It amazes me how some old texts stay relevant through time.
“With consistency a great soul has simply nothing to do.”
-> Delegate the tedious, repetitive work. Focus on the “art” of what you’re doing.
-> Change your mind and dare to be misunderstood.
https://t.co/VfXq8cYwAo
— John Mihaljevic (@JMihaljevic)
Oct 25, 2022
S3E04: David Einhorn on Value Investing: Will It Come Back?
October 25, 2022 in Audio, Podcast, This Week in Intelligent InvestingIt’s a pleasure to share with you Season 3 Episode 4 of This Week in Intelligent Investing, co-hosted by
- Phil Ordway of Anabatic Investment Partners in Chicago, Illinois;
- Elliot Turner of RGA Investment Advisors in Stamford, Connecticut; and
- John Mihaljevic of MOI Global in Zurich, Switzerland.
Enjoy the conversation!
In this episode, co-hosts Elliot Turner, Phil Ordway, and John Mihaljevic discuss David Einhorn’s recent comments on value investing, which are available at https://youtu.be/ERa_d7PpbYU?t=31
Follow Up
Would you like to get in touch?
Follow This Week in Intelligent Investing on Twitter.
Engage on Twitter with Elliot, Phil, or John.
Connect on LinkedIn with Elliot, Phil, or John.
This Week in Intelligent Investing is available on Amazon Podcasts, Apple Podcasts, Google Podcasts, Pandora, Podbean, Spotify, Stitcher, TuneIn, and YouTube.
If you missed any past episodes, you can listen to them here.
About the Podcast Co-Hosts
Philip Ordway is Managing Principal and Portfolio Manager of Anabatic Fund, L.P. Previously, Philip was a partner at Chicago Fundamental Investment Partners (CFIP). At CFIP, which he joined in 2007, Philip was responsible for investments across the capital structure in various industries. Prior to joining CFIP, Philip was an analyst in structured corporate finance with Citigroup Global Markets, Inc. from 2002 to 2005. Philip earned his B.S. in Education & Social Policy and Economics from Northwestern University in 2002 and his M.B.A. from the Kellogg School of Management at Northwestern University in 2007, where he now serves as an Adjunct Professor in the Finance Department.
Elliot Turner is a co-founder and Managing Partner, CIO at RGA Investment Advisors, LLC. RGA Investment Advisors runs a long-term, low turnover, growth at a reasonable price investment strategy seeking out global opportunities. Elliot focuses on discovering and analyzing long-term, high quality investment opportunities and strategic portfolio management. Prior to joining RGA, Elliot managed portfolios at at AustinWeston Asset Management LLC, Chimera Securities and T3 Capital. Elliot holds the Chartered Financial Analyst (CFA) designation as well as a Juris Doctor from Brooklyn Law School.. He also holds a Bachelor of Arts degree from Emory University where he double majored in Political Science and Philosophy.
John Mihaljevic leads MOI Global and serves as managing editor of The Manual of Ideas. He managed a private partnership, Mihaljevic Partners LP, from 2005-2016. John is a winner of the Value Investors Club’s prize for best investment idea. He is a trained capital allocator, having studied under Yale University Chief Investment Officer David Swensen and served as Research Assistant to Nobel Laureate James Tobin. John holds a BA in Economics, summa cum laude, from Yale and is a CFA charterholder.
The content of this podcast is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment, or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information set forth on this podcast. The podcast participants and their affiliates may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated on this podcast. [dkpdf-remove]Qiagen: Medical Diagnostics Leader With Long Growth Runway
October 18, 2022 in Audio, Discover Great Ideas Podcast, Equities, Europe, European Investing Summit 2022, European Investing Summit 2022 Featured, Ideas, Member Podcasts, TranscriptsHenrik Andersson of Didner & Gerge presented his in-depth investment thesis on Qiagen (Germany: QIA, US: QGEN) at European Investing Summit 2022.
Thesis summary:
Qiagen is a medical diagnostics company focused on instruments and consumables (primarily assays and kits) for molecular and biological research.
The company was founded in 1984 by a group of researchers at the Heinrich Heine University in Düsseldorf, Germany. Their slogan “From Sample To Insight” further adds to what the company strives to do in order to help their customers. The company has for a long time held a leading position in terms of product quality and cutting edge innovations – not the least displayed by the five Nobel Prizes won with Qiagen products as a base in the research.
After a period in the mid 2000s of very successful penetration of HPV-testing instruments and consumables, Qiagen became somewhat “one-legged”. This has now been corrected due to a successful decade of R&D-efforts but also commercialization of products, and the company has broadened its product portfolio considerably.
They are also – as one of few companies – exposed to both customers within the field of academic research but also towards more “front-end” medical applications (life science clients). Qiagen has a raft of leading product families in this regard, of which QuantiFeron (tuberculosis), QIAcuity (digital PCR-tests), and QIAstat (multiple diagnostic tests) can be mentioned.
Today, Qiagen helps more than 500,000 customers with machines, instruments, consumables, services, and software. Henrik foresees a considerable runway of structural growth ahