Tuesday 15 October 2013

New stock bought October 2013

I decided to make an increase of my shares in K+S and bought an additional 55 shares for the price of 18.72 € per share. This now gives me a total amount of shares in K+S of 105 and the average price per shares including fees now ends up at 20.00 €.

picture for buying and increasing shares

I will try to stick to this trend of investing for around 1000 euros per month and it should at least be possible also next month due to the large transfer that I made in the end of September 2013.

Concerning K+S I have full confidence that they will do well in the future. I can imagine that they will lower the dividend slightly for the next year due to the insecurity caused by Uralkali but looking at the figures from Uralkali they had a horrible first half year and if they do not push up their own prices as well as production then they will be in trouble in 2014 or at least they will be in trouble by having plenty of angry shareholders.

On the 3rd of October 2013 Uralkali came out with a production report for the last nine months that showed that they had dropped in production from 7.4 million tonnes in 2012 to 7.2 million tonnes in 2013 which is only a 2.8% drop but still and then add decreased prices on top of that and all of a sudden there is an effect that you can feel as a shareholder.

If we take a slightly closer look at the financial figures for Uralkali in the first six months then we see that they were compared to 2012 down by -38% in revenue and over -50% in profit. K+S had no such dramatic issues in their first half year 2013 as I also previously reported about.

Conclusion is that I do not fear Uralkali and their little price games and K+S is still standing strong with their expansion in Canada going according to plan and therefore I considered K+S to be a very cheap stock on DAX which I then also wanted to buy more of... and I did.

In the end of this month the Stock Portfolio page with be updated with these new changes.


Falk said...

Good buy Fredrik!

I agree on your detailed analysis of K+S. Uralkali's price games will not influence the value of K+S at all. Mr. Market is overreacting these days.

You bought a profitable market leader in potash and salt and a very conservative management at a cheap price, a share price of 25++ Euro is therefore only a matter of time. I personally expect a dividend of 1 Euro for 2013, which leads to a dividend yield of over 5 percent, a nice premium waiting for Mr. Market to get more optimistic again.

Fredrik von Oberhausen said...

Thanks Falk!

I agree that the dividend will most likely be decreased from the 1.4 € to maybe 1 €.

There is a small possibility that the dividend will stay the same as an attempt to attract the investors back again and to signal to Mr. Market that K+S is still strong.

However the correct approach in my opinion when a company is slightly uncertain about the future is to horde money by decreasing for instance dividend payments. It can always be paid out later anyway when the uncertainties are gone.