Wednesday 10 December 2014

End of year overview 2014

bear, hug, air

The end of the year is near and for that reason it is a good time to look over all the investments again. The reasons for why I bought shares have not changed since last year so for all the old stocks you can go to the previous report called End of year overview of my contrarian stocks 2013. The old companies will however still be brought up with how much value they have generated (share price * shares + dividend - trading fees) and if there has been any new lesson learnt then that will also be brought up.

MüRe, a German re-insurance company

Company: Münchener Rückversicherung
Shares: 18
Invested: 1974 €
Value: 2970 (+50%)
Dividends: 369 €
Generated value: 3329 € (+69%)
Reason for investment: See previous end of year overview.
Lesson learnt: Buy and hold starts to look better for each passing year.

E.On., a German electricity company

Company: E.On.
Shares: 240
Invested: 3717 €
Value: 3554 € (-4%)
Dividends: 528 €
Generated value: 4065 € (+9%)
Reason for investment: See previous end of year overview.
Lesson learnt: The danger of management going after their bonus with no consideration for employees or shareholders. I will start thinking about management bonuses how high they are and for what reason they are given.

DB, a German financial institute

Company: Deutsche Bank
Shares: 241
Invested: 6911 €
Value: 6227 (-10%)
Dividends: 371 €
Generated value: 6558 € (-5%)
Reason for investment: See previous end of year overview.
Lesson learnt: When the management are crooks then they will spend shareholders money on legal fees to protect themselves.

Asian Bamboo, a forest company stepping into the property bubble in China

Company: Asian Bamboo
Shares: 950
Invested: 6721 €
Value: 797 € (-89%)
Dividends: 72 €
Generated value: 839 € (-88%)
Reason for investment: See previous end of year overview.
Lesson learnt: It takes much longer time for a company to change the direction than what they thinks and in the meantime plenty of cash is burnt. I doubt they will be successful with their property investments.

BP, a British oil giant

Company: British Petroleum
Shares: 354
Invested: 1991 €
Value: 1873 € (-6%)
Dividends: 242 €
Generated value: 2085 (+5%)
Reason for investment: See previous end of year overview.
Lesson learnt: In some big companies the litigations are a never ending story and sufficiently bad news for the oil industry in general will push down an all ready pushed down company further which can even wipe out any dividend gains that have been collected over the years.

Commerzbank, a German bank

Company: Commerzbank
Shares: 314
Invested: 4298 €
Value: 3794 € (-12%)
Dividends: 653 € (actually sale of pre-emptive rights by mistake)
Generated value: 4417 € (+3%)
Reason for investment: See previous end of year overview.
Lesson learnt: Nothing this year.

ABF, a British conglomerate

Company: Associated British Foods
Shares: 100
Invested: 1676 €
Value: 4052 € (+142%)
Dividends: 75 €
Generated value: 4119 € (+146%)
Reason for investment: See previous end of year overview.
Lesson learnt: Something overvalued can always become even more overvalued and I keep my fingers crossed that ABFs feet will grow into the big shoes they know walk around in.

Intel, an American chip producer

Company: Intel
Shares: 100
Invested: 1644 €
Value: 2981 € (+81%)
Dividends: 119 €
Generated value: 3092 € (+88%)
Reason for investment: See previous end of year overview.
Lesson learnt: The market can wake up and when it does then things move quickly.

Kernel, a Ukrainian agricultural and logistics company

Company: Kernel
Shares: 550
Invested: 4686 €
Value: 3933 € (-16%)
Dividends: 0 €
Generated value: 3901 € (-17%)
Reason for investment: See previous end of year overview.
Lesson learnt: When war starts then share prices drops dramatically. This made it possible for me to increase my holding further at an even lower level which is good for me but personally I would prefer to see peace in Ukraine.

Enel, an Italian electricity company

Company: Enel
Shares: 450
Invested: 1077 €
Value: 1737 € (+61%)
Dividends: 59 €
Generated value: 1788 € (+66%)
Reason for investment: See previous end of year overview.
Lesson learnt: When a company that stopped paying dividend decides to start again then the share price is also going back up again.

K+S, a German mining company

Company: K+S
Shares: 152
Invested: 3095 €
Value: 3657 € (+18%)
Dividends: 38 €
Generated value: 3671 € (+19%)
Reason for investment: See previous end of year overview.
Lesson learnt: In the natural resources field, such as mining, an unlucky competitor can have a major positive impact for your company. Still... also my very own company can be as unlucky as Uralkali have ended up being.

DBAG, a German investment company

Company: Deutsche Beteiligungs AG
Shares: 100
Invested: 2014 €
Value: 2384 € (+18%)
Dividends: 60 €
Generated value: 2428 € (+19%)
Reason for investment: See previous end of year overview.
Lesson learnt: 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.

