Category Archives: Special Situation

“Space is the place” – SpaceX IPO, OHB SE and a Rocket Internet update

Posted on by 3 comments

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

A lot has happened since I published my Rocket Internet write-up from the end of January. Just as a refresher: I found Rocket Internet interesting, despite some Governance issues as the “sum of the part” value was significantly higher than the share price back then and that it offered some relevant &  discounted exposure to Elon’s SpaceX IPO.

But before we start, I would recommend to click on the following link and get David Bowie’s Space Oddity as a nice background sound for reading this post:

David Bowie – Space Oddity (Official Video)

As I write, SpaceX has just released its S-1 filing and plans to go public on June 10th. This is what I wrote back then:

My time horizon for this would be either the (Rocket) AGM or the actual SpaceX IPO. On Polymarket, the odds are 60% for an IPO before end of Q3 2026

Compared with two other “SpaceX Proxies” that I mentioned, EchoStar & Alphabet, Rocket actually did quite OK if we look at the chart:

The real Space Superstar: OHB SE

However, the real “Performance Rocket” would have been another German stock called OHB:

OHB, a German/Bremen based Satellite manufacturer went parabolic despite having a really small free float after KKR acquired a significant portion of the minority free float at 44 EUR in 2023. Initially they wanted to delist but then kept the listing.

The main reason for this increase seems to be that OHB is included in a very popular ETF called Tema Space Innovators ETF with the great Ticker NASA.

This ETF is one of the fastest growing ETFs ever and currently has a 5% allocation in OHB. At around 1,4 bn AUM, that’s around 60 mn EUR in OHB. As most of the OHB shares are held by the founding Fuchs family and KKR (together ~94%) and some specialized “Squeeze out” players, there seems to be a pretty hard squeeze on the few remaining shares.

I also guess that you cannot short OHB shares. Operationally, OHB has been doing okayish, but nothing that would justify a 130x P/E.

In any case, this is a monster deal for KKR who (obviously) plan to exit while its “hot”. I am pretty sure that after that exit, OHB will be one of those “Christmas Tree” charts that we know from the Covid times.

Back to SpaceX

Elon seems to target a valuation of 1,75 tn USD, that would be the upper range of what I assumed in my January sum-of-the part valuation. However, “old” SpaceX shareholders from the beginning of the year have been diluted by ~20% after the “merger” of SpaceX with XAi, so we have to take this into account.

I am sure that Matt Levine will write and say much smarter things than I do about the SpaceX IPO, so here are just some observations:

  1. The S1 prospectus contains some really nice pictures of rockets
  2. There are already a lot of write-ups & observations about several aspects of SpaceX. A pretty good thread can be found for instance on Bluesky.
  3. Overall, SpaceX is clearly much more resembling a giant “Elon Venture Fund” than a normal company. I think I read this in one of Matt Levine’s newsletters about Tesla. Elon has assembled a relatively loosely connected group of companies (XA, Twitter, SpaceX, Starlink, maybe Cursor) with which he can more or less credibly jump on any new hype that will come his way.

    Like the VC giants Sequoia or A16Z, he has two talents: To raise funding and to attract (a certain type) of tech people with which he can at least create the appearance of riding the next big thing.

    If Ai hits a brick wall, Elon finds something else like maybe Quantum computing or he will merge Neuralink into SpaceX or become the Number 1 in obesity pills.

    His hardcore fans are not looking for earnings but to ride the next hype
  4. A lot has been already said about the “total Addressable Market” figures from the deck which equal the US GDP.

    The great thing about both, the socalled “Space economy” and also AI is, that both at the moment seem to have indefinite TAMs. Mathematically, even a small slice of something indefinite is worth an indefinite amount of money.

    So that’s clearly much better than something like earth bound EVs where there is a clear ceiling or humanoid robots that just don’t work and where the Chinese are obviously much better.

    I am pretty sure, Cathy Wood or someone similar will come up with an “analysis” that SpaceX is worth 100X from wherever it is trading.
  5. A nice contrarian take can be found at the “Wertegang” Substack with the nice title : SpaceX is a Zero. Here, my friend Dirk argues that the SciFi bestseller “The three body problem” clearly shows that reaching to the stars is pretty risky from a cosmic perspective (Dark Forrest theory). But I am pretty sure that if needed, Elon will also promise to manufacture Pocket Universes in one of his Gigafactories.
  6. What I am really curious about is, if Elon manages to really hype two companies, Tesla and SpaceX at the same time. Also, how will the typical “Elon retail hardcore supporter” react ? If he/she is a real Elon fan, he/she will have all of their money already in Tesla (plus maybe some more). But of course, they want to have SpaceX exposure, too. So will they sell their Tesla shares to get a 50/50 allocation ? I think this will be interesting to observe.

