Food for Thought #27 // Links🔗

This time the most interesting content and Food for Thought I stumbled over includes: CD Prodject, key lessons on value and growth demagogues, ROIC, GME, Haier,

Empirical research: Joachim Klement on Investing about research on individuals’ loss aversion in The young and the fearful.

Valuation: The undercover fund manager shares his approach to valuing companies.

Valuation: On ROIC or Return on Invested Capital: How to Get It Right – Junto.

GME: Here is Roaring Kitty’s (or DFV’s from r/wsb or Keith Gill’s) original GME analysis video. I know the GameStop and the GME ticker for many years from value investing newsletters making about the same points (personally never took a deeper look).

  • I sold BBBY before the ride. The r/wsb actions on every stock with a high SI provides a new perspective that has always been true for value investors:
    • You can make returns when your thesis is right or when you get lucky.

Collaborative explains Why It’s Usually Crazier Than You Expect (GME, Sears).

Pembridge Capital with an Investment Memo on CD Projekt.

Swen Lorenz with his newest weekly dispatch* providing some view contrasting with mainstream media on London.

You are lucky when you bought in the German listed Haier Smart Home shares (690D GR) in early 2020 when Asian Century Stocks wrote about them and the heavy discount vs its stocks listed in Hong Kong and China (690 CH, 1169 HK).

Bloomberg front row: Why Grantham Says the Next Crash Will Rival 1929, 2000.

Investment philosphy: Vitaliy Katsenelson with Value & Growth Demagogues – another attempt to correct the fasle Value vs Growth-discussion. Three good reasons to read it

  1. If you missed his mini book on Tesla or his six commandments of value investing you get another chance >> they are referenced
  2. He describes failures by die hard value investors (who got the message from Graham wrong: simplified low trailing metrics) and by blinded growth fetishist (who think no price is too high for high growth)
  3. He describes the accounting issues for modern companies in a short and crisp way
    • growing through the balance sheet, vs
    • growing through the income statement)

Net Interest: Interview with Antony Jenkins in Getting to the Data on credit cards, payments, data, banking … . Also some correcting views on GME and the role of shortsellers (i.e. uncovering frauds) and brokers and robinhood, which had record downloads on Wednesday (in hindsight maybe a prime indicator?)

Negative interest rates: Negative interest rates are nothing new to us Europeans, but it seems more and more banks are going to charge customers with negative rates for certain accounts and amounts, i.e. above €100k – luckily I do not have that problem 🙂

  • This (negative) interest rate background is important to keep in mind when comparing expected stock returns to alternatives (including cash)
    • some old-school value-investors have other opinions but there are risks included regardless of what action you take
      • keeping cash and earnings no or negative returns
      • invest in stocks and risk suffering losses (deflating multiples) when rates rise
        • personally I do not expect interest rates to rise soon in Europe (US might be earlier) but this is an opinion loosely held
  • DKB, a more modern bank with good online capabilites (my impression)
    • will not charge negative interest rates of -0.5% but
    • a positive-formulated 0.5% custody-fee called Verwahrentgeld
      • we Germans like to strung-toghether-nouns
    • positive interest rates for money on the VISA-creditcard accounts will cease

Company news

  • Sberbank (SBER RU) released its new ir presentation as of Jan 1st
    • Still like the profitable bank + ecosystem development around it (Quicky #9)
  • L’Occitane (973 HK, Wed: +25%) files voluntary chapter 11 for US unit L’Occitane, Inc. only! and released its 9m trading update and its presentation on Jan 26th
    • renogitiations of lease portfolios for its brick and mortar stores were stuck
    • Sales momentum (at constant ccy) is strong, especially so in Asia (more travel)
    • 44 stores were closed in 9m until December
    • the Group is confident that it will deliver better results than initially targeted at the start of FY2021
  • Progressive (PGR US) reports stellar results for Dec and FY 2020 at Jan 27th but
    • sold off -5% in a weak market
      • (hedgies selling their liquid big cap longs for covering shorts?)
    • I bought some more shares
  • Krka (KRKG SV) reported strong prelim. FY 2020 results, as usual with
    • next to nothing news on the bloomberg screen (edge?)

Best and happy investing, s4v

* marks an affiliate: if you want to become a paying member to Swen’s world-class content please use my link. hte price for you is the same. I might receive a referral bonus (money).


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