Monday, April 13, 2099

Valuation of all stocks listed in Holland AEX All Share AAX: Benjamin Graham Defensive Investor method

Warren Buffett: "Well, start with the A’s." Click on the companies below for Graham Evaluation:

Aalberts Industries 2018
ABN AMRO 2018 
Accell Group 2018 
Ahold Delhaize Koninklijke 2018
Accsys Technologies 2018
Adyen 2018
Aegon 2018
AFC AJAX 2018
Air France-KLM 2018 
Akzo Nobel 2018 
Alfen new IPO, 1/2 year report August 28th 2018
Altice AEX:ATC, NL0011333752
Alumexx 2018
AMG Advanced Metallurgical Group NV 2018
Amsterdam Commodities ACOMO 2018
AND International Publishers 2018
Apollo Alternative Assets EMPTY? 
Aperam 2018
Arcadis 2018
ArcelorMittal 2018 
ASM International AEX:ASM NL0000334118 2018
ASML 2018
ASR Nederland 2018
Avantium 2018
Batenburg Techniek 2018
BAM Koninklijke Groep 2018 
Basic Fit 2018
BE Semiconductor AEX:BESI, NL0000339760 2018
Beter Bed Holding 2018
B&S Group 2018

Berkshire Hathway run by Warren Buffett

Bever Holding 2018
BinckBank 2018
Boskalis Westminster Koninklijke 2018
Boussard & Gavaudan Holding Ltd. An expensive hedge fund.
Brill, Koninklijke 2018
Brunel 2018
Coca-Cola European Partners 2018
Corbion 2018
Core Laboratories 2018
Ctac 2018
Curetis 2018
DGB Group cijfers 27 september 2018
DPA Groep N.V. buy at €1,4
DSM Koninklijke 2018
Dutch Star One 2018
Ease2pay 2018 a  holding for the https://www.ease2.com/ parking payments via Rabo app
Envipco 2018
Esperite: Stem Cell Bank losing money, selling shares. Price recently fell from 3 to 0,25
Eurocastle 2018
Eurocommercial Properties 2018
Euronext 2018
Fagron 2018
Flow Traders 2018, seems like a buy under €30
ForFarmers 2018
Fugro's 2018
Gemalto Thales offer 2018
Galapagos 2018
GrandVision 2018: Buy under EUR 15
Groothandelsgebouwen N.V. bought for EUR 56,92
HAL Trust 2018
Headfirst Source part of Value8 holding. Figures? Earnings 2017 before Amortization 0,30?
Heijmans losing money check August 17 2017
Heineken 2018, buy under 60?
Holland Colours 2018 buy under €70
Hunter Douglas 2018
Hydratec 2018
ICT Group NV 2018 buy under 9 Euros
IEX Group 2018 Sales 3m, losses 600k, not for the defensive investor
IMCD buy under 35 Euros
ING Bank 2018
Intertrust 2018
Inverko used to be Newconomy, is for sale, garbage (disposal) Price = 0,60 Euros
Kardan 2018
KAS BANK 2018
Kendrion 2018
Kiadis Pharma 2018
Klepierre cheap at €29? 2018
KPN 2018
Porceleyne Fles Koninklijke 2018
K. VolkerWessels check after August 31st, 2017
K. VOPAK buy under 35
K. Wessanen 2018 
K. VolkerWessels
Lavide sold childcare company oct 2018 1 Euro 
Lucas Bols 2018 buy now
Nedap 2018
MKB Nedsense 2018
New Sources Energy 2018 fraud
Neways 2018
NIBC 2018
NN Group 2018
Novisource 2018
NSI Nieuwe Steen Investments HNK = Het Nieuwe Kantoor 2018
OCI 2018
Oranjewoud 2018 
Ordina 2018
Pershing Square 2018
Pharming back of the envelope math 2018
Philips 2018
PostNL 2018
Probiodrug 2018
Randstad 2018
Real Estates 2018
RELX 2018
RoodMicrotec 2018
Royal Dutch Shell
SBM Offshore 2018
Sif Holding 2018
Signify Philips Lighting 2018
Sligro 2018
SnowWorld 2018
Stern Groep 2018 a buy?
Takeaway.com 2018
Tetragon 2018
Thunderbird Resorts 2018
TIE Kinetix 2018
TKH Group 2018
TomTom 2018
Unibail Rodamco 2018 a buy?
Unilever 2018
Value8 2018
Van Lanschot 2018
Vastned Retail 2018

Volta Finance fund including CLO (Collateralized Loan Obligations)
Wereldhave, buy! 2018
Wolters Kluwer
Yatra Capital Indian Real Estate, losing money, stopping? Book 7,5 E, Price 5,75 E.

Other countries:
Starbucks 2018

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Wednesday, December 05, 2018

Van Lanschot Kempen intrinsic value and stock price

The https://en.wikipedia.org/wiki/Graham_number is also not usually used for financial companies like banks.


For banks and real estate I have decided to use 1 x book value instead of 1,5 x book value which makes more sense for other industries. The Graham Value is the geometric average of 15 x Earnings per Share and Book Value x  1,5 (in this case x 1).


The company is paying out a special dividend of EUR 1,5 / EUR 22,6 = 7% on December 19th 2018. 

Conclusion December 2018: Like other Dutch stocks and banks, Van Lanschot seems like a buy at the moment.

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Tuesday, December 04, 2018

Unilever intrinsic value based on Benjamin Graham number and Peter Lynch chart

Conclusion a little over a year ago: "The Price for Unilever has gone up more than I expected a few years ago. A bid from Kraft Heinz (Buffett / 3G) has helped increase the "quoted value". Not a stock for the Defensive Investor at this price." Since then Unilever's stock price has increased by about 10%.

The Graham Value which is the geometric average of 1,5x book value and 15x Earnings per Share has decreased. The reason seems to be that Unilever is buying back shares at a large premium over book value which decreases book value per share and thus the Graham number. On the other hand debt per share is increasing, but so are Earnings per Share which could be considered more important than book value. Consider the trend of the Peter Lynch chart with Price and Earnings per Share lines. (Something seems to have gone wrong in this chart with the 4 to 1 stock split just before 2000.)

Seen from this perspective the increase in share price is more logical. As Peter Lynch liked to point out, if a company's Earnings per Share doubling, the share price will probably follow. The Earnings per Share increase is partly driven by share buybacks financed by increasing debt. 

Graham Defensive analysis:
SECTOR: [PASS] Unilever is neither a technology nor financial Company, and therefore this methodology is applicable. 

SALES: [PASS]  The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. Unilever's sales of €53 715 million, based on 2017 sales, pass this test.

CURRENT RATIO: [FAIL] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. Unilever's current ratio €19 833m/€26 000 of 0.8 fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL]  For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for Unilever is €24 000 million, while the net current assets are - €6 200 million. Unilever fails this test.

LONG-TERM EPS GROWTH: PASS] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. EPS for Unilever increased roughly 50% over the past 10 years, therefore the company fails this criterion. 

Earnings Yield: [FAIL] The Earnings/Price (E/P) ratio, based on the lesser of the current Earnings Yield or the  yield using average earnings over the last 3 fiscal years, must be "sufficient", which this methodology states is greater than 6,6%. Stocks with higher Earning Yields are more defensive by nature. Unilever's E/P of 4% (using the current PE) fails this test. 

Graham Number: [FAIL]  The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. Unilever has a book value of €5 per share, a Graham Number of €15,3 per share and fails this test.

Dividend: 1,52/49 = 3%

Conclusion 2018: I have been misreading Unilever in the past years.

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Friday, November 30, 2018

Unibail Rodamco Westfield intrinsic value


Unibail Rodamco merged with Westfield and financed the deal by selling 38? million shares, so the share count has increased from 100m to roughly 140m. I haven't seen the balance sheet or P&L since the merger / stapling? of stocks.
The business is retail real estate so investors might be afraid of the long-term results...

Usually, the Benjamin Graham number is the geometric average of 15x Earnings and 1,5x book value. For real estate 1,5x book might lead to a too high valuation so I have used 1x book.
Earnings are a mix of revaluation and income, so you could also say the EPS will be 12,90 Eur this year...

Graham Number = 260 Euro = Square Root ( 15 x 25 EPS x 1 x Book 200 )

Dividend = 10,8 / 150 = 7% and increasing.

Conclusion: As of November 2018 Unibail Rodamco Westfield looks like a buy. Not my circle of competence.

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Thursday, November 29, 2018

TKH Group intrinsic value based on Benjamin Graham number


SECTOR: [PASS] TKH formerly Twentse Kabelfabriek Holding is in industry. Technology and financial stocks were considered too risky to invest in when this methodology was published. 

SALES: 
[PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. TKH's sales of  € 1 484 million based on 2017 sales, pass this test.

CURRENT RATIO:   [FAIL] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. TKH's current ratio 723m/442m of 1,6 fails this test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [PASS] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). The long-term debt for TKH is 343 million, while the net current assets are  423 million. TKH passes this test.

LONG-TERM EPS GROWTH: [PASS] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. TKH's earnings have increased 100% since 2006.

Earnings Yield: [FAIL] The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature.TKH's  E/P of 5%  (using the average of the last 3 years Earnings) is a bit too low for this test.

Graham Number value: 
[FAIL]  The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. TKH has a Graham number of √ (15 x  2,2 EPS x 1,5 x  14 Book Value) =   € 26,50

Dividend: TKH 1.2/ 45 =3%

Conclusiom Sales and profits have been increasing, but so have debts... not a stock for the Graham Defensive Investor at a price above EUR 35

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Wednesday, November 28, 2018

Managing Berkshire Hathaway subsidiaries

1. On charging managers a high rate for incremental capital they employ.

 The questions about incentive arrangements we have with managers or other situations, where we either advance capital to a wholly owned subsidiary or withdraw it, usually, that ties in with the compensation plan.


And we want our managers to understand just how highly we do value capital. And we feel there's nothing that creates a better understanding than to charge them for it.

So, we have different arrangements. Sometimes it's based a little on the history of the company. It may be based a little bit on the industry. It may be based on interest rates at the time that we first draw it up.

We have arrangements depending on those variables and perhaps some others and perhaps just, you know, how we felt the day we drew it up, that range between 14% and 20%, in terms of capital advanced.

And sometimes we have an arrangement where, if it's a seasonal business where, for a few months of the year, when they have a seasonal requirement, we give it to them very cheap at LIBOR.

But, beyond that, we start saying, "Well, that's permanent capital," so we charge them considerably more.

Now, if we buy a business that's using a couple hundred million of capital, and we work out a bonus arrangement, and the manager figures out a way to do the business with less capital, we may credit him at a very high rate -- same rate we would use in charging him -- in terms of his bonus arrangement.

So, we believe in managers knowing that money costs money. And I would say that, just generally, my experience in business is that most managers, when using their own money, understand that money costs money.

But sometimes managers, when using other people's money, start thinking of it a little bit like free money. And that's a habit we don't want to encourage around Berkshire. By sticking these rates on capital, we are telling the people who run our business how much capital is worth to us.

And I think that's a useful guideline, in terms of the decisions they're making, because we don't make very many decisions about our operating business. We make very, very few. I don't see capital budgets, in most cases, from our 100%-owned subsidiaries. And if I don't see them, no one else sees them.

Do you speak Dutch? If so please opt-in at www.valuemachinesfund.nl Thanks in advance! Comments, questions or E-mails welcome: ajb@valuemachinesfund.nl

Tuesday, November 27, 2018

Tie Kinetix notes

2016: TIE Kinetix Shares Outstanding: 2013:933 2014:1127 2015:1227 2016:1830
2018: Oustanding: 1,6m shares, diluted 1,95m shares
Earnings per share: EUR 0,1 , book value per share EUR 3,- , price per share has fallen from EUR 11 in 2016 to EUR 7 today. No dividend or plan to pay out dividend or buy back shares.  

Conclusion November 2018: Tie Kinetix shares seem relatively expensive at EUR 7,-

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Monday, November 19, 2018

Thunderbird Resorts

2017:Negative book value and losing money.
2018: Positive book value. Still making an operational loss. Has been selling stock:

201520162017 
Aantal werknemers1.415,001.392,001.361,00

Aantal uitstaande aandelen (x 1000)23.650,0024.240,0027.100,00
Stock price 20 cents hasn't changed much: http://thunderbirdresorts.com/

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Tetragon GB

2017: Tetragon investment fund including CLO (Collateralized Loan Obligations) NAV $20, price $12,44

Dividend: $0,18*4 = $0,72

2018 November: NAV Sept $21,75 , price Nov $12,15

Including dividend has outperformed indexes since inception 2007.

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Friday, November 16, 2018

Next PLC intrinsic value guesstimate based on Peter Lynch chart

A Peter Lynch chart is not "technical analysis" or "charting" but a visualized form of fundamental analysis (value investing). The first chart is the theory, the Next chart is practice.

Theory

Practice


Using this Peter Lynch chart of NEXT PLC stock price and a multiple of 15x Earnings per share (P/E = Price / Earnings ratio) you see 2009 was a good time to buy Next (and other stocks), 2010 at 20 GBP was also an opportunity. If you bought shares at 80 GBP, the person who sold to you was making a better decision (in hindsight). 40 GBP in 2017 was also a good price at which to buy. Currently, the shares seem reasonably priced. 

Notes: Next has clear reporting. https://en.wikipedia.org/wiki/Simon_Wolfson takes the trouble to try to explain clearly what is going on and where mistakes have been made. They understand the operating leverage you get when you sell more from the same store (they call it "economies of scale"). See: https://www.nextplc.co.uk/investors      
Interestingly stores account for less than half of sales, on the other hand, 50% of Online orders are picked up in the stores (I am not sure how that revenue is booked).

Benjamin Graham Defensive Analysis

SECTOR: [PASS]  Next is in retail and neither a technology nor primarily a financial Company, and therefore this methodology is applicable. 

SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. Next's sales of GBP 4 100 million, based on 2017 sales, pass this test.

CURRENT RATIO: [FAIL] [PASS]  The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. Next's current ratio €179m/€132m of 1.6 just fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [PASS] [FAIL] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for Next is GBP 906 million, while the net
current assets are €754 millionNext just fails this test.

LONG-TERM EPS GROWTH: [PASS] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. Next's Earnings per Share have increased 251% in the past ten years.

EARNINGS YIELD: [PASS] The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. Next's E/P of 9% (using this year's estimated earnings) passes this test.

Graham Number value: [FAIL] The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. Next has a Graham number of (15 x GBP 4.5 EPS x 1,5 x GBP 3,3 Book Value) = €18,31 and fails this test.

Note: The Graham Number is low, but Next generates very high returns on its relatively low Book value (ie high Return on Equity) of 100-200% per year and Returns on Assets of 25% a year. So the intrinsic value is much higher than the Graham Number in this case.

DIVIDEND GBP 1.6/51 = 3% and the company is also buying back shares in order to return cpaital to shareholders and increase Earnings per Share.

Conclusion: Next seems like a good buy at this price and I have heard they are hiring hardworking, honest and intelligent people ;) 

www.valuemachinesfund.nl 

Tesla: Innovation is often based on finding errors in conventional wisdom

(Note: Not yet finished. Math at the end.)

Larry Ellison is the founder and part owner of Oracle. His second biggest holding is Tesla. Ellison has said: "Innovation is often based on finding errors in conventional wisdom."

At Tesla, Elon Musk is enthusiastic about a recent insight he had and immediately started putting into practice. It is interesting because it goes against conventional wisdom. What he is doing, doesn't "make sense".

He explained his thinking during the recent Q3 conference call (excerpt below), subsequently he has started taking action.

Let's consider some actions he undertook and whether they "make common sense".

From Twitter yesterday:
Musk: "Tesla just acquired trucking capacity to ensure Model 3 can be delivered in US by Dec 31 if ordered by Nov 30"
Musk: "We bought some trucking companies & secured contracts with major haulers to avoid trucking shortage mistake of last quarter."
Musk: "Skipping rail saves over a month for East Coast deliveries. All things considered, it’s better to use trucks. Single load/unload & direct to owner location."
Q; What happened to being green? Trains save fuel!
Musk: "We have to truck to departure rail head & truck from arrival rail head, which is usually (far) from customers. Car gets moved around rail yard a lot too & trains don’t leave often."
Musk: "Will also be using dedicated roll-on, roll-off fast ships for transporting cars to Europe & Asia in Q1. Major focus on minimizing time from factory to new owner. Did not fully appreciate the working capital impact until recently."

