Tuesday, June 16, 2015

Stock bought June 2015: Avtovaz


Avtovaz, a Russian automotive company

As I wrote in the comment to Garry in the article analysis of Picanol Group back in December 2013 the only CEO that I had discovered and wanted to keep an eye on was Bo Inge Andersson and there I write that if he ever goes to a publicly traded company then guess what? I must buy it!

Avtovaz is my second investment that is purely management based and I care very little of what the company have looked like in the past and what they look like right now because I trust these guys enough to be able to sort out any obstacle that are thrown at them.


Bo Inge Andersson was born in Falkenberg in Halland, Sweden. He spent many years in the military as an officer before he decided to step into the world of business. He started off working in the automotive industry in Sweden before he moved over to GM in the US. From there he was hand picked to take over the oligarch owned Gaz Group (producing trucks, buses etc.) in Russia. He managed to convert a corrupt and poorly performing company within a couple of years to a highly successful profit making machine!

I found him sometime during summer 2012 and was disappointed that I could not invest in the Gaz Group. Looking back it was unprofessional of me to write the comment to Garry without checking where Bo Inge Andersson was currently working. Because when I wrote this comment he had left the Gaz Group and had taken over the steering wheel of Avtovaz the biggest automotive producer of Russia. I should have bought stocks in Avtovaz that very same day.

I am very grateful to my blog colleague Riskminimeraren (he is also in my blogroll) for this article (in Swedish) Intressanta insikter i rysk ekonomi från Bo Andersson, VD AvtoVaz, intervju Lennart Ekdahl  because that was how I discovered that Bo Inge Andersson was once again working for a company that one could buy shares in! So thank you Riskminimeraren!

Avtovaz is to around 51% owned by Renault (biggest part) / Nissan (smaller part) so if one would like to go the safer approach with some exposure to Russia then one should buy Renault but to me that would the same as buying Picanol Group instead of buying Tessenderlo when I decided to invest in the successful manager Luc Tack, so a non option for me.

Bo Inge Andersson has been in the bleeding Avtovaz for a bit over 1,5 years now (he has a five year contract). The first thing he did was to fire 40,000 people of which 10,000 where managers. How many managers can a company have? He has, at least attempted to change the production procedure to make production based on customer demand. One could have thought something like that would be obvious today but apparently it was not. He have also managed to get contracts to build other car brands in their factories and the quality control is intense and he is going after quality awards to show the world and the customers that what they produce is worth buying.

I will very soon (maybe even tomorrow) arrive with an analysis of the company which will for sure not impress anyone.

I bought 1,800 Avtovaz GDR (Global Depositary Receipt the European version of the US ADR) shares and I paid, including fees 2,142.10 € which gives a share price of 1.19 € and yes, the price became hefty (due to high fees) and as always I bought at the wrong moment, falling dagger and all that.

If you want to see my current Stock Portfolio then click on the link but the portfolio will not be fully updated until the end of the month. 

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