Some links 16/2024

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Sweet Stocks with an interesting write-up on US recruiter Robert Half

Maynard Payton with a very interesting “Small Cap Spotlight report” about Software Circle, the UK version of Chapters

Todd Wenning with a fantastic post about improving the “Return on Mental Capital”

For the port enthusiasts: An interesting deep dive into Port Automization (US focus)

NotebookLM, the AI tool from Google is really impressive. Especially the “make a podcast from any text” function.

Everything you (never) wanted to know about sand and if it is really scarce or not

California is losing inhabitants and companies at scale these days (FT, Google search results)

Performance review 9M 2024 – Comment: “How to train patience during periods of underperformance”

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In the first 9 months of 2024, the Value & Opportunity portfolio lost -0,4% (including dividends, no taxes) against a gain of +6,8% for the Benchmark (Eurostoxx50 (25%), EuroStoxx small 200 (25%), DAX (30%), MDAX (20%), all TR indices).

Links to previous Performance reviews can be found on the Performance Page of the blog. Some other funds that I follow have performed as follows in the first 9M 2024 (values taken from public websites, no guarantees for correctness):

Partners Fund TGV: +7,5%
Profitlich/Schmidlin: +9,6%
Squad European Convictions: 6,8%
Frankfurter Aktienfonds für Stiftungen: 1,8%
Squad Aguja Special Situation: +10,8%
Paladin One: -1,5%
Gehlen & Bräutigam: +5,4%

Performance review:

Some Performance reviews are more fun to write, some less so. This one is clearly in the second category, as was last quarter.

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

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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

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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.

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        Fuchs SE (FPE) – A Hidden Champion “Greased for Growth” after a 10 year consolidation phase ?

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

        As always with my more detailed writeups, I will focus on the general sections in the post and attach the full pdf for anyone interested in the details. And of course the Bonus Sound Track.

        1. Elevator Pitch

          Fuchs SE is a 4,5 bn EUR market cap, family owned and run Lubricant manufacturing and distribution company that had been a super star performer until 2013/2014. Since then, the stock traded more or less sideways and had to fight some margin compression. Since early 2023 however, Fuchs seems to be back on a growth and margin expansion path. 

          This very well managed  company earns double digit EBIT margins and Returns on capital of >20%.The valuation is very moderate with 13,5x 2024 or 12x 2025 earnings for this very boring but high quality small cap company. Based on company projections, EPS should grow organically by ~9% plus any additional effects from share buy backs and M&A over the next 4-6 years and the current dividend of around 3,5%.

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          Some links 15/2024

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          Being a successful Contrarian investor is harder as it seems

          Mavix with a write-up on Italian Live event Audio company Powersoft

          Interesting write-up on Polish Mini Market operator Dino Polska

          Concerns are increasing about the Private Credit “Asset class”

          Emerging Value on struggling UK serial Acquirer SDI Plc

          The “success rates” in Venture capital investing are quite low

          The UK renewable sector looks potentially interesting again (FT, search result)

          The curious case of the imploding UK Battery Storage Funds (GRID, GSF)

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          Management summary:

          If you are looking for actionable investment insights, you can skip this post. This post is more about satisfying my own curiosity why the two UK traded battery funds have been doing so badly in the recent months. In the unlikely case you are interested in that, I invite you to read on.

          The UK was for some time a lighthouse country for rolling out “grid scale” Battery Energy Storage Systems (BESS) in Europe. Relatively benign regulation and support schemes allowed a significant amount of BESS capacity to be developed in the UK, well ahead of other European countries.

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          Some links 14/2024

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          Prof. Damodaran with some reflections on how AI will impact the investment analyst profession

          Nice deep dive into recently UK listed CK Infrastructure from Bos Invest

          Cliff Asness from AQR thinks that markets have become less efficient over time

          Remitly looks like a potentially interesting Fintech stock

          The boom time of dating apps is (long) over

          The rise and Fall of NFT trading venue OpenSea mirrors the NFT market

          In the US, “professional whistle blowing” seems to be a very lucrative career path

          Admiral post mortem & Sto SE 6M results

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          Admiral Post mortem:

          A few weeks ago, after the 6M numbers, I sold out of Admiral, after holding it for ~10 years. I already had updated my thesis in 2022 where I “re-undwerwrote” the stock for 3 more years.

          So why now selling it just after 2 years ? First, the stock price nicely recovered from 17,5 GBP per share 2 years ago to around 30 GBP when I sold after the earnings announcement. Secondly, it seems that Admiral is really not able to “copy&paste” its formula outside the UK.

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          A quick look into the Lineage Cold Storage IPO prospectus

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          As mentioned in my STEF write-up, US Cold Storage company Lineage went public a few days ago and was able to do so quite successfully.

          As IPO prospectuses often contain some quite interesting information, I wanted to quickly look through and extract what I find interesting. Especially on a hot day like today, reading a lot about cold storage is quite comforting 😉

          Valuation

          Let’s look at the new price point we got through the IPO. Unfortunately, Lineage Cold Storage is not yet available in TIKR, so let’s hae a quick look at comps “by hand”:

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