Cez, a Czech Republic electricity provider

Company: Cez
Shares: 100
Invested: 2142 €
Value: 2230 € (+4%)
Dividends: 143 €
Generated value: 2357 € (+10%)
Reason for investment: A good P/E, P/B and acceptable ROE with a high dividend payment that is still at an acceptable level of their earnings. After visiting Prague I was impressed with how things are running in the Czech Republic and how excellent the infrastructure is and how hard working they are. I therefore wanted to make an investment and decided that a piggy bank such as a energy company would be a good investment especially since the government is still sitting on shares and I am sure they want their dividends each year just like I do.
Lesson learnt: Taxes on dividends in the Czech Republic are 35% and that quickly eats up a large part of the dividend cake but I still get a nice dividend out so it is still ok.

IBM, an American service company

Company: IBM
Shares: 16
Invested: 2250 €
Value: 2080 € (-8%)
Dividends: 14 €
Generated value: 2078 € (-8%)
Reason for investment: Acceptable P/E, very high earnings to sales and spectacular ROE. They have almost managed to finish the conversion of being a fully fledged service company and to my astonishment they have managed to keep up the revenue during this process. 
Lesson learnt: When the management goes out with a statement saying that they will no longer pursue, in my opinion, crazy set targets, then the share price directly drops and chances can be found for making contrarian investments.

Fugro, a Dutch oil service company

Company: Fugro
Shares: 120
Invested: 2166 €
Value: 2204 € (+2%)
Dividends: 0 €
Generated value: 2189 € (+1%)
Reason for investment: This company has all the magic key figures in the, for me, sweet spot. Extremely low P/E and P/B, excellent ROE and they were paying a good dividend. The reason for the low share price was mainly due to clouds on the sky in the oil industry.
Lesson learnt: What were clouds that I expected to go away pretty soon turned into a typhoon in the end. The board member as well as previous CEO Kramer decided to step down, not only was the oil industry in general pushed down but then the oil price dropped like a stone and there were even a hostile take-over action on Fugro. Oh, and when they then also decided to cut the dividends that also made them dip down pretty deep. So things can always get worse and as a small time investor I can often not even imagine how bad and for what reasons things could get worse so it makes no sense to think about it.

Tessenderlo, a Belgian chemical company

Company: Tessenderlo
Shares: 45
Invested: 1021 €
Value: 924 € (-9%)
Dividends: 0 €
Generated value: 909 (-11%)
Reason for investment: This investment was made due to that the Belgian entrepreneur Luc Tack decided to buy out the French government from the company. Mr. Tack has been extremely successful with all the companies that he has stepped into and I believe it will be the same here.
Lesson learnt: nothing more than the classical that the share price very often continues down after one has made an primary investment. 

Eniro, a Swedish search provider

Company: Eniro
Shares: 850
Invested: 1035 €
Value: 572 € (-45%)
Dividends: 0 €
Generated value: 557 € (-46%)
Reason for investment: Extremely low P/E and P/B with an additional benefit of that they had calculated earnings too early under the previous CEO.
Lesson learnt: Rumours can bring down the share price of an already shaking company to extremely low levels. I made a huge mistake with the book value for Eniro. Almost all the "assets" are intangible and that I must honestly say I did not consider as I should have. In the future I will look more on intangible assets and the amount of build up goodwill in the companies. At least I made no watering of this weed.

BASF, a German chemical company

Company: BASF
Shares: 31
Invested: 2012 €
Value: 2239 € (+11%)
Dividends: 0 €
Generated value: 2231 € (+11%)
Reason for investment: Due to the autumn depression BASF was traded at a very nice P/E level and when these kind of things happen to the DAX giants one should simply buy and hold, no questions asked.
Lesson learnt: As of yet nothing.

Talanx, a German insurance company

Company: Talanx
Shares: 40
Invested: 1012 €
Value: 1004 € (-1%)
Dividends: 0 €
Generated value: 996 € (-2%)
Reason for investment: I wanted to have another piggy bank that pay out dividends to me and Talanx was currently traded at a low P/E and especially a low P/B in combination with an acceptable dividend payment which was the reason for the investment.
Lesson learnt: As of yet nothing.

Conclusion: I do not know if my stock picking skills have become any better over the years and I definitely still do not have a investment style of the type one ring to rule them all but I hope that with each failed investment I manage to take something with me to try to avoid the mistakes from repeating themselves. My biggest real loss is still focused on one company and my stupid mechanical buy rule that I then used. Also this year I have stepped in and bought more shares in companies that have dropped but at least I then tried to analyse why they dropped and if it was based on changed company fundamentals or something else. If I did not like the reason then I also did not buy more.

No comments: