At the time of writing, it seems that the worst is over at least for the developing world. Numbers of newly infected persons are shrinking and in the Epicenter, Wuhan, life slowly seems to open up again. Yes, the number of deaths is still rising but this is to be expected as there is at least a 10-14 day delay in deaths compared to new infections.
All in all, it looks that “the hammer” including lock downs seems to have worked for the time being. For me time to think about two areas:
- What did I learn in the last few weeks ?
- What should I focus on going forward ?
The last few days were almost “High Frequency Trading” for me with more transactions in 10 days than the 2 years before. Here is the overview (also in the comments) after my “Panic Journal 1” Post including a short assessment. I have also listed the stocks that I bought before the panic as part of my “German” basket, but which I should have clearly bought later.
Overall, I added
10 11 (!!) new positions, sold 3 positions and ended up with a cash position of 14,4% (this is also an effect of the ~-22% lower portfolio value YTD).
I was clearly too early in many case, but what I have learned over the last 20 years or so is the following: In a tanking market you always look stupid in the short term as a buyer and smart as a seller. In the long term, you look smart when you have bought at cheap valuations and you look stupid if you sold at cheap valuations.
This week I need to slow down a little more and think if everything that I did really makes sense ;-). I will try to limit daily transactions to 0.5% of the portfolio in any direction.
My overall assessment at the moment is that some sectors (Travel, events) will be hit much longer than I initially thought. I do think that “The Hammer and the Dance” scenario is a very likely one.
Here is the the transaction list:
This post is written mostly for myself in order to document my thoughts and actions and to learn from my obvious mistakes. But I promise that the blog won’t turn into a short term trading site !!
Today was a lot worse than I expected. Who would have expected that OPEC members disagree and the Oil price would tank more than 30% overnight ? In general, lower oil prices are good for most economies, but such a move will create some issues with regard to margin loans, counter party risk, indebted frackers etc etc.
So instead of the expected Monday “Corona panic” we have now the “Corona + Oil super panic”. Plus some strange moves like the EUR gaining strongly against the USD, despite Europe always being in the weaker position, even now with the Corona Virus.
Nevertheless, I started to put some money at work. Surprisingly not in the tourism sector, as I need to do more homework there. Not everyone might have read the comments but this is what I bought today:
Kinenvik was an investement I first looked at in December 2017 and then decided to invest in late 2018 however only up to a 1,5% allocation.
As mentioned in the comments by a reader. since then a few things happened. From the market side, first their Zalando stock cratered and then recovered. What worries me more is the flurry of personal changes including Christina Stenbeck, the heir of the major founding family completely leaving the board. Personally; i also didn’t find their main new investment, online Grocer MatHem, very convincing. Overall, I am slightly underwhelmed from the strategic perspective. I don’t know enough about the Nordic Telecom market and if I really like Zalando, I could buy them outright. The non-listed part at Kinnevik is just to small to make a difference and the changes in the Board are hard to understand.
Edit: I actually forgot to include Expedia…..
This post has become now a small tradition at the end of December and is also very helpful for me to review my holdings.
The summaries of the previous years can be found here:
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
From the 21 stocks of last year, 4 have left the portfolio:
Silver Chef and Metro were clear mistakes from my side and I exited them as discussed with significant losses. IGE & XAO was a much more positive case. The company received a buy-out offer from Schneider SA and I exited at 138 EUR per share. DOM Security finally was merged into the main shareholder company SFPI. Luckily, I could sell 40% of my holdings at 75 EUR/ share.
This is the follow-up on part 1 some days ago.. These were the listed VC vehicles,I presented as the base in part 1 (in brackets my short vote for the first 4)
- Softbank (too crazy)
- Kinnevik (Yes)
- Rocket Internet (bad rep)
- German Startup Group (no thanks)
- Vostok New Ventures
- Vostok Emerging Finance
I have added two US vehicles to this list:
- Firsthand Technology Value Fund (SVVC)
- GSV Capital (GSVC)
A few thoughts on Permanent Capital vs. “classical” fund structure vs. “SPACs”
In the previous post, one commentator mentioned that he was “sceptical of permanent capital” vehicles. Personally I would not support this. Berkshire Hathaway for instance is a permanent investment vehicle with quite some success. However there are other vehicles like Greenlight Re or Bill Ackman’s Persing NV which clearly have done a lousy job for shareholders as we can see in this chart: (Greenlight in yellow, Pershing Square blue):
Although I wrote a lot about Watch companies over the past few years (Swatch part 1, Swatch part 2, Hengdeli, Fossil part 1, Fossil part 2, Movado, Richemont), no investment came out of it. However I had a lot of fun researching these companies so it was time well spent.
When I initiated the series in 3 years ago, Smart Watches were a big thing and especially the Apple Watch was perceived to be the “Swiss Watch” killer, which, as we know now didn’t happen as they seem to coexist quite well.
Besides Smart Watches, Fitness Trackers were the “hot shit” and especially VC backed FitBit that IPOed in 2015 was taking oer the world.
This chart shows Fitbit against Fossil (blue) and Richemont (green) and we can clearly see who had staying power and who not:
Saga Plc is a UK company that combines two business that I have looked at quite often: Insurance and Travel.
Saga has its origin as a Seaside Hotel in England and then became a travel company before then moving into insurance in the 1980s. Saga caters specifically for the “over 50” market and claims to be the “leading provider” to people over 50 in the uK.
After a PE financed management buyout in 2007, he company was IPOed in May 2014 at a price of 185 pence / share.
Looking at the stock chart, IPO investors at first saw a decent outperformance before things went south this year:
It’s no secret that I like French family run companies. TFF Group, G. Perrier, Installux, Dom Security are just the main examples of these kind of companies.
Boiron SA is a French company which Bloomberg lists as “Specialty Pharmaceutical” company. Although “Specialty Pharma” is not exactly what they do. in fact, Boiron SA ist the only listed company that I know that exclusively produces and sells Homeopathic “pharmaceutical” products. The call themselves “World leader” of this field.
A few words on Homeopathy
Kinnevik is one of the more well-known “typical” Swedish investment companies. Founded in 1936 and still controlled (via A shares with multiple votes) by the 3 founding families, Stenbeck, Van Horn and Klingspor, the company now has a market cap of around 7,8 bn EUR.
Originally, farming, forestry & industrial were their main businesses but Jan Hugo Stenbeck, who unfortunately died in 2002 at the age of 59, transformed Kinnevik into a more “modern” company.
One specific feature of Stenbeck was that he didn’t only invest in listed companies but also helped to create new companies or invested in a very early stages. This is from Stenbeck’s obituary in the annual report 2002: