The middle manager conundrum

Since around half a year or so I have been writing that I am looking for a, to put it nicely, new challenge in my life. To be more frank I am bored out of my mind and I need a new job to kick start my brain cells again.

I have by now been running my own company for over seven years and I have had between three to seven employees during these years. For a small company that makes you the CEO but for a large one that makes you a middle manager. Times have sometimes been tough with decreased employees and decreased salary but that is how things can be.

Due to my studies in Business Administration and the essay that we had to write in the end I have come to realise what a fatal mistake I have made in my career. The essay lifted my eyes over the plate but I had already before started to suspect that something was not correct.

Analysis of IBM 2016

Company: IBM

ISIN US4592001014 | WKN 851399

Business: An American IT service company. They are currently standing on five larger pillars and one tiny one: Global Technology Services (IT infrastructure and business process services), Global Business Services (Consulting and Application Management Services), Software (middle-ware and operating systems software), Service & Technology (business solutions requiring advanced computing power and storage capabilities), Global Financing (invests in financing assets, leverage with debt and manages the associated risks) and the final one is Other (it generates 206 million USD so pretty insignificant). 

Active: World wide making sales in over 170 countries.

P/E: 9.2

IBM annual report 2015

IBM arrived with their annual report or better put with their press release concerning the fourth quarter. Sure there will probably be some changes in the "proper" annual report but I would be surprised if those changes will become enormous and therefore I make already now the summary. The share price of IBM has been dropping because they have not lived up to expectations and investors probably start to be worried if IBM will ever manage to finish the restructuring.

Analysis of DBAG 2016

Company: Deutsche Beteiligungs AG 

ISIN DE000A1TNUT7 | WKN A1TNUT 

Business: A German private equity company. Their focus lies with the management buy out of small and medium sized companies that have excellent products. To see their full company portfolio then please click here. Five new investments joined during 2015.

Active: Germany, and surroundings. Companies are sometimes more globally oriented. 

P/E: 13.3

DBAG annual report 2015

Ouch... another ball dropper. I start to see the same trend as last year which means that I definitely have too many companies to keep correct track of them IF technology fails me. With this I mean that I need the email notification or the calendar poke to realise that something happened. Either way DBAG is a long term investment so I do not really care what happens from quarter to quarter. During late autumn the share price did however drop down a little (I noticed that at least!) so my guess is that DBAG did not fully live up to the market expectations.

Kernel report Q1 2016

It is a little late but better late than never so here comes the summary for the first quarter of Kernel. The market probably accepted the report very well because back when it got published the share price was looking much better than what it looks like today.

Repeat or not?

I have desperately been searching my own blog for an article or comment that I wrote concerning that I have started to be more and more unhappy with the low P/E and P/B strategy since I find that it does not live up to what it promises. I did unfortunately not manage to find it and for this reason I now write this reflection concerning the matter. So if you remember what I then wrote then please excuse an old man for ranting on and on about same things.

The reason why I, at least in my mind if not in text, claimed that I was unhappy was because the strategy by David Dreman included not only that low P/E and P/B companies would over time outperform the others BUT ALSO that when the market drops and when there are bad news then the low P/E and low P/B companies will not fall as much as the market because they ARE already so low.

Analysis of Intel 2016

Company: Intel 

ISIN US4581401001 | WKN 855681 

Business: An American hardware producer (mainly processor). They have now decreased their segments to five and those are: Client Computing Group (which is the processor part and now also contains the mobile part), Data Center Group (which is server, workstations and storage platforms), Internet of Things Group (platforms designed for embedded market segments), Software and Services (mainly being McAfee) and the final one is All Other (which mainly has to do with non-volatile memory solutions). 

Active: Products are sold world wide. 

P/E: 12.6

Intel annual report 2015

The report from Intel arrived last week and the stock market did not accept it with much enjoyment which is mainly due to a slightly grimmer outlook than what probably analysts expected. Intel is not really showing a significant boost in their business due to the acquisition of Altera but are more bringing up the costs and how that will make 2016 (full year!) look... bad. The share price dropped with around -10% in the days following the report.

Analysis of Kernel 2015

Company: Kernel

ISIN LU0327357389 | WKN A0M7QF

Business: An Ukrainian agricultural and logistics company with its headquarters in Luxembourg. They have six different business units: Sunflower Oil in Bulk (buy sunflower seeds and crush them to oil), Bottled Oil (sold under the brand names: Schedry Dar, Stozhar and Chumak Zolota), Farming (producing all kind of crops with the new thing being rapeseed), Grain (logistic handling of bought crops), Export Terminals (export of the grain and oil via harbours) and Silo Services (storage and drying of crops before export and sale). 

Active: Agricultural production in Ukraine and Russia. The products are exported and sold all over the world according to world market prices.

P/E: 7.9

Kernel annual report 2015

Dang it! A big ball dropper on this one! Kernel arrived with not only the annual report but of course also the Q1 report is out so I need to push out all this material. I have subscribed to their email notifications but since I am, obviously, not getting it I must assume it gets stuck in the spam filter. Share price have generally gone down lately with the rest of the market but not more than that so the reports were at least according to expectations.

Extra stock bought January 2016: K+S

The share price of K+S have kept dropping with the rest of the market. I still stick with the argument that I used before which is that the biggest competitor were prepared to pay 41 € per share then anything below that value is cheap. The EPS after three quarters are up at 1.93 € (after LARGE hedge losses) and with a 40-50% pay out ratio I hope to receive 1.1 € in dividend which would be around 5% on YoC which I can live with.

Potash is a commodity that took a bad beating some time ago when Uralkali decided to break up the agreements between the potash producers. Lately the potash price have made an additional dip by around 5 to 10% which is a lot but then again a lot less than many others.

Fertilizer is still needed. Decreased oil prices leads to decreased production costs for the potash miners, it leads to cheaper freight costs for shipping and transporting the potash and it leads to lowered costs for the farmers that are spreading it out on their fields.

I therefore decided to buy 45 more shares in K+S at a total investment of 1,029.54 € (including fees). This now gives me a total of 240 shares that I have received by investing 5,196 € including fees which means that I have paid 21.65 € per share.

My broker arrived with the decision to increase the fee from 7.9 € to 8.9 € so a 12.5% increase for buying stocks over their platform. I am not happy with this and I have therefore started to look around and have found that DeGiro seems to be the cheapest one however there are too many things that I do not like with using a broker that is not classified as a bank. I now have two options... either I start up a new broker account and start to do all my new investments there (with or without transferring the stock portfolio) OR I decide to make larger investments in blocks of 2k € instead of the 1k € that I have made. This would sometimes mean that I will not make a monthly investment because I would have to save up.

Still one have to laugh at my brokers incompetence. Their counter offer for increasing the fee was that there is no cost for cancelling orders which previously costed around 5 €. To me this is an incompetent attempt to increase the amount of orders placed. If you want people to do more orders then the correct approach is to DECREASE the fee ON THE ORDER. If the price would be around 2 € as for DeGiro then I would have no problem to make several 500 € orders instead of the 1k € that I have been doing. Now, most likely, I will end up pushing up the value of each order and make less of them instead of more. Cause and effect... cause and effect... I only wish that Nordnet or Avanza would decide to step into the German market so sort things out.

To find out more regarding K+S then please visit analysis of K+S 2015.

If you want to see my current Stock Portfolio then click on the link but the portfolio will not be fully updated until the end of the month.

Analysis of Maersk

Company: Maersk

ISIN DK0010244425 | WKN 861929

Business: A Danish shipping and oil company. The two pillars are: Container Logistics (with container shipping, port operation and, of course, logistics and freight) the second pillar is Upstream Oil (which includes an oil and gas extraction, offshore drilling and tanker shipping of refined oil products). Around 40% of all revenue comes from the container shipping business and the overall Container Logistics generate 65% if the revenue and oil related (including the oil tankers) generate 35% of the revenue.

Active: world wide

P/E: 5.1

Comment: It was a bit annoying to collect the data due to A and B shares as well as share prices being in DKK but they are filing their reports in USD... in the end I converted all to USD which increases the chance of error.

Stock bought January 2016: BP

Oil price has crashed and the oil companies share prices have followed the same trend. Since I see no reason to jump into several different oil companies I instead decided to increase my holding in the one I do have in my portfolio since almost four years.

I bought an additional 210 shares for the total price of 1,000.99 € (4.77 €per share). This means that my total holding is now up at 800 shares and I have in total invested 4,042 € or 5.00 € per share including the fees.

To find out more about BP please click on analysis of BP 2015.

If you want to see my current Stock Portfolio then click on the link but the portfolio will not be fully updated until the end of the month. 

Analysis of Usu Software

Company: Usu Software

ISIN DE000A0BVU28 | WKN A0BVU2

Business: Usu Software is a Germany software company. They mainly stand on two legs: Product Business (with for instance infrastructure management, software license management,  finance management and process management) and secondly Service Business (with for instance consulting services for IT projects).

Active: as any software company world wide but main activity in Germany, Switzerland, the Czech Republic, Austria and the United States.

P/E: 35.6

Analysis of AerCap

Company: AerCap

ISIN NL0000687663 | WKN A0LFB3

Business: A Dutch aircraft leasing company that is listed on the New York stock exchange. They currently have over 1,300 owned and managed aircraft of which 458 are highly attractive, high-demand, fuel-efficient aircraft. AerCap serves over 200 customers today with their services: Leasing & Trading, Asset Management and AeroTurbine.

Active: In 90 countries world wide.

P/E: 9.8 (running year even lower)

Fast Retailing report Q1 2016

The Japanese retail chain Fast Retailing arrived already with their Q1 report for 2016. The reason for this is due to that they are running a broken accounting year. I missed the direct impact of the share price upon the release of it but in general the share price has been dropping lately.

Dividend from ABF: January 2016

The new year have started and with it many calculations starts from scratch again. Among those zeroed are my dividend payments. Just like last year my UK company ABF is the first one to arrive with the dividend. They tend to pay out two dividends per year: one "big one" in January and then a smaller one during the summer.

I still hold only 100 shares in ABF and this year it was decided that we would pay out 0.25 GBP per share which gets converted into 33.48 € that are paid out in full as cash to my broker account since also my "free" capital gains value (801 €) have been zeroed by the German government. The increase in dividend compared to 2015 is 7.7% but comes mainly from currency effect and less from growth of the dividend being paid out.

To find out more about ABF please visit analysis of ABF 2015 and the Stock Dividends page has now been updated if you want to follow my dividend progress.

Analysis of Euronext

Company: Euronext

ISIN NL0006294274 | WKN A115MJ

Business: A Dutch operator of stock exchanges. They are currently operating stock exchanges in Belgium, France, the Netherlands, Portugal and in the UK. They claim they are the #1 listing venue in continental Europe, #1 cash trading venue in continental Europe and #2 listed derivatives trading venue in continental Europe.

Active: Belgium, France, the Netherlands, Portugal and the UK.

P/E: 27.2

Comment: I was a bit annoyed by the company because on their home page they only have the annual report for 2014 available. Weak!

Analysis of Lancashire

Company: Lancashire

ISIN BMG5361W1047 | WKN A0HM5W

Business: A Bermuda insurance and reinsurance company. They are especially focused on four segments: Property, Energy, Aviation and finally Marine. 

Active: World Wide 

P/E: 8.0

Stocks of Interest: January 2016

In December 2015 the share prices kept dropping and now in January 2016 even more so. This means to me that contrarian times are here and it is time to go shopping! Unlucky for me, as I have mentioned before, I need to build up my cash buffer as preparation for a potential unemployment period during this year.

I am currently late with plenty of things and then I do not only mean with this report but also from analysis requests due to that I have a terrible cold and have not managed to find the energy to write articles as I would have liked. I am now feeling a bit better and will hopefully get started slowly again.

Summary of December 2015

Life is running away. Christmas is already gone (I was Jultomten!), New Years Eve is also gone and as always no fireworks were bought since I consider that to be very similar to burning money. The one week skiing that I bought the snow chains, ski and ski boots for are also gone. Left is however five days of additional vacation and those I will enjoy as much as I can.

During the vacation I started to bring up the topic of investing for my brothers oldest child. He is eight years old but not yet ready so I guess I will have to wait. I told him that one that I will teach him about investing. He was not too excited about it when I said it. Happily he got a long life ahead of him and we are investing for him until his investing interest has awoken.

German inside trading: December 2016

To be honest with you all I have not followed the stock market very well during the last month. It was simply too much with work, studies and well... buying Christmas gifts and being on vacation at least in the end of it and all this combined made me less interested in following daily movements on the stock market.

For the previous report please click on German inside trading: November 2015.

The dealings were: