Links🔗: Food for Thought #15

Below you find the most interesting investment-related content and thought-provoking articels I stumbled about in the recent past. Enjoy reads about: investment vehicles, China, 100 baggers, Goldman Sachs, 1MDB, Gilead, Intel, SES, Flow Traders, SPACs, … (this one got a bit longer far too long)

Must read: Steven Wood (GreenWood) with Sustainability & A Kick Ass Culture (part 2).

Blogroll update: Good Investing TV and its German version Gut Investieren TV offer great interviews with investors. The valueDACH community has a great blog. My (very long) guest contribution about Bolloré was published here as well. The website was relaunched as good-investing.net making use of a beautiful layout. Take a look!

  • Must watch: Interview with Dennis Hong (ShawSpring) & Fred Liu (Hayden Capital), or if you prefer reading, you can also read the transcript.

Empirical: Joachim Klement on Investing about empirical company characteristics helping you Finding the next Amazon. But don’t rejoice too early: 98% of the differences in returns remained unexplained. (In another post, he compares shocks and crisis and discusses 2020 similarities)

Foundling: I stumbled over a great 2h talk from another value investor Vito Maida from Patient Capital from 2013. One of my highlights () was his reasonable expectation and hope for prices of investments going down after the purchase. That is because usually there is some (short term) issue with (our) invesmtents as value investors. He talked about: core business values (6:35), Investment phylosophy (11:30), key beliefs (18:15), markets are not efficient (20:30), analyzing a buiness (1:04:00), security analysis (1:13:28), sell discipline (1:23:50), and did a Q&A (1:36:10)

Undervalued Japan about procrastination: The Hidden Value of Delaying.

Personal: One of the things that always make me smile is too see where all my readers come from. It turn out, they are located all over the world which feels very good, especially the more exotic places, from my personal perspective. 🙂 What would make me even more happy? — When more of my many reader become follwers and so will never miss the next article 😉

Would love to see Africa in pink as well 🙂

Valueandopportunity with another piece of a great series All German Shares Part 32.

Chris Mayer (woodlockhouse) with his Reflections on 100 baggers. They are not to be found in specific industries, and he views the (tech) industry classification as a blur, as I do. Important ingredients for 100x baggers are (first two bullets = good bsuiness)

  1. high return on capital (ROI, ROC, ROCE, ROA, ROE, … you name it!)
  2. reinvestment possibilities (at these high rates)
  3. time, or better to say a long timeframe without selling (even on elevated valuations)

Forager about the new meaning of ‘lit and about investment vehicles trading at a discount to NAV. And, with another post about alarming SPAC Capital Raisings.

Collaborative with What They‘re reading.

Marc Rubinstein from netinterest about The End of (auto) Insurance (incl. Root, Lemonade). Many fintechs underestimate pitfalls in the traditional lending or insurance business (managing risk). Instead, some of them tend to focus on customer experience and hyperscale growth first. I still feel very comfortable with my position in Progressive (PGR US). PGR has its own telematic product as well.

German perspective: Goldman Sachs reached an agreement with the DOJ to pay $ 2bn for their involvement in the 1MDB scandal. Thus, Goldman is off hte hook in the US, but Sigapore could levy additional charges on its local unit. As a German, I am happy that a US financial institution has to pay up for its (potential) wrongdoings. European banks payed (more than) their fair share.

German only: China-Experte Ingo Beyer von Morgenstern im Handelsblatt Podcast , interessant erst ab 8:00. >> More value for price paid (your time) >> MHO: lieber nochmal seinen Acatis Vortrag angucken als diesen Podcast anhören. Reminder: His presentation is also available with English translation (sorry for the bad quality, but it was a live stream — the brilliant content makes up for it 😉 ).

Company news

  • Flow Traders (FLOW NA) released its Q3 results on Oct 22 (Thursday) and reported ‘disappointing‘ Q3 earnings which were below estimates (from two analysts?). Trading volumes and vola normalized during Q3, but Flow gains market share. I like 🙂
    • I bought some shares at a discount of (only) 30% to my estimated fair value (€ 43.55) derived in my initial analysis in July.
    • Back then, I set a buy price of € 26.13 based on a margin of safety of 40%
    • but I believe my scenario based valuation was rather conservative and volatility (as the most importnat profit driver) could/should likely turn out to be higher …
  • SES (SESG LX) is capacity media‘s chosen winner for Satellite Project of the Year. News gave some support for the stock on Thursday (+7%). SES is deepening its partnership with Microsoft for better Azure connectivity.
  • Check Point (CHKP US) reported Q3 results as well on Oct 22 and the stock reacted negatively (-5%), even despite an earnings beat. I still like CHKP for all the following …
    • fortress balance sheet, net cash pile now slightly below $ 4 bn now (*help*)
      • partially due to a small and technology focused acquisition
    • steady growth and highly profitable at the same time
    • high share buy backs (SBBs), which have an even better effect at lower prices 🙂
      • I love this capital allocation of $ 325m SBBs per quarter!
    • I bought some more shares
  • Intel (INTC US) beat earnings estimates but got pounded postmarket, falling 9.4% as a tepid forecast. Sales matched estimates, data center chip business revenue -10%. Adj EpS came in at $1.11, sales were $18.3 bn (-4% yoy). Revenue in exp. to shrink (-14%) in current period.
    • The stock trades at a 11x P/E, with little net debt, which seems low for a tech company (these days!). Though, Intel has its problems (compared to competitors)
  • I bought some Gilead (GILD US) on Tuesday.
    • Thursday, I read The FDA approved remdesivir, making it the first Covid drug to obtain formal clearance.
    • But, my Gilead case does not really rest on remdesivir.
  • WeWork might soon be in default, which might put pressure (psychology) on Softbank Group shares (9984 JP), which I hold. Still, my SOTP valuation based SBG investment case does not rest on WeWork.

Best and happy investing, s4v

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