Category Archives: Boss Score

Amsterdam Commodities (ISIN NL0000313286) – a 60-bagger over 20 years -but why ?


Amsterdam Commodities (Acomo) is a Dutch based company which “trades and distributes agricultural products”.

The company went on my “to-do list” some time ago because at first glance it looked like a company which managed to grow nicely over many years by maintaining very health returns on capital.

This resulted in very healthy shareholder returns over the last years as we can see in the chart:


Including dividends, ACOMO Shareholders made 27,2% p.a. over the last 10 years and (10-bagger), 25,2% p.a. over 15 years (29 bagger) and 22,5% p.a. (60-bagger) over 20 years. So a real success story. Interestingly, despite these mind-boggling returns, only 2 analysts cover the stock according to Bloomberg.

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AQ Group (ISIN SE0000772956) – a 15 year “42- bagger” without a Moat ?

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



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Some thoughts on (Australian) Leasing / Equipment rental companies

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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Arcadis NV (ISIN NL0006237562) – One deal too many ?

Arcadis is a stock which popped up in my “BOSS score model” which I still use regularly to find ideas. It is a Dutch based Design, Consulting & Engineering company with global reach and a diversified business. Historically, they have consistently produced ROE’s of 20% and grown nicely.

Some key figures:
Market cap 1,7 bn EUR
P/B 1,7
P/E 19,5 (2014), 11,6 (2015 est)

The company trades at a ~20% discount to Peers like AF AB, Ricardo or SWECO.

What I did like about Arcadis at “first sight”:

+ consulting is capital light business
+ potential growth areas like infrastructure, water, urbanization
+ ROIC as relevant measure for compensation
+ organic growth as target for compensation
+ well-regarded in the industry

What I didn’t like so much:

– large project exposure
– China / EM Exposure (26%)
– Utility exposure (22%)
– big M&A transactions in 2014
– annual report focuses on adjusted numbers
– debt significantly increased, far above target

Hyder Consulting acquisition in 2014

In 2014, Arcadis did several larger acquisitions, the largest one being the UK listed Engineering company Hyder Coonsulting Plc. After the first bid, a Japanese bidder emerged and at the end they had to pay around 300 mn GBP for a company that earned around 6 mn GBP in 2014. This really looked expensive and is maybe one of the reasons why EPS in the first 6 months 2015 fell from 0,77 EUR to 0,70 EUR per share.

Looking into historic annual reports one can see that there was little organic growth for many years (page 15) and growth was driven by acquisitions:


Arcadis looks pretty much like your typical “roll up”, gobbling up competitors one after the other. However with the Hyder deal, it looks like that they made maybe “one deal too many”. Debt is now clearly above their own targets and business is not doing well. They acquired Hyder for their Asian presence which maybe looked like a good idea last year.

Management incentives: The reality test

When I did read the annual report 2014, I really like the fact that management seems to be incentivized on ROIC and organic growth. However, this is the score card they presented with their half-year numbers:

arcad sct

At first sight the source card looks, great, everything green, only organic growth “orange”. A closer look actually shows that the only target they hit was actually external growth which in itself is a pretty stupid target. All the other targets were either misses or not available.

This slide alone to me indicates that management doesn’t take its stated goals that serious. Yes, on paper it looks great but such a “target achievment assessment” is clearly a joke.


Although the “roll up” strategy seems to have worked for some time, in my opinion there is the risk that the 2014 acquisition spree was maybe too much. If they can make the acquistions work, the stock would be relatively cheap, but combined with the current debt load the stock is now much riskier than it was in the past. Bilfinger is a good example how a seemingly working “buy and build” strategy can implode over night.

It is also a good lesson in checking if a compensation system which looks good on paper is actually implmented and followed or if management just adjusts everything to look good despite not achieving the targets.

So I will watch this from the sidelines although I like the business and industry in general.

A quick look at the Stockopedia Screening tool + Quantitative value investing & Data quality

It seems that I begin to harvest my successes as an investment blogger. After getting a free book, I now received already for the second time (temporary) free access to a stock screening tool. I wonder what comes next……maybe someone offering me 100 mn EUR to manage ?? 😉

A year and a half ago, I checked Tim Du Toit’s Eurosharelab screener which looked like a fair deal and a good tool

Now I checked the Stockopedia tool. I did only check the screening tool, they offer a lot of other stuff but I am not really interested in that.

