German inside trading: November 2013

The question as always is what have the management, the board and other key figures in the companies been up to during the last month? Plenty of people received stocks based on various bonus programs but those I do not bring up in the table below unless they directly sold them which will then be registered as a normal sale of shares.

I hope that you will find something of interest and if one of your companies were sold then start thinking about why that might be happening.

Inside trades November 2013:

Analysis of Elringklinger

Company: Elringklinger

Business: A German supplier to the automobile industry. They are divided into five segments: Original Equipment (manufacture and distribution of engines) , Aftermarket (spare parts for engines etc.), Engineered Plastics (high quality PTFE plastics for vehicles), Services (engine test benching for car producers as well as other suppliers) and finally Industrial Parks (leasing of land and buildings)

Active: Strong German and European focus since over 60% of their sales happen there. The remaining 40% goes to the rest of the world and they claim to supply each car and truck producer in the world with some of their products.

P/E: 22.8

Analysis of EADS

Company: Airbus (prev. EADS)

Business: A German group working with aerospace and defence. In the group there are four daughter companies: Airbus (building commercial as well as military aircrafts), Astrium (space program with for instance satellites), Cassadian (global security systems and solutions - IT networks) and finally Eurocopter (civil as well as military helicopters)

Active: They are present on over 170 sites world wide and at least claim to promote ethics, compliance and transparency (but we all know weapons end up everywhere anyway...)

P/E: 35.1

Outcome German election 2013

I made the title of this article a long time ago, actually directly after the election had finished, but due to the difficulty in creating the government it has taken a very long time of negotiation between all the parties. The starting point of this article was made the day before the election. To find out more about what is going on you can read this in German or this in English.

In the end it did become the "great coalition" which means that CDU joins with SPD. This then also leads to that they will definitely have complete power with almost 70% of the German votes.

For Germany this creates an excellent moment to push things through that will strengthen and improve the future for Germany but also for Europe.

I am listening to the web cast while writing this article so everything is very fresh and new. The SPD boss said that he had realised that CDU/CSU does not exist it is CDU and CSU and he was forced to negotiate with both which made it even more difficult. SPD have also managed to push through plenty of salary changes for especially people with low salaries and time based people.

They have made big agreements on no tax increases, significant increases in money to research as well as the infrastructure in Germany. Big improvements for the "small" people with social and salary improvements. Money for parents with little children will remain the same. In principle the German population received that they wanted and should be very happy today! I will celebrate with a nice German beer tonight because I do indeed believe that it will strengthen Germany even more and that it will be good for the future.

Analysis of Dürr

Company: Dürr

Business: A German mainly automobile supplier of products, systems and services. They are divided into four division: Paint and Assembly Systems (the entire systems for a coatings assembly line for not only automobiles but also airplanes), Application Technology (high tech automated painting of 3D objects), Measuring and Process Systems (filling equipment for household appliances, also more regular assembly line products for the automobile business, includes also cleaning and filtration systems so a big and broad division) and Clean Technology Systems (energy efficiency and air cleaning systems).

Active: They are active in 23 countries world wide.

P/E: 10.6

Contrarian stocks of interest November 2013

It was high time to make an update of the contrarian stocks of interest which can be found here. We have plenty of additions to the list and those are:

Lanxess
Merck
RWE
Volkswagen
Hannover Rückversicherung
Aurubis
Deutsche Euroshop

I have now also decided that it was time to kick out some companies from the contrarian list because they have simply become too expensive for being of interest to buy. And here are the companies that were kicked out from the list with the adjustment according to their current share price. I decided that everything over 110% of the towards price was kicked out:

Analysis of Deutsche Wohnen

Company: Deutsche Wohnen

Business: A German residential company with the core business to develop and manage real property. A secondary business that they have is nursing homes. Almost 70% of their employees are active within that and it goes under the name of Katharinenhof.

Active: They are currently only active in Germany they have almost 90,000 residential units.

P/E: 16.6

Analysis of Deutsche Euroshop

Company: Deutsche Euroshop

Business: A German commercial real estate equity owner. They pay entire or equity parts of shopping centres on prime location. The rent is to a certain extent based on the consumer price index meaning that in hard times their rent goes down and on good times it increases which is a system the stores seem to be pretty content with.

Active: Europe with main bulk in Germany with 16 centres and then one in Poland, one in Hungary and one in Austria so 19 in total.

P/E: 14.6

KEEP STOCKS and CARRY LONG

Lately I have been seeing plenty of variations on the by today classical slogan, KEEP CALM and CARRY ON, made during the 2nd world war in the United Kingdom to make sure that the British population kept their heads high. To my knowledge this particular slogan was never used but was re-discovered some years ago and are now everywhere on mugs, stickers, posters etc. So why not make a variation that involves stocks?

I find that KEEP STOCKS and CARRY LONG has a very nice ring to it. My first thought was: keep long and carry stocks but I find that less catchy. Alternatively one should change the keep to BUY STOCKS and CARRY LONG but I find that it goes a bit too far from the original but it is nice enough to get its own poor graphical creation by me.

So it goes down to a voting that can be found on the right side! Which is the best one?

Analysis of DMG MORI SEIKI

Company: DMG MORI SEIKI AG

Business: A German-Japanese company that was created from GILDEMEISTER that were previously also on MDax and the Japanese company Mori Seiki, both of which have been strong brand names in machine tool construction. They have three segments: Machine Tools (with Turning & Milling Technology, Ultrasonic/Lasertec, Ecoline & Electronics, all these are high tech machines for industrial applications), Industrial Services (Services & Energy Solutions, the energy solutions are suncarrier, windcarrier and cellcube. So they make solarpanels, windpower plants and highly efficient battery stations) and the final one is Corporate Services.

Active: They are present with sales offices and service locations in over 140 countries. Due to the merger they have not only a strong presence in Europe and Germany but also in Asia with Japan and China.

P/E: 18.5

Comment: I am looking at the data from 2012 which means that the Mori Seiki part has not yet been included therefore the analysis becomes GILDEMEISTER before the merger but I am looking forward to see the change and make a new analysis in 2014 based on the annual report from 2013.

Contrarian stock bought November 2013: Kernel

I have since a couple of months now been trying to buy Agroton via the direct trade that I use in my stock deposit for buying shares. Usually it is possible to buy all kind of stocks here since Germany is such a large country even American shares are being traded from a German person to the next instead of being forced to buy it from the American market and without being forced to pay extra fees due to that. Agroton is by the look of it too small or too uninteresting for it to be traded over direct trade. I therefore once again took a secondary option and next time I must seriously consider if it is not worth it to pay some extra fees to get that stock.

Pershing Square: William Ackman Q3 2013

This is the last of the four American investors that I follow and it is William Ackman with Pershing Square Capital Management L.P. Usually they have very few companies and are making few trades. This quarter was no different and no new American companies entered into the portfolio, two were kicked out and three saw decreased positions. Only one stock had an increased position as can be seen in the list below:

Conclusion: By the look of things they are building up cash. Interesting is also that they have a pretty large call option on Proctor & Gamble. So they decreased their shares in P&G and then placed a large call option. It is an investment field that am currently not working with and I do not know if I ever will.

Analysis of Celesio

Company: Celesio

Business: A German wholesale and retail company that provides logistics and services to the pharmaceutical industry. They themselves own 2,200 pharmacies, have an additional 4,100 as participants in brand schemes and are in total providing 65,000 pharmacies and hospitals with medication each day.

Active: They are only active in Europe and are present in 14 countries mainly northern Europe.

P/E: -25.4 (P/E3: 122)

Greenlight Capital Inc: David Einhorn Q3 2013

David Einhorn and his Greenlight Capital were a little bit more relaxed this quarter. They managed to add three new companies and they kicked out another three.

The new one were:

Intrexon Corp - Claim to improve the bioindustrial revolution via better DNA. I have never heard the word bioindustrial before. Either way they are by the quick look of it working with the enhancement of DNA so similar to Monsanto but they are pushing four fields. Health, Food, Energy and Environment.

NVR Inc - An American real estate and home financing company.

Tempur Sealy - It is the matrasses and pillow company that are working with ergonomics and composition mixtures to improve the sleep of people.

Berkshire Hathaway: Warren Buffett Q3 2013

Once again I have been digging into the filing and have made a summary concerning the American stocks that Berkshire Hathaway has been dealing with during the last quarter.

There were actually two completely new additions to the stock portfolio for Berkshire Hathaway and those were:

Exxon Mobile - The American oil and gas giant. I have previously made a contrarian analysis of the company and it can be found here.

Suncor Energy - Also an oil company but in this case focused on oil sands and are working in Canada, around Alberta, with the extraction of the oil.

There were also some companies were they decreased their involvement of which all can be seen in the list below.

Analysis of Brenntag

Company: Brenntag AG

Business: A German chemical distribution company. They buy and store large quantities of chemicals from the producers and after some repackaging these products are later on sold directly to the chemical users and customers.

Active: They have a global presence with 450 locations in over 70 countries world wide with 170,00 customers in total.

P/E: 19.4

Dalal Street: Mohnish Pabrai Q3 2013

Mohnish Pabrai has been sitting very still in his boat and has done absolutely nothing in America according to the SEC filing. No addition, no sale, no new company.

Therefore the list this times becomes pretty airy:

Conclusion: Since I know that he keeps a high %-age in cash my guess is that he simply has not found anything new of interest. This could be due to that the market is today fairly valued and the value of his current companies have not yet fulfilled their potential but I do not know and it is only guessing also I can not see what he is doing outside of the US so maybe he has been active but only on a different market.

K+S report Q3 2013

My latest company addition arrived with their quarter report for 2013. The information and pictures in the short summary are coming from there and it can be found here. The market seem to have liked it because the stock directly jumped up a couple of %-age points (even above +5%) which then was dropping down over the day as far as being even minus and ending with around -4%. Is there a reason to be cheerful? or sad for that matter?

E.On. report Q3 2013

The biggest German energy provider arrived with their third quarter report for 2013 and it can be found here (all information has been extracted from there). The report, which look very professional, is as thick as a book written by an American professor getting paid per written page. The response from the stock market was a direct minus but over the day the share price worked itself upwards and finally it stopped on +2.1% which made E.On. the winner of the day. So which response was correct? The direct drop or the +2%?

Analysis of TC PipeLines

Company: TC PipeLines

Business: An American company that fully or partially owns six gas pipelines that are critical for the American energy infrastructure. These gas pipelines have the capacity to transport 8.9 billion cubic feet (= 0.25 billion cubic meters) per day. The company was created and is owned to around 28% by TransCanada Corporation that besides from owning pipelines in Canada also have gas storage and power plants.

Active: TC PipeLines are in principle only active in the US. Sometimes they join on some deal in Canada with the mother company.

P/E: 21.3

Comment: Ugh! became much tougher then what I expected due to that they favour to only report their net earnings but I want to have also the revenue to see their growth in the last five years. So I had to calculate their revenue part from the different pipelines. I hope I made no mistake but please check it to be sure.

Asian Bamboo report Q3 2013

The nicer and thicker the report the worse the news or? When I was going through the report I did however realise that they are reusing pictures from previous reports. Good! They have realised they need to tighten the belt and remove all useless expenses. The stock market responded on the report with -4.4% at the deepest dip and then went back up to -2.3%. How about the content then?

Enel report Q3 2013

This is like! An ugly report with no wasted money on fancy pictures but directly down to business AND it is even short! Directly when the report came out the shares dropped by a couple of %-age but at closing time they were down by 1% so not much.

Analysis of Bilfinger

Company: Bilfinger SE

Business: A German engineering and services group that offers customized services for industrial facilities, power plants, real estate and infrastructure which are also more or less what they are divided into as four core segments: Industrial (blueprints/design, building as well as running/servicing the industrial plants), Power (main focus lies with the maintenance of all kind of power plants), Building & Facility (biggest builder of private as well as commercial real estate in Germany) and finally Construction  (tunnels, bridges and roads).

Active: The big bulk of their activity is in Germany and Europe. Due to their engineering services and maintenance contracts they are present all over the world.

P/E: 13.7

Commerzbank report Q3 2013

Also Commerzbank arrived with their jogging woman... sorry... their quarter report. One have to admit that when they start a concept they stick to it and she has now been running all over as well as inside the reports this year.

The market made a significant hiccup jump (+10.1%) on Thursday due to the quarter report from Commerzbank. Apparently the market was amazingly impressed that Commerzbank had a better operating profit quarter than Deutsche Bank... does that make sense?