Anyway, the SpaceX IPO is great financial entertainment and might only be topped by an OpenAI IPO in autumn.

Rocket Internet Update

In the meantime, Rocket Internet has “published” its 2025 annual report. Interestingly they did revaulue their participations upwards to a certain extent. After a loss of -550 mn EUR in 2024, they now show a profit of 750 mn EUR. It seems that the letter from Scherzer AG to the auditors did have some effects.

If I would be in the Microcap Stock promotion game, I would maybe post something like: “Hidden Perfromance Rocket trading below NAV at 3x P/E ratio”, but economically the shown profit is pretty meaningless.

On the negative side, there will be no large cash distribution and Rocket seems to intend to make the company even less transparent going forward.

In any case, I updated my valuation sheet, including some “bug fixes”. Again, this is a quick and dirty exercise and definitely not investment advice !!!

Here is the new sheet:

The main changes that I made were some haircuts on Software companies andTraveloka and adjusting Kalshi and SpaceX for the most recent values. For SpaceX I incorporatedthe 20% dilution from XAi and a new range of 1750 to 2000 mn USD as valuation. For Kalshi I used the 22 bn valuation and implying a further dilution of 10% from the YE 2025 number.

This is a quick comparison between my old and the new exercise:

We can see that the Upside NAV is more or less the same at 53 EUR per share vs. 54,5EUR despite the “haircuts” applied to Software, but the downside valuation is singinifcantly higher, mainly because of the expected valuation of SpaceX at theIPO and the recent Kalshi round which was only a rumour in January.

The upside to the NAV is of course lower, as the shares gained ~+30% since the write-up.

As mentioned in the beginning, I will keep the shares until the IPO hoping for some more irrational exuberance around the SpaceX IPO. Unless I’ll change my mind earlier 😉

DCC Plc Update – Starting the “Intertek Dance” ?

Posted on by 3 comments

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

Two weeks ago, I posted a short note on my portfolio company DCC which received a bid from KKR and a partner at 58 GBP per share, which I considered as too low.

Yesterday, not too surprisingly, Bloomberg and Reuters published a short note that KKR and its partner are considering a sweetened offer for DCC.

Interestingly, a similar “dance” between target and acquirer ended just a few days earlier bewteen Intertek Plc, the UK testing and certification company, which is supposed to finally accept a sweetened bid from Swedish PE company EQT.

A little bit similar to DCC, EQT tried at first a low ball offer, but had to increase that offer 3 times within a time frame of ~ 4 Weeks.

This is how the bids developed per share

1st April 10th: 51,50
2nd: 54,00
3rd: 58,00
4th May 13th: 60,00 plus 1.07 final dividend accepted

So from the first to the final bid, the bid price increased by almost 20%. Interestingly enough, after rejecting the third bid, EQT threatened to walk away but obviously didn’t.

What I find quite interesting is, how volatile the share price behaved after each rejection, it traded down significantly below the bid price after each round.

Another interesting point to mention is that at the time of writing, the Intertek share price trades more than 10% below the bid price. A certain discount is normal, but this looks quite wide as I do think that the deal is relatively certain to close.

So Intertek might itself be an interesting “Merger Arbitrage” situation.

So what does this mean for DCC ?

Looking at how things worked at Intertek, one should expect some volatility around further bids from KKR and maybe several rounds of rejection and threats to walk away.

I would expect that, as with Intertek, an overall 20% uplift on the initial bid would do the trick which would be an offer of ~70 GBP/share. For anything below that, most shareholders would just point at Intertek. But as in the Intertek case, one should not expect that DCC will then directly trade up to the bid price.

If the DCC price overshoots my 70 GBP target in between, I would maybe sell a part of the position.

BioNTech: The Founders announced their exit – what’s next ?

Posted on by 12 comments

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

I wrote this post this morning (CEST) when the stock price was around 73-74 EUR. I then had to run some errands before being able to post and the stock price moved already significantly. All calculations etc. are based on a stock price of 73,50 EUR.

By coincidence, I just wrote about Biontech a few weeks ago. Luckily my summary back then was not to invest:

Now two things happened yesterday on March 10th, when they were supposed to talk about Q2 earnings:

  1. The two founders announced that they will leave by the end of 2026 in order to start a new company
  2. The share price dropped significantly after the announcement

This is the stock chart in Germany (in EUR):

After a low of around 68 EUR, the shares currently trade at 73-74 EUR at the time of writing.

Funnily enough, this is almost exactly the current net cash per share and even 10% below my “worst case” assumption:

Using my “old” scenario, the potential upside would now be obviously a lot higher.

But, and this is a BIG BUT: With the founders leaving, one of the main qualitative arguments became a lot weaker. This was my Pro & Con list back then:

We just don’t know who will run the company from next year onwards. Initially this was a big negative news for me.

What did the founders actually announce:

I haven’t listened to the call yet, so I stick to the slide from the results presentation from yesterday:

So Sahin and his wife will leave by the end of the year and basically take some (or most ?) of the mRNA technology in exchange for a minority stake into a new company. We do not know if they also get cash or not. I would assume not.

Normally, one sees such “deals” only after a Biotech company is taken over by a big Pharma company and a founder wands to make sure that early stage projects are not getting killed.

One such situation was the Actelion/Idorsia Special Situation I invested 9 years ago, where after the take-over of Actelion by Johnson & Johnson, the founder Clozel took the whole development department including the early stage pipeline into a new company called Idorsia which was then spun-off to shareholders.

Interestingly, Idorsia, even after 9 years didn’t do too well and trades significantly below the value right after the spin-off:

In the German press, there are some rumors that the founders have made that move because a sale of Biontech to a bigger Pharma company might be imminent, although officially the founders have said this is not the case.

What I find most striking is the issue that they haven’t announced a successor for the founders yet.

Without a potential sale of Biontech on the horizon, the founders could have just “hired” or promoted someone to CEO who takes care of commercializing the late stage pipeline and continue to do their research within Biontech.

I get the impression that maybe, after 18 years, the billionaire Strüngemann Brothers who put up the initial funding and still own 40% do not agree anymore with the founders who own around 15%. In some older articles, both the Strüngmanns and Sahin always made the point that they want to create a “full blown” BioPharma company that can play in the first league internationally.

At least Sahin and his wife now decided that they actually prefer to do research.

Another dicey issue is that the founders will basically negotiate the transfer of the mRNA technology with themselves as they want to close this before the end of the next quarter, maybe specifically before a new CEO is installed. My impression is that they are honest people and really interested in research, but it is of course not ideal if they negotiate with themselves.

Also the announcement that Biontech will only get a minority share seems to indicate that this time, Sahin and his wife want to have the full control which they currently don’t have.

It will be also interesting to see if and how many of Biontech’s R&D staff will follow them to the new company. 

What is the worth of a charismatic founder ?

Yesterday’s announcement is also an interesting datapoint regarding the question: What is the worth of a charismatic founder? In this case, for most shareholders, the announcement was clearly a big surprise.

The -20% clearly indicate that at least in the short term, investors think that the company is worth less without its founders.

So what about Biontech now ?

As I mentioned in the beginning, the share price is now around -25% lower than in January. On the other hand, without the founders, a lot of things could be more difficult, especially if a lot of people follow them to the new company..

As a compensation, the possibility of a take-over/sale of the company to a large international player has clearly increased, I would assume that in the case of a takeover, the pipeline value would be paid to a large extent by an acquirer.

I have asked various versions of LLMs who the most likely acquirer would be. The favorites were Merck (US), Bristol Myers (with which they partnered) and Roche. All of them could make use of Biotech’s pipeline and have the means to do the transaction.

I also think that once the mRNA deal is signed, a subsequent sale of the company could happen rather sooner than later.

New scenario:

My new downside case would be 80% of net cash which is a level that many loss making Biotech firms trade at.

My upside scenario would be the 144 EUR with the pipeline value from the last post.

If I use a 50/50 scenario this would translate into (-20%+100%)/2= +40%

That looks a lot better than in January. 

Of course anyone could add a lot of other cases but I like to keep it simple.

There is still the issue that we don’t have a “hard” deadline for a potential deal, but on the other hand, the year end deadline for their exit could be interpreted as a deadline for the Strüngmanns to find a buyer.

Playbook:

My assumption is that this situation doesn’t escalate totally between the founders and the Strüngmann brothers. One big warning sign and red flag would be, if the agreement for the new company would not be signed until the end of June. 

Summary:

In a nutshell, Biontech now looks much more like an interesting “Special situation” than in late January.

Yes, the founders will be gone by year end, but the stock is 25% cheaper and we now have a “soft deadline” for a potential M&A announcement.

My “back of the envelope” calculation indicates and expected average return of 40% for roughly one year which is attractive. I therefore allocate 1,5% of the portfolio into Biontech at current prices of 73,50 EUR/Share.

Bonus Soundtrack:

I imagine that the founders will play that Soundtrack if the walk into their new company in 2027: Jon Batiste – Freedom

Jon Batiste – FREEDOM

OTC Adventures: Rocket Internet AG – Jump on this Rocket and get some Kalshi & SpaceX exposure for free ?

