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 AEX:AALB, NL0000852564
ABN AMRO AEX:ABN48 NL0011540547
Accell Group AEX:ACCEL NL0009767532
Ahold Koninklijke AEX:AH, NL0010672325
Accsys Technologies AEX:AXS, GB00BQQFX454: Too small, making a loss, but growing sales.
Aegon AEX:AGN, NL0000303709
AFC AJAX AEX:AJAX NL0000018034
Air France-KLM PSE:AF, FR0000031122
Akzo Nobel AEX:AKZA NL0000009132
Altice AEX:ATC, NL0011333752
AMG Advanced Metallurgical Group NV AMG:AEX NL0000888691
Amsterdam Commodities AEX:ACOMO NL0000313286
AND International Publishers
Apollo Alternative Assets AEX:AAA1, GB00B15Y0C52
Aperam AEX:APAM LU0569974404
Arcadis AEX:ARCAD, NL0006237562
ArcelorMittal AEX:MT, LU0323134006
ASM International AEX:ASM NL0000334118 BUY under €35
ASML Holding NV
ASR Nederland a buy under 30 Euros?
Batenburg Techniek
BAM Koninklijke Groep 
Basic Fit ?! don't buy above 7,50
BE Semiconductor Industries AEX:BESI, NL0000339760
Beter Bed Holding AEX:BBED, NL0000339703

Berkshire Hathway run by Warren Buffett

Bever Holding: Small real estate fund, neg. cash flow, selling at 3,8 under 5,5 Euro book value. Plans to make money in near future. Buy?
BinckBank buy under 3 Euros
Boskalis Westminster Koninklijke AEX:BOKA, NL0000852580
Boussard & Gavaudan Holding Ltd. An expensive hedge fund.
Brill, Koninklijke kopen onder 22 Euro
Brunel International AEX: BRNL, NL0010776944
Coca-Cola European Partners
Corbion AEX:CRBN, NL0010583399
Core Laboratories AEX:CLB, NL0000200384
Ctac buy under €3,20
Curetis loss making biotech company = too difficult pile. Price fell from 7,14 to 5 June 2016-June 2017
Docdata: Now a  holding for the https://www.ease2.com/ Internet of Cars app, under construction.
Delta Lloyd now part of NN Group.
DPA Groep N.V. buy at €1,4
DSM Koninklijke don't buy over 40 Euros
Esperite: Stem Cell Bank losing money hand over fist. Price fell from 3 to 0,70 June 2016-17
Eurocastle NPL Non Performing Loans in Italy 10% dividend FFO Funds From Operations pretty good, selling at 8,55 which is 7% under Net Asset Value
Eurocommercial Properties: Buy under 40?
Euronext buy at €30
Fagron compounding 
ForFarmers a Graham Defensive Pick up to €6,50
Flow Traders outside my circle of competence, seems like a buy under €30
Fugro's Graham Value has decreased, buy at €10?
Gemalto buy under €35
Galapagos is a clinical-stage biotechnology company, not profitable (yet?).
GrandVision : Don't buy over €20
Groothandelsgebouwen N.V. buy under €50
HAL Trust
Headfirst Source part of Value8 holding. Figures? Earnings 2017 before Amortization 0,30?
Heijmans losing money check August 17 2017
Heineken, buy under 60?
Holland Colours buy under €70
Hunter Douglas, good balance sheet, buy if under €70
Hydratec buy at 55 sell at 65
ICT Group NV buy under 9 Euros
IEX Group Sales 2m, losses 600k, not for the defensive investor
IMCD buy under 35 Euros
ING Bank buy under 15 Euros
Intertrust too little history: Earnings per share 2016 Euro 1,3 x 15 = 19,5 Euros: Price = 19,86 Euros
Inverko used to be Newconomy, is for sale, garbage (disposal) Price = 0,60 Euros
Kardan made a loss 5 out of the last 5 years including 2016 and first Q 2017. Almost bankrupt?
KAS BANK cheap now under 10 Euros ?
Kendrion buy at 25 Euros
Kiadis Pharma bleeder, not for Defensive Investor, no sales
Klepierre French Retail Real Estate 5% dividend
KPN not for the Graham Defensive Investor
Porceleyne Fles Koninklijke Check under 5 Euros.
K. VolkerWessels check after August 31st, 2017
K. VOPAK buy under 35
K. Wessanen 
K. VolkerWessels
Lavide taking over childcare company sept 2017 
Lucas Bols buy under €15
Nedsense lege beurshuls prijs 5,6x intrinsieke waarde
New Sources Energy fraud
Neways electronic manufacturing services (EMS)
NN Group NV buy now under €40?
Novisource turnaround
NSI Nieuwe Steen Investments HNK = Het Nieuwe Kantoor
Nedap NV Nederlandsche Apparatenfabriek
OCI NV buy under 16 Euros
Oranjewoud not a Defensive stock...
Pharming back of the envelope math
Philips Electronics buy around 20?
Philips Lighting
PostNL
Probiodrug loss making biotech, not a stock for the Defensive Investor
Randstad
Refresco Group  buy around 12 Euros?
RELX Group (formerly Reed Elsevier)
RoodMicrotec shareholder financed
Royal Dutch Shell
SBM Offshore 
Sif Holding
Sligro 
SnowWorld
Stern Groep buy under 25 Euros?
Takeaway.com making a loss, not for the Defensive Investor. Prijs 10x verkoop.
Tetragon investment fund including CLO (Collateralized Loan Obligations) NAV $20, price $12,44
Thunderbird Resorts: Negative book value and losing money.
TIE Kinetix Shares Outstanding: 2013:933 2014:1127 2015:1227 2016:1830
TKH Group
TomTom
Unibail Rodamco a buy?
Unilever after Kraft Heinz bid
Value8 Rat in mi Kitchen
Van Lanschot
Vastned Retail check after share buybacks May 15th
VNC = too difficult pile: Geert Schaaij + Selwyn Duijvestijn 
Volta Finance fund including CLO (Collateralized Loan Obligations)
Wereldhave, buy?
Wolters Kluwer
Yatra Capital Indian Real Estate, losing money, stopping? Book 7,5 E, Price 5,75 E.

Comments, questions or E-mails welcome: ajbrenninkmeijer@gmail.com

Wednesday, February 21, 2018

The most Effective Giving / Altruism ? Setting a benchmark $30 per QALY / DALY

Last year I read "Doing Good Better" by William Macaskill and was allowed to take part in an Effective Giving Mini Masters here in the Netherlands.

Summary: I believe that a donation to CHAT Africa could be one of the most effective donations you can make. A $30 donation may result in 1 DALY / QALY (Disability / Quality Adjusted Life Year), that is better than the $100 estimate for the Against Malaria Foundation.

Feel free to let my know how, why and to what extent I might be mistaken

Cause area: Increasing access to family planning
Solution: Mostly in-expensive implants
Organisation team: Local Kenyan team

In practice you can use benchmarks to help decide where to give: https://www.effectivegiving.nl/growing-your-effectiveness-with-benchmarks/

The Against Malaria Foundation (‘AMF’) is considered one of the world’s most effective charities. The explanation for this is quite straight forward: AMF provides bednets that stop very young children (mostly under-5’s) dying prematurely from malaria. GiveWell estimates that roughly $3,500 donated to AMF saves a child’s life. More specifically, that $3,500 buys 35 ‘QALYs’ (Quality-Adjusted Life Years), which is more technical way of saying it creates 35 years of healthy life for the beneficiary.

Benchmark: $100 per Quality Adjusted Life Year (QALY)
--------------------------------------------------------------------------------------
Some math on http://www.chatafrica.org/ ( I can send you the spreadsheet, email: ajbrenninkmeijer@gmail.com )

CHAT Africa 2016 efficiently providing access to contraceptives to save the environment
>> GRASS ROOTS << For Kenyans, by Kenyans CHAT Africa
People Years access to contraceptives Expected Value Couple Years of Protection
3-5 year implants           20.000 x 4 =        80.000 years
3 month injectable             6.967 x 0,25 =           1.742 years
Pill (1 year? )             2.381 x 1 =           2.381 years
IUCD  Device in uterus                 310 x 1 ? =              310 years
Condoms distributed         117.800 0,008 120 units per CYP*              982 years
With 2016 budget        85.414 Couple years of protection CYP
*https://www.usaid.gov/what-we-do/global-health/family-planning/couple-years-protection-cyp
Budget 2016 33 million Kenyan Shillings =   €          270.000
 Extra 
 Donation ?   €          200.000 =  2 / 2,7 of 2016 years =        63.270 Possible extra years of access to contraceptives 
74%  higher Expected Value than research suggested 
CHAT Africa
"$ per bottom line" 2016 Budget / Years access  € 270.000 divided by        85.414 =  €         3,2 per Couple Year of Protection "CYP"
"$ per bottom line" Website "$5 or £3 will provide protection for 1 woman for 3 years against unwanted pregnancies."=   €       1,40 per CYP ?
Website is marginal cost? "the cost added by producing one additional unit of a product or service." 

DALY Disability Adjusted Life Year ratio 4,1 to CYP Couple Year Protection ? Ratio by Guttmacher Institute found in a DFID research report
35 DALY = 243 CYP Couple Years Protection = ratio 7 http://www.psi.org/wp-content/uploads/drupal/sites/default/files/publication_files/DALYs%20for%20FP%20final.pdf
Higher Ratio = 7 Couple Years of Protection = 1 DALY , cost per DALY is then  €3,2 / CYP x 7 CYP/DALY = € 22 per DALY = roughly $30 per DALY 

A life = 35x a DALYear = $30 x 35 = $1 050 per life (death averted).

http://www.chatafrica.org/summary.html



Comments, questions or E-mails welcome: ajbrenninkmeijer@gmail.com

Saturday, February 17, 2018

Warren Buffett on annual meeting 2017,

WARREN: Milton Friedman, I think it was, used to talk about the time—probably apocryphal—he would talk about the huge construction project in some communist country and they had thousands and thousands and thousands of workers out there with shovels digging away on this major project. And then they had a few of these big earth moving machines behind which were idle and which could have done the work in one-twentieth of the time of the workers.
So the economists suggested to the local party worker—whoever it was—that why in the world didn't they use these machines to get the job done in one-tenth or one-twentieth of the time instead of having all these workers out there with shovels and the guy replied, "Well, yeah, but that would put the workers out of work," and Friedman said, "Well then why don’t you give them spoons to do it instead?"


Comments, questions or E-mails welcome: ajbrenninkmeijer@gmail.com

Tuesday, February 13, 2018

Randstad intrinsic value based on Graham Defensive analysis



This is the current analysis using the criteria from Chapter 14 Defensive Investing from "The Intelligent Investor":

SECTOR: [PASS]  Randstad 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. Randstad's sales of €23,273 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. Randstad's current ratio €5 085m/€4 631m of 1.1 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 Randstad is €880 million, while the net current assets are €454 million. Randstad fails this test.

LONG-TERM EPS GROWTH:[FAIL] 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. Randstad's EPS growth was 4% over the past 10 years, Randstad fails 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. Randstad's E/P of 6% (using the last 3 years Earnings) fails 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. Randstad has a Graham number of (15 x €2,9 EPS x €23,1 Book Value) = €41 

Dividend: €2,76/€57 = 5%

Conclusion: Randstad is firing on all cylinders based on strong economic conditions and has a good 5% dividend. The stock price is a bit high but not ridiculous.

See: www.beterinbeleggen.nl for more in depth, qualitative analysis in Dutch.


Comments, questions or E-mails welcome: ajbrenninkmeijer@gmail.com

Friday, February 09, 2018

Fagron intrinsic value based on Graham Defensive analysis

Here is an analysis of Fagron using the methodology of Benjamin Graham, the father of value investing as explained by John Reese and Jack Forehand in The Guru Investor.

I don't know much about the company except that it is literally a compounder (it mixes drugs: https://en.wikipedia.org/wiki/Compounding )

SECTOR: [PASS] FAGRON is in the pharmaceutical sector, which this methodology accepts. 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 $340 million. FAGRON's 2017 sales of 437 million passes 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. The current assets are €36 million ? and current liabilities are €25 million? FAGRON's current ratio of 1.4 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 meet this criterion display one of the attributes of a financially secure organization. The long-term debt for FAGRON is €236 million, while the net current assets are  €11 million. FAGRON fails this test. 

