espirito Santo and Credito Bergamesco.

Interestingly, the P/B multiple for listed Private banks is a lot higher. Swiss competitors Julius Baer, EFG and Banq Privee de Rothschild for instance trade on multiples between 1.1-2.0 times book, a clear premium to „normal“ banks.

So with a “normal” result, one could argue for a valuation somewhere at 1.5 x book value. Clearly, this will be a long way, one should not expect exploding profits in the next quarters. But in a time period of 3-5 years, I could imagine that the stock can triple if the turn-around is succesful. Also, when people finally realize that not every Dutch homeowner will go broke, there might be a re-rating of Dutch financial stocks in general. But this might also take time.

It would be easy to come up with a much more complicated valuation method, but I like to keep it simple. If there are no big holes in the balance sheet and costs are kept under control, equity is at a safe level, then book value should be achievable for any bank.

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7 Years of Value & Opportunity – THANK YOU !!

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blogyear7

Exactly 7 years ago now, the first (German) blog post appeared on this site.

As I have done in the past years, this is a good time to reflect about happened over the year. Again a huge THANK YOU to all readers and especially those who actively contributed by commenting (critically) or sending Emails. And those who are suffering my sloppy spelling and grammar….

I am still surprised that I manage to keep this level of activity in the 7th year, but knowing that a lot of really smart people read my post is a fantastic motivation to keep going and try to become better.

Thank you again !!

The 10 most popular posts written in 2017

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Italgas SpA (ISIN IT0005211237) – Spin-off special situation meets contrarian opportunity

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Management Summary

As this turned into a pretty long post again, quickly the highlights. I do think that Italgas SpA, the recent Spin-off from SNAM SpA represents a potentially interesting special situation investment because:

  • overall sentiment towards Italy is really bad (“Renzi referendum”)
  • the Spin-off was not timed well just a day before the US election
  • the current uncertainties within Italian regulation changes further deters potential investors
  • all this is reflected in asset multiples at the very low-end for comparable regulated assets

For those reasons I initiated a 2,7% position for my portfolio for my “Special Situation” bucket.

DISCLAIMER: This is not investment advice. Please do your own research !!!!

ml_colore

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