Posted on by 13 comments

HEALTH WARNING & DISCLAIMER
This is not Investment Advice. The stock discussed in this post is a “Pink Sheet” OTC stock with limited liquidity and almost no reporting. The author may own, buy or sell shares in this company without pre-warning. DO YOUR OWN RESEARCH !!

As a change to previous write-ups, I will start with the sound track for this write-up. And of course it is “Rocket Man” from Elton John. It fits in more than one way to this Special situation and you maybe want to listen to it while reading the write-up.

Elton John – Rocket Man (Official Music Video) 

As again, this write-up became a little bit longer, I’ll just show the “elevator pitch” here but will embed the PDF document.

0. Elevator Pitch

Rocket Internet AG,  a former German Venture Capital super star company run by the Samwer brothers has gone “dark” and delisted in 2020. Since then, the stock price languished until more recently, when a German activist sent an open letter to Management and the auditors criticizing the “low balling” of accounting numbers. Diving a little bit deeper, some true gems are hidden in Rocket Internet’s portfolio, especially a participation in SpaceX and prediction market superstar Decacorn Kalshi. The current share price reflects most likely less than 50% the current NAV. In my opinion, the upcoming SpaceX IPO and further positive development of Kalshi could maybe act as a “catalyst” and lead to a higher share price. In addition there is a (low) chance that Rocket Internet might distribute another special dividend as they did in 2024.

Jump on a Rocket and get some SpaxeX shares for freeDownload

Bombardier – A potentially successful Aerospace turnaround shot down by Trump Tariffs ?

Posted on by 3 comments

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

Background:

Bombardier is a Canadian company that after a colorful past as a conglomerate and an “almost bankruptcy” in 2020 is now fully focused on manufacturing Private Jets and until recently has been a poster child of a very successful turn-around. My friend @Govro12 from the Wintergems substack has written a very nice post on Bombardier just a few weeks ago which I highly recommend to read.

High level Presentation:

Although I only could convince myself to buy a small starter position (<1%, to keep me interested), I presented Bombardier as a potential interesting investment case in a private investor meeting some days ago. Here is the presentation which I admit is pretty high level. Spoiler alert: I would not recommend to invest right now.

Read more

Ocean Wilsons (OCN-LN) Update – Error in the NAV calculation

Posted on by 20 comments

Disclaimer: This is not investment advice. The guy who is writing this has problems distinguishing USD and GBP. PLEASE DO YOUR OWN RESEARCH !!!

A friendly reader alerted me that I made an error in the Ocean Wilson Special Situation NAV calculation. I seem to have gotten confused by the fact that Ocean Wilson reports in USD. I did translate the Wilson and Sons stake into GBP but not the investment portfolio. Instead of 319,6 mn GBP, the investment portfolio is worth 319,6 mn USD which equates ~ 239,7 mn GBP

So the initial calculation should have rather looked like this:

The expected return is a full -8% lower than inititally (and wrongly) calculated. Still not bad, but clearly less advantageous.

Based on this, I reduced the positon to a ~1% position.

I am deeply sorry for this mistake and a big thanks to the reader who alerted me. Going forward I will need to be more dilligent for these calculations-

One other remark: A reader congratulated that my post has moved the stock price. This is not my intent for the blog. I try to avoid writing about illiquid stocks as some readers tend not to read the posts and seem to blindly buy. With Ocean Wilson, I was very surprised how illiquid this 500 mn Market cap stock actually is. For me this is a good lesson for the future that I don’t write much about illiquid stocks. I leave that to others.

Ocean Wilsons (OCN.LN) – Deep Value “Sum of the parts” Special Situation with a Catalyst

Posted on by 11 comments

Disclaimer: This is not investment Advice. Never trust an anonymous dude on the internet. DO YOUR OWN RESEARCH!!!

As always, I have attached a pdf with the full writeup and only focus on a few sections in this post. And the Sound Track of course.

  1. Elevator pitch:

      Ocean-Wilsons, a UK listed, Bermuda domicile HoldCo which owns a 56% stake in a listed Brazilian Port/Maritime company called Wilson Sons and an investment portfolio, is trading a a deep discount (-48%) to  its SOTP value. Now however it seems very likely that the Brazilian Asset will be sold by year end 2024, which could potentially trigger a re-rating of the stock on top of any premium paid in the sale. 

      2. Introduction:

        Longer term readers of my blog know that in addition to investing into boring GARP stocks, I also invest into Special Situations from time to time. A special situation is a more short term oriented investment with a clear trigger or catalyst. In earlier times, I did more of them, these days I have less time and only look into them if they jump at me but usually with a relatively small allocation. There are different types of Special Situations. This one is of the “Undervalued company sells major operating asset” type of Situation, of which I have done a few in the past. The last one was Exmar two years ago with a decent outcome.

        Read more