Monday, December 14, 2015

End of year overview 2015


Panda Bear, end of year

For the third time I will now make an end of the year summary regarding my current holdings. Some companies have been with me for a long time and others have during this year parted ways. Two companies left the portfolio this year; Asian Bamboo and MüRe and in a third one, Kernel, I decreased my holding. Plenty of companies (too many?) entered the portfolio: Adidas, RWE, Avtovaz, Gerry Weber, TJX, VW, Deere and Fast Retailing (while writing this I am wearing a turtleneck sweater from Uniqlo). To me the generated value is (share price * shares + dividend - trading fees).


For the previous please click on end of year overview 2014 and for the one before then please click on end of year overview 2013. I will refer back to both especially regarding the reason for the investments.

MüRe, a German re-insurance company

Company: Münchener Rückversicherung 
Shares: 25 
Invested: 3119 € 
Value at time of sale: 4106 € (+32%) 
Dividends: 509 € 
Generated value upon divestment: 4615 € (+48%, 3.5 years holding time, 11.9% per year)
Reason for divestment: Management talked down share price before starting to buy themselves + Berkshire Hathaway started to decrease their holding.
Lesson learnt: The more time passes the more I consider this divestment to have been a mistake. I did not make the investment because Berkshire Hathaway stepped in so there was no reason to leave when they did. I was hoping for a substantial share price drop and a chance to step back in again which never appeared.

E.On, a German energy company

Company: E.On.
Shares: 400
Invested: 4933 €
Value: 3612 € (-27%)
Dividends: 648 €
Generated value: 4234 € (-14%)
Reason for investment: See previous end of year overview 2013.
Lesson learnt: Already talks of splitting a company and handing that out to the shareholders can increase the share price temporarily. For E.On it directly started dropping again afterwards. Additionally interesting that the incompetent managers had to take back their word and keep nuclear power in the "green" company that E.On will be. Amazing. This means they will split the company into what will from their customers be considered to be two "dirty" companies. The danger of too many institutional owners that just goes along and accepts everything the management do.

DB, a German bank

Company: Deutsche Bank
Shares: 280
Invested: 7843 €
Value: 6852 € (-13%)
Dividends: 551 €
Generated value: 7355 € (-7%)
Reason for investment: See previous end of year overview 2013.
Lesson learnt: Sometimes enough is enough and even crooks can be kicked out from management. It did however take around six years. The new boss arrived with big changes that caused excitement on the market and the share price increase but over time that has dropped down significantly again and is now very low. Additionally... and this goes for several of my shares. I have strongly under-estimated the time it can take for a turn around to happen.

Asian Bamboo, a Chinese crook company

Company: Asian Bamboo
Shares: 950
Invested: 6721 €
Value at time of sale: 866 € (-88%)
Dividends: 72 €
Generated value upon divestment: 938 € (-86%)
Reason for dinvestment: The two banks that had given them loans demanded them into bankruptcy. That was unfortunately as far as it had to go before I managed to part with my holding.
Lesson learnt: There are many lessons learnt from Asian Bamboo. Even though I sold it in March 2015 I still today go back to their homepage and read all their press releases, I read their Chinese home page (via Google translator) and I have re-read their annual reports. Looking back there were signals that indicated that everything was not good not only before I made the investment but especially it could be seen afterwards. Besides from that Asian Bamboo should never have been bought in the first place I even did not step out when I started to see things being wrong. The reason why I keep going back to their homepage and read everything is to rub my face into the dirt and to keep doing that for as long as it takes me to make sure that I never make such a stupid mistake again.


BP, a British oil giant

Company: British Petroleum
Shares: 590
Invested: 3041 €
Value: 3210 € (+5%)
Dividends: 367 €
Generated value: 3577 (+17%)
Reason for investment: See previous end of year overview 2013.
Lesson learnt: When a turn around have actually started to turn around, in this case because finally the legal situation was over, a completely new situation can arrive that is going on the entire industry and not on an individual company as such but either way it does not matter. Oil prices dropped and BP dropped with it as all the other oil companies did. Looking back is easy. High prices lead to higher production and searching for new sources which lead to over production and decreasing prices. Could one have seen this coming. Yes, one probably could have. Did I? No, I did not consider that. Where today do we see too high prices? Where are the prices too low? Mining industry? What else?

