Prof. Damodaran on valuing vs. pricing IPO stocks
Will “Value Investing” ever make a come back ?
Interesting statistics on outperfomance of active stock managers (hint: High conviction helps…)
Good Q&A session with Bill Nygren (Oakmark)
Ben Evans thinks that Machine Learning (ML) is the new SQL
Valuesque with 2 good posts: 1) Adjusting for Hyperinflation (Unilever) and 2) Securitization transactions (Schaltbau)
John Kingham on (long term) lease obligations & IFRS 16
Innogy Tendered Shares
A quick update on this “cheap option play”: To a small extent this has developed better than I intitially thought as I had mentioned in the comments. My initial expectation would have been a small loss. However, E.On now has increaesd the price for the tendered Innogy shares voluntarily to 37.59 EUR which, inclding the dividend of 1,40 will lead to a small profit (before taxes and cost) . However the ultimate upside, if there is a lawsuit, will be smaller as the E.On shares dropped to 9 EUR and the theoretical value of the tendered shares is now 4.371*9= 39,34 EUR.
Post number 4 in this series. This tiem a quick upfront remark what I do with the “watch list” that I create out of this: The watch list will be used to actually just watch these shares more actively and maybe follow up with a deeper analysis when time allows. In general I do think there is no time pressure with German shares. Germany has technically entered a recession and a lot of shares are still not cheap.
Nr. 30: Centrotec Sustainable AG – ISIN: DE0005407506
A 215 mn EUR market cap company with a very interesting product portfolio, i.e. specializing in energy efficient technologies for buildings. Majority owned by the founder, quite cheap (P/E of 12) and growing. Tailwind from new “climate saving” initiative from the German government which bumped the share price in the last few days. The company unfortunately is not very profitable (EBIT margin ~4-5%) despite the construction boom in its core market Germany. I have also doubts how long the ccurretn real estate boom in Germany will last. Nevertheless one for the “watch list”
And the next 10 shares in this series:
Nr. 20: Magforce AG
123 mn EUR Nano-Medtech company claiming to develope a cancer cure. Sales so far negligible. Not my area of competence, so “pass”.
Nr. 21: Bijou Brigitte AG – ISIN: DE0005229504
Prof. Damodaran with a deep dive into WeWork
Woodford’s problems might lead to some value opportunities in Tech (search result, H/T Monevator)
A good reminder that value investing works over the long term because it often doesn’t work in between
Interesting post on banking (and German Banks) from Bruce Packard
VC “legend” Fred Wilson on the merit of positive Cash Flows
A16Z on how even successful platforms are at risks to be “unbundled” into new verticals
Stitch Fix looks like an interesting company / Stock
Disclaimer: This is not investment advice. PLEASE DO YOU OWN RESEARCH.
Ouch, another day, another problem. Yesterday, one of my Special situation stocks Osram lost around -7%.
What happened: The largest shareholder Allianz Global Investors (AGI) announced that they do not support the offer as they consider the price of 35 EUR per share as too low.
A few observations from my side:
Another headline for this post could have been “The good, the (not so) bad and the (very) ugly…
Let’s start with “the ugly” right away: Cars.com
Yesterday was a pretty bad day anyway but Cars.com decided that it is a good day to tell investors that a potential sale of the company will not materialize. The whole bidding process has been described in details by the company. In summary, 29 parties looked at the company but no “actionable” bid could be obtained. This alone might not have triggered the -36% share price reaction taht happened yesterday,
First of all thanks to the readers that mentioned these two potential M&A arbitrage situations.
Acacia/Cisco
Acacia, a US based received a take over offer from Tech Giant Cisco valuing the company at 2.6bn or 70 USD per share. The offer price included a 46% premium on the undisturbed price. The stock traded at the time of writing at 64,75 USD, indicating a 5,25 USD or a 8,1% premium.
The transaction is expected to close at the end of Cisco’s Q2 FY 2020 which if I have read it correctly translates into January 2020.
This will be a very short one:
Bain Capital and Carlyle want to take over Osram at 35 EUR per share. The offer is friendly as Managment and Supervisory board have agreed to the takeover.
The offer runs until beginning of September and minimum acceptance level is 70%.
There is no detailed offer document out now yet.
Nevertheless I established a 2,5% position at ~33.1 EUR, providing a 5,7% potential return.
Major risk is in my opinion politics (loss of jobs), chances to the upside could come form activists pushing for a higher price. In the meantime there could be clearly hick-ups (not reaching the 70% because of activist involvement) but Bain and Carlyle are pros.
The buyers are top tier PEs who execute this kind of offers well and have the money.
For those investors who remember: I looked at the Osram spin-off 6 years ago, but then failed to buy the stock because my limit was a few cents too low. So I know the company relatively well. This doesn’t of course guarantee any success ……
Handelsbanken Update:
2018 was on the surface a solid year for Handelsbanken. According to the 2018 annual report, operating profit increased by +5% and net income by +8%, top line by +5%. ROE was 12,8% which is below my assumed 15% but still a remarkably good number for a large bank.
Just looking at the bottom line, the first quarter of Handelsbanken looks great: Net income up +19%, operating profit up +18%. However top line only grew at +4% (vs. Q1 2018).
However this is solely a function of the fact that the bank reversed their provision into the Oktogonen pension fund for employees which they clearly state in the quarterly report:
value and opportunity 