Category Archives: Anlage Philosophie

Performance review 6M 2022 – Comment “The Siren’s Song of Fallen Angels and (very) low P/E stocks”

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In the first 6 months of 2022, the Value & Opportunity portfolio lost  -14,4% (including dividends, no taxes) against a loss of -20,2% for the Benchmark (Eurostoxx50 (25%), EuroStoxx small 200 (25%), DAX (30%), MDAX (20%), all TR indices).

Links to previous Performance reviews can be found on the Performance Page of the blog. Some other funds that I follow have performed as follows in the first 6M 2022:

Partners Fund TGV: -33,5%
Profitlich/Schmidlin: -18,1 %
Squad European Convictions -13,1%
Ennismore European Smaller Cos -2,5% (in EUR)
Frankfurter Aktienfonds für Stiftungen -14,1%
Greiff Special Situation -2,5%
Squad Aguja Special Situation -12,7%
Paladin One -17,0%

Performance review:

Overall, the portfolio was more or less in the middle of my peer group. Looking at the monthly returns, it is clear that June was one of the worst months in the 11 1/2 years of the blog in absolute terms:

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All Danish Shares part 9 – Nr. 81-90

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And on we go, another 10 randomly selected Danish stocks. In the current batch, there are some very interesting and unique business models, however only one made it onto the “watch list”. We are now at ~50% coverage of the universe. Once again a quick reminder: Thank you for any requests to look at a specific company, but the random generator determines in what order I look at companies.

81. Scandinavian Medical Solution A/S

Scandinavian Medical is a 17 mn EUR market cap company that seems to be active in trading second-hand medical equipment that was IPOed in late 2021. Not my area of expertise. “pass”.

82. ChemoMetec A/S

ChemoMetec is a 1,9 bn EUR market cap MedTech company that offers Equipment to count cells which, among others is used for  Advanced Cell Analysis, Counting of Mammalian Cells, Yeast Cells, and Sperm Cells.

The stock has performed very well over the last 5 years:

Chmeometec

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Naked Wines ($WINE) update – The Good, The Bad and the Ugly

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Disclaimer: this s not investment advice. PLEASE DO YOUR OWN RESEARCH !!!

Naked Wines released their full earnings last week and the result was a full disaster with the share price down a whopping -43% despite the fact that the headline numbers were already known. It is a good reminder that even being down more than -60% from its top, a stock can still fall another -40% on one day. Although the stock was only a 2,9% position prior to that drop, it still warrants a deeper dive than usual.

The signs were already obvious

Before moving to the actual numbers and the report, I have to criticize myself for not acting on the stock despite the following issues that I had identified already some time ago:

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Inflation vs. Pricing Power for Chemical companies & Nabaltec follow up (ADD)

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Disclaimer: This is not investment advice. PLEASE DO YOUR OWN RESEARCH !!!!

Inflation & Pricing power

One of the obvious strategies for for investors in an inflationary environment is to pick companies that have “Pricing power”. Pricing power means that companies should be able to raise prices at least as quickly as costs rise.

Now one could try to do some deep thinking if and how different business models react to inflation. As I am a more “hands on” guy, my solution is to look at actual numbers and then try to draw my conclusion.

For any company that is producing material goods, the best indicator for pricing power in my opinion is Gross profit, i.e. the difference between selling price of a product minus the direct costs to produce them.

A company with pricing power should keep the gross margin or ideally even improve gross margins in an inflationary environment.

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Insurtech Massacre part 3 – Lemonade & Churn, churn, churn !!

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Long time readers know that I have a soft spot for insurance companies. Some weeks ago, I started looking into Insurtech companies and then I looked into Lemonade’s 2021 earnings. Since my first post, Lemonade has lost another 1/3 of its value and is now significantly below its IPO price.

What I like about Lemonade is that they indeed created a “fresh” insurance brand, however the numbers were clearly challenging. My main takeaways from last time were as following:

  • Growth is slowing
  • marketing cost is increasing (per new dollar premium)
  • The business is not really scaling

Already a week ago, Lemonade issued its Q1 earnings. This time, I have compiled a few line items that I find interesting on a quarterly basis in order to analyze things more deeply:

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More thoughts on Inflation (Linkers, Pension liabilities, highly indebted Countries)

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As inflation is something that we haven’t seen for a few decades, I am still trying to get my head around this trying to understand how this could influence investments going forward.  In this posts I just wanted to touch three areas: Inflation linked bonds, pension liabilities and highly indebted countries. 

  1. Inflation linkers

When looking for assets that gain or at least compensate for inflation, one should not forget Inflation linked bonds. Per construction, they compensate at least fully for the officially measured inflation.

In addition, Inflation linked bonds function also as an instrument to observe “implied” inflation rates, I.e. the market price of an inflation linked bond contains the investor’s expectation for future inflation rate.

The German agency for debt has a good page (in German) that explains how these securities work. One thing to mention is that most bonds are linked to Eurozone inflation, not German inflation.

Looking at the detail page of the 2033 linker we can see that this bond carries a 0,10% coupon and trades at a yield of -1,73%.  Comparing this with the 2032 fixed rate bond (there is no 2033 fixed rate Bund) that yields around 1%, we can estimate that the difference between the two yields (1-1,73%)= 2,73% is the market’s current estimate for the inflation in the Eurozone for the next 10 years or so. (Remark: in reality, this is more complex, see for instance here, but for this exercise it is good enough).

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All Danish Stocks part 6 – Nr. 51-60

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And another batch of 10 randomly selected Danish shares, this time, none of them made it onto the watch list. We have now covered almost 1/3 of all Danish stocks.

51. Ringkjøbing Landbobank A/S

Ringkjøbing Landbobank is a 3,3 bn EUR market cap bank active only in Denmark, that is surprisingly profitable with a ROE of ~15%. This is reflected in a very good share price performance and a rather high valuation at 20x trailing P/E.

ringbank

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ALL DANISH STOCKS PART 5 – NR. 41-50

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Back to Denmark with a new batch of 10 randomly selected shares. What I have to say is that the Danish stock maket really offers a wide variety of companies. From a Fintech active in Africa, via shipping and concrete blocks over to Medtech, today’s selection has a lot of different business models. Four of them I found actually worth to “watch” this time.

 

41. SPENN Technology A/S 

SPENN is a 80 mn EUR market cap company that seems to offer a banking/trading app. The majority of the business seems to be in Africa (Zambia, Rwanda) via a company that was acquired in 2021. their offering seems to comprise (of course) Blockchain, Crypto, Payment and remittance services.

The stock chart looks quite uninspiring:

SPENN

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Performance Q1 2022 – Comment: “Podcasts & Inflation”

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In the first 3 months of 2021, the Value & Opportunity portfolio lost  -6,6% (including dividends, no taxes) against a loss of -8.6% for the Benchmark (Eurostoxx50 (25%), EuroStoxx small 200 (25%), DAX (30%), MDAX (20%), all TR indices).

Links to previous Performance reviews can be found on the Performance Page of the blog. Some other funds that I follow have performed as follows in the first 3M 2022:

Partners Fund TGV: -20,09%
Profitlich/Schmidlin: -3,67 %
Squad European Convictions -6,4%
Ennismore European Smaller Cos +0,42% (in EUR)
Frankfurter Aktienfonds für Stiftungen -4,29%
Greiff Special Situation -1,42%
Squad Aguja Special Situation -8,31%
Paladin One -6,59%

Performance review

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Panic Journal Russia/Ukraine edition Part 3

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The war

The war is now going on for more than a month. Every other day there are rumors that progress has been made with regard to negotiations and the Russian army is failing or withdrawing, but the bombings are going on and more and more Ukrainians are fleeing (~4mn at the time of writing).

In contrast, the major stock market indices, in particular the US indices but also the DAX are at the same level or even higher now than before the invasion. BTFD has worked and again and these days “anything is good for stocks” seems to be the only motto.

One explanation that I have read is that Russia and Ukraine are only 2% of Global GDP, so a “loss” of these countries is no big deal. Personally, I do think that this is not a very useful number. Russian oil and gas is powering a significant amount of European (and Global) GDP. A supply disruption from Russian oil and gas would impact a much larger share of GDP globally and might make Covid-19 supply chain disruption like a toddler party. But the oil and gas is still flowing, so why worry ?

Just a few days ago, the CEO of BASF gave an interview warning against a full embargo against Russia, because it will “destroy the German economy”. He was stating the obvious, but especially BASF in my opinion shares a lot of responsibility for the dependency on Russian gas.

As for the endgame: As much as I hope for a quick, clean victory for Ukraine, I do think that this is the most unlikely scenario. Russia and Putin cannot afford to lose which is also the essence of an interview with one of Putin’s former advisors.

Tunnel vision

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