LONG-TERM EPS GROWTH: [FAIL] 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. FAGRON made losses in recent years and fails this test.

Earnings Yield: [FAIL] The Earnings/Price (E/P) ratio, based on the lower of the current E/P or the E/P using average earnings over the last 3 fiscal years, must be "moderate", which this methodology states is greater than 7%. Stocks with high E/Ps are more defensive by nature. FAGRON's E/P at the moment is only 5% and fails 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. FAGRON has a Graham number of √(15 x €0,65 EPS x 1,5 x €2,7 Book Value) = €6,4

Conclusion: FAGRON is difficult to evaluate. It belongs in what CharlieMunger calls the “too hard pile”. Business seems to be turning around, but recent performance hasn't been good and the company has been issuing a lot of new shares...

See www.beterinbeleggen.nl for analysis of quality companies.

Comments, questions or E-mails welcome: ajbrenninkmeijer@gmail.com

Tuesday, January 23, 2018

Bitcoin " HODL" vs Claude Shannon's Demon 50% Bitcoin 50% cash


Claude Shannon described a way to make money off a volatile random walk even if the underlying asset is slowly losing value on average. He asked an audience to consider a stock whose price jitters up and down violently. Put half your capital into the stock and half into a “cash” account. Each day, the price of the stock changes. At noon each day, you “rebalance” the portfolio. That means you figure out what the whole portfolio (stock plus cash account) is presently worth, then shift assets from stock to cash account or vice versa in order to recover the original 50–50 proportions of stock and cash. To make this clear:

Imagine you start with $1,000, $500 in stock and $500 in cash. Suppose the stock halves in price the first day. (It’s a really volatile stock.) This gives you a $750 portfolio with $250 in stock and $500 in cash. That is now lopsided in favor of cash. You rebalance by withdrawing $125 from the cash account to buy stock. This leaves you with a newly balanced mix of $375 in stock and $375 cash.

Now repeat. The next day, let’s say the stock doubles in price. The $375 in stock jumps to $750. With the $375 in the cash account, you have $1,125. This time you sell some stock, ending up with $562.50 each in stock and cash. Look at what Shannon’s scheme has achieved so far. After a dramatic plunge, the stock’s price is back to where it began. A buy-and-hold (or in Bitcoin case "hodl" investor would have no profit at all. Shannon’s investor has made $125.

William Poundstone describes this “Shannon’s demon" in the book Fortune's Formula.

Comments, questions or E-mails welcome: ajbrenninkmeijer@gmail.com

Thursday, January 11, 2018

The Warren Buffet 5 year cryptocurrency Put option

In 2017 crytocurrencies went mainstream. The start of trading in Bitcoin futures alarmed Thomas Peterffy because there is no reason that Bitcoin could not keep shooting up in price, making clearing impossible and bringing the international financial system into peril.

Billionaire investor Warren Buffett told CNBC yesterday that the recent craze over bitcoin and other cryptocurrencies won't end well.

"In terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending," the chairman and CEO of Berkshire Hathaway said.

"When it happens or how or anything else, I don't know," he added in an interview on CNBC's "Squawk Box" from Omaha, Nebraska. "If I could buy a five-year put on every one of the cryptocurrencies, I'd be glad to do it but I would never short a dime's worth." 

Puying a Put option would give you the right to sell at a certain price in the future. Below are the prices of the 10 largest cryptocurrencies by market cap. Buffett would like to buy the right to be able to sell you these coins at these prices in 5 years. His assumption is that he could buy them much more cheaply sometime between now and January 10th 2023 and then profit on that day.

$14,661 Bitcoin
$1,333 Ethereum
$2.04 Ripple
$2,648 Bitcoin Cash
$0.77 Cardano
$0.57 Litecoin
$1.49 NEM
$0.57 Stellar
$3.59 IOTA
$1,090 Dash

Would you be willing to sell such Put options to Buffett?

