Book review: “A Blueprint for Better Banking: Svenska Handelsbanken and a proven model for post-crash banking “

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The author of the book is Nils Kröner, a German who among others worked as consultant at McKinsey, at Barclays and for AKO capital before he became professor.

The book has been written following the big financial crisis and starts with a review about what went wrong in general.

Then he introduces the “7 deadly sins of banking” that contributed in his opinion to the banking crisis which are:

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Special situation: Stada Arzneimittel AG – swimming with the sharks (again)

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Disclaimer: This is not investment advice. please do your own research !!!

Stada is a company I had been looking at many times in the past. A business which in principle is quite good (Generics and OTC drugs) but the company was run by a long time CEO who acted as it was his own company without owning a single share. He paid himself huge salaries, employed his son in a non-sensical but highly paid job, the company afforded itself a huge corporate center and so on. As a result, the company created little to no shareholder value in the 10 years up to mid 2016. As a comparison, the 10 year return of Stada until 03/2016 was only around 1,8% p.a. compared to 7,5 % p.a. for the MSCI Europe health care index, a significant underperformance.

Then however something happened which is still very rare in Germany: A local activist investor (Active Ownership Capital) and some other funds acquired a significant stake in the company and pushed for change.

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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”:

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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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