Author Archives: memyselfandi007

Performance Q3 2016 – Random observations

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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:

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Again some thoughts on Banks (Low interest rates, ECB and yes, Deutsche Bank again) – Part 1

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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”.

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Some links

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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

Book review: “Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money”

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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.

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Some links

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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.

 

 

Bayer vs. Monsanto: Who is the “patsy” at the Poker table ?

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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:

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Uniper/E.On Spin-off: Take one ugly duck and transform it into ….. 2 really ugly ducks ?

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Background:

Monday, Sep 12th will be the first trading day for Uniper, the E.On spin-off. E.On shareholders will get one Uniper share for each 10 E.On shares they are holding.

Just to recap: Uniper will contain all the (unwanted) power generation assets of E.on, so all the “fossil fuel” power plants, the Russian assets and the Swedish nuclear plants plus some other stuff. The German Nuclear assets (and the corresponding liabilities) will remain at E.on due to the reasons I mentioned in the last post.

Uniper is clearly an ugly Duck, maybe the “most ugliest spin-off” I have seen since I started the blog. If we look into the most recent investor presentation, it is clear that you have a problem when the 3 listed growth projects are a German Hard Coal Power plant, q Russian power plant closed due to an accident which will reopen in 2018 and some strange dealings around the North Stream gas pipeline (page 9.). It doesn’t help either that Uniper had to take a 3,8 bn EUR pre tax write down in the first 6 months of 2016.That makes the duck still uglier.

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“Luxury update” – 4 years later (Prada, Boss)

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Almost exactly 4 years ago I pondered shorting luxury stocks in 2 posts.

Part 1 – Idea Generation

Part 2- follow up

The only stock I actually shorted was Prada and I gave up 1 year later as the stock strongly went against me.

Back then, I divided (totally arbitrary) a “peer group” of luxury stocks into 2 sub groups, “tier 1” and “tier 2” brands. Let’s look how those stocks performed over the past 4 years:

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Some links

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Deep thoughts on communciation between investors and management of a company (Graham, Buffett, Bezos)

A fine wine Madoff/Ponzi scheme

The farewell post of Motley Fool’s Morgan Housel and why investing is great

How Hormel foods tries to move beyond “Spam”

A good write up on the “new” Dell /VMWare Tracking stock

Andrew Left (Citron) is done shorting Hong Kong stocks

HIGHLY RECOMMENDED: Damodaran’s valuation class starts again  on September 7th.

 

Coface SA (ISIN FR0010667147) : Ultimate death spiral or contrarian opportunity in an attractive industry ?

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Executive summary:

Coface SA  is a relatively simple contrarian “mean reversion” case:

  • the company at the moment has some specific issues which in my opinion can be solved
  • the industry as such is attractive (within the generally problematic insurance space) with significant barriers to entry and little exposure to interest rates
  • Even in a bad case, the downside at current depressed levels is small. A conservative “mean reversion case” would indicate ~75% upside without assuming any growth
  • no hard “catalyst” and fundamentally it could get worse before it gets better
  • For exposure management reasons, NN Group will be sold and replaced by Coface
  • As always the reminder DO YOUR OWN RESEARCH. THIS IS NOT INVESTMENT ADVISE !!!!

The company:

Coface SA is a French “Trade Credit Insurance” company and one of the Big 3 players of this industry which together have 80% market share.

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