Category Archives: Anlage Philosophie

Deutsche Pfandbriefbank (ISIN DE0008019001) update

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In July last year I introduced Pfandbriefbank as a “forced IPO” special situation. That’s what I wrote at the end of the post:

As I have said in the beginning, PBB is a simple case: I do think that the “forced IPO” of PBB from the German Government has created a typical special situation with good upside potential. This is clearly no “shooting out the lights” grand slam home run. In golf terms I would say that this is a “solid 6 or 7 iron” shot.

Looking at the perfomance of the stock since then, it looks like in Golf language that my “solid 6 or 7 iron” nevertheless “landed in the rough” with the stock being down -23% vs. -9% in the CDAX.

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Capital Allocation & Capital Management – What is good and what is bad

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Everyone who has read Thorndikes book “The Outsiders” clearly knows that capital allocation& capital management is one of the most important factors in creating long term shareholder value. After I watched Thorndike give a briliant talk at Google on this topic, I decided to write down my own thoughts on the topic.

What is CAPITAL ALLOCATION & CAPITAL MANAGEMENT anyway ?

CAPITAL ALLOCATION is simply what you do with your profits/cash inflows once they are in your account. You can do a lot of things with it. Thorndike in the talk above uses 5 uses, I would add another 2 (in bold)

1. Reinvest: Maintain your existing assets/infrastructure/operations
2. Grow organically: Expand your business by buying more machines/outlets/opening stores etc.
3. Expand your business by M&A
4. Pay back liabilities (debt, payables, pension liabilities etc.)
5. pay dividends
6. buy back shares
7. just leave the cash on your account and wait for better opportunities

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Kinder morgan (KMI): Asymmetric upside potential

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So let’s move on from focusing on the bad things and look at the the things that I like at Kinder Morgan. While I was writing this post, I found a very good blog post from Glenn Chan from 2 years ago which I can only recommend and includes a lot of interesting points about Kinder Morgan.

The Management:

Rich Kinder, age 71 owns 11% of the company and was famous for paying himself only 1 USD salary during his time as CEO.

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Kinder Morgan (KMI): Slow moving train wreck or Contrarian opportunity ?

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In late 2014 I started looking into oil related companies. I have looked at a couple of energy related companies like explorer Peyto, LNG liquification terminal Cheniere , Consol Energy and Gaztransport. I only bought Gaztransport which I then sold 6 weeks later. As I am still interested in the Energy sector, I will cover some stocks from time to time.

Kinder Morgan, the US pipeline owner/operator looks like another typical potential contrarian “Value investment”.

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What I liked at first sight: Read more

Free cashflow reporting: Doing it “Grenke style” (Grenke, Silver Chef)

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After my post about Australian Leasing companies a few days ago, I decided to start with Silver Chef, a company I found interesting.

Negative Free cash flow at Silver Chef

As many other value investors have, I have incorporated the concept of Free Cash flow into my investment process. A company which produces great earnings but no free cash flow is often a big red flag (see for instance the Globo Plc case)

So a first look at Silver Chef seems to indicate that they  have a big problem. Great earnings but negative free cash flows and increasingly so:

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Some thoughts on (Australian) Leasing / Equipment rental companies

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One very interesting aspect about Australian stocks is that there are many listed companies whose main activity is some sort of leasing. Those companies are all quite profitable and relatively cheap.

So far I only had looked at one leasing company, AerCap, the US based Aircraft leasing company.

Leasing business

The leasing business simply stated is asset based lending without a banking license. The client, instead of buying something outright and recieveing a loan from a bank, “leases” the good, pays installments and hands over the good after some time back to the lessor.

The leasing company therefore has the following main risks to bear:

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Australian stocks: Contrarian opportunity or too early ?

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Up until now, I only looked at one single Australian stock: Australian Vintage two years ago. I didn’t like it mainly because I thought the interests between Management and shareholders were not aligned. Interestingly the stock jumped in the last weeks after doing nothing for 2 years.

Australian stock market facts

Let’s start with some facts about the Australian stock market. According to Bloomberg, there are 2.059 Australian companies listed on the Australian stock exchange, total market cap is 1.59 tn AUD.

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What to do if a stock which you just bought is rising quickly ? (Gaztransport)

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This is clearly a luxury problem: Imagine you bought a stock and for some reason the stock price goes up very quickly let’s say by +40% or so within a few weeks.

What are you going to do ? Sell, buy or do nothing ?

In my case, this “problem” now hit me with Gaztransport. I reviewed Gaztransport first in January 2016 at a price of around 34 EUR. This is what I said back then:

Under those assumptions my results were the following:

10% discount rate: 20,80 EUR per share

15% discount rate: 14,26 EUR per share

So now one could clearly challenge my “model” and tweak it somehow, but in general it looks like that GTT is not a bargain at current prices (34 EUR). To me it rather looks like that the current valuation already implies a certain value for the LNG ship fuel “option”. Therefore GTT at current prices is not interesting to me as an investment.

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