So what is happening? Shipping by truck instead of train increases expenses. Fast ships are more expensive than slow ships.

What Musk is doing literally "doesn't make sense". Here is a good explanation of why that is the case as calculated in this Twitter thread: https://twitter.com/ad8871/status/1063183182701436934

Twitter user People's Grain: "1/ So what does Captain Planet (Musk) mean by working capital impact of shipping by rail? Let's see." 
"2/ working capital for holding inventory is covered by Tesla's ABL (Asset Based Lending) credit line. They can borrow approximately 85% of COGS (Cost of Goods Sold) per car and the rate is LIBOR (London Interbank Rate) +1% = 3.3% interest"
3/ in q3 (third quarter of 2018) unit COGS for Model 3 were about $47k so you can borrow $40k at 3.3%. Musk said shipping by truck saves a month vs rail. So 1 month of interest on a 40k loan is $110. Stated goal is reducing delivery from 29 days to 10 which is $70/car
4/ at current production that's about $6m savings per quarter but subtract the higher cost of shipping by truck from that. Small potatoes indeed, maybe even negative potatoes. How many "trucking companies" can one acquire for $6m?
5/ the answer here is that it's not about working capital efficiency. But we knew that. I suppose it's
about credit being maxed and having capital at all.

To be continued: From a Earnings per Share point of view "negative potatoes' but from a cash flow point of view;  Consider Phil Knight and Nike in "Shoedog" high profits, negative cash flow and neg. equity, Sam Walton: highest debt just before Walmart IPO.

Bezos 2004 Letter: http://media.corporate-ir.net/media_files/irol/97/97664/reports/2003_%20Shareholder_%20Letter041304.pdf

Musk during last quarter call Q3 2018:

"We do not intend to raise equity or debt. At least that's our intention right now, that may change in the future. But the current operating plan is to pay off our debts not to refinance them, but pay them off and reduce the debt load and overall leverage of the company. But I actually almost forgot one quite important thing. As - and this is quite helpful, it's always helpful to have these sort of crisis situations with logistics, for example.


As I dug into the inventory like basically finished product inventory from factory to the customer, I was quite surprise to see how long that took that took, and that it was quite expensive in a lot of cases to get cars to customers. This was something I didn't fully appreciate before. And we really have a major initiative at Tesla to get the average time from the exiting the factory to receiving the check from the customer, being in the customers hand, if we can only get the check when we give the car to the customer. So getting car from factory to customer to get that to as short as possible.

In August, the average time in North America to get a car from the factory to a customer was 30 days, which is embarrassingly long. By the end of the quarter, we've reduced it to around 20 days. And our goal in Q4 - this is a goal, not a promise. But our goal is to get the average time of the car from factory to customer under 10 days. This is a giant improvement in the capital efficiency of the company, because we're making on the order of $75 million worth of products per day - of cars per day. So every day, it required $75,000 - $75 million with capital, so every 10 days, it's $750 million.

And we - obviously, we have a loan from the bank that we can make use of. But the banks will only loan us 85% of the cost of the vehicle, which translates to about 70% of the price of the vehicle. So - and then we've got this loan outstanding, which effectively increases the COGS of the car. And it dilutes the company to the tune of 30% of one of the inventory - of the finished goods in transit it.

So that this is really like tightening that and getting that below 10 days in North America and then also improving dramatically the time - the transit time to Europe and Asia. It is where like having local factories is actually very important for capital efficiency of the overall system. Because, I think, over time, we want to get the time from a car going from a factory to customer under 7 days worldwide. And then, the terms that we have with from our suppliers are, on average, just over 60 days.

Now, our product inventory management also there's a lot of room for improvement there. We think we can probably cut that down to a few $100 million or so, Deepak, something like that, maybe $200 million or $300 million of COGS at the factory. So effectively, what we're going to go is reverse the working capital requirement for the company quite dramatically, so to a point where the faster we grow the more capital we have. This is incredibly important for capital efficiency of the company. It's night and day."

Deepak, is there anything you would like to…

Deepak Ahuja (Tesla CFO)

No. I think, you are totally - we are reducing the raw material inventory on one hand by keeping production stable, finding efficiencies and warehouse management and the supply chain. And at the same time, reducing the time to deliver the car and convert that car into a cash. And that significantly improves working capital needs.

Elon Musk

Yeah, it's really quite dramatic. So, yeah, I think it sure profoundly changes the financial effectiveness of Tesla.

Deepak Ahuja

Yeah, we reduced our inventory in Q3, which helped. And then, although we had higher payables because - sorry, higher receivables, because the quarter end, the weekend, we won't have that in Q4, so all of this should continue to help us in Q4 and beyond, the working capital again.

Elon Musk

Yeah, I mean, it occurs to me that, even if the only thing - like even if this was the only thing that Tesla did differently was to shorten the time from factory to end customer. In any given company that would outcompete all of the companies over time. It would not be a contest.

Math: Sales Tesla $75m a day November 2018, Toyota $700m a day (automotive, not an energy company)

Today:
Payment to suppliers after 60 days, delivery in 10 days = 50 days float.
$75m x 50 days = $3 750 float - $250m COGS at factory = $3,5b float
Sales doubling:
$150m per day = $7b float
$300m per day = $14b float
$600m per day = $28b float
Current Tesla long term debt: $10b 

If growth continues Accounts Payable should keep increasing, but the company will be generating cash (as well as profits) and less reliable on external financing.

Going forward: Question: When will they self-drive to customer's door?Musk: "Probably technically able to do so in about a year. Then up to regulators."

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Thursday, November 15, 2018

Takeaway.com notes

Very rough notes:

1. Gross Merchandise Value vs. Sales

Lesson learned from Takeaway (and Uber) is the difference between "Gross Merchandise Value" and company Sales. At a brick and mortar retailer, it is normal to define "Sales" as all the money customers give to the store. At Takeaway.com they say sales are the money recieved for transporting the food. That is "Gross Merchandise Value" minus the money the customer is paying (through Takeaway.com) to the restaurant for food. This is similar to the way retailer C&A work(s/ed). The focus is on "Deckungsbeitrag" (at C&A BCP Fund in Euros). Conventional Sales are largely irrelevant: www.profitperx.blogspot.com

2. "Growth hacking"

Takeaway.com is growing quickly and trying to stake a claim to market share to start making EBITDA profit sometime in 2019. Is there a Metcalfe's law in their business similar to eBay? They refer to "network effects" which seems reasonable. Is the business a good business?

The business model was easier when it was virtual, but new entrants (Foodora, Uber Eats, Deliveroo) have forced Takeaway's hand to start organizing physical delivery: Excerpt:

"Dat de bezorgmarkt aardig wat voeten in aarde heeft, blijft een feit, benadrukt Groen. 'Het is een zeer uitdagende activiteit. Het is voor ons organisatorisch veel moeilijker om een bezorger op de elektrische fiets te laten stappen dan een order te ontvangen en door te spelen aan een restaurant. Maar het is een goede investering, omdat we hierdoor meer orders binnen krijgen.' https://twinklemagazine.nl/2017/08/thuisbezorgd-scoober/index.xml

3. Scoober is part of https://www.lieferando.de/ ?

4. Valuation (orders of magnitude guesstimate): (Too difficult pile)

They are losing EUR 30m a year but growing. Say they earn EUR 50m a year x 15 multiple is a valuation of EUR 750m, current market cap EUR 2b seems a bit steep. Wouldn't buy at a price over EUR 25 per share, current price EUR 50 per share.

Do you speak Dutch? If so please opt-in at www.valuemachinesfund.nl Thanks in advance! Comments, questions or E-mails welcome: ajb@valuemachinesfund.nl

Monday, November 12, 2018

Snowworld intrinsic value and offer

Marc Coucke https://en.wikipedia.org/wiki/Marc_Coucke owns 83% of Snowworld through his holding Alychlo. He had to make an offer to buy all the shares and he set the price at EUR 9,50 last year. See green line in the graph below: Since then business hasn't been good due to great weather in the Netherlands, discouraging people from spending time indoors.


