Wertart has a very good writeup on UK retailer SportsDirect
Punchcard likes used goods retailer Winmark
Forager likes Italian company El.En (I didn’t like El.En 5 years ago)
A few critical observations on Elon Musk and his “Master Plan II”
Some deep thoughts about the “Brexit Blues”
A very interesting reading list (investing & other)
The situation:
A few weeks ago, Kuka, the Robotics specialist and one of the typical German “Mittelstand” hidden champions came suddenly into the spotlight.
Chinese company Midea Group (listed, ~20 bn USD market cap) made a 115 EUR per share offer. Midea already owned a stake before but now wanted to have more.
Recommended: TGV Partners Fund 6 month report: “Don’t be a dividend monkey”
Recommended: RV Capital 6 month report: “Is it possible to be long-term and contrarian?”
Congratulations. John Hempton (Bronte) got a full Bloomberg profile
Matt Levine on the FTC ruling for Herbalife
Buying a diet shake from a Herbalife distributor will now be harder than buying a gun;
Why Active Asset Managers need to change their business model
A good checklist from Forager if an Acquisition makes sense (or not)
The current state of the Bordeaux WIne market (FT.com, search result)
The company:
Waddell & Reed is a Kansas based Asset Manager (mostly listed equity) & Financial Advisory firm. The company became somehow infamous during the 2010 “flash crash” when they were initially blamed that one of their order had caused the crash. Later, the SEC blamed a guy in London for it.
W&R looks like an interesting “High quality mean reversion” type of value stock.:
Market Cap: 1,4 bn
P/E (2015): 6,9
EV/EBIT: 4,5
Div. Yield: 10,3%
10 year avg. ROE: 33,4%
10 Year avg. NI margin: 14,1%
So we have a high ROE/ROCE, high margin business with significant net cash that trades at a ridiculously cheap level (based on 2015 earnings). There is a relatively recent SeekingAlpha “long” pitch with the following summary:
Executive Summary:
Dom Security is a small French company specializing in commercial lock systems. The business itself is attractive, the valuation relatively cheap, although the company is a small player. The “kicker” in my opinion is the fact that the largest subsidiary, DOM Sicherheitstechnik Germany, had significant R&D expenses over the last few years, which, if things normalize, could lead to a significant profit increase within the next 2-3 years to the extent of +40-45% which should translate into a similar upside for the stock price.
Additionally, the rebranding in 2015 could lead to better profitability in other units and in turn to potentially higher multiples, which at the moment are only a fraction of the listed larger competitors.
WARNING: This is not investment advice. Do your own research. The presented stock is very illiquid, so be extra careful.
Performance Q2 2016:
In the second quarter, the portfolio gained +0,6% against -3,5% for the Benchmark (25% EUR Stoxx 50, 25% EUR Stoxx small, 30% DAX, 20% MDAX). YTD the score is -1,4% for the portfolio against -9,5% for the Benchmark. On a rolling 1 year basis, its +1,0% for the portfolio and -8,4% for the bench.
Just for fun, here is the YTD/1 Year performance of some small funds that I follow and where I know the managers (I will track them in future reviews just to see how I am doing against the “Pros”, data from Bloomberg):
Partners Fund TGV: +1,71% / +7,20%
Profitlich/Schmidlin: -3,86% / -4,35%
Squad European Convictions -1,19% / +7,85%
The book:
“Disrupted” ist the autobiographical adventure of Dan Lyons, a journalist who lost his job at Newsweek as technology writer at age 52.
Would you consider to invest into a company which at every occasion states the following:
AQ possesses no amazing patents or other security, we rely on having the best crew.
For a “Buffett/Munger” style value investor, this would be tough as there is clearly no moat or anything close and according to Buffett, the business economics always win in the long run, no matter how well a company is run.
Welcome to AQ Group, a Swedish “non moat” manufacturing company
Great insights how the event ticket market works (hint: You’re screwed)
Armstrong Flooring could be an interesting small cap Spin-off (h/t AR, market folly)
Is there a mattress store bubble ? Plus Jeff Mathews on Mattress Firm (MFRM)
Interesting letter from Gator Capital, a HF focused on financial services companies with an analysis of post-reorg Ambac
Jim Chanos sees big issues in online and auto lending in the US
Shipping Parties in Greece are not as much fun anymore
Reading the press and comments of market pundits lately, one might get the impression that the end is near if the British referendum next week will result in a vote for leaving the EU.
value and opportunity 