Author Archives: memyselfandi007

Ocean Wilsons (OCN.LN) – Deep Value “Sum of the parts” Special Situation with a Catalyst

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Disclaimer: This is not investment Advice. Never trust an anonymous dude on the internet. DO YOUR OWN RESEARCH!!!

As always, I have attached a pdf with the full writeup and only focus on a few sections in this post. And the Sound Track of course.

  1. Elevator pitch:

      Ocean-Wilsons, a UK listed, Bermuda domicile HoldCo which owns a 56% stake in a listed Brazilian Port/Maritime company called Wilson Sons and an investment portfolio, is trading a a deep discount (-48%) to  its SOTP value. Now however it seems very likely that the Brazilian Asset will be sold by year end 2024, which could potentially trigger a re-rating of the stock on top of any premium paid in the sale. 

      2. Introduction:

        Longer term readers of my blog know that in addition to investing into boring GARP stocks, I also invest into Special Situations from time to time. A special situation is a more short term oriented investment with a clear trigger or catalyst. In earlier times, I did more of them, these days I have less time and only look into them if they jump at me but usually with a relatively small allocation. There are different types of Special Situations. This one is of the “Undervalued company sells major operating asset” type of Situation, of which I have done a few in the past. The last one was Exmar two years ago with a decent outcome.

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        Fuchs SE (FPE) – A Hidden Champion “Greased for Growth” after a 10 year consolidation phase ?

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        Disclaimer: This is not investment advice. PLEASE DO YOUR OWN RESEARCH !!!

        As always with my more detailed writeups, I will focus on the general sections in the post and attach the full pdf for anyone interested in the details. And of course the Bonus Sound Track.

        1. Elevator Pitch

          Fuchs SE is a 4,5 bn EUR market cap, family owned and run Lubricant manufacturing and distribution company that had been a super star performer until 2013/2014. Since then, the stock traded more or less sideways and had to fight some margin compression. Since early 2023 however, Fuchs seems to be back on a growth and margin expansion path. 

          This very well managed  company earns double digit EBIT margins and Returns on capital of >20%.The valuation is very moderate with 13,5x 2024 or 12x 2025 earnings for this very boring but high quality small cap company. Based on company projections, EPS should grow organically by ~9% plus any additional effects from share buy backs and M&A over the next 4-6 years and the current dividend of around 3,5%.

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          Some links 15/2024

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          Being a successful Contrarian investor is harder as it seems

          Mavix with a write-up on Italian Live event Audio company Powersoft

          Interesting write-up on Polish Mini Market operator Dino Polska

          Concerns are increasing about the Private Credit “Asset class”

          Emerging Value on struggling UK serial Acquirer SDI Plc

          The “success rates” in Venture capital investing are quite low

          The UK renewable sector looks potentially interesting again (FT, search result)

          The curious case of the imploding UK Battery Storage Funds (GRID, GSF)

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          Management summary:

          If you are looking for actionable investment insights, you can skip this post. This post is more about satisfying my own curiosity why the two UK traded battery funds have been doing so badly in the recent months. In the unlikely case you are interested in that, I invite you to read on.

          The UK was for some time a lighthouse country for rolling out “grid scale” Battery Energy Storage Systems (BESS) in Europe. Relatively benign regulation and support schemes allowed a significant amount of BESS capacity to be developed in the UK, well ahead of other European countries.

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          Some links 14/2024

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          Prof. Damodaran with some reflections on how AI will impact the investment analyst profession

          Nice deep dive into recently UK listed CK Infrastructure from Bos Invest

          Cliff Asness from AQR thinks that markets have become less efficient over time

          Remitly looks like a potentially interesting Fintech stock

          The boom time of dating apps is (long) over

          The rise and Fall of NFT trading venue OpenSea mirrors the NFT market

          In the US, “professional whistle blowing” seems to be a very lucrative career path

          Admiral post mortem & Sto SE 6M results

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          Admiral Post mortem:

          A few weeks ago, after the 6M numbers, I sold out of Admiral, after holding it for ~10 years. I already had updated my thesis in 2022 where I “re-undwerwrote” the stock for 3 more years.

          So why now selling it just after 2 years ? First, the stock price nicely recovered from 17,5 GBP per share 2 years ago to around 30 GBP when I sold after the earnings announcement. Secondly, it seems that Admiral is really not able to “copy&paste” its formula outside the UK.

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          A quick look into the Lineage Cold Storage IPO prospectus

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          As mentioned in my STEF write-up, US Cold Storage company Lineage went public a few days ago and was able to do so quite successfully.

          As IPO prospectuses often contain some quite interesting information, I wanted to quickly look through and extract what I find interesting. Especially on a hot day like today, reading a lot about cold storage is quite comforting 😉

          Valuation

          Let’s look at the new price point we got through the IPO. Unfortunately, Lineage Cold Storage is not yet available in TIKR, so let’s hae a quick look at comps “by hand”:

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          All Belgian Shares – The Grand Final

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          As promised last time, this is the summary post for the “All Belgian Shares” series. If you click this link you will see all 10 posts as Blog search results.

          In the end, I put 28 stocks onto my larger watchlist.

          As my watch list got honestly too long and unproductive, I started to manage my watchlist more systematically so that I can hopefully prioritize things better in the future. The main feature of my new watchlist design are 2 main inputs:

          1. A Quality score between 0 (shitty) and 9 (perfect) based initially on a high level assessment of factors that I find relevant
          2. A rudimentary caclulated fair value and a resulting upside potential

          In a later post, I will this explain a little bit more in depth, but here is the result for the 28 Belgian shares that I will continue to track in one way or the other:

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          Private Equity Mini Series (1): My IRR is not your Performance

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          These days, more and more offerings for Private Investors are popping up to participate in Private Equity, which until now was mostly exclusive for Institutional investors and very wealthy people. In Europe, the socalled ELTIF II format allows now fund companies to directly target individual investors from as low as a few thousand EUR.

          Private Equity in my opinion has its place. The good Private Equity funds are indeed “value investors” that have a decent ability to identify undervalued assets. However, Private Equity Investing also is not directly comparable with investing into public markets.

          In particular, any prospective investors should take any returns stated by PE funds with a grain of salt and I want to explain why these “PE IRRs” cannot be directly compared with Stock market performance. This is due to 2 main differences:

          Critical point 1: IRR calculation – critical assumption: Reinvestment at the IRR is possible

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          Some links 13/2024

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          TGV Partners 6M letter (Midwich, Fila)

          Pernod Ricard is selling its Wine business and an interesting summary on how restaurants price their wine lists

          Margins of Asset Managers continue to shrink due to high costs

          Interesting and very bullish presentation from Coatue on the “Gen AI Super Cycle”

          Very interesting post from Klement on Investing on the optimal size and discance to the coast of Offshore windfarms

          Sweetstock investing with a write-up on an Australian Filling station operator called Viva Energy

          Emerging Value with a quick look at Swatch Group

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