One of Buffett's main points (the trick) is that cryptocurrencies are like digital golden eggs, that don't by themselves create anything else. They don't create a profit or cash flow. It is better to own "money making machines" or geese that lay eggs, than money. As Buffett puts it: "You cannot value Bitcoin because it is not a value creating asset." 

Comments, questions or E-mails welcome: ajbrenninkmeijer@gmail.com

Wednesday, December 06, 2017

Templeton's Way with Money Re-Balancing Program: Update

 Since last year the MSCI World index https://www.msci.com/world has increased from 1770 to 2070. According to the adapted John Templeton re-balancing program I made last year, your percentage in stocks should decrease slightly from around 60% in stocks to roughly 55% in stocks.


One year ago:


Sunday, December 04, 2016

Templeton's Way with Money Re-Balancing Program 1955

What will you do if stock prices go up or down? Sir John Templeton gave his customers a program, a plan before the year started: Today in 2016 he might have a higher percentage of stocks because interest rates (on (government) bonds) are currently near 0%.




Comments, questions or E-mails welcome: ajbrenninkmeijer@gmail.com

Wednesday, November 29, 2017

C&A trick Part Deux, "Meters are the Alpha and Omega"

Storyboard for video C&A trick Part Deux. See part 1 here: https://youtu.be/ThM4vwnZFWw

The C&A system of Deckungbeitrag (Contribution $s or Fund $) and Opportunity Costs is based on a planning and evaluation system which is different than conventional retailing.

In Dutch: "Rekenen in Centen, in plaats van Procenten."  Counting money instead of comparing margin BCP %s.

Meters are the Alpha and Omega means you start your planning with the number of square meters of retail space you intend to use and how many gross margin $s you hope to generate.

Planning framework: Less is more

Conventional "bricks" retail planning starts with sales. Online retailers consider sales (what they refer to as "Gross Merchandise Value" a footnote. https://en.wikipedia.org/wiki/Gross_merchandise_volume
Revenue (Sales or Gross Merchandise Volume GMV) is largely irrelevant for assortment decision making. The reason is that a retailer is a conduit for payment by the customer to the manufacturer. The amount involved in this payment, Cost of Goods Sold, is irrelevant for a retailer’s Bottom Line result, which is Gross Margin $ - Operating Expense $. To optimize assortment decision making for a store, managers should consider the Dollar Contribution of products (Fund) and the possible Opportunity Cost incurred when choosing one option over another.

Sales also know as Gross Merchandise Volume GMV
Cost of Goods Sold money that the customer pays the factories for making clothing
Gross margin dollars (Fund)    Last Year     Next Year
 - Operating expenses               Last Year     Next Year
= Net Earnings                         Last Year     Next Year

If the number of stores (square meters) is unchanged, then the target should be to increase Gross margin dollars (Fund) and decrease Operating Expenses.

When considering merchandise options and evaluating performance gross margin $ per sqm is the yardstick to compare different options.

Also $ gm per hanger (piece in stock).


Comments, questions or E-mails welcome: ajbrenninkmeijer@gmail.com

Friday, November 24, 2017

Altice price rollercoaster, no intrinsic value?

"Buy low, sell high". If you just look at the stock price (blue) of Altice you might think now is a good time to buy. Quoted value €7,50 as I write this November 24th 2017. 

Here is an analysis of Altice using the methodology of Benjamin Graham, the father of value investing as explained by John Reese and Jack Forehand in The Guru Investor.

SECTOR: [FAIL] ALTICE is in the Technology sector, which is one sector that this methodology avoids. Technology and financial stocks were considered too risky to invest in when this methodology was published. At that time they were not the driving force of the market as they are today. Although this methodology would avoid ALTICE, we will provide the rest of the analysis, as we feel times have changed.

SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than $340 million. ALTICE's sales of 23 billion, based on the trailing 9 month sales, passes 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. The current assets are €7,7 billion and current liabilities are €15 billion. ALTICE's current ratio of 0.5 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 meet this criterion display one of the attributes of a financially secure organization. The long-term debt for ALTICE is €61 billion, while the net current assets are minus €7,3 billion. ALTICE fails this test. THIS IS €50 OF DEBT PER SHARE. 

