Handelsbanken Update & Annual Report 2016 -(almost) on track

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Already a couple of weeks ago, Handelsbanken issued their 2016 annual report. On the surface, the numbers look like a small disappointment with flat profit and a slight decrease in EPS.

Behind the surface however, some things happened. The CEO was fired in 2016 for “too much centralization”.

Some highlights of the annual report from my side:

  • the number of branches in Sweden went down from 474 to 435
  • the 4th quarter was very weak, but most likely driven by cost for branch closures in Sweden which happened in Q4. I liked this comment:

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Book review: Genentech – “The Beginnings of Biotech”

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As I currently own a 5% poisiton in  (special situation) Biotech company Actelion, I thought it makes sense trying to learn at least a little bit about Biotech.

By chance I came across the book “Genentech – The Beginnings of Biotech” which recounts the history of Genetech from the very early beginnings in the 1970s until the company went public in October 1980.

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Some links

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Langfrist hosts a new interesting fund: Rubicon Stock Picker fund with their first 2016 annual letter describing their 3 largest positions in some detail (Eurotech, Max21, Songa Bulk)

Good collection of 2016 year end fund letters (Reddit)

Is there a huge fashion retail bubble in the US ?

Rob Vinall has posted some interesting Videos from his investor day a few weeks ago on Youtube

Chris Hohn (TCI) tries to kill the Safran/Zodiac take-over (presentation slides)

How stock investing looked in the 1950s with an appearance of Benjamin Graham (h/t Valueinvestingworld)

 

Contingent Value Rights (CVRs) – The case of the Sanofi/Genzyme CVR

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As I was trying to research a little bit how to value a pipeline of drugs still in development (Actelion spin-off), I stumbled across the so-called “Contingent Value Rights” (CVRs) which are often used in Pharma takeovers.

A CVR is somehow similar to a tracking stock with the exception that the CVR often tracks a more specific item such as a single product or in case of many Pharma M&A transactions, the outcome of a certain drug development project.

Acquirers and sellers sometimes use this instrument if they cannot agree on the value of an under development drug. The idea behind is that the seller keeps the upside and the buyer doesn’t need to pay upfront for some very risky future cashflows.

Sanofi/Genzyme Lemtrada CVR

When Sanofi took over Gynzme in 2011 such a situation crystalized. This is from a 2015 NYT story:

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Australia Updates: DWS & Silver Chef

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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-vs-siv

DWS is up +42,5%, SIV is down -19% (in AUD). So let’s look at DWS first.

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Some links

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Before ultimate world domination, right now Uber seems to be in some deep trouble.

A good collection of Mungerisms by the always excellent Farnam Street blog

An epic 2016 letter from Semper Augustus with very interesting thoughts on profit margin mean reversion (h/t valueinvestingworld)

An interesting historical comparison of ship brokers Clarkson and Braemar

Joel Greenblatt interview on Wealth Track” ((h/t valueinvestingworld)

Tyler Cowen’s new book “The Complacent Class” looks very interesting

Travel series (3): Trivago (ISIN US89686D1054)- Ultra fast growing Hotel search engine, but what about profits ?

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The company / IPO

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Trivago is an interesting company. Founded in Germany (where succesful startups are very rare anyway), Expedia acquired the majority (61%) in 2012 for 477 mn EUR. Then, in December 2016 Expedia decided to IPO Trivago on NASDAQ at 11 USD per share (down from an initial range of 13-15 USD).

Interestingly. it is not so easy to find out how many shares are outstanding. The IPO itself comprised 30 mn shares, 20,8 mn new shares and 9,2 mn shares from the founders. Expedia didn’t sell any shares.

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Some notes from the Berkshire 2016 Report & Letter to the Shareholders

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To sum it upfront: In my opinion there was nothing “really new” or spectacular in Buffett’s 2016 letter.

Operationally, 2016 was not such a good year for Berkshire, operating profit was flat and book value gain lower than the S&P. Nevertheless Berkshire’s stock price outperformed the S&P 500. Comprehensive income however was very good, around 50% better than 2015 (which was not very good).

Net tangible assets declined to around 170 bn from 186 bn mostly due to the Precision Cast Part acquisition which added more than 40 bn in intangibles.

I made some notes which might be interesting to some reader (or not).

Berkshire share repurchases:

The most interesting part from my side was where he writes about share repurchases in general and Berkshire in particular. I actually know some investors who treat the “Buffett put” at 120% of NAV as a real one, assuming that the stock price can never go below that level. This is what Buffet says:

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A few thoughts on the 2017 French election & Risk Management

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Background:

One of the major “geopolitical” events this year will be the French Presidential election. The first round will be held on 23 April 2017. Should no candidate win a majority, a subsequent final election with the top two candidates will be held on 7 May 2017.

Why bother ?

Well, since I have started the blog, French stocks have been one of the cornerstone of my investment strategy. Despite the bad headline news, I found many good and cheap French companies which contributed significantly to the performance. Currently, I have around 28% of my portfolio invested in France in the following stocks (in % of the portfolio):

  • TFF Group (8,0%)
  • Installux (4,1%)
  • G. Perrier (4,4%)
  • IGE & XAO (2,4%)
  • Coface (3,1%)
  • Thermador (2,9%)
  • Dom Security (2,3%)

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