Author Archives: memyselfandi007

Homework: Electrica SA update

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Electrica is the only remaining “Emerging Market” stock in my portfolio. I bought the stock in December 2014 and now after 3 year and some months it maybe time to assess how the situation looks against my initial expectations.

Including dividends, the stock is up ~18% in total since then, in my portfolio however the stock is flat because I bought more of Electrica at higher prices. Compared to a +53% performance of the portfolio in the same period, the stock is clearly a underperformer and the question is clearly if I should keep the stock.

My initial thesis relied on the following assumptions:

  • the stock was cheap for a grid company with guaranteed returns on invested capital
  • Romania was supposed to grow significantly and Electrica as well
  • As a former Government owned company, I expected significant cost savings potential
  • I had expected After Tax / After minority Earnings of around 442 mn RON in 2017

What happened ?

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The Value and Opportunity “All Time Flop 10”

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During my Silver Chef “Post mortem” some days ago, I decided to look at the 10 biggest losses I made since I started the blog in order to check if I have actually learned from mistakes.

These were the (by absolute performance) 10 worst investments in the 7+ years of Value and Opportunity:

10. Medtronic -18,93% (2011)

Medtronic was one of the initial portfolio investments. I kicked them out in August 2011 as I was not very comfortable owning US large caps and I never deeply looked into the company myself. Medtronic since then outperformed the S&P 5000 IN USD terms (~17,1% p.a. vs. 15.3%) or ~ 233% in EUR terms. This is slightly better than my portfolio which made around 215% in the same period.

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Some links

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Some troubling Figures about loan volumes and credit quality

Prof. Damodaran (again) tries to value Spotify ahead of its IPO

A very nice illustration of the impact of volatility on investment returns

Why Cryptokitties could become something much bigger

Prem Watsa’s 2017 shareholder letter is worth reading

For Mexican stocks, insider trading seems to be normal

“Concierge Brands” can take away a lot of value form “Normal” brands

Some links

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Prof. Damodaran is trying to value Spotify ahead of its “IPO”

A look into DE Shaw, one of the earliest and most successful Quant Hedge Funds

Must watch: Crypto currencies explained by John Oliver

Wyndham Worldwide looks like a potentially interesting Spin-off situation

US Company audit reports might be soon much more interesting to read 

Japanese Game companies could be worth a look

Forager Funds on why Dividends should be taxed higher in Australia

The return of the Travel Series (9): Expedia (EXPE) – Cheaper than I thought

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Disclaimer: This is not investment advise !!! Do your own research !!!!
The guy who wrote this post just lost a lot of money with his Silver Chef position. You might even consider shorting his recommendations 😉

Background:

When I looked at Expedia almost exactly one year ago as part of my 2017 Travel Series my key take negative aways were as follows:

– CEO has super high salary (90 mn USD in 2015)
– top line growth, operating profit stagnant
– expensive acquisitions in 2015/2016, number of shares and debt increased significantly
– reported growth numbers not adjusted for acquisitions in investor presentation
– lots of share options

Additionally, the stock looked expensive:

At 119 USD per share, Bloomberg tells me that they have a trailing P/E of 54, an expected 2017 P/E of 22,3 and an EV/EBITDA of ~16. This means that a lot of growth is already priced in.

As we can see in the chart, the stock became at first even more expensive before dropping back to a level of around 100 USD / share:

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