Friday, February 17, 2017

Stocks sold February 2017: Eniro, Gerry Weber and Kernel

Eniro, logo, 2017

I wanted to keep Eniro until the very bitter end. Not because I believe they can turn anything around but simply as a monthly reminder of how poor the decision was to invest in them. To buy into a company where the CEO has been arrested for not running things with the company properly is not a good idea. To take a current event example then that would be to buy into Samsung now. Every company everywhere will have a couple of crooks employed. Once the authorities start to seriously look into a company or person for that matter then you will always be able to find something. It does not please me to say so but I honestly believe that to be true.

Eniro had a crook CEO. The CEO that took after was, by the look of things, not better. The person running the show now I neither know or care what or who he is. Key employees will have left the company and what is left is a call center in Poland.

With Eniro I additionally learnt to take a look at the goodwill. If your goodwill is higher than your equity and your tangible assets are non existing all the while having a large debt... well... that will not end very well and it did not.

Due to tax reasons I decided to walk a separate road compared to Eniro and I sold all my 850 shares, that I had paid 1035 € to acquire, for 13.60 €. There were some fees but I think I got some slack because they only reached the value of 13.60 € which means that I received zero € out for that sale. Due to that I once sold share rights for 74.50 € this "investment" did not become a -100% loss but merely a -93% loss. Eniro became, in the end, a 31 months holding.

Gerry Weber, Logo, 2017

The reason for why Gerry Weber ended up in my visual field at all was due to insider trading. The new CEO, the son of one of the founders, was each month buying shares after shares after shares. He did that when the share price was up at over 30 € so when it dropped down to around 20 € I started to look upon it as being an interesting investment. The new CEO kept buying shares. Not that long afterwards the price dropped further down to around 15 € before it started to settle around 10 to 12 €. All of a sudden the CEO was not buying any more shares.

In the article that I wrote when I bought the shares I was already then annoyed with myself because I never ever saw any customers in the store. Never. It was therefore a kind of anti-Lynch company where the books looked ok however a company without any customers will only end up at one location in the end. The bin!

I have too many companies and far too many within retail that removing one while having a tax benefit from doing so felt pretty ok. Gerry Weber you are out! and for the future of the company I hope that Ralf Weber will pretty soon also be out!

I sold my 50 shares including the removal of fees for 509 € which gives me a loss of 530 €. I received a tiny dividend in the size of 20 € which gives me a loss of -49%. Gerry Weber stayed with me for 28 months more than what they should have stayed.

Kernel, logo, 2017

Kernel was a pure low P/E, P/B and looking into a war zone where very often share prices of companies drops like stones even though they are still able to continue their business. Sometimes they are even able to perform better during such situations so it was a classical contrarian company. When I look back at the reason for why I bought it then there was not that many. I had tried to buy another one but ended up with this one... was more or less the reason for the buy. In war zones everything drops so maybe no other reason is actually needed.

I ended up buying more shares in Kernel on four different occasions which came from that the share price kept dropping and back then I had my "auto" rule of buying more shares when the drop went passed certain borders.

After a couple of years the share price started to increase and I was sitting around with a Ukrainian agricultural company, in a war zone, having plenty of business with Russia in the size of 10% of my entire stock portfolio. I then decided to decrease the holding and I sold off a large part of my shares at a profit of 35%. I now decided to sell off the rest of this holding because there were several things in the latest report that I have not been so happy with.

They are playing around a lot with the valuation of the crops on the fields and not only in storage. The have hired a person for hedging. The dollar is very strong and all crops are traded in dollars so their profits are inflated due to this... all the while they are unable to increase their revenue flow since many, many years now. An insider, it must have been the founder and CEO, sold off larger portions of shares during the end January. For me that was enough and I decided it was time to leave.

I sold my remaining 170 shares for 2864 € with a 92% gain. Looking at the entire Kernel investment then I made a profit of 2518 € and I received almost 160 € in dividends giving me a profit of 56% during the 45 months that I remained as a shareholder in Kernel.

My average holding time of my departed shares are now up at 29 months.

Any changes will be brought into the stock portfolio upon the next update in the very end of the month.

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