Some links

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Recommended: TGV Partners Fund 6 month report: “Don’t be a dividend monkey”

Recommended: RV Capital 6 month report: “Is it possible to be long-term and contrarian?”

Congratulations. John Hempton (Bronte) got a full Bloomberg profile

Matt Levine on the FTC ruling for Herbalife

Buying a diet shake from a Herbalife distributor will now be harder than buying a gun; 

Why Active Asset Managers need to change their business model

A good checklist from Forager if an Acquisition makes sense (or not)

The current state of the Bordeaux WIne market (FT.com, search result)

 

Waddell & Reed (WDR): “mean reversion” opportunity or potential Value Trap ?

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The company:

Waddell & Reed is a Kansas based Asset Manager (mostly listed equity) & Financial Advisory firm. The company became somehow infamous during the 2010 “flash crash” when they were initially blamed that one of their order had caused the crash. Later, the SEC blamed a guy in London for it.

W&R looks like an interesting “High quality mean reversion” type of value stock.:

Market Cap: 1,4 bn
P/E (2015): 6,9
EV/EBIT: 4,5
Div. Yield: 10,3%
10 year avg. ROE: 33,4%
10 Year avg. NI margin: 14,1%

So we have a high ROE/ROCE, high margin business with significant net cash that trades at a ridiculously cheap level (based on 2015 earnings). There is a relatively recent SeekingAlpha “long” pitch with the following summary:

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DOM Security (FR0000052839)- A Hidden Champion with a “key to unlock” higher profits ?

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Executive Summary:

Dom Security is a small French company specializing in commercial lock systems. The business itself is attractive, the valuation relatively cheap, although the company is a small player. The “kicker” in my opinion is the fact that the largest subsidiary, DOM Sicherheitstechnik Germany, had significant R&D expenses over the last few years, which, if things normalize, could lead to a significant profit increase within the next 2-3 years to the extent of +40-45% which should translate into a similar upside for the stock price.

Additionally, the rebranding in 2015 could lead to better profitability in other units and in turn to potentially higher multiples, which at the moment are only a fraction of the listed larger competitors.

WARNING: This is not investment advice. Do your own research. The presented stock is very illiquid, so be extra careful.

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Performance review June 2016 – Comment: “Brexit, Excuses and Risk Premiums”

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Performance Q2 2016:

In the second quarter, the portfolio gained +0,6% against -3,5% for the Benchmark (25% EUR Stoxx 50, 25% EUR Stoxx small, 30% DAX, 20% MDAX). YTD the score is -1,4% for the portfolio against -9,5% for the Benchmark. On a rolling 1 year basis, its +1,0% for the portfolio and -8,4% for the bench.

Just for fun, here is the YTD/1 Year performance of some small funds that I follow and where I know the managers (I will track them in future reviews just to see how I am doing against the “Pros”, data from Bloomberg):

Partners Fund TGV: +1,71% / +7,20%
Profitlich/Schmidlin: -3,86% / -4,35%
Squad European Convictions -1,19% / +7,85%

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AQ Group (ISIN SE0000772956) – a 15 year “42- bagger” without a Moat ?

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Would you consider to invest into a company which at every occasion states the following:

AQ possesses no amazing patents or other security, we rely on having the best crew.

For a “Buffett/Munger” style value investor, this would be tough as there is clearly no moat or anything close and according to Buffett, the business economics always win in the long run, no matter how well a company is run.

Welcome to AQ Group, a Swedish “non moat” manufacturing company

 

large

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Some links

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Great insights how the event ticket market works (hint: You’re screwed)

Armstrong Flooring could be an interesting small cap Spin-off (h/t AR, market folly)

Is there a mattress store bubble ? Plus Jeff Mathews on Mattress Firm (MFRM)

Interesting letter from Gator Capital, a HF focused on financial services companies with an analysis of post-reorg Ambac

Jim Chanos sees big issues in online and auto lending in the US 

Shipping Parties in Greece are not as much fun anymore

 

 

Exor SpA: Buying a Reinsurance company doesn’t mean that you’re the “next Bershire”

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Following my Old Mutual “sum of parts” valuation I saw the following Ira Sohn presentation of Exor Spa, the Agnelli family holding (FiatChysler, CNH etc.) as a potential  “Sum of part” value investment.

exor_logo_dec_2013

To summarize the presentation  in my own words:

  • Exor Spa is basically a “Berkshire like” company at a “Graham” valuation
  • Exor is managed by a “great capital allocator” and trades at a discount as people see it as an Italian company
  • After the acquisition of Reinsurance Partner Re Exor should trade at similar valuations as Berkshire or Markel
  • Big upside potential as FiatChrysler, Ferrari (and CNH) are severely undervalued (“Coiled springs”)

The study sees a potential upside of several times the current share price. They forecast a 150 EUR NAV per share (vs. ~50 EUR now and 30 EUR share prices), driven by a quadrupling in value of the FCA and the CNH stakes.

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From the archive: Emak Spa, Sol Spa, Piquadro – The Italian update

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From time to time I check on previous investments how they performed and if they might be interesting again. I find  this a very efficient way to create potential (re)investment ideas as only relatively little effort is needed to get up to speed.

EMAK SpA

EMAK SpA was an Italian “special situation” investment I made in 2011 following an “italian style” capital increase in 2011 and then sold end of 2013 and early 2014 for a decent profit. Looking at the chart we can see that the timing of the sale was not that bad, as after a peak of around 1 EUR in early 2014, the stock is now trading ~30% below that price:

emak

Optically, EMAK looks very cheap now:

P/E 12,8
P/B 0,7
EV/EBITDA 7,0

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