Category Archives: Bilanzanalyse

Admiral Plc – Deep Dive and Re-underwriting the Stock

Disclaimer: This is not investment advise but some rather incoherent ramblings of an extremely incompetent former value investor. DO YOUR OWN RESEARCH AND NEVER TRUST ANONYMOUS DUDES ON THE INTERNET!!

On “re-underwriting” an existing position

While writing part 1 of the UK Insurance update and even earlier, during the analysis of Naked Wines, I realized that my investment process has (among other issues) one serious gap: I have no systematic way to reassess or “re-underwrite” a position, especially for those who are in the portfolio for a longer time.

I do a short review every year in my “xx stocks for 20xx” series, but I do not seriously analyse my longer term holdings unless there is a problem.

In some cases that works well, but in other cases, I have been missing things or the case goes far away from the original case. Due to time constraints, doing this every year is not realistic, but going forward, I plan to do this on a 3 year rolling basis for each long term holding.

Review of my initial Admiral case

My original Admiral investment case was from 2014 and can be read here. The initial “underwritten business case” was as follows:

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

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)

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 !!

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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All Danish Stocks part 6 – Nr. 51-60

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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Protector Forsikring ASA – The Scandinavian “Baby Markel/Berkshire” ?

The company:

Protector Forsikring ASA is a name that came up more often in my “stream”. It is a Norwegian “Challenger” Insurance company founded in 2007 (and IPOed in 2008) that has been growing nicely over the past years and doesn’t look expensive.

The stock price has been quite volatile but recently the stock has reached new highs and long time shareholders should be quite happy:

Protector

The high level financial indicators look very attractive: A relatively Ok valuation with an impressive ROE:

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Gaztransport & Technigaz (GTT) – welcome back !!

Background:

Gaztransport & Technigaz is a company that I had looked at in early 2016 and most of what I have written back then still applies:

Imagine you could invest into a company with the following characteristics:

– Global market leader with 70-90% market share (95% new built)
– Net margins after tax of 50% or more
– business protected by patents
– almost no capital requirement, negative working capital
– a potentially huge growth opportunity
– conservative balance sheet (no debt) and “OK” management

Back then, I found the stock initially too expensive at EUR 34 per share, however I invested then at around 22 EUR but sold after a quick gain at around 31 EUR.

What did happen since then ?

Looking at the chart, I was clearly underestimating the value of the stock by a wide margin as the stock more than tripled until early 2021:

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All Danish Shares part 2 – Nr. 11-20

And on we go with the second post after kicking off last week. Two of the stocks already appeared in the blog some years ago and overall, these ten candidates yielded two “Watch list” candidates.

11. Conferize A/S

Conferize is a 15 mn EUR market cap company that seems to develop software for managing conferences. The company seems to be still “pre revenue”. I do not fully understand why a pre revenue Software company is public, but I’ll happily “pass” without further analysis.

12. Jobindex A/S

Jobindex is a 220 mn EUR market cap company that operates an online Job board which covers all Danish vacancies. The company has been growing nicely until 2018 but then stagnated already in 2019. The chart reflects this to a certain extent, the share price now is similar to the price during the “high growth” phase:

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A first look into the “Insurtech Chainsaw Massacre” – Part 1

The (short) history of Insurtech so far:

Just a few years ago, “Insuretech” was one of the hottest sectors within Fintech and VC. As in other sectors like retailing or travel, “Digital Insurance” companies were supposed to disrupt this old and slow industry. Listening to VCs and founders was mostly about how easy it would be to take market shares and profits from the old Dinosaurs.

Lemonade was the first Insurtech that went public in July 2020 and its 139% increase on the first day clearly set the scene. The share price went up further and peaked in February at around 170 USD.

Of course this triggered a certain feeding frenzy and a couple of other Insurtechs went public either via IPO or SPAC in the following months, like Root, Oscar, Metromile etc.

However, now, roughly 18 months after Lemonades IPO, things look a lot different. Here is an overview of the “Chainsaw massacre” that happened (in the order off going public):

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