. @RobertIger ‘s book is a good read. Intuition overlaps with data, Hollywood overlaps with Silicon Valley, and the professional overlaps with the personal. https://t.co/r9ecpogCio
— Saurabh Madaan (@saurabh_madaan) October 5, 2019
Sberbank: Dominant Russian Bank with Strong Operating Metrics
October 5, 2019 in Audio, Equities, Europe, European Investing Summit, European Investing Summit 2019, European Investing Summit 2019 Featured, Financials, Ideas, Large CapGuillermo Nieto of Salmon Mundi Capital presented his in-depth investment thesis on Sberbank (UK: SBER) at European Investing Summit 2019.
Thesis summary:
Sberbank is the leading Russian bank. It has a 45% market share in retail deposits and a 31% market share in corporate loans. They are the leading major bank in terms of profitability with a 24% ROE and they are very efficient in terms of costs with a 33% cost to income. NPLs are contained at 4%, which is better than the system and it has a sound capital ratio: Tier1 12.3%. The bank is trading very cheap at 5.6x PER and 1.2x PB. We think Russia as a country it is interesting for banks since the country has a low level of debt: overall private and public debt is c80% of GDP, much lower than other developed or other emerging market countries, the Russians have a high percentage of their financial assets (c65%) in deposits and overall the country is very cheap at 7x CAPE.
Read Guillermo’s preview article on Sberbank.
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About the instructor:
Before Guillermo was appointed CEO of the Sicav, he had spent ten years at Interdin where he served first in equity sales and then he joined the Analysis Department as the Analyst for the sectors of banks, airlines and paper. Studying banks as an analyst he found out the Austrian Economics approach. He began his professional career doing a rotational programme in Chase Manhattan Bank. In his early years he began managing family portfolios applying value-investing principles. He holds a Bachelor´s Degree in Law and Business Administration from the Universidad Pontificia Comillas (ICADE; E-3). His main hobbies are reading history and investment books, as well as biographies and playing tennis, swimming and skiing. He speaks Spanish, English and French.
Bigben Interactive: Bollore-Controlled French Digital Entertainment Provider
October 5, 2019 in Audio, Equities, Europe, European Investing Summit, European Investing Summit 2019, European Investing Summit 2019 Featured, Ideas, Information Technology, Micro CapMarc Siebel of Peacock Capital presented his in-depth investment thesis on Bigben Interactive (France: BEN) at European Investing Summit 2019.
Thesis summary:
Bigben Interactive is a French company focusing on digital entertainment. The business segments are Gaming, Mobile Phones, and Audio. While Bigben has been a video console gaming publisher for just a few years, it has been an exclusive partner for high-end video controllers for several years (Sony and Nintendo). Bigben also holds exclusive distribution agreements with smartphone manufacturers in France for accessories while also producing own-branded high performance accessories. In Audio, Bigben produces and markets products under the Thomson license, such as Bluetooth speakers and soundbars. Bolloré Group owns a 20% stake in the company.
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About the instructor:
Marc Siebel founded Peacock Capital GmbH in October 2012 after more than 12 years’ professional experience in institutional asset management. Since founding the company, he has acted as managing director and primary fund manager. The investment boutique pursues a dedicated “Value Investing” approach. Specifically the “pure” valuation approach of Benjamin Graham is combined with a dedicated Small & Mid Cap approach which includes meeting more than 300 companies in Europe every year.
After graduation with honours at University of Siegen and his studies at University of Tulsa, USA, he started his career as fund manager in 2000 at WestLB Asset Management. Managing more than EUR 1 billion he then focused on European small & mid cap stocks. In 2009 he moved to Lampe Asset Management as Head of Small Caps.
Marc Siebel has been award by Thomson Reuters` Extel Survey as one of the 30 fund managers in Europe from 2012 onwards.
Envea: High-Quality, Well-Run Maker of Air Quality Equipment
October 4, 2019 in Audio, Equities, Europe, European Investing Summit, European Investing Summit 2019, Ideas, Micro CapJeremie Couix of HC Capital Advisors presented his in-depth investment thesis on Envea (France: ALTEV) at European Investing Summit 2019.
Thesis summary:
Envea develops, manufactures and sells Air Quality and Emission measurement systems for both public and private operators. It is based in France but has a global reach and derives a large portion of its sales from Asia (about 40%). About 1/3 of the business is recurring thanks to service and customized spare-parts. Demand is non-GDP related and driven by pollution regulation. As air quality has become a major issue in many parts of the world the company has a long tail growth opportunity in front of itself. It is a small player in a big market, competitors are Thermo Fisher, Tedelyne Technologies and Horiba, but the company can count on its agility and the expertise of its long standing management team to further gain market share and grow. Valuation wise Envea is cheap despite high ROI, a strong balance sheet and a good capital allocation track-record. Envea is a microcap worth discovering and studying.
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About the instructor:
Jeremie Couix is a co-founder of HC Capital Advisors based in Germany.
Prior to co-founding HC Capital, he worked at Discover Capital as an investment analyst and later as co-portfolio advisor of the fund Squad Growth. Previously, he worked at FORUM Family Office, a value-oriented investment manager based in Munich. Jeremie graduated from EM Lyon Business School in France with an MSc in Management.
Duerr: Family-Controlled Leader in Automotive Paint Robots
October 4, 2019 in Audio, Equities, Europe, European Investing Summit, European Investing Summit 2019, Ideas, Small CapValue investor Mallika Paulraj presented her in-depth investment thesis on Dürr Group (Germany: DUE) at European Investing Summit 2019.
Thesis summary:
Dürr was established in 1895 and is known commonly for paint robots and assembly for the automotive industry. With customers such as BMW, Tesla, and Ikea, it has significant market share in industries with high barriers to entry. Although it is placed in a GICS automotive bucket, about half of revenue comes from non-automotive, general industry customers. With a market cap of EUR 1.7 billion, it is part of the German MDAX and Stoxx 600. The share price sits at a 60% discount to its late 2017 peak. The company has significant founder-family holdings and is financially stable. It appears poised to ride out the macro headwinds facing the automotive sector and German industry.
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About the instructor:
Mallika serves as an investment coach for wealthy families and high net worth individuals. Her family’s painful past in learning to manage investments led her to create a long-term focused, value-oriented education platform. Throughout her career, the most elite investors have sought her out as a clear and sensible sounding board. Born in India, Mallika moved to Silicon Valley as a child. Graduating from Palo Alto High School and attending Stanford University in the 1990’s she worked for several startups and had a ring side seat of the rise and fall of the ‘90s tech bubble. Mallika is author of “”How the Best Invest – Make Decisions Like the Investing Superstars””.
Quantitatively trained, she began her career as a programmer in Silicon Valley and has worked at Lehman Brothers, Trucost (now S&P), MSCI Barra and several funds. She has worked in Wall Street and London’s The City. For ten years she worked in sustainability investing including renewable energy and governance issues. She has worked for a premier index investing provider and risk manager and has a good handle on how indexes are created and implemented. Mallika educates her clients through clear and practical measures based on timeless principles and long-term investing. She has been a guest lecturer at London Business School on value investing and Stanford University on sustainable investing. She is a Lecturer at the FINTECH Circle Institute.
Mallika has a BA from Stanford University, an MSc from the London School of Economics, and has completed the Investment Management Programme at London Business School. She was awarded the Women’s Club of Palo Alto scholarship for one graduating senior in 1993 and the Stanford Alumni Association’s Award of Merit in 2013.She is on the board, and past-President of the Stanford Club of Great Britain. She is on the board of the Stanford Angels Network UK. From 2015-17 she was a board member on the London School of Economics Alumni Committee
Saab: Regional Defense Leader Controlled by Savvy Shareholder
October 4, 2019 in Audio, Equities, Europe, European Investing Summit, European Investing Summit 2019, European Investing Summit 2019 Featured, Ideas, Mid CapJean-Pascal Rolandez of The L.T. Funds presented his in-depth investment thesis on Saab (Sweden: SAAB-B) at European Investing Summit 2019.
Thesis summary by Jean-Pascal:
Saab, originally Svenska Aeroplan AB, was founded just before World War II for the specific purpose of guaranteeing Sweden’s supply of high-tech defence equipment. The company focused then on aircraft manufacturing, diversifying in the late 40’s in in cars and in the late 50s in the computer business. In 1968, Saab merged with the Swedish truck company Scania, becoming Saab-Scania. In 1990, Investor AB carried out an LBO on SAAB Scania, which was subsequently delisted. In 1995, Saab-Scania was divided in two independent companies, demerging into Scania and Saab. In 1995, SAAB Military Aircraft and British Aerospace formed a JV Saab-BAe Gripen to support internationally this new fighter aircraft. BAe bought a 35% stake into Saab, holding it until 2010. In 1999, Saab acquired the missile business of Bofors and in 2006 the radar business of Ericsson. In 2014, Saab acquired Kockum from Thyssen, widening its offer to the marine area as Kockum develops, builds and maintain submarines and surface ships.
With 2019(e) sales of SEK136Bn and over 17,000 employees, Saab‘s products and services are sold to over 100 countries and the company operates in 35 countries. While Sweden accounts for 41% of sales, 71% of the order book originates from abroad. Saab is either the main supplier of platforms and systems directly to the end customer or is a subcontractor of subsystems and components. 85% of sales relate to defence related products and services.
Aeronautics (23% of sales) offers airborne systems, related subsystems, unmanned aerial systems (UAS) and aero-structures. Dynamics (21% of sales) offers ground combat weapons, missile systems, torpedoes, sensor systems, remotely operated vehicles for armed forces as well as civil security applications. Surveillance (21%) focuses on airborne surveillance solutions, radar (air, ground and naval based) and electronic warfare. Industrial Products and services (15%) include avionic systems and traffic management: it focuses on private customers. Support services (16%) offer maintenance, integrated support solutions, logistics and regional aircraft maintenance.
Over the last 20 years, geopolitical turmoil in the world has led many countries to reassess their defence capabilities, both nationally and multilaterally. Since 2000, worldwide defence expenditures have increased 3% p.a.. 36% of the global defence market is in Northern America, Asia and Pacific (28%) and Europe (20%). By 2023, this market is expected to grow 2-3% p.a. (Source: Sipri, 2019), probably more in Europe due to US pressure on NATO to spend more.
Over the last 7 years, SAAB’s sales and EBITDA per share have grown by respectively 6.9% and 4.9%, with organic sales growth at 5.5% p.a.. A heavy investment and R&D program seems to have peaked in 2018. Thanks to a strong focus on surveillance, hand-held systems, fighter aircraft (Gripen), training aircraft (TX) and sensors & radars, we expect organic sales CAGR close to 5% by 2023, with some bolt on acquisitions allowing for a 6% sales growth p.a.
We expect a 7% EBITDA CAGR by 2023. SAAB should manage to achieve an aggregate operating cash flow close to SEK 8.0Bn. Its 7.9% 2018 ROCE slightly exceeds its 5.9% WACC. The stock is trading on 9.3 x its 2019(e) EBITDA (on line with peers) and 1.3x sales. We expect the share price to increase by 6% p.a. by 2023 in line with EBITDA. Investor AB owns 28.8%, Wallenberg Foundation 9.0% and the Kingdom of Sweden 5.9%.
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About the instructor:
Jean-Pascal Rolandez is the manager of The L.T. Funds, a Geneva-based investment firm focused on a buy and hold strategy based on a limited number of European stocks with a 5+ year investment horizon. Jean-Pascal has more than 25 years of equity investment experience and has founded the first investment club at the leading French business school ESSEC. Prior to establishing The L.T. Funds, Jean-Pascal held various executive positions at BNP Paribas for 22 years, including as Paribas’ French equity strategist.
Dixons Carphone: Revisiting Idea at Lower Price After Two Years
October 4, 2019 in Audio, Consumer Discretionary, Equities, Europe, European Investing Summit, European Investing Summit 2019, Ideas, Small CapDominic Fisher of Thistledown Investment Management presented his in-depth thesis on Dixons Carphone (UK: DC) at European Investing Summit 2019.
Thesis summary:
Dixons Carphone is the largest electrical retailer in the UK, Scandinavia and Greece with sales of £10bn and a market capitalisation of £1.4bn. The business has market shares above 20% in all markets and has a significant online presence. Fundamental changes to the market in mobile phones in the United Kingdom, turnover of £2bn, have destroyed returns and consumed working capital. The company, under new management, has moved to deal with the issues and the first signs of success are visible in a working capital inflow. Success in this strategy, although expensive; the company has written off nearly £500m and expects a loss of £100m in the current year, should lead to cash generation from working capital and a company valued at over £2.7bn assuming nothing more than a return to average margins and a below-market rating.
Access Dominic’s session on Dixons Carphone at European Investing Summit 2017.
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About the instructor:
Dominic Fisher has been investing since 1988 working at a number of London based firms. He founded Thistledown Investment Management in 2009. He is the largest investor in the VT Thistledown Income Fund which follows a value discipline. He heads the investment committee of the Royal Hospital Chelsea, a director of Aberforth Split Level Investment Trust and Trustee of the Clinical Human Factors Group.
European Life Reinsurance: Oligopoly of Tier I Reinsurers
October 4, 2019 in Audio, Equities, Europe, European Investing Summit, European Investing Summit 2019, IdeasGregor Rudolph-Dengel of Allianz Global Investors presented his life reinsurance industy thesis at European Investing Summit 2019.
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Gregor Rudolph-Dengel joined Allianz Global Investors in September 2007 through the graduate programme. Having completed the programme in April 2009, he joined the European Equity team within the Investment Style Team Value. He recently took over responsibility for Allianz European Value. He has been a member of the Dividend team since January 2013 and became the Co-PM of the Allianz European Equity Dividend about two years ago. Before his career at Allianz Global Investor, he graduated with a combined Diploma and Bachelor’s degree in European business (Diplom-Betriebswirt) from the European School of Business in Reutlingen and Dublin City University in 2007. He has also been a CFA charter holder since 2011.
Corticeira Amorim: Owner-Operated World Leader in Cork Products
October 4, 2019 in Audio, Equities, Europe, European Investing Summit, European Investing Summit 2019, European Investing Summit 2019 Featured, Ideas, Small CapSantiago Domingo Cebrian of Solventis Asset Management presented his thesis on Corticeira Amorim (Portugal: COR) at European Investing Summit 2019.
Thesis summary:
Corticeira Amorimis the world’s largest producer of cork products. This Portuguese company is family owned (Amorim family owns around 60% of the company) with its origins dating back to 1870. Cork is a great asset but it is only valuable if you transform it in a value-added product as cork stopper for instance. Corticeira leads the cork industry with a market share of around 40% in manufacturing cork stoppers (from the natural to the agglomerated one), floor & walls coverings, composite and insulation cork. Santiago highlights the good and long relationship (more than 140 years in some cases) with suppliers (cork oak owners) and customers (wine and spirit producers among others) as one of the main Corticeira´s intangible assets. The first one is key, because cork oak trees only grow in seven countries and it takes 43 years from sowing to manufacture a cork stopper. Cork by itself has “zero value” but is valuable when transformed into a finished product, and that know-how comes from Corticeira. The second one is also important, because the company has listened to customers for a long time and is prepared to offer them the best solutions. Wine consumption increase, more cork adoption and the expansion of other applications are the main sources of growth of Corticeira that expects to grow around 3-4% per year. The Amorim family is focused on achieving more with less, improving profitability year after year. It can reach around 20-22% margin EBITDA (vs 17,5% in 2018 and 19% in 2016). So Corticeira can generate a normalized net profit of around 110 million € in 2023 that we multiply by a 15x PE that shows a terminal value of 1.650 million € that added to interim FCF of around 400M results in a value of 2.050 million € (vs 1.300 million € of market cap). Corticeira is a company that grows, generates cash flow, and can invest those cash flows at good returns.
Read Santiago’s preview article, Investment Mistakes: Scratch or Scar?
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About the instructor:
Santiago Domingo is a portfolio manager at Solventis Asset Management. He is the co-investment manager of Solventis EOS fund since February 2017. Solventis EOS is a long only European equity fund founded in 2006, and focused on investing in companies with sustainable competitive advantages and that are undervalued by the market. Prior to Solventis, Santiago worked as an analyst for a start-up called OralSurgeryTube and in the Endesa´s financial department. Santiago holds a Bachelor´s degree in Finance and Accounting from University of Zaragoza and a Master´s degree in Institutions and Financial Markets from CUNEF.
My philosophy of writing:
• Write every day.
• Write in public to improve the quality of your thinking.
• Write for clarity, not to impress people.
• Write about your curiosities. You don’t need to be an expert.
• Write for the most intelligent person you know.
— ᴅᴀᴠɪᴅ ᴘᴇʀᴇʟʟ ✌ (@david_perell) October 4, 2019