Coba, a German bank

Company: Commerzbank
Shares: 522
Invested: 6362 €
Value: 5421 € (-15%)
Dividends: 653 € (sale of pre-emptive rights by mistake)
Generated value: 6074 € (-5%)
Reason for investment: See previous end of year overview 2013.
Lesson learnt: The interesting thing that has happened with Coba this year is that they announced that they would start paying dividends next year. At least I interpret that as if business starts to go better again and that they see some kind of light in the end of the tunnel. Sure... it was not a massive dividend payment but it is a start. I would have expected that to increase the interest in Coba. That has not been the case.

ABF, a British agricultural and retail company

Company: Associated British Foods
Shares: 100
Invested: 1676 €
Value: 5130 € (+206%)
Dividends: 120 €
Generated value: 5250 € (+212%)
Reason for investment: See previous end of year overview 2013.
Lesson learnt: I bought ABF due to Primark and the entire investment is resting on the shoulders of Primark. I did however at some point hope that their sugar part would once again start to bring in some earnings but that have yet to happen. Over time I have started to hope that Primark would be split off but as long as sugar is not doing well that will for sure not happen and I get more and more uncertain if it ever will.

Intel, an American processor producer

Company: Intel
Shares: 100
Invested: 1644 €
Value: 3303 € (+100%)
Dividends: 205 €
Generated value: 3508 € (+113%)
Reason for investment: See previous end of year overview 2013.
Lesson learnt: Nothing last year.

Kernel a Ukrainian agricultural and logistics company

Company: Kernel
Shares: 170
Invested: 1494 €
Value: 1899 € (+27%)
Dividends: 122 €
Generated value: 2021 € (32%)
Sold shares: 380

Invested value upon divestment: 3450 €
Generated value upon divestment: 4392 € (+27%)
Reason for investment: See previous end of year overview 2013.
Reason for divestment: I started to be very uncomfortable with having such a large investment in a company in Ukraine.Lesson learnt: In some cases it can turn out favourable to keep pushing more money into the investment because without doing that in Kernel I would not have been able to sell part of my holding with a nice profit. However... looking back... should I have done that? Should I as a small time amateur investor push in around 5000 € into an Ukrainian company in the middle of a war? This investment might just as well have gone the direction of Asian Bamboo and it still can because I still have shares left but I have protected myself for the future by decreasing my holding significantly.

Enel, an Italian energy company

Company: Enel
Shares: 450
Invested: 1077 €
Value: 1886 € (+75%)
Dividends: 121 €
Generated value: 1999 € (+85%)
Reason for investment: See previous end of year overview 2013.
Lesson learnt: Last year I had as lesson learnt that "When a company that stopped paying dividend decides to start again then the share price is also going back up again." This year I have already been forced to remove that lesson learnt because of Coba so well... share price can or it can not improve when a company announces dividend payments. Oh, and I also find it a pity that this investment is so small. There has been many moments when I have thought about increasing my holdings but it simply never seem to happen.

K+S, a German potash and salt miner

Company: K+S
Shares: 195
Invested: 4166 €
Value: 5127 € (+23%)
Dividends: 175 €
Generated value: 5270 € (+26%)
Reason for investment: See previous end of year overview 2013.
Lesson learnt: When there is a dramatic share price increase due to an overtake offer then use that and sell. Do not be greedy and attempt to squeeze out that final cent. Be grateful and sell. If the deal will not happen then the share price will almost certainly drop down again which means one can step in again into a company that ones knows fairly well.

DBAG, a German investment company

Company: Deutsche Beteiligungs AG
Shares: 100
Invested: 2014 €
Value: 2941 € (+46%)
Dividends: 260 €
Generated value: 3185 € (+58%)
Reason for investment: See previous end of year overview 2013.
Lesson learnt: From last year was "When management announces an increased dividend payment the share price seems to increase by more than what it should, just as the inverse seems to happen when dividends are cut." Besides form previous remarks regarding dividend payment this year we have seen the other half of that statement. Investors seemed to want to get 2 € again which we only got due to an excellent exit in an investment and this year we therefore go back more normal payments and that caused share price movements.
Cez, a Czech energy company

Company: Cez
Shares: 100
Invested: 2142 €
Value: 1745 € (-19%)
Dividends: 288 €
Generated value: 2018 € (-6%)
Reason for investment: See previous end of year overview 2014.
Lesson learnt: Nothing last year.

IBM, an American internet service giant

Company: IBM
Shares: 16
Invested: 2250 €
Value: 2106 € (-6%)
Dividends: 81 €
Generated value: 2171 € (-3%)
Reason for investment: See previous end of year overview 2014.
Lesson learnt: It does indeed take a long time to re-shape an entire company and to prepare for the coming decades. I would not say that I expected it to be faster but I can honestly say that I had no feeling at all regarding the time it would and will take until this is finished.

Fugro, a Dutch geotech company

Company: Fugro
Shares: 120
Invested: 2166 €
Value: 2172 € (0%)
Dividends: 0 €
Generated value: 2156 € (-1%)
Reason for investment: See previous end of year overview 2014.
Lesson learnt: When there is an unmotivated share price increase due to dramatic decisions from the management that I did not agree with then I should also have sold my shares. I must become better at selling my holdings when I do not appreciate what the managers decide to do. If one looks at the Lesson learnt for BP and the questions I ask there then the management of Fugro by the look of it did not what so ever see the drop in oil price coming and they were completely caught sleeping in bed. Does that say a lot of the management or does that tell that even the people in the business were not able to see what would happen in the future? And if they can not? How will I be able to see such things?

Tessenderlo, a Belgian chemical company

Company: Tessenderlo
Shares: 90
Invested: 2080 €
Value: 2587 € (+24%)
Dividends: 69 € (from sale of offered rights)
Generated value: 2626 € (+26%)
Reason for investment: See previous end of year overview 2014.
Lesson learnt: A turn around can go very quickly with the right managers and luck should of course not be forgotten. Almost every chemical company are profiting from the decreased oil prices.

Eniro, a Swedish search engine company

Company: Eniro
Shares: 850
Invested: 1035 €
Value: 107 € (-90%)
Dividends: 75 € (sale of rights offerings)
Generated value: 167 € (-84%)
Reason for investment: See previous end of year overview 2014.
Lesson learnt: A company that starts to write-down "assets", intangible/tangible or goodwill for that matter well... there does not have to be an end to that as long as there is still a value in the books. So just because a company took 1 billion in write-offs does not mean that they will not do the same the coming year. They can and if they feel like it they obviously also will. The problem in my eyes goes back to accounting and that companies are allowed to carry too many skeletons in their coffers before something is done.

BASF, a German chemical company

Company: BASF
Shares: 31
Invested: 2012 €
Value: 2376 € (+18%)
Dividends: 87 €
Generated value: 2454 € (+22%)
Reason for investment: See previous end of year overview 2014.
Lesson learnt: Managers every now and then consider that they should give themselves (and the other employees) bonuses because the company celebrate 150 years. Are they the reason for those 150 years? No, they are not. A nice dinner is fine for celebration purposes but excessive bonus payments are NOT fine. I need to start thinking of making a list of good, question marks and bad managers. In the future that might become a valuable resource.

Talanx, a German insurance company

Company: Talanx
Shares: 80
Invested: 2109 €
Value: 2343 € (+11%)
Dividends: 100 €
Generated value: 2427€ (+15%)
Reason for investment: See previous end of year overview 2014.
Lesson learnt: As of yet nothing.

Adidas, a Germany sports and shoes company

Company: Adidas
Shares: 35
Invested: 1978 €
Value: 3250 € (+64%)
Dividends: 52 €
Generated value: 3295€ (+66%)
Reason for investment: They were bought due to that they had a very attractive P/E valuation in comparison to other sports companies. They also had a reasonable share buyback program running
Lesson learnt: Turn arounds can go very fast. Today Adidas is fairly valued and I keep asking myself... is this a company for life or should I sell and take the profit?

RWE, a Germany energy producer

Company: RWE
Shares: 330
Invested: 4581 €
Value: 4056 € (-11%)
Dividends: 85 €
Generated value: 4117 € (-10%)
Reason for investment: The P/E valuation of the entire sector is silly low. RWE that had managed to keep their share price up for along time finally dropped like a stone and it kept dropping. At some point I got interested and bought also RWE and kept buying it. The electricity demand I do not see dropping in the future and the current issues will be solved.
Lesson learnt: Well... not a new lesson but you can never stop repeating it when the situation keeps appearing. You can never catch a falling dagger. You can not. I stepped in the first time too early but since one can not know then it also does not matter one just have to step in and accept that it can drop 50% more and if it does AND you have no fears regarding the company then buy more.

Avtovaz, a Russian car producer

Company: Avtovaz
Shares: 1800
Invested: 2142 €
Value: 1440 € (-33%)
Dividends: 0 €
Generated value: 1422 € (-34%)
Reason for investment: This was my second investment that is based on the manager and not on the company as such. Also here it is however a very clear turn around situation.
Lesson learnt: Just because an excellent manager takes over a company does not mean that it will automatically and quickly have excellent results. I have however not lost any faith in Bo Inge Andersson and I will bid my time.

Gerry Weber, a German retail chain

Company: Gerry Weber
Shares: 50
Invested: 1039 €
Value: 715 € (-31%)
Dividends: 0 €
Generated value: 702 € (-32%)
Reason for investment: I saw the new CEO keep buying shares month after month and he even did that when the share was up at 30 € (now it is around 14 €). I also thought that their concept of directing themselves towards elderly women was good business.
Lesson learnt: Managers are not better investors than what I am. they are probably even more emotional regarding the company they work for as they also should be. That they keep pumping shares does not mean that it is a good investment. Even worse... I visited the stores and almost never saw any customers. I also did not like their store concept and how they were working with their customers. So this was once again one of those poor investment decisions which is why I have not pumped in any more money into it... just like in Eniro.

TJX, an American off-price retailer

Company: TJX
Shares: 32
Invested: 2009 €
Value: 2152 € (+7%)
Dividends: 12 €
Generated value: 2156 € (+7%)
Reason for investment: Excellent business idea. Fully established in the US and are starting to establish themselves in Europe. The stores are packed with people that are shopping like crazy so it was a Lynch investment
Lesson learnt: Nothing as of yet.

VW, a German automobile producer

Company: VW
Shares: 12
Invested: 2003 €
Value: 1595 € (-20%)
Dividends: 0 €
Generated value: 1587 € (-21%)
Reason for investment: I had been looking for a long time at VW and when they started to drop down I in the end decided to step in as shareholder because I found the P/E far too low for such a successful stable company.
Lesson learnt: I bought VW one month too yearly. What one considers to be a stable company can change over night which I find interesting. I was on my way to say that it scares me but that would be the wrong word. It would have been an excellent moment to step in when they dropped below 100 € and obviously those kind of things happen with also large companies... one just have to hang in there and wait. What is strange with VW is that... if I would not have had shares previously then I would most likely have stepped in when this happened. Now that I did have shares I decided not to buy more. Very strange. I need to work on that.

Deere, an American machine company

Company: Deere
Shares: 30
Invested: 2097 €
Value: 2259 € (+8%)
Dividends: 0 €
Generated value: 2251 € (+7%)
Reason for investment: One of those American giants that are having temporary problems and that Berkshire Hathaway have also stepped in I also find good. The P/E is low considering the long run so it was a good moment to step in.
Lesson learnt: Nothing as of yet.

Fast Retailing, a Japanese retail company

Company: Fast Retailing
Shares: 6
Invested: 2140 €
Value: 2325 € (+8%)
Dividends: 0 €
Generated value: 2317 € (+8%)
Reason for investment: Uniqlo and the amount of customers that run into the store and comes out with an Uniqlo shopping bag. The P/E is scary high but this was another Lynch investment and then I accept high P/E as long as there is growth potential and there is.
Lesson learnt: Nothing as of yet.

Conclusion: Of the eight new companies that I decided to step into during 2015 four have crashed, one has gone excellent and three are more or less flat. My stock picking skills have, by the look of it, not improved. I have three large investment blocks: Banks, Retail and Energy. Will they go well during 2016. Retail will probably do well but I do not believe that neither the banks nor the energy sector will start to do well during 2016. I hope that in the end of the next year that I will have improved my investment skills and that I will not have 50% of new investments that kept crashing.

2 comments:

Chris Bailey said...

Congratulations - an excellent write-up, warts and all. What I liked was that compared to 2014 your 'what I have learnt' insights were longer and deeper. This investment game is always learning-centric. 2016 I believe holds much hope for you. Good luck!

Fredrik von Oberhausen said...

Thanks Chris! I also have high hopes for 2016 and especially in terms of making better investments.

I am currently working on an investment check list. Once I feel that it is ready enough I will post it hoping to get some nice feedback for what should be added. In 2016 I will hopefully make no new investment in any company unless I have looked over that check list first.