Category Archives: Capital allocation

Fielmann Group – Will “Junior” be able to execute the 5 year plan once again ?

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DISCLAIMER: This is not Investment Advice. PLEASE DO YOUR OWN RESEARCH !!!!

Soundtrack:

There were quite a few songs that fit the topic, but in the end I really like Disco so ”Sexy Eyes” from Dr. Hook is my favorite;

Dr. Hook – Sexy Eyes • TopPop

Editorial Notes on AI use:

I do use AI tools (Gemini, Claude, NotebookLM) extensively during the research but I write everything “by hand”. In some cases, I will however copy & paste a summary or result table from a query after checking that the content is plausible. But I will always explicitly mention if I do this explicitly.

Management Summary:

Fielmann Group, the majority family owned German optical retailer has seen a significant multiple compression over the past 10 years despite a very decent operational performance since the Covid lows.

Based on a credible 5 year plan laid out in 2025, Fielmann is attractively priced and if they continue to execute under the leadership of the second generation family CEO, the stock offers significant potential over the next 4-5 years.

For this high margin, high return on capital business with a rock solid balance sheet and strong cashflow generation,  the current valuation of ~15 NTM P/E and ~3,3% dividend yield looks attractive. 

And here is the full write-up:

Fielmann final 08 2026Download

Frosta AG – Defining their own Category the Hard Way

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Disclaimer: This is not Investment advice. The stock discussed is very illiquid and trades at the unregulated market (Freiverkehr). If you want to buy this stock, work very carefully with strict limits. The author owns the stock and might buy/sell it without giving prior notice. And as always: PLEASE DO YOUR OWN RESEARCH !!

After having two (relatively) exciting stocks in the last two weeks with Rocket Internet and Innoscripta, I decided to tune down the exitement a little bit and focus on a very boring, family run German small cap this time. In order to not fall asleep, you might want to listen to the Soundtrack while reading:

Elevator Pitch:

This write-up is special in two ways. For one, I have privately bought the stock already a few months ago. Secondly, I base this write-up on another write-up from my friend Jon from abilitato.de. So please read that one before you read my “mini-writeup” where I only focus on a few specific aspects.

In a nutshell, Frosta is a boring, under-the-rader German family owned and run frozen Food company that does not do a lot of investor relations but runs a very convincing strategy focusing on additive-free ready made frozen meals. Inventing this category more than 20 years ago, the main Frosta brand is now growing with solid “mid teens” percentage rates p.a., has succesfully managed to enter and grow in neighbouring countries and with profitability that is steadily increasing. For the quality of the company and the potential growth prospects, the stock is still relatively cheap in my opinion at around 12×2025 P/E (ex net cash).

Here ist the write-up. Best read it after having a decent “Chicken Paella” from Frosta 😉

Frosta mini write-up-1Download

The German Mittelstand is maybe Down but not Out: Hermle AG – Hidden Automation Champion from the “Ländle”

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As always with my longer write-ups, I will attach the full PDF below. In the post itself I will focus on the Exec summary, Pro’s and Con’s and the conclusion. And the Bonus Track of course at the end.

Executive Summary

Hermle AG is a typical “Hidden Champion” Mittelstand company from Southwestern Germany (Baden Wuerttemberg, the “Ländle”) that managed to carve out a very nice niche in 5- Axis CNC machines and connected production automation.  The company is able to earn industry leading EBIT margins (>20%) and Returns on Capital (>30%), has a Fortress Balance sheet and trades only at a relatively modest valuation of around 7,7x EV/EBIT.

The business is exposed to the economic cycle, but a combination of competitive advantages, a flexible cost base and a structural tailwind (Automation) make the stock attractive in the mid- to long term

Full PDF can be read & downloaded here:

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Eurokai KGaA (ISIN DE0005706535) – Playing the “Time arbitrage game” with the possibly cheapest Port Stock in the World 

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

Some reason for not reading this post:

  • You have already posted YTD Performance numbers on FinTwit
  • You don’t like capital intensive stocks
  • You don’t like cyclical stocks
  • You prefer stocks that have positive share price and/or fundamental momentum
  • You require short term catalysts/Share buy backs/activists etc.
  • You like simple businesses with simple structures
  • You think Germany/Italy/Europe is going down the drain anyway

In such a case, do yourself and myself a favor and move on.

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My 22 (+1) investments for 2024

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Following an annual tradition, by the end of the year, I review my portfolio by writing/updating very short summaries for each individual position.  16 of the 23 positions from last year are still in the portfolio and I have added 7 new positions. That turnover has been partially driven by exits/take-overs (Schaffner, Logistec) and by finding new ideas. A more comprehensive Performance review will follow in early January 2024.

A short user guide:
My preferred style of investing is a bottom up approach, focusing on 20-30 small/midcap stocks that in my opinion have a good return/risk profile over the next 3-5 (or more) years. Many of these stocks are not household names and are unlikely to make spectacular gains in any single year. Many of them look interesting only after the second or third glance and are rather boring, which is exactly what I am looking for. So if you are looking for a “Hot stock for 2024”, this post won’t help you much.

And always remember: THIS IS NOT INVESTMENT ADVICE. PLEASE DO YOUR OWN RESEARCH.

As a special service and to offer something “fresh”, I have created a new portfolio overview chart based on holding periods which I proudly present here:

The summaries of the previous years can be found here:

My 23 Investments for 2023
My 28 Investments for 2022
My 21 (+6) Investments for 2021
My 20 investments for 2020
My 22(+1) Investments for 2019
My 21 investments for 2018
My 27 investments for 2017
My 27 investments for 2016
My 28 investments for 2015
My 24 investments for 2014
My 22 investments for 2013

Let’s go:

1. TFF Group (Portfolio weight 7,4%, Holding period 13,0 years)

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Samse Group (ISIN FR0000060071) – A Hidden French Compounder that is as exciting as watching Paint dry ?

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

As in the past, due to the bad WordPress editor, I’ll post a summary here and attach the full write-up as PDF.

After teasing a new position in the Nabaltec “Post Mortem”, I proudly present the next (hopefully) super boring company for my boring portfolio.

SAMSE SA is a French company that distributes building materials to “professional” customers like contractors, craftsmen etc. It also has a smaller “Direct to consumer” DYI store segment, which represents around 20% of sales. Samse is active only in France and No. 2 after Saint Gobain, which, however is much bigger even only in this specific sector (2000 outlets vs. 350).

Here is an overview of relevant “KPIs” at a share price of 190 EUR (time of writing):

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Italmobiliare (ISIN IT0005253205) – Buying “Italy’s Finest” for only 50 Cents on the Euro ?

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

What better day to publish a post about an Italian company than Ferragosto, the Italian Public Holiday where virtually any Italian family is somewhere close to a beach and Italian offices only are staffed with the most junior person to take up the telefone in order to say: “No one here, please call next week/next month”.

With Italmobiliare, I fell deeply into a rabbit hole, which lead to a quite extensive analysis. Due to some problems with the WordPress editor, I wrote it with a different Editor and have attached the PDF with the full version. In the blog post I’ll focus on the executive summary, the Pro’s and Con’s and the return expectations. The rest of the gory details can be read in the attached PDF document.

vo-im-write-up-15.08.2023Download

Executive summary:

Italmobiliare (IM) is an Italian Holding company with a market cap of ~1 bn EUR that underwent 2 pivots in its 40 year history as a listed company. The first pivot, in the 1990s, from conglomerate to Cement (Italcementi) and then once again in 2017 after a 2 bn sale to Heidelberger into an Italy focused, “Quality-growth small/mid cap PE” style investment company.

What makes the company very attractive to me, is a very interesting portfolio (including at least two potential “Super Star” holdings), decent value creation, good strategy/transparency  and especially a 50% Discount to NAV. 

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Mikron Group AG – Super Cheap (EV/EBIT ~4) and +33% EBIt 6M 2023- what is not to like ?

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

Spoiler: If you are short on time: I did not buy a position here. No need to read everything.

Mikron is a company that I had on my (passive) radar since my “All Swiss shares” series some years ago (since I passed on it, it made around +100%, so keep this in mind for the rest of the post). It is a Swiss based machinery manufacturer with a market cap of 200 mn CHF and has some connection to SFS (SFS is a client, same Chairman in the past).

These were the main items that motivated me to looks deeper into Mikron this time:

+ currently very (very !!) cheap (P/E 7,5, EV/EBIT 3,5)
+ currently VERY good business momentum (6M 2023: Sales +22%, EBIT +33%)
+ better customer/product mix than in the past
+ Rock solid balance sheet (100 mn CHF cash vs 200 mn CHF market cap)
+ good share price momentum

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“Freedom Insulation” – Follow up and Basket Update (Sto, Steico)

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

Some days ago, I made the case for a significant increase in demand for insulation in Europe for the next several years. In this post, I want to dig a little bit deeper into the main listed players and which I find more interesting. In general, even only for the German speaking region there are many companies that offer insulation, among them very large, diversified groups such as BASF, Dow Chemical and St. Gobain.

However, the following listed companies are those who do the majority of sales in insulation to my knowledge:

Kingspan, Irleand/UK
Rockwool, Denmark
Recticel, Belgium
Steico, Germany
Sto SE, Germany

Sto, Rockwool and Recticel are already in my portfolio with relatively small weights.

Before jumping into the companies, I have compiled a table with a few KPIs that i find interesting. One quick coment upfront: As Recticel is undergoing a signifcant transformation, their numbers are curently not comparable.

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Schaffner Group AG (ISIN CH0009062099) – Is this “Meier & Tobler 2.0” ?

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

Summary:

If you would ask me about the most boring stock of my generally very boring portfolio, I would possibly name Schaffner Group. I had bought a first position back in 2021 during my “All Swiss Stocks” series.

However, I have never written a more detailed write-up despit my annual summaries (2021/2022 , 2022/2023), maybe becasue I always got bored when I started writing about it ? Over time I added to the position and after the most recent 6 months numbers, I decided to increase into a full position. Time to explain the investment case a little bit better.

  1. The Company – Transformation

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