Book review: “Competing against luck” – Clayton Christensen
I think it is no exaggeration to say that Clayton Christensen is THE management guru on innovation. His first book, “The innovator’s dilemma” is a must read classic management book.
memyselfandi007
Some links
Taleb has written a foreword to the upcoming biography of Ed Thorpe. (This is the book I am really looking forward to….)
Jason Zweig on the stamina required for longterm investing success
Damodaran on the perils of family owned (Indian) companies (Tata)
Morgan Housel on (non traditional) sources of competitive advantages
Steve “the big short” Eisman is short European Banks
And yes, finally a few Trump related links worth reading:
– Howard Marks
– Ray Delio
– Bill Gross
– and of course the full interview with Warren BUffett
Novo Nordisk (DK0060534915)- What now ?
When I looked at Novo Nordisk 3 months ago, I found the stock too expensive at 315 DKK/share. That was my summary back then:
What could make the stock interesting again ?
Well, that’s simple: Either a lower stock price or higher growth. Maybe management has low-balled growth ? Who knows. Maybe the market over reacts if the next quarters don’t look that good ? According to Bloomberg, analysts officially still expect double-digit earnings per share growth well into 2019. Even adjusting for share buy backs, this will be difficult to achieve based on the growth rates communicated by management.
For me, the stock would become more interesting at around 250 DKK under the current growth assumptions. I think I would also like to see more negative comments from analysts.
With the stock now trading at ~229 DKK, it is clearly necessary to revisit the stock again.
Some links
Guranteed “Trump Free”:
India has been “demonetized” this week. Interesting to see how this will turn out.
Freakonomics podcast on why expensive wines seem to taste better (and other stuff)
The Brooklyin Investor has a look a Och-Ziff, the listed US Hedge fund
Geoff Gannon is blogging again and answering questions like “How to find sutainbale profitable companies” or “How to invest if you have only one hour a day”
Ginni Rometty (CEO of IBM) on “How Blockchain will change your life” (WSJ, search for headline
Wired podcast on why Fitness trackers seem to lose steam (Fitbit, Apple)
Staffline Group Plc (ISIN GB00B040L800) -Growth machine or Brexit victim ?
Due to the well-known Brexit troubles in the UK, my contrarian instincts seem to motivate me to look more at UK companies these days. One of the UK companies on my watchlist was Staffline Plc, a recruitment and “human resources outsourcing company”.
The company got on my radar screen because friends mentioned that it looks like an interesting company and that the have a “great CEO”.
Those are the usual multiples:
Market Cap 232 mn GBP
P/E 2015: 15,6
P/E 2016: 7,4
EV/EBIT 11,7
EV/EBITDA 7,0
The company grew sales almost 10-fold over the last 10-12 years. Interestingly however GAAP EPS in 2015 was at the level of 2006.
Some thoughts on index funds & market efficiency (including some empirical material)
Currently there are a lot of articles in the financial press about the perceived “fight” between active and passive asset management styles.
The passive guys make the point that on average, after fees, active funds have to underperform against the index and low-cost index funds, which is difficult to counter. On top of that, “alpha” created by large active funds is not very persistent.
From the active side, there is the argument that if there is too much money invested in index funds, market efficiency will suffer and stocks will go up and down together because not enough people are analyzing single stocks. If stocks go up and down together without reflecting fundamentals, at some point in time “good stocks” should be too cheap and bad stocks to expensive. Which then should be some easy money for any good stock picker.
Is the market already inefficient ?
This argument reasonable at first but is there any evidence that the market is less efficient ? Let’s look for instance at the DAX 30, the major German index. It is hard to come up with good numbers but I do think that maybe between 10-15 % of the DAX is somehow invested via index funds with a clear trend towards more index ownership.
So let’s look how the DAX constituents have performed so far this year (as of Nov. 2nd). The Dax itself ytd is down -2,8% This is the YTD performance of the constituents:
Amsterdam Commodities (ISIN NL0000313286) – a 60-bagger over 20 years -but why ?
Amsterdam Commodities (Acomo) is a Dutch based company which “trades and distributes agricultural products”.
The company went on my “to-do list” some time ago because at first glance it looked like a company which managed to grow nicely over many years by maintaining very health returns on capital.
This resulted in very healthy shareholder returns over the last years as we can see in the chart:
Including dividends, ACOMO Shareholders made 27,2% p.a. over the last 10 years and (10-bagger), 25,2% p.a. over 15 years (29 bagger) and 22,5% p.a. (60-bagger) over 20 years. So a real success story. Interestingly, despite these mind-boggling returns, only 2 analysts cover the stock according to Bloomberg.
Some links
Jeff Bezos interview by Charlie Rose (h/t valueinvestingworld)
Market Folly has a good summary of pitches from the “Invest for kids” conference
The positive effects of no news (for 7 days)
Tyler Cowen on why China’s economy didn’t crash (yet)
Bill Miller explains the accelerating shift from active to passive strategies
Podcast: Barry Ritholz interviews Prof. Damodaran
Smart thoughts on if we will ever see fully self driving vehicles
Majestic Wine (GB00B021F836) – Nothing to see or potential UK “Outsider” company ?
DISCLAIMER
As always: this is not investment advise. Please DO YOUR OWN RESEARCH. Never trust any “stock tips” from anyone.
A few weeks ago I already mentioned that I had invested into a UK small cap company. Because of a lack of time I had to delay finishing the write-up but now I happily reveal the “UK mystery stock”:
Majesic Wine Plc is the dominant wine retailer in the UK for “medium to higher priced” wines, from 5 GBP/bottle upwards. They run a retail chain plus a commercial service for restaurants and a “fine wine” subsidiary. They recently purchased online only wine trader “Naked Wine” but we come to that later.
Charly Munger’s mantra is “Invert, always invert”. So let’s start this one with a couple of reasons why you shouldn’t buy Majestic Wine at the moment:
- BREXIT: This has potentially multiple negative impacts on Majestic. With a lower Pound, imports get more expensive plus a general potentially weak consumer climate could make things really difficult and squeeze margins and/or reduce volumes. On top of that, many of the bankers who might need to leave the City might be target customers
- The overall wine market in the UK hasn’t been growing in the last years so any growth needs to come from competitors. If Wine importers need to raise prices there is also the potential of a “substitution effect” towards other, cheaper alcoholic beverages like for instance craft beer which can be made locally.
- Current numbers do not look that good, even if one adjusts for one-offs etc. the stock is not “cheap”. The company cancelled the dividend for the current year.
- Even before the Brexit discussion, the business had weakened. The earnings peek has been the business year 2013/2014
- As everywhere in retail, online is definitely an issue for the wine trade.
Some links
Interesting story how Chipotle tries to fight back from their E.coli scandal
A good summary how the big UK banks are currently doing
According to the WSJ, stock picking is dying (search for headline)
Bill Ackman has seen better days indeed.
Why mechanical watches still go strong in the digital age
12 essential aspects of platform businesses
value and opportunity 