From the beginning, I found their tool very easy to use. I don’t know the current status of Eurosharelab, but for me the biggest plus of the stockopedia screener is the fact that one can set up custom screens based on a large number of different variables. I was able to create my custom screens without reading any manuals etc. The navigation is very good, I liked especially the “Bloomberg” like selecting of fields for the queries.

The results are presented very well, it is very easy and convenient to drill down into the stocks or to check the fundamental data. This is even better than in Bloomberg and a big advantage of the fully web based technology. The speed of the queries was OK, could be a little bit faster.

I also liked the existing “Guru” screens, especially the “Screen of Screens” which kind of aggregates all existing screens. (Note: EGIS is the second best stock there after Dart. It looks like that my Boss model is not totally useless…..)-

The list of “in and outs” is interesting, too, where one can see which stocks newly qualified for the top positions and which stocks dropped out. The single stock monitor also looks very comprehensive, with a good data history. Up until now they offer only Europe but including many exotic countries like Bulgaria etc.

All in all it is a very good tool which is a lot of fun to work with. They told me that they would charge normally 499 GBP p.a. but if someone is interested, they would offer a “special rate” of 399 GBP. If I recollect correctly, Eurosharelab had also 3 month access which could be interesting for people who don’t need such a tool permanently.

For small investors, they should consider if the really need this. If you for example have a 50 K GBP portfolio, the 500 GBP full rate would eat up already a full 100 bps of annual returns or depending on what you expect at least 1/10th of your total return if you make on average 10% p.a.

Quantitative investing & Data issues. Example “Magic Sixes”

As I have written many times, I like using screeners as a basis, but I do not think that quantitative value investing, especially in the small cap sector, makes a lot of sense. The major issue is data quality.

In order to test the data quality of the Stockopedia screener, I did the following:

I set up a custom “Magic Sixes” screen (P/E lower than 6, P/B lower than 0.6, Div Yield higher than 6%, Europe) both, in Stockopedia and Bloomberg and compared the results. The results were quite surprising for me. Stockopedia returned 28 stocks, Bloomberg 19 stocks, but only 2 stocks showed up in both lists.

Here you find the results:

Stockopedia Magic Sixes   Bloomberg Magic Sixes  
AIRC Air China    
AURG Aurskog Sparebank    
BQRE Banque de la Reunion SA    
BTG4 Bertelsmann SE Co KGaA    
ELMU Budapesti Elektromos Muvek Nyr… ELMU ELMU NYRT
CAT31 Caisse Regionale de Credit Agr…    
CCN Caisse Regionale de Credit Agr…    
6C4 Chimimport AD Sofia    
CICG Cinkarna Celje dd    
CTC Cyprus Trading    
DOM Domstein ASA    
ERME Ermes Department Stores    
EMASZ Eszak Magyarorszagi Aramszolga…    
RAM F Ramada Investimentos SGPS SA    
HJH H.J. Heinz Co    
HF HF SA    
HSPG Holand og Setskog Sparebank    
MELG Melhus Sparebank  
PVL Plastiques du Val de Loire SA  
5BU Real Estate Fund Bulgaria ADSI…    
SALB Salling Bank A/S    
SPOG Sparebanken Ost    
PLUG Sparebanken Pluss    
SVEG Sparebanken Vest    
SHL Stademos Hotels    
TOTA Totalbanken A/S    

Only Highland Gold Mining and Budapesti Elektromos showed up in both tools. When I digged into the detailed data, I was even more surprised. In total, I had 43 “diverging” entries. From those, 7 stocks were stocks where there were large bid/ask spreads and depending on the price the stock would either have 0.59 as P/B or 0.61 for instance, so this is a pure technical issue.

On the other hand, 20 diverging stocks were clearly mistakes in the data of Stockopedia (either wrong, outdated or missing data) and still 16 stocks were clear data mistakes by Bloomberg.

I emailed a little bit back and forth and it seems that they get their data from Reuters and are working hard on improving data quality. But nevertheless it is for me highly revealing that based on two different data sources, you get 2 almost completely different set of stocks with a few relatively basic filters.

Clearly, the Magic Sixes filter at the moment only throws out micro cap deep value stocks, where data is always an issue, but still, I wouldn’t have expected such a result. Also rankings might help to a certain extent. Nevertheless that mae me highly suspicious of any “automated” Value trading strategies no matter how good they look in backtests.