LONG-TERM EPS GROWTH: [FAIL] 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. ALTICE made a loss in 2014, 2015, 2016 and this year.

P/E RATIO: [FAIL] The Price/Earnings (P/E) ratio, based on the greater of the current PE or the PE using average earnings over the last 3 fiscal years, must be "moderate", which this methodology states is not greater than 15. Stocks with moderate P/Es are more defensive by nature. ALTICE's P/E can’t be calculated because it made losses (using the 3 year PE) fails this test.
(Note: IF ALTICE’s Earnings per share were 0,5 than the price shouldn’t be higher than 0,5*15 = 7,5. )

PRICE/BOOK RATIO: [FAIL] The Price/Book ratio must also be reasonable. That is, the Price/Book multiplied by P/E cannot be greater than 22. (Or Price/Book shouldn’t be higher than 1,5). ALTICE's Book value is - 1 billion equity divided by 1,2 billion shares is 1 Euros per share and the Price/Book ratio is -1/1,2 = -1. ALTICE fails the Price/Book test.

Conclusion: ALTICE is very difficult to evaluate. The company’s financials have changed drastically in the past years due to deal making. Sales have increased dramatically and could result in fantastic earnings for shareholders going forward, but it is not a company for the Defensive Investor. ALTICE might be cheap at a price of under 10 Euros per share, but belongs in what CharlieMunger calls the “too hard pile”.

See www.beterinbeleggen.nl for analysis of quality companies.

Comments, questions or E-mails welcome: ajbrenninkmeijer@gmail.com

Monday, October 23, 2017

The Three Mungertiers

2 Buffetteers +1 

Comments, questions or E-mails welcome: ajbrenninkmeijer@gmail.com

Tuesday, October 10, 2017

Oranjewoud waarde en prijs

Gerard Sanderink voornemens is door de koop van 971.742 gewone aandelen A zijn belang in Oranjewoud N.V. uit te breiden naar 97,53%. 

Are only 2,5% of shares being traded?  


Profit 2017 maybe 0,2 Euro divided by price 5,3 Euro = 4% Earnings Yield. Too low for the Graham Defensive Investor.

Comments, questions or E-mails welcome: ajbrenninkmeijer@gmail.com

Thursday, October 05, 2017

What is more effective: Giving to charity ? or Impact Investing?

My friend, Frank van Beuningen, asked Giving Evidence to write a report on:

 "What is more effective: Giving to charity ? or Impact Investing?"

The context was a Mini-Masters in which we both took part, organized by www.effectivegiving.nl

Download the PDF here:

https://drive.google.com/file/d/0B35UrU85jnu7a3Rsc2tld0NsaUpzN19RZ1dGd21kSGdnNUFV/view?usp=sharing

Comments, questions or E-mails welcome: ajbrenninkmeijer@gmail.com

Tuesday, October 03, 2017

Nedap stock intrinsic value using Benjamin Graham Defensive analysis

Old chart February 2017:

Profits were up in 2016 but lower than 2014, 2015 was quite a dip. The dividend is quite high: €1,3/37 = 3,5%

Not a stock for the Graham Defensive Investor at the current price.
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Today October 2017
The discrepancy between Price and estimated Graham Value is interesting. I don't have a theory why this might be the case for Nedap, except dividend % return?

SECTOR: [PASS] Nedap is 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. Nedap's sales of €186 million, based on 2016 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. Nedap's current ratio €69m/€39m of 1.8 just fails the 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). Companies that meet this criterion display one of the attributes of a financially secure organization. The long-term debt for Nedap is €16 million, while the net current assets are €30 million. Nedap 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. Nedap's EPS growth over that period of 60% passes the EPS growth 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. ENedap's E/P of 4% (using the average of last 3 years) fails 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. Nedap has a Graham number of √(15 x €1,4 EPS x 1,5 x €8,34 Book Value) = €16

Dividend: Nedap currently pays a dividend of 1,40 E/40 E = 3,5%

Conclusion: Price (koers) a bit too high at the moment. Start buying only if under 30 Euros.

See www.beterinbeleggen.nl for analysis of other great companies.