Tagesarchiv

 ECP | Luxemburg, 27.11.2020 This week we thought of revisiting Friday Morning Coffee Nr. 59 — “The devil wears Prada” that we wrote in May 2019. Back then our musing came forth on the back of our investment into Prada. Just like any other investment case this was not an easy call given the then prevailing circumstances; Sino-China trade war at its peak with the potential for further escalations, talks of repositioning of Global supply chains, market pundits foreseeing death …

Nach dem Biden-Sieg und guten Impfstoffnachrichten könnten Anleger versucht sein von Growth auf Value umzuschichten. Das wäre ein Fehler meint Mathias Born. Der Durchbruch bei der Entwicklung von Covid-19-Impfstoffen und der Sieg von Joe Biden bei der US-Präsidentschaftswahl hat dazu geführt, dass viele Investoren darüber nachdenken, ob sie in Value-Titel umschichten sollen. Matthias Born, Head of Investments & Head of Portfolio Management Equities bei Berenberg (Citywire-Rating AAA), meint: Tun Sie das nicht!

 ECP | Luxemburg, 13.11.2020 The beginning of this week has been marked by a violent rotation out of Big Tech and so-called Covid-19 winners into the cyclical and value names. This move was triggered by promising trial results from an experimental Covid-19 vaccine developed by BioNTech and Pfizer. European equities have also started to perform noticeably better than their US peers and continue to recover some lost ground in terms of negative performance year-to-date. Strategists from big investment banks were …

 ECP | Luxemburg, 06.11.2020 As I write this morning coffee on Thursday afternoon, the probability of a blue wave has substantially diminished. While it still looks plausible Biden will become the next President of the United States the Republicans may well keep the majority the of Senate. Markets were quick to adjust to this new scenario by reversing the blue wave trade as Big Tech stocks rallied, and healthcare rebounded.

 ECP | Luxemburg, 30.10.2020 Recently we came across a couple of articles formulating cases either “for” or “against” value investment. True to their style of financial journalism, authors bucketed the entire investable universe based on a few fundamental metrics and ran all sorts of academic analysis based on lowly valued deciles to put forth their respective arguments. But is this all there to value investment? Or Is this how value investors approach investing? We do not think so.

 ECP | Luxemburg, 23.10.2020 According to a study titled “Elections, stock market returns & your savings” by Prithy Serrao from SmartBe Wealth: Democratic presidents were on average better for the stock market than Republicans: 8.3% annualized return in Democratic Presidents compared to 3.6% with a Republican leader. Are we in for a Blue Wave in case of a Biden victory? Less protectionist sabre rattling, strong stimulus measures, and increased green energy spending would certainly help the economy and ultimately support the stock market. …

 ECP | Luxemburg, 16.10.2020 It is not a surprise that interest rates are at rock bottom levels. An already anaemic economic activity has been slowed down further by the pandemic pushing central banks to inject unseen amounts of liquidity into our financial systems. For the moment at least these monetary policies are not leading to inflation and hence to higher rates. This environment is not favourable for value investors as the traditional industries they are investing in are facing headwinds. Financials …

 ECP | Luxemburg, 09.10.2020 Big Tech has had a tremendous run since over the last years against the US broader market. The developed markets outside of the US, especially Europe, have been left behind partly due to the relatively low weight of technology stocks in the market. Apple, Microsoft, Amazon, Facebook and the parent company of Google, Alphabet represent 22% of the S&P 500, an unseen concentration on 5 companies. The winner takes it all argument where Big Tech is ruling …

 ECP | Luxemburg, 02.10.2020 It has now become a tradition for me to present the principles of value investing to students in Luxembourg, this year at the Luxembourg School of Business. The course is co-organized by the Luxembourg Value Investing Society ( LVIS ) and is taught by 2 university professors,  Jos van Bommel for finance and Thomas Kaspereit for accounting, and myself. One objective of the course is to confront the academic and the practitioner’s views on value investing. …

 ECP | Luxemburg, 18.09.2020 What if we were to tell you that this large cap company operating in the cement industry has grown its revenue two and a half times in last five years and has EBITDA margins of +30 percent? Exactly, even we did not believe our senses at first. We are talking about Anhui Conch, a Chinese cement manufacturer. It is hard to digest a hyper growth cement manufacturer when we have grown accustomed to mature, low margin and …

 ECP | Luxemburg, 11.09.2020 We hear that several large asset managers are throwing the towel on value investing. One example is Nordea merging its Nordea European Value Fund into the Nordea European Stars Equity Fund. I have been co-manager of Nordea European Value Fund between 2002 and 2014 so I can state with a certain level of confidence I have some understanding of the underlying investment strategy and process of this Fund. I also understand the receiving fund targets large-cap …

 ECP | Luxemburg, 04.09.2020 “People calculate too much and think too little”- Charlie Munger (Vice Chair at Berkshire Hathaway). Our confession – When we look at a stock trading at 182x current year’s normalised earnings, our imagination hits its limits and we end up doing lots of calculations. In order to understand the exuberance around certain IT names, we thought of revisiting the concept of “Expectation Investing”. In a book published by Rappaport and Mauboussin in 2003, the authors suggest that investors should …

 ECP | Luxemburg, 28.08.2020 Referring to the telephonic conversation with the boss of a large US cruise line operator at the onset of Covid-19, the CEO of Tui (Anglo-German tours and travels operator) says “Shared pain is halved pain”. Fair enough, when the giants in the sector are bleeding then the entire value chain would bleed equally, if not more. But what if a company which had historically derived its income from a volatile segment of a sector has over …

 ECP | Luxemburg, 21.08.2020 One of the attractions of European equity markets is their valuation gap compared to the US. According to Bloomberg, S&P 500 currently trades at a forward price earnings ratio of 23.2 times versus only 19.2 times for the Europe Stoxx 600. The valuation gap between the US and the old Continent has increased over the last years and is at a record high. However I believe it would be a little too simplistic to reduce the “Why Europe” argumentation …

 ECP | Luxemburg, 14.08.2020 Think of an automotive supplier and the first thought that comes to mind is a “component pusher”. Given the relative small size of these players in comparison to global OEMs and the transactional nature of their relationships in this mature industry it is obvious to term them as price takers, which is partially true, especially if one compares the profitability of some of these players to that of OEMs.  Wilson Kia Onn Wong in his book …