Currently, the price is EUR 8,80 but that doesn't mean you can buy a lot of shares at that price, the volume traded is very low. The offer price and today's stock price both seem reasonable.

SECTOR: [PASS]  SnowWorld is in retail and food service and neither a technology nor financial Company, and therefore this methodology is applicable. 

SALES: [FAIL] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. SnowWorld's sales of €28 million, based on 2017 sales, fails this test.

CURRENT RATIO: [FAIL] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. SnowWorld's current ratio $1,6m/$12,7 of 0.1 fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for SnowWorld is €32 million, while the net current assets are - €11 million. SnowWorld fails this test.

LONG-TERM EPS GROWTH: [PASS]  Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. SnowWorld EPS grew by 42% over the past 4 years and passes this test.

Earnings Yield:  [PASS] The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. SnowWorld's E/P of  8% (using the current Earnings) passes this test.

Graham Number value: [FAIL] The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. SnowWorld has a Graham number of (15 x €0,7 EPS x 1,5 x €4,8 Book Value) = €8,8

Dividend: 0,4/8,8 = 5%

Conclusion: The shares seem fairly priced, but there is too much debt for a Graham Defensive Investor. It is not clear to me whether Alychlo will make another offer. If it is at EUR 9,5 then there is an 8% upside from the current price.

Do you speak Dutch? If so please opt-in at www.valuemachinesfund.nl Thanks in advance! Comments, questions or E-mails welcome: ajb@valuemachinesfund.nl

Saturday, November 10, 2018

Sligro: I made some mistakes?


Conclusion April 2017It is interesting to see how Sligro's price fluctuates around its Graham value. Currently at 35,29 Euros there is no margin of safety for the Graham Defensive investor.


After that Sligro completed the sale of Emte supermarkets and gave shareholders a special EUR 7,57 dividend per share at the end of July 2018 and the share price has gone up to EUR 40. Last year I wrote that the book value was EUR 33 per share and now I see and calculate around EUR 15 per share...? Business seems to be going well too. To be continued in 2019.

Do you speak Dutch? If so please opt-in at www.valuemachinesfund.nl Thanks in advance! Comments, questions or E-mails welcome: ajb@valuemachinesfund.nl

Thursday, November 08, 2018

SIF Holding intrinsic value


SIF has had a bad 2018, so I have extended a very rough estimate to 2019. I found this interesting; This year the water levels in the Rhine river have been so low that ships couldn't travel it fully loaded: SIF "With a production level of 19 Kton, the capacity utilization remained somewhat low in Q3, due in part to delays in the supply of steel and the extremely low water levels in various rivers."

SECTOR: [PASS]  Sif  Holding is in offshore and neither a technology nor financial Company, and therefore this methodology is applicable. 

SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. Sif Holding's sales of €327 million, based on 2017 sales, pass this test.

CURRENT RATIO: [FAIL] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. Sif Holding's current ratio $72m/$97m of 0,7 fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for SIf Holding is €1,3 million, while the net current assets are - €25 million. Sif Holding fails this test.

LONG-TERM EPS GROWTH: [FAIL]  [PASS]  Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. I don't have Sif Holding's EPS from 10 years ago when it was a private company, therefore Sif Holding neither passes or failsfails this test.

Earnings Yield: [FAIL] The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. Sif Holding's E/P of 2% (using an estimate of the current Earnings) passes this test.

Graham Number value:  [FAIL]  The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. Sif Holding has a Graham number of (15 x €1 EPS x 1,5 x €3,5 Book Value) = €8,7

Dividend ? the company pays dividend when it can.

Conclusion 2018: Sif Holding due to its debt and thus low book value is currently not a company for the Graham Defensive investor.

Do you speak Dutch? If so please opt-in at www.valuemachinesfund.nl Thanks in advance! Comments, questions or E-mails welcome: ajb@valuemachinesfund.nl