I really liked the Stockopedia tool. If I would not have access to Bloomberg, I would seriously consider their tool . Although I would always use it as a screener only, not as a basis for a trading strategy,

Maybe it is not representative, but my Magic Sixes example clearly shows that data sources alone can have a huge impact how portfolios look like even if you use the exactly same criteria.

If one really digs deep into data like I had to for my boss model, one would detect even more disturbing data issues, but that is a topic for another post.

DISCLOSURE: I got free access to the tool but I do NOT get any referal fees etc.

MIKO NV (BE0003731453): Coffee and plastics – a tasty combination ?

DISCLAIMER: The stock discussed is a relatively illiquid small cap. The author will most likely own the security already before posting any analysis. This is not an investment recommendation and reflects the personal (biased) opinion of the author. Please do your own research.

Miko NV is a Belgian company, which has been lying on my “reasearch pile” quite some time.

However, a few weeks ago when I read the news that the Benckiser heirs were acquiring Coffee company DE Master Blenders for 7.5 bn EUR (2.6 times sales, 27 times book, 23 times EV/EBITDA), I decided to look at them next.

Miko’s traditional numbers look Ok, but not spectacular

Edit: I wrote the post last week, a few days ago for some reason the stock price jumped significantly. I did not update the numbers. The analysis is based on a stock price of around 57 EUR.

P/E 10.5
P/B 1.1
P/S 0.5
Div. Yield 1.9%

At a first glance, their core businesses look like a very odd combination. 50% of sales are coffee related, 50% is plastic packaging for food and cosmetics.

This is how they explain it on their website:

Out of the coffee roasting department, which in 1958 launched the one-cup coffee filter, and which as such acquired significant expertise in the area of plastics, the second core activity of the Miko group developed itself next to the coffee service division, namely plastics processing.

The company looks quite well in my BOSS model, because in the past they have shown consistently double-digit ROEs and ROICs, together with nice growth:

NI margin ROE Sales per share FCF per share
31.12.2002 5.0% 21.7% 55.2591  
31.12.2003 5.2% 21.1% 59.346  
31.12.2004 5.2% 17.5% 61.1627  
30.12.2005 5.3% 16.0% 67.2204  
29.12.2006 5.4% 15.6% 73.2292 -0.5172
31.12.2007 5.5% 15.0% 79.3292 -0.0121
31.12.2008 3.9% 11.5% 90.1941 -2.6932
31.12.2009 7.2% 18.5% 89.0562 10.4591
31.12.2010 6.5% 15.3% 94.8683 1.4043
30.12.2011 4.3% 10.0% 104.8493 -2.5251
31.12.2012 4.6% 10.6% 111.4887 #N/A N/A

However we can see 2 issues in this time series:

a) ROE’s declined to ~10% and net margins to < 5% in 2011 and 2012
b) Free cash flow looks very "Lumpy"

Lets tackle the first one: Why did margins and ROE decline in 2011 and 2012 ? Well both, the plastics division and the coffee division share that they depend on "commodity input". The coffee segment clearly depends on coffee prices, the plastic segment on the price of plastic granule which itself depends on oil price and energy costs.

This is a table how the price of raw material developed in comparison to sales:

Raw materials /Consumables Total sales In % Net Margin
2006 40.7 90.6 44.9% 5.4%
2007 45.7 98.4 46.4% 5.5%
2008 53.9 113.0 47.7% 3.9%
2009 49.6 111.0 44.7% 7.2%
2010 57.2 117.8 48.6% 6.5%
2011 69.4 130.2 53.3% 4.3%
2012 73.1 138.5 52.8% 4.6%

So we can clearly see that input costs compared to overall sales increased quite significantly over the last years. But we can also see that at least in 2009/2010 they seemed to have been able to compensate for the rise in input prices. nevertheless it is interesting to see, that despite almost 9% increase in input prices, they manage to squeeze out more or less the same margin as in 2007. Why so ?


2007 in% of sales 2012 in % of sales Delta % of sales
Other (pos) 1.8 1.8% 2.7 1.9% 0.1%
Raw material etc. -45.7 -46.5% -73.1 -52.8% -6.3%
labour -23.9 -24.3% -30.7 -22.2% 2.1%
Depr. -6.3 -6.4% -7.8 -5.6% 0.8%
other -17 -17.3% -20.8 -15.0% 2.3%
financial -0.1 -0.1% -0.6 -0.4% -0.3%
Taxes -1.5 -1.5% -1.7 -1.2% 0.3%

This table shows the “composition” of the cost base 2007 vs 2012. We can see clearly, that input costs have increased relatively to sales and quite dramatically so. On the other hand, the growth of the company seems to have produced good economies of scale effects. Labour percentage is down, depreciation and other costs.

