value and opportunity

Beschreibung des Ziel-Portfolios in deutscher Sprache

Target Investments „Core Value“

This is an overview with short comments for the current portfolio. We will add detailed analysis for the positions in the coming weeks.

AS Creation (ISIN DE0005079909) 7%
European market leader producing and whole selling wallpapers. Family owned, cheap valuation with continuous growth. Currently issues with the German anti trust authority which lead to a drop of ~15% in the share price.

Buzzi Unichem Pref. (ISIN IT0001369427) 6%
Italien based cement producer. Family owned, cheap on the basis of historical valuation. Exposure to problematic Italian and US markets, however strong presence in Germany through Dyckerhoff subsidiary. Low debt and goodwill compared to other cement companies.

Vetropack (ISIN CH0006227612) 5%
Swiss based specialist for glass packaging. Strong profit growth in the last couple of years but still relatively cheap. Currently issues due to strong Swiss Franc.

Bijou Brigitte (ISIN DE0005229540) 5%
Costume jewelery and accesoires retail chain, former growth „star“ company. Peak of sales and profit in 2008, since then shrinking sales and profits. However, company produces lots of cash and is relatively cheap. 100% equity financed, family ownership, attractive dividend yield and share repurchases make the stock attractive.

KSB Vz. (ISIN DE0006292030) 5%
Global market leader for pump systems. Typical German „Mittelstand“, meaning low debt, no goodwill and family owned. Produces among others pumps for power plants. Listed subsidiary in India.

Frosta (ISIN DE000606900) 5%
Family owned frozen food producer, who survived a crisis in the years 2000-2003. Famous in Germany for frozen meals without artificial condiments. Strong market position and brand name in Germany and Poland. Relatively cheap valuation.

EVN (ISIN AT0000741053) 5%
Austrian utility company with subsidiaries in the Balkans. Majority owned by the Austrian Government, another big chunk of the shares are held by German utility EnBW. EVN itself owns 11.5% of Verbund, another Austrian utility. Cheap valuation and constant dividend payments

Ensco (ISIN US29358Q1094)) 5%
US Offshore oil drilling oil service company. Almost no debt, currently depressed share price because of Deepwater Horizon accident. Also large position of David Einhorn’s Greenlight.

WestagGetalit Vz. (ISIN DE0007775231) 3%
Solid German building material company with cheap valuation, high dividend yield and consistent earnings.

Hornbach Baumarkt (ISIN DE0006084403) 3%

German Home improvement store chain with cheap valuation combined with reasonable profit growth.

OMV (ISIN AT0000743059) 3%
Austrian Gas and Oil company. Strong presence in Southern-Eastern Europe, especially Oil drilling in Romania.

Fortum (ISIN FI0009007132) 3%
Utility from Finland with high percentage of renewable and nuclear power generation. Within the European peer group extremely low Carbon emissions. Currently build up of capacity (natural gas) in Russia. Not really cheap but attractive as share price has suffered due to general problems in the utility sector.

Apogee Enterprises (ISIN US0375981091) 3%
Apogee designs and develops architectural glass and other building glass installations. Currently in the low of the business cycle as glass facades are completed at the end of an construction product, cpacity utilization at the moment only around ~50%. Apogee now concentrates on “value added” glass, especially insulation in order to save energy. Similar story as Sto Vz.

Tonnellerie Francois Freres (ISIN FR0000071904)) 3%
Global market leader for manufacturing oak barrels (Barrique). Vertically integrated business from the production of wood to recycling barrels into wooden chips. Cheap valuation, very stable margins.

Medtronic (ISIN US5850551061) 3%
Market leader for many types of medical products. Fundamentally not really cheap but cheap compared to historical valuations. High margins, benefits from demographic trend.

Einhell VZ(ISIN DE0005654933) 2%
Company produces low cost handyman and craftsmen tools. Distribution through all major discount chains and home improvement stores. Constant earnings and growth for a cheap price.

Tsakos Energy Navigation (ISIN BMG9108L1081) 2%
Family owned tanker fleet operator from Greece. Very cheap valuation, however difficult market and surprising capital increases make the stock risky.

WMF Vz. (ISIN DE0007803033) 2%
Traditional German manufacturer of silverware and other household wares. Through clever acquisitions, WMF succeeded to enter the market for professional coffee machines. WMF also operates its own retail stores.

Benetton SpA (ISIN IT0003106777) 2%
Former star performer with provocative marketing campaigns. After 10 years of share price declines, stock is fundamentally very cheap incl. a good dividend yield combined with low debt and low goodwill. Company has significant presence in BRIC markets, which could offset further decline in its home market Italy.

Ishares -Stoxx 600 Utilities (ISIN DE0006289457) 3%

Utilities were on average one of the most underperforming sectors. Cheap valuations, stron cash flows and high dividend yields however make the sector attractive. High goodwill and significant debt create risks as well as in some cases questionable investments into emerging markets projects.

=Sum Core Value 78%

The following titles represent the category “Opportunity”

Aire KGaa (ISIN DE0006344211) 3%
Former “AIG Real Estate”. A traded closed real estate investment fund. No direct links or exposures to AIG. Real estate portfolio consists of international projects around the globe. A lot of the investments are highly leveraged but have been written down substantially in some cases even completely. More than 50% of the remaining NAV is concentrated in one object in Bratislava where refinancing is due in 2011.

Degi International (ISIN DE0008007998) 3%
One of several open real estate investment trusts which had to be closed down due to overwhelming redemption request. Portfolio is relatively solid and fund is priced ~50% of NAV. Small chance for reopening until November 2011.

CS Euroreal (ISIN DE0009805002) 2%
temporarily closed open ended real estate fund with very high likelihood to reopen in 2011

IVG Convertible 2014/2017 (DE000A0LNA87) 3%
Non-rated Convertible bond issued by a large German real estate company, maturity 2107. No option value as exercise price is 10 times current share price. Bond holder have put right at par in 2014, yield at current prices ~11% p.a. which is significantly more than for corporate bonds with the same risk profile. 100k EUR min . notional.

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HT1 Funding (ISIN DE000A0KAAA7 3%)
Officially default rated (“C”) Hybrid bond from Commerzbank who has already suffered a principal write down of about 15%. Specialty: Bond still pays coupon due to guarantee fram Allianz SE. Further risk for writedowns limited. If Commerzbank starts to pay dividends in 2012 as expected by equity analysts, bond will have to be written up to 10% before that.

Drägerwerk Participation Rights (ISIN DE0005550719) 3%
Classical capital structure “arbitrage”. Participation rights receive 10 times the dividends of the listed pref shares of Draeger but only costs twice as much. However some issues about dilution provisions exist. In 2011, significant cash out (dividend + compensation for capital increase of 2010) is expected.

Sum “Opportunity” = 15%

Sum Total = 93%