Must read: Morgan Housel trying to make sense of today’s world via five stories
Rob Vinall’s take on Wirecard
Some smart thoughts if and what type of “value investing” might work in the future
TGV Partners 6M 2020 report (DCC, TGS Nopec & others)
TGV Rubicon Stockpicker 6M 2020 report
Very good write-up/update on UK ad company System1
Interesting Freudian approach trying to explain the adversity of Americans to face masks
German Startups Group – Sell
As mentioned in the comments of the original post, I sold out the complete position today at an average price of ~1,71 EUR per share.
When I established the position in December 2019, the case was simple:
My assumption was that the intrinsic value of the portfolio was higher than the ~ 1,40 EUR share price, that the management would continue to liquidate the portfolio and that there would be a catalyst in form of share repurchases.
From an incentive perspective, the CEO had a big incentive to move the share price above 1,80 EUR so that the management fees would kick back in.
Implicitly however there was always the risk, that the CEO would hesitate to reduce the asset base as this would reduce the AUM and management fees accordingly, but the risk/return profile looked OK for me.
After a 4 week break, a new batch of 25 randomly selected German shares. Seven of them I found worth “watching”, although none of them with super high priority. And only 200 more stocks to go 😉
551. Pfeiffer Vacuum AG
Pfeiffer is a 1.7 bn company that specializes in vacuum technology and especially vacuum pumps. the stock price recovered quickly after the crisis despite a pretty disappointing 2019 and is still within the long term growth path:
Roughly 4 months have passed since my first post that I called the “Panic Journal” series in order to document my thought process during the “corona crisis”. Time to look back and reflect. These were the posts so far:
March 15th Part 2 – Fear & Bullet proof your portfolio
March 18th Part 3 – Expert Virologists and statistics
March 23rd Part 4 – Consolidation
March 29th Part 5 – Everyone has a plan
April 13th Part 6 – After the Hammer
May 7th Part 7 – Where is my bail out
June 7th Part 8 – Easy Dancing
Major missjudgements made: Covid-19 winners and time available
Interesting interview (Video) with Barry Diller (Expedia, Match.com etc..) on Covid-19 impacts
Undervalued Shares with a nice intro to Poland and its stock market
Great story on the current status of the financial system
The stock market as a gigantic carry trade
Good background article on the new breed of “David Portnoy” like retail speculators
FtAlphaville is sceptical about current SaaS company valuations (me Too…)
In the first 6 months of 2020, the Value & Opportunity portfolio gained +0,9% (including dividends, no taxes) against a loss of -9.6% 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 6M 2020:
Partners Fund TGV: +0.9%
Profitlich/Schmidlin: -4,1%
Squad European Convictions -4.7%
Ennismore European Smaller Cos –7.49% (in GBP)
Frankfurter Aktienfonds für Stiftungen -13.5%
Evermore Global Value -23.6%(USD)
Greiff Special Situation -4.2%
Squad Aguja Special Situation -0.2%
Since inception (01.01.2011), this translates into +193,0% vs. 93.1% for the Benchmark.
As promised last time, the follow up to the follow up. Let’s look at a few other “actors” in this developing crime story.
A few updates:
Yesterday, the German authorities started searching offices and private homesa second time with a big team of over 50 people. The new CEO in a feature story of Manager Magazin seems to have found out on his first day that the fraud started at least 5 years ago. After the crazy idiot speculator orgy the last two days, the stock seems to approach back its intrinsic value of 0,00 EUR per share.
The local newspaper SZ “discovered” that the escrow accounts were not the only fraud and and a lot of well known clients & cooperation partners leave the sinking ship rapidly, for instance Aldi Süd, Allianz and Softbank.
My new prediction is that not only the stock is a zero but all debt at TopCo level is essentially worthless.
There is also a very good interview with Dan McCrum on finanz-szene.de which covers a lot of aspects that I have been writing about. Most interestingly, McCrum promises to “tell the bigger story”……
The German Regulator BAFIN and what went wrong there
Thanks to a week of vacation I was on “read only” mode since I posted my Wirecard story 11 days ago.
Since then a lot of things happened, such as EY suddenly doubting the existence of 1,9 bn in “cash”, Wirecard releasing a really strange 2 minute video Statement, the CEO resigning, the CEO being arrested and subsequently released on a 5 mn bail, the COO having disappeared somewhere between the Philippines and China and the company finally filing for insolvency.
As mentioned in the earlier post, the insolvency is not really a surprise, but to be honest, the speed of the unraveling was clearly surprising. Equally surprising was today’s share price movement of ~+130% at the time of writing, resulting in a market cap of 360 mn EUR. With the senior bonds trading at only ~18,6% of notional and falling further, it is pretty clear that shareholder will end up with a zero, but the gamblers and day traders seem to have a lot of fun. Personally, I think even the unsecured borrowers (Hi Softbank !!) will end up with a nice “Donut” due to the weak creditor protection in Germany.
The Book/ The Movie
A great interview with Marc Andreessen on how to schedule workdays and other stuff
The inspiring story of how coach Juergen Klopp transformed the Liverpool FC
Highly recommended: The UK Value Investor with a very nice post on how to calculate and judge the quality of growth of a company
Activist hedge funds are increasingly targeting companies that try to do “greenwashing”
Very interesting story on Joe Granville, the “original” David Portnoy like “stock market entertainer”
Volatility strategies have really been killed during the Covid-19 crisis
And finally a Wirecard link: Dan McCrumm tells his story (and don’t worry, there will be a Wirecard follow up post soon):
For those who just came back from a 15 year space mission: Wirecard is a German company that according to its website is ” one of the world’s fastest-growing digital platforms for financial commerce”. It managed (briefly) to achieve a market cap of close to 25 bn EUR and is part of the German Blue Chip index DAX 30. The stock lost -62,71% today which is most likely a record for a DAX company for a single day.
Backstory / Personal history 2008
This is an article I wanted to write for a long time but I was actually afraid to do so for several reasons.
Wirecard is a company/stock that I have been following for a very long time. My first “encounter” with the company ended in a kind of “5 minutes of fame” situation with some very unpleasant side effects.
The story starts in May 2008 when a post appeared under the pseudonym memyselfandi007 on Wallstreet Online, the largest German stock community/forum. (fun fact: This Thread seems to have been read 17,8 million times, so a lot more than all my blog posts on V&O combined….).
value and opportunity 