A quick recap on the performance of all companies discussed in this Substack since its inception, and also some comments –not for all of them - on what has happened since the original post.1
The simple average is negative -7%, so if you are looking mostly for long ideas you might want to consider reading other Substacks…2
The best performing stock is SimCorp, mostly thanks to the buyout offer from Deutsche Börse accepted last May. A good return also from Logista, which, as discussed in the post, is not a melting ice cube, but rather the typical good value investment: a mature company with high revenue visibility, resilient business model, captive customers, no debt, decent profitability and robust economic cash flow profile. Brembo has taken more time than I expected to shine, but it has been good so far in 2023 (+30% YTD).
On the negative side, the worst call has definitely been Aker Horizons, down more than 60% since the initial post: green tech and hydrogen energy are indeed long shot, but despite shuffling some assets around so far the company has been disappointing.
doValue has also been a delusion: the recent acquisitions and expansion beyond Italy have not grown NPLs volumes as expected, and both earnings and ROE have suffered (in 2020 and 2021 the company likely “over-earned” thanks to favourable post-pandemic taxation and government support). The current very high dividend yield (14%) is not helping much, as the stock is still quite expensive (P/E 20x) regardless of the price crash. And the fact that management seems to keep focusing on even more acquisitions in the near term does not support market sentiment.
Among the stock with negative performance, VNV Global was actually a good call: this is what I said in the post:
[…], I’m not convinced this is yet a good entry point: the de-rating for many disruptors has just started, and many companies will find it extremely difficult to finance not only their future growth but even their existence.
Shareholders in one of its main assets (Babylon) were indeed wiped out in a restructuring last month.
Similar conclusions can be drawn for Sofina, another private equity/VC holding company.
Societè BIC has also not done too well: some of its businesses are in secular decline (other less so) but not at risk of suddenly disappearing, and valuation is not demanding. But it’s definitely not the kind of company the market likes at the moment.
Shaftesbury Capital is down significantly too: here the idiosyncratic reason in the all-stock merger with peer/competitor Capital & Counties (Capco), which was done on terms that were not that favourable to Shaftesbury considering the relative strength of the two companies before the merger, as it was effectively a nil-premium takeover by Capco (despite SHB’s shareholders owning the majority of the new company).
Three other companies where I was not fully convinced for different reasons – and so far performance has been negative, albeit not disastrous – are DCC, Ashmore and Bonheur.
DCC has an interesting underlying distribution business, but still have some qualms about the strategy and the metrics reported by management:
I’ve seen several analyses exposing the merits of DCC and how this disciplined serial acquirer creates long-term value, but for the moment I’m not yet convinced of its merits: I’ll keep checking the company and will revisit my thesis from time to time.
For Ashmore it was more a macro call, which I tend to avoid as I’m not good at them but sometimes I do make:
I’m not a macro investor and my predictions can be very wrong: although the long-term outlook for EM is likely positive, given the current headwinds (persistently high inflation, rising interest rates, tightening liquidity, geopolitical tensions and global food insecurity), the last place I want to be in is EM, especially credit.
Lastly, for Bonheur it was mostly a question of market price being at the time too close to my estimate of intrinsic value, not a call on the quality of the business or its fundamentals.
Finally, one my favourite companies in this bunch and also one of the cheapest, Grupo Catalana Occidente, has actually gone nowhere, despite the rise in bond yields that should benefits its business.
Just a reminder: as I always said, this has never meant to be a stock picking service, so these numbers should not be the basis for your buy, hold or sell decisions right now. There’s no guarantee that the stocks mentioned will turn out to be either winners or losers, and I may or may not invest in them.
Also, not very relevant as some ideas were published 18 months ago and some three weeks ago.