Some of my readers might remember that I looked at Delta Lloyd a long time ago as it was one of David Einhorn’s top pick back then, but we didn’t like it back then.
A quick look at the chart shows, that the problems I had identified were indeed there and the stock never really recovered:
Rocket Internet’s startup factory is really struggling
The mad world of the bottled water business
Good Bloomberg post on UK star asset manager Neil Woodford
Interesting post from Farnam Street on Jared Diamond and “how to get rich”
Clayton Christensen’s “Talk at Google” on growth and how to sustain success
There will be more mergers in the Asset Management industry
This is the follow-up post to the one from last week about banking stocks in general and Deutsche Bank in particular.
Damodaran on Deutsche Bank
Before moving on to my own stocks, again Deutsche Bank. Prof. Damodaran did value Deutsche Bank last week and came to the following conclusion:
At the current stock price of $13.33 (at close of trading on October 4), the stock looks undervalued by about 36%, given my estimated value, and I did buy the stock at the start of trading yesterday.
What he basically does is that he assumes an ROE of around 9,44% after ten years and capital costs around the same number,wich at the end of the day is assuming some kind of mean reversion and a Price to book value of ~1 in year 10.
First a big “thank you” to the reader who sent me an EMail and pointing me to this book.
Everyone who works in a big company knows the feeling: You had a really stressful day with many meetings etc. but by the end of the day you go home and are frustrated because you got nothing done. Or you have those colleagues who are always busy but if you need something from them, you never get an answer. Or you have been watching the Bloomberg screen on a really bad day all day long and achieved exactly nothing.
Performance:
In Q3 2016, the portfolio gained by +7,5% vs. +7,7% for the benchmark (25% Eurostoxx 50, 25% Eurostoxx small 200, 30% Dax, 20% MDAX).
YTD the score is +5,9% vs. -2,5%, since inception (01.01.2011) +121,8% vs.63,5%. As always Quarter & YTD numbers are very volatile and can easily fluctuate +/- 5% on relative basis in very short time.
The detailed month-by-month table, graph and links to all the reviews can be found on the performance page.
My subjective “Peer Group” has done like this YTD:
Partners Fund TGV: +6,9%
Profitlich/Schmidlin: +0,2%
Squad European Convictions +9,3%
Ennismore European Smaller Cos +13,3%
Frankfurter Aktienfonds für Stiftungen +3,5%
The best performing shares in the portfolio in Q3 were:
First things first: Deutsche Bank
I had a post in February last year why investing in something like Deutsche bank is maybe not a good idea. But still, as I said in February this year, I don’t think Deutsche Bank will be the next Lehman Brothers.
However the internal Memo from John Cryan is clearly not a good sign. Not the text of the memo, but the fact that he had to send out one (again). Similar to Dick Fuld back then, Cryan blames “speculators” for the stock price drop. Interestingly he didn’t say “short sellers”. Maybe this has to do with the fact that Deutsche Bank itself has around 106 different disclosed short positions on stocks according to the Bloomberg function SPOS.
The big difference to Lehman in my opinion is liquidity.and the general market environment. As a universal bank they have much better access to (guaranteed) deposits and overall the market still looks relatively stable.
So one could ask: After losing -50%, is Deutsche Bank now a good (Value) investment ? I honestly don’t know. For me, a value investment is an investment I can actually value with a “Margin of safety”.
The retail experience of the future ? Warby Parker’s new flagship store doesn’t try to sell you anything.
A short write up on Steel Partners and the link to the last shareholder letter. Plus the guy who runs Steel Partners is called Warren.
Good WSJ article on Moleskin Spa (search for headline). I had this stock on my to do list but now it is too late….
John Hempton on “Punchcard Investing” and an answer from John Huber
A very insightful story about John D. Rockefeller, written in ….1906.
Forager Funds recap of their Sotheby’s investment
Knowing more about Bitcoin was one of the points on my personal “to do list” for this year. By chance I found this book on Amazon which looked like it would be a good starting point.
This book is written by a “real” journalist, so the style of writing and the pace of the narrative is very good.
It covers the story of Bitcoin from the very beginning, when a guy calling himself Sathoshi Nakamoto uploaded the original white paper on Bitcoin in 2008 and was met initially with very little feedback.
Why a fish market is not so different from financial markets
The ukvalueinvestor with a short case study on Chemring and the risk of M&A fueled growth
Why you shouldn’t even think about buying Spanish bank stocks (H/T to 2 of my readers, best piece of sell side research I have seen in a decade)
An interesting look at the potential total impact of Electric Vehicles on the economy
Basehit Investing about the really important items in an investment check list
The luxury industry slumps further and how Cartier’s attempt in luxury watches didn’t work out. However better times may lie ahead.
David Merkel eplains why buying stock of an indebted cyclical company is never a good idea, even if Monosh Pabrai and Guy Spier own it (Horsehead)
Finally, check out this relatively new blog GlobalStockPicking. Some pretty good content and interesting (global) stocks in the blog portfolio.
One of the highest profile merger cases at the moment is the Bayer / Monsanto case.
A quick recap:
In may 2016, Bayer made a proposal to buy Monsanto. The first offer was 122 USD per share which was rejected. Bayer increased the offer 2 times, first to 125 USD and currently to 127,5 USD.
The big question is: Why is Monsanto only trading at 107 USD (at the time of writing)? Compared for instance to the initial ChemChina/Syngenta deal spread, the Bayer case looks a lot more solid:
value and opportunity 