Personalized Index Fund C: December 2013

The Personalized Index Fund C or PIF C was created by looking at four things. The P/E, the P/B, the dividend payment and ROE. So the lowest none negative P/E gave value 1 and the highest P/E alternatively the most negative gave value 30. The same was done with P/B, dividend and ROE. By adding the score together I ended up with a list of DAX companies where the lower the total score the better the company was. This "fund" was also started back on the 16.04.2013 just like PIF A and PIF B but I only look at the changes occurring with share prices and have not "bought" fake shares according to a specific sum of money like in PIF A. I then took the ten best company and pretended that I bought them.

The cheapest with added ROE parameter were:

DAIMLER
E.ON SE
MÜNCH. RÜCK
VOLKSWAGEN
ALLIANZ
DT BÖRSE
BMW
K+S
CONTINENTAL
LANXESS

The difference from PIF B is only three companies and as can be seen in the graph above the development has been pretty ok and it has developed (19%)almost as good as DAX being up 21%. It will be very interesting to see how this fund will develop over time.

Analysis of ProSiebenSat.1 Media

Company: ProSiebenSat.1 Media

Business: A German media company with the core business of commercial sales on their TV stations. They are divided into three segments: Broadcasting German Speaking (four TV channels: SAT.1, ProSieben, kabel eins, and sixx), Content Production & Global Sales (international program production and distribution) and finally Digital & Adjacent (Online Video, Online Games, Ventures & Commerce and Music).

Active: Main activity areas are Germany, Austria and Switzerland but are present in 12 countries world wide and try to establish themselves more in English speaking areas with especially their online activities and content production.

P/E: 26.6

Personalized Index Fund B: December 2013

The Personalized Index Fund B or PIF B was created by looking at three things. The P/E, the P/B and the dividend payment. So the lowest none negative P/E gave value 1 and the highest P/E alternatively the most negative gave value 30. The same was done with P/B and with dividend. By adding the score together I ended up with a list of DAX companies where the lower the total score the cheaper the company was. This "fund" was also started back on the 16.04.2013 just like PIF A but I only look at the changes occurring with share prices and have not "bought" fake shares according to a specific sum of money like in PIF A. I then took the ten cheapest company and pretended that I bought them.

The cheapest companies were:

DAIMLER
E.ON SE
MÜNCH. RÜCK
VOLKSWAGEN
ALLIANZ
RWE
BMW
K+S
DT. POST
LUFTHANSA

As can be seen in the graph above the development has not been very good and it has developed even worse than PIF A since it is only up 13% vs. DAX being up 21%. Theoretically these companies should to better in hard times... are hard times coming? I do not really think so which means that it will indeed take some time until it will perform better than DAX if it ever will.

Analysis of Osram

Company: Osram Licht AG

Business: A Germany registered company (was split off from Siemens this year) but the roots of the company is from the UK. Osram is one of the two leading light manufacturers in the world and they are very strong with LED but have the entire value chain from components to electronic control gears as well as complete luminaires, light management systems and lighting solutions.

Active: They are active world wide but main focus is still today Europe

P/E: -11.2 (counted with P/E3 then around 66)

Personalized Index Fund A: December 2013

It was once again time to make an update of the personalised index fund A which was based on DAX companies and that the performance they have had. If they had performed poorly more money was redistributed to them. So the base value was 2000 euro and then the strong performers I only virtually bought shares for 1500 euro and the poor once for 2500 euro.

It is indeed amazing to see how DAX is beating PIF A. Since this virtual fund was created DAX has gone up by 21.2% and the fund A only 14.4%. What I like here is to see how difficult it is to beat DAX I am truly amazed each time I look at these funds and when I look at my own result with the real shares.

My decision that I will force myself to buy index funds for a certain amount of my portfolio only grows stronger for each passing day.

Analysis of Norma Group

Company: Norma Group

Business: A German producer of high and low tech joining products. Meaning pipe clamps, cable ties, tool clips, hose connectors, band straps etc. For a more complete list please look here.

Active: Main activities are in Europe, the US and in South East Asia (including Japan and China)

P/E: 20.5

Analysis of MTU Aero Engines

Company: MTU Aero Engines

Business: A German engine producing company. They manufacture and develop commercial and military aircraft engines in all sizes. They have also started to maintain and repair industrial gas turbines.

Active: They claim to be present in all significant markets worldwide either in person or by affiliates. Still their biggest presence is in Germany and Europe with a small expansion into North America.

P/E: 21.2

Merry Christmas!

Today I will celebrate Christmas with my family. We will be few this year but it is a growing number again. It is interesting to see the influence a couple of small toddlers can have on the unification and celebration of holidays. The Christmas tree was as in normal order frugally dressed. Like life in general the less you put on the less you have to remove. That can be concerning Christmas trees, it can be cloths, it can be weight, it can be work. Some things might be more fun to remove than others.

When I was in the Netherlands, it must have been in January 2004, I once overheard a discussion between a couple. The woman was very angry with the man because he had just thrown out the entire Christmas tree from the balcony to the street below and then added it to the heap of things that should be removed by the garbage truck the day after. Throwing out the Christmas tree as such after the holidays were over was not the problem. The problem with this was that they guy had left everything in it that he found too annoying to remove before throwing it out. So the Christmas lights were still in, the glitter things were still in, in principle anything that he could not remove in one go he had left still in when he tossed it out.

She, on the other hand, wanted to re-use it all for the next year and he obviously found it too annoying to spend even five minutes to take the things out before throwing out the entire Christmas tree. His argument was that it is so cheap to buy new things. Yes, it is indeed true. Many things today are simply too cheap and we as humans have to try to control ourselves to make sure that we save things, to make sure that we do not waste things just because it is cheap, that we try to buy better quality that guarantees that the product will last longer etc.

I am sure that the guy will never ever become financially independent with that attitude. The woman seemed to have had a more frugal approach to life but I doubt that will help her in the long run if she stayed together with this guy. Sometimes it would have been interesting to find such people again and to see how their lives are today.

Are they still together? Have they changed their style of living?

So... How do you dress your Christmas tree and what are you doing with it in the end of the holidays?

Merry Christmas to all of you and I wish you and your families all the best today!

Analysis of MAN

Company: MAN

Business: A German producer of commercial vehicles and engines which means that they are producing trucks, buses, diesel engines, turbo machinery and turnkey power plants.

Active: Sales are pretty much world wide and they have production sites in North and South America, Europe and in Asia.

P/E: 73.8

Comment: I was annoyed by their homepage. When I go to the investor page of a company there are some things that should just be there, directly up front, in my face and on the MAN homepage it just was not there... Also Volkswagen owns 75.2% of the shares and have left an offer of 83 € for buying th rest of the shares so the market is betting on getting out more...

Analysis of LEG Immobilien

Company: LEG Immobilien

Business: A German real estate company. They have today 94,000 objects that are rented out. Main focus is one and two person household were the margins are slightly higher.

Active: In Germany and more specifically in the North-Rhine Westphalia region.

P/E: 23.0

Investing in investment companies

There has been two comments concerning my way of analysing investment companies of which both have considered that I am doing it incorrect. One was fairly aggressive and written in Swedish and can be found here with my attempt of translating it. The second one can be found here and is from PoomK who seems to be an excellent investor and a person that I instinctively know I should learn from but obviously still wants to disagree a little with in this case... ;)

In my response to the second comment I wrote that I would write an article about my thoughts concerning investing in investment companies and this is it! I am sure that many of you will not like this article but please never forget that I am a wet behind the ear investor with much to learn and many miles to travel so please keep the comments civil yet harsh if you do consider me to be wrong but make sure that your points are valid and not based on some old well-known rules of how things should, must and have to be because those I give very little value to.

Analysis of KUKA

Company: KUKA

Business: A German producer of automated robotics for production industry. They are divided into three sectors: Laboratories (medical robotics products for medical device producers), Robotics (intelligent robotics that rationalize productions processes especially for the automotive industry) and finally Systems (simply the service and the customer-tailored solutions for receiving a rationalized production process on client location).

Active: Like the automotive industry they are active world wide but their strongest presence is in Europe and Germany.

P/E: 20.5

Analysis of Picanol Group

Company: Picanol Group

Business: A Belgium based company that are developing, producing and selling weaving machines as well as other high-tech industrial products, services and systems. They have a couple of daughter companies but they divide themselves into two divisions according to their annual report: Weaving Machines (production of weaver machines based on air or rapier technology, with the sales comes service, spare parts etc.) and Industries (with Proferro: cast iron for weaving and agricultural machines, PSIControl Mechatronics: develop and manufacture various controllers, and finally Melotte using Direct Digital Manufacturing (DDM) and Near-to-Net-Shape Manufacturing (NNSM) technologies)

Active: They are active in Europe, India and Asia (many customers there!), and in the US, Mexico, Brazil and Indonesia.

P/E: 7.8

Comment: As soon as I read weaving company I just got some bad flashback feelings about Warren Buffett and Berkshire Hathaway which was one of his big failed investments the difference here is that the Picanol Group builds the machines for it and do not weave as such which Berkshire did...

Asian Bamboo steps into the Chinese property hysteria

Yesterday there was an ad-hoc report from Asian Bamboo which leaves a very foul taste in my mouth and simply makes me furious. If I would have been a dog there would have been rabid foam around my mouth. The ad-hoc can be read here. The share price directly dropped around 40% and the question is then why did this happen?

It is indeed very easy. The management say that they completely failed with their restructuring that they have been attempting to make since a long time now and as a funny little extra joke on top of all this they tell us that they will step into the Chinese property hysteria that in media very frequently has been called a bubble with increases of 35% only during the first three quarters this year. For more information please read for instance this article about the bubble.

They also say that they will have to add some more money and this will be done buy selling I think it was 3 year convertible bonds at 1/3 of your holding. The management guaranteed to step in and buy anything the shareholders did not pick up. Oooohhh, nice! They are squeezing out the small shareholders and increasing their own shares with crazy announcements that kills the share price and makes no one wanting to buy the convertible bonds that will be traded at a low price.

Another fantastic side note was that the part that the CEO and founder had taken extra care of since the last 6 months (pulp and fibre extraction of bamboo) they now decide there is no future with and they will try to sell it off.

Oh, I will keep my shares, I will keep them as a reminder to myself how wrong things can go when I decide to step into a company without a long track record of success and what happens when you water the weeds!

Right now I want to write some really bad words so please add your own...

So **** *** Asian Bamboo and your ******* management that are a bunch of thieving ******** rot in the **** that you came from and may you never see the sun shine again unless you are looking out of my *******!

Sorry I just had to get that out of my system. So right now I am looking forward to owning, and this we should not forget, IN COOPERATION with other inland Chinese companies wink, wink, say no more, say no more, ay, ay, know what I mean wink, wink... that will then of course all share profits equal to what was put in and of course we will have full control and knowledge concerning these companies and the real owners of them. Great!

Analysis of Krones

Company: Krones

Business: A German producer of machines and production lines that are active in the fields of process, filling and packaging technology. Krones product portfolio contains intralogistics, information technology and factory planning. Their biggest field are the production line machines for the bottle and can shaped containers for water, beer, soft-drinks, still or sparkling wines and spirits. They are also highly active within the food, luxury-goods, chemical, cosmetics and pharmaceutical industries.

Active: All over the world. Over 90% of their sales are made outside of Germany. It was a bit funny to see their sales percentage divided into the different regions world wide because almost all of them were around 12-13% as if it was a strategically decided to diversify like that but I doubt that... I mean as a company one will in principle take every sale available. I think the reason might be that their competitors are also already present there... The Swedish company Sidel (Tetra Laval Group) as well as the German company KHS belonging to the Salzgitter Group (also on MDax and will be analysed shortly).

P/E: 28.8

Analysis of Kabel Deutschland

Company: Kabel Deutschland (however Vodafone now owns over 76% of the company and will most likely get the rest also...)

Business: It is/was a German cable operator with offers of digital, high definition (HD) and analog TV, Pay TV and DVR offerings, Video on Demand, broadband Internet, WiFi and fixed-line Phone services via cable as well as mobile services.

Active: Germany

P/E: 34.6

End of year overview of my contrarian stocks 2013

As requested by my brother, a bear, I will now go through all the stocks that I have and write down why I bought it, what the development has been, when I will start to consider to sell it and the mistakes or better put what I learnt with each stock. Sorry for the length of this article but I do not like to break things up once I get started.

Analysis of Hugo Boss

 

Company: Hugo Boss

Business: A German high-end fashion retailer and accessories for both men and women. They have several different brands: BOSS, BOSS Orange, BOSS Green, HUGO and finally HUGO BOSS. The brands consist of business wear, evening wear, shoes and leather accessories. They are also active with licensed fragrances, glasses, watches and other areas they consider to be able to make contributions to.

Active: Due to active marketing the Boss brand is well known in the world and they sell products in 126 countries world wide. Production is in Asia & Eastern Europe. They have more than 6,800 sale points, with 1,200 stores as franchise and Hugo Boss have themselves 840 stores which they currently are expanding pretty heavily.

P/E: 22.4

Comment: Four years ago I bought a Hugo Boss suit for the very first time. It looked excellent and I was very happy with it. Until today I think I have worn it maybe seven times and in the groin the material have already started to be destroyed. For a cheap suit I would not care that much but for a suit that cost 450 € I find this unacceptable and I have therefore decided that I will never buy a Hugo Boss product again. I accept to pay for quality but I refuse to pay for a brand name. Still... the question is how the company is doing? Because everyone does not think and act like I do and many are fully prepared to pay for a brand name.

Analysis of Accell Group

Company: Accell Group

Business: A Dutch company that are active with the design, development, production, marketing and sales of bicycles, bicycle parts and accessories and fitness equipment. They have several well-known bicycle brands under their umbrella and continue to expand their business by buying more and more brands. To mention a few they have: Raleigh, Batavus, Juncker and Brasseur. For the full list of brands please look here.

Active: Strong presence in Europe with almost 80% of their revenue (50% of that is in the Netherlands and Germany almost equally distributed) in the US they make almost 15% of their revenue and finally with around 4% in the rest of the world.

P/E: 13.2

Kernel report Q1 2014

First of all. I am very, very sorry. This Q1 report from Kernel came out some time ago and I wrote part of the article, never finished all of it, got a lot of other things coming up in between and never managed to get it published. For that reason I am here very much behind schedule with this report and I must admit that when I was reading the report I was also pretty annoyed but that was honestly not the reason for me forgetting to publish it.

So... the report came out some time ago and on that day the stock directly dropped almost 4%... The question therefore is why? Will something change in the future to improve this? Was the drop justified?

Analysis of Hochtief

Company: Hochtief

Business: A German construction company (90% of sales are made outside of Germany though) with a focus on develop, build and operate. They are pushing especially four areas: Transportation Infrastructure (roads, bridges and tunnels), Energy Infrastructure (production of power plants (any by the sound of it) and the distribution net for that power), Social and Urban Infrastructure (houses, apartments, schools, commercial buildings, other public buildings are being built and operated) and finally Contract Mining (they are building the entire mines and the infrastructure around it in Australia and Asia as well as maintaining it.

Active: They are active all over the world and they are divided into three divisions with America, Asia Pacific and Europe.

P/E: 29.1

Analysis of Gerry Weber

Company: Gerry Weber AG

Business: A German fashion retail and accessories company with three brands for women: Gerry Weber, Taifun and Samoon. Underneath the Gerry Weber brand they have an additional two brands (Gerry Weber Edition and G.W.). They run their own stores but also franchise as well as online and sale of their brands in department stores.

Active: With their own stores (around 850) they are mainly present in Europe with strong focus in Germany, Austria and Switzerland. Lately they have starting to expand into the countries around them so Poland, the Netherlands, Denmark, Sweden (opening first store in Malmö soon and then in Stockholm). In total their brands are being sold in over 2600 stores world wide and have distribution channels in 62 countries.

P/E: 17.6

Comment: When I made this analysis there were serious problems with their homepage. I hope that it is sorted out by now so that you can check it out without problems. I liked that they kind of direct themselves to the older generation and not the young like most other companies. When I walked past one store they had a catwalk for retired people with a bit elder, not thin models showing what was new in the collection. Sometimes the world seems to forget that the old generation are sitting on big bucks... but Doro knows for instance this...

Contrarian stock bought December 2013: K+S

It was time to send off the little cash I had left into a contrarian stock which then also became the final investment of 2013 and I once again increased my position in K+S the link goes to the analysis that were previously made. The addition investment will appear in the list with the next monthly update.

I got a longer email from my brother the other day and he was then questioning my investment in K+S as well as were wondering about my other investments. Why I made them, and how I think about them today and especially if i would have invested in them today. Good questions so I decided that I will write an article were I look over my investments why I made them and if that was correct or not. I will do this before the end of the year.

I will, as always, go back home over Christmas to see my family and friends and we will have to see if I will manage to keep the blog running with a new article every day. During the summer vacation I did manage to do that based mainly on a very kind neighbour that are kind enough to keep his internet open so even in my families summerhouse I managed to keep writing. So we shall see and if you see few or no updates during my two weeks Christmas vacation then no worries I will definitely be back!

There are still plenty of companies on the MDax that must be covered before we start to move more south in Europe (as well as east) and we should not forget to dig into the other smaller lists in Germany also. Like I mentioned before that I must do what I do now to build up a feeling for the companies in Germany, what they produce and what they do. I must do this because I am a foreigner here and does not from the mothers milk or beer or whatever you want to call it know what the companies do as any normal German person knows from just growing up here. This of course have created a lot of boring articles from companies that are not at all interesting to invest in but hopefully also you have learnt something about these companies by reading the short article that I write.