DISCLAIMER: THIS IS NOT INVESTMENT ADVICE. DO YOUR OWN RESEARCH !!!!!!
Almost exactly 1 year ago I started my exploration into the Australian stock market with DWS Ltd. and Silver Chef.
As some readers know, I didn’t buy DWS (I only put it on my watch list) and bought Silver Chef instead. Now, 1 year later it seems to be that I backed the “wrong horse”:
DWS is up +42,5%, SIV is down -19% (in AUD). So let’s look at DWS first.
A logical follow-up to lastminute.com is clearly Expedia. Why ? Well, firstly because I use it personally (for flights) and secondly because it is one of the leading “OTAs”.
Expedia started in 1996 as a division of Microsoft and did an IPO in 1999. They have a pretty detailed company history web page.
Hastings Plc, a UK-based direct insurance company was IPOed in 2015 at 1,70 GBP per share (IPO prospectus). To call Hastings a “Mini Admiral” is actually very close to the truth.
The company was founded as an underwriting Agency in 1996 by an American called David Gundlach who then sold the company 10 years later. Via a couple of more transformations (MBO etc.) Hastings then was finally brought to the stock exchange. Interestingly, according to some sources, Gundlach had worked at Admiral before so it is no surprise that Hastings looks pretty much like a 1:1 copy Admiral:
They only do direct business, reinsure significant amounts of their premiums and make their money mostly with anciliariy products and fees instead of investment returns like “classical” insurance companies. They only exception is that they don’t run a price comparison website (PCW) but they sell almost all policies via PCWs. Like Admiral, they have branched out into home insurance from
Hastings currently has a market cap of ~1.5 bn GBP and trades at an estimated 17,6 times 2016 earnings.
The Company / Spin-off
Gocompare.com (GoCo) has been spun-off from parent Esure in the beginning of November, a week before the US elections and only a few days before Italgas SpA. As a “parting gift”, Esure took out a special dividend of about 75 mn GBP financed by some net cash and a 70 mn GBP loan before spinning the company off-
In my understanding, the major reason for the spin-off was that Esure, the listed UK online direct insurer was short in solvency capital and that this transaction improved the solvency substantially.
Every Esure investor got one GoCo share for an Esure share. Interestingly, Toscafund, the second largest shareholder only holds 14% in Goco compared to 16,7 for Esure, so they seem to have sold some shares.
Oaktree Capital is an US-based listed asset manager specializing in alternative assets and more specifically in “distressed” securities. Co-founder Howard Marks became quite famous and is one of the most intelligent people in the investment industry. I had reviewed his book 5 years ago and read everything he writes with great interest.
Oaktree is clearly one of the “Highest quality” names in Alternative Asset Management with a very good long-term track record. A reader mentioned Oaktree in the “ideal company post” and as I had them on my list anyway I decided to make this my first analysis for 2017.
Yesterday, I sold my complete Kinder Morgan position at ~21 USD per share with a total gain of around 25% (in EUR, including dividends). Why ?
When I bought the stock in April I argued like this:
For me, the “expected case” would be something like a 8% discount rate and 1% growth resulting in a fair value of around 25,60 USD per share. Also, under my assumptions, the downside is relatively limited. Based on 18 USD per share (at the time of writing), that would imply an upside of around +42% which for me would be an acceptable return over my typical 3-5 year investing period (plus any dividends).
So why did I sell out now and didn’t wait for higher prices ? Well, something has changed: Interest rates went up. Since April, the 10 year USD Swap rate went up by +0,90% and the 20 year rate by around +0,70% p.a. If we look at my valuation grid from back then we can see that the value reacts significantly to change in interest rates:
Camellia Plc is a pretty odd company for UK standards. It is a conglomerate with interest in plantations around the world, as well as some engineering businesses, a UK cold storage business, a fish trader in the Netherlands and a private bank plus an art collection, a stock portfolio and other stuff.
Some UK blogs have covered Camellia like Richard Beddard and Expecting Value.
Camellia seems to be a favourite among deep value or “assets at a discount” investors and as I do like strange companies (and conglomerates) , I decided to take a deeper look at it. Also as it is in the same sector as ACOMO makes it easier to get “into it”.