Sunday 5 October 2014

Contrarian stock bought October 2014: Eniro

Eniro, a Swedish search and advertisement company

Due to my shopping hysteria some days ago I try to hide it by claiming that this became my October investment. I bought 850 shares of Eniro at a cost of 1035.11 € including fees. This means that I paid 1.22 € per share so I am already down some %-age points.

Why did I then make this investment?

Eniro is today traded at a silly low P/E and P/B value. Those are reasons enough for me as a contrarian investor to step in. With Eniro there comes some additional aspects though...

This old company has been around since 1880 and their business was for a long time to give out printed versions of business as well as private search information. When I was a child I often looked in that book to find a new hairdresser or opening hours of the library, swimming hall etc. It was back then very useful and it was also used frequently by people.

With internet they lost ground and they became a thing of the past and not only were they punished on the stock market but also by customers that stopped using their services. They themselves also dropped the ball on how to profit from internet.

In the last years (with our without the current issues with the accounting) they have been bringing home 0.2 € in earnings per year. To me that indicates that they have managed to transform into an internet based company and they have managed to find ways to profit over internet.

Currently they are working on bringing down their debt and once that is done they will start to pay dividends also to common shares. I hope that in two to three years from now that I will be able to collect dividends that will be sufficiently large (based on my current investment) to cover the years when I received nothing.

If you want to take a closer look at Eniro then please see analysis of Eniro and to see my current Stock Portfolio then click on that link but it is not yet updated.

A crazy investment? Probably it was and in a couple of years we shall find out.


Anonymous said...


Do not buy Eniro, their business model is f*cked. They have been on a downward slope for the last, well decade really.

I haven't looked at Eniro closely in the last years but _everything_ that is written and said about them makes want to keep a distance. I'd urge you not to waste your money on Eniro.. Buy Industrivärden instead!

// Sweden.

Fredrik von Oberhausen said...

Hahaha, thanks for your strong emotional comment Sweden!

Of course you are also correct. No one with a sane brain should go out and buy Eniro today. Everyone hates it.

For fundamental value investing then one should directly jump into industrivärden and sleep very well during the night knowing that the Swedish industry will keep performing very well also in the future.

As a contrarian I every now and then go out and buy some coal just to see what comes out after the purification/washing is over. Eniro will have a purification and cost cutting future and hopefully there will be something interesting coming out.

But just like Sweden says! If you are sane then do not buy Eniro.

Fredrik von Oberhausen said...

"...Ebola-ridden-half-dead-zombie Company that Eniro is." well written!

I had not read that article before but now I did. I hope they find neglect in the actions of the accountants so that the real numbers will be published AND that they will be more proper in the future.

It is crucial that the books are properly made especially for me that invest based on the contrarian analysis that I make which is purely book based.

I agree that the books are probably cooked but I hope that they are less cooked than what the market response was.

And once again. I only report here what I do with my money and it is not an advice to what other people should do.

If I would have thought that people would start to invest like me (just take a look at my poor track record) then I would probably feel forced to leave my contrarian investing and start to make more fundamental value investing to make sure that they as well as I (due to them) would sleep better in the night but that would be sad...

I think... since there are plenty of fundamental investors out there already and I hope that they at least look at my reports from Buffett, Pabrai, Ackman and Einhorn so that they can buy the companies that those guys invested in each quarter coz that is pure fundamental value investing!

Anonymous said...

Sure, the 30% drop could be an excessive market reaction on the bookeeping. You might make some Money in the short run hoping for the volatility of the stock to work in your favor.

I wouldn't bet that you are going to be happy with owning the stock long term (3yrs).

Since you invest on a P/[EB] basis, investing in a Company that has lied in the [EB]-reporting is to me pure speculation..

I wouln't feel comfortable owning Eniro.. Buy Talanx instead ;)

Fredrik von Oberhausen said...

My main investment criteria for Eniro was the P/B. I hope that the P/B will increase to 1 from the current P/B ratio of 0.29. How wrong can PWC be concerning the book value?

That there is a deviation of even -25% would not scare me (giving a real P/B of 0.36) and it would still be cheap in my opinion especially if the company is even making some kind of earnings.

If the error is even more than that, in a company traded on the stock exchange in Sweden with PWC as accounting company, then I would be scared of the entire Swedish stock exchange and each company using PWC for the accounting.

So yes, if you want to call it speculation then I speculate on that the book value is not completely off the charts.

Good that you mention Talanx! I almost bought it but I figured in the end that I can buy Talanx also in two to three months from now without any drastic movements happening to the share price in the meantime.

Which, of course, might end up being a stupid speculation of me... ;)

Anonymous said...

Down over 30% and the trade in the stock halted, that is what happens when you invest in companies with major problems.

Fredrik von Oberhausen said...

Yes, that is true. Small companies with problems can always drop even further... all the way to zero if things goes seriously bad.

I still wonder from where the journalist got the information...

Especially now that there are other articles claiming that Triton (known to make dodgy deals) is trying to get in by buying the loans cheap from the banks.

If that is correct then why would an investment company try to get hold of Eniro?

Then again that might come from the same journalist that created the other article so who knows.