So we can see that we have a company here which is clearly a price taker to a large extent, but was able to grow quickly enough in order to realize economies of scale and keep the margins more or less constant. This means that management has done a good job and can grow while at the same time control costs. I see that as a huge plus and a sign for good management.

Lumpy free cashflows

In today’s investment world, investors want to see a smooth increasing figure for free cash flow per share. I have written about this quite often. But in reality, for a “normal” company, free cash flow is anything but smooth. A real “traditional” company will buy or build a long-term asset, sand depreciate it over a certain amount of time and then buy the asset again etc. Naturally for a traditional company, free cash flow will be lumpy, unless it is “managed”. Operating leases for instance are a management tool or M&A activity. Personally, I can live with “lumpy” free cash flows. At Miko, they clearly are not “managing” this because it think the majority family shareholders are not too interested in such an exercise.

The core Coffee business

Their core coffee business is relatively straight forward. They install and service larger coffee machines in offices and bars/restaurants including additional supplies like roasted coffee, milk, sugar, cookies. They do not produce coffee machines themselves, also the technical service is outsourced to a partner. However they do lease them out if required. So once they have got a contract, it seems to be a nice “recurring” business although they are clearly not the only company offering it.

When they expand internationally, they usually buy a local company and then expand on that basis. In the last few month, the bought in this fashions small existing companies for instance in Denmark and Sweden.

Qualitative aspects / checklist

The score in my checklist is a good 19 (out of 28), at the same level as for instance G. Perrier or Tonnelerie. Highlights are

+ small market cap 71 mn and only 1 analyst following company
+ 55% Family owned via 2 holding companies
+ unusual feature of 2 very different businesses in one stock (investors prefer “pure plays”)
+ potential catalyst for higher margins: Lower coffee prices
+ solid balance sheet, no significant pensions, low debt, low operating leases
+ straight forward reporting, no fancy “adjusted” numbers
+ the company operates over a diversified region (Belgium, UK, Germany Poland)
– not actively shareholder oriented (no buy backs etc.)

An interesting soft factor is the fact that the stock cannot be traded at one of my two brokerage accounts (DAB Bank). This means that no one of the currently 600k clients in Germany has ever traded that stock. Which


My BOSS model (which I don’t take to seriously in that regard) says the shares have an upside of 75%-150%. With a more simple approach I would assume the following:

Both, the coffee service and plastic packaging businesses are “above” average businesses. An “average” business for me would justify a PE of 10, an !above average” like those two something like 12-13 times. On top, MIKO has demonstrated that it can grow and compound in both areas. This is also something one should not pay for explicitly but factor in. All in all, for me a P/E of 15 or EV/EBITDA of 7-8 would be not totally unreasonable.

Based on this, I would see an upside from the current share price of ~30-40%. The downside risk in my opinion is relatively limited. Miko never traded below book value since its IPO, so the current 1.1 P/B seems to be comparably cheap.

Overall I would rate this as buying an above average investment at a below average price.

Stock price

The stock price looks quite interesting. The current price is approaching the all time high from 2007/2008. In comparison to now, Miko then was valued at around 13-14 trailing P/E, so around 30% higher than today. I am not a chartist but if they actually manage to crack this ATH, this is normally a good sign.

Timing & oither considerations

An important question to keep in mind is the following: Would I buy this stock also now if I would not sit on a pile of cash ? The answer is yes, I would even buy it if I were 95% invested or I would also be prepared to sell lower conviction stocks like SIAS for it.

The reason is the following: As discussed earlier, I am not really positive on BRIC and commodity prices in general. So I stay away from anything which profits from increasing commodity prices. MIKO, on the other hand benefits from a decline in commodities, especially coffee.

This is the coffe price chart over the last 15 years:

This illustrates quite well, how unusual the 2011-2012 period was. SO I do think that there is a good chance that we can see improved margins in the coffee business, starting already in 2013. The sole analyst covering Miko is actually expecting 7 EUR Earnings per share for 2013 and 8 EUR for 2014. I don’t think it will be that good, but nevertheless it looks like a good time to buy into Miko.

Miko is in my opinion an interesting stock because it doesn’t fit in most “value” categories. It is clearly no “wide moat” company, it is not a “bargain” nor will it show up on a lot of classical value screens. Also those investors who want (or need) a high dividend yield will not consider the stock However, as a new member of my “boring but sexy” quality stock portfolio it is a very interesting “off the beaten path” addition.


Miko fits nicely into the type of stocks I am looking for:

+ it is small, unspectacular family owned company followed by only one sole analyst
+ the underlying two businesses are stable, solid balance sheet, good management
+ the company should be able to compound at 10-15% ROE for quite some time
+ there might be a small “catalyst” with increasing margins in the coffee business dut to lower input prices
+ geographically it nicely diversifies vs. my France/Italy holdings (mostly Belgium, UK, Germany, Poland)

I therefore establish a “half” position at 58 EUR per share (see disclosure above).

South Korea – value investor’s dream ? (plus Top 20 Korean BOSS Score stocks)

At the moment, the Japanese Stock market seems to be “red hot”. Finally, after 25 years or so, Japanese stock seem to be one of the top stories. Honestly, I do not really understand why. Despite the Japanese Finance Minister targeting actual Nikkei levels, I was quite disappointed when I ran a couple of Japanese stocks through my “Boss” screen.

Although many Japanese companies trade at significant discounts to book value, the problem is with Japanese companies that their returns on book value are extremely low. Many companies over time even are actively destroying value. Dividend payouts are extremely low and shareholder activism is not really an option for Japan Inc.

In the past, I had looked at some Korean securities as well, however only at “special situations” like LG Household prefs, Hyundai prefs and Hankook Tire.

Out of curiosity, I started to screen Korean companies with my BOSS model as well. Before jumping into the list of the most interesting companies, let’s review a few facts about South Korea:

Somehow “under the radar”, South Korea has been one of the most succesful economies over the last 20-30 years. Even the Asian crisis could not stop the South Korean economy from growing at around 5% p.a. since 1990.

The countries’ economic position compared to Japan is very healthy, Debt/GDP is only 30%, the Government currently runs a surplus and the current account is of course positive.

Korean stock market

According to Bloomberg, there are currently 1973 traded stocks. Interestingly, this means that there are 600 more traded stocks than in Germany. The market cap of the major Index KOSPI is ~1.100 trillion won or around 760 bn EUR, almost equal to the German CDAX (820 bn EUR) or 2 times Apple…..

20% of the Index alone is giant Samsung electronics, followed by Huyndai with 4.3% and Posco at around 3% index weight. For some reason, Bloomberg shows a trailing P/E of 26 for the Kospi, however the forward P/E is estimated at 10.3. Price Book is a cheap 1.1, dividend yield only 1%.

First results from the Boss model

So far, I have added 160 South Korean stocks to my database. The first results are quite interesting. Sorted by the 10 Year Boss Score, i get the following Top 20 stocks:

SEOUL CITY GAS CO LTD 324.5% 226.0%
POSCO 304.1% 235.7%
OCI MATERIALS CO LTD 255.0% 403.8%
SAMYOUNG M-TEK CO LTD 219.1% 227.9%
HANNET CO LTD 217.9% 154.4%
MK ELECTRON CO LTD 213.1% 190.2%
FURSYS INC 206.9% 125.6%
HANIL CEMENT CO LTD 201.5% 103.4%
KORTEK CORP 200.5% 213.3%
WISCOM CO LTD 197.8% 284.7%
BUSAN CITY GAS CO LTD 184.6% 185.4%

I only superficially checked the companies, but some look interesting:

MI CHANG OIL INDUSTRIAL according to Bloomberg seems to be the Korean Fuchs Petrolub, Fidelity is owning 10%.

KYUNGDONG PHARM CO LTD has among its shareholders Delta Lloyd (10%) and Baupost (5%)

Foreign shareholders

One of the big issues with Korean stocks is that only very few of them are listed outside Korea. Out of the top 20, I only found Posco with a meaningful foreign listing. It seems to be possible however to open a Korean trade account as a foreigner. E-Trade Korea for instance seems to offer this service but I haven’t tried contacting them yet.

Anyway, I think I will need to do some more research into Korean stocks but I think the list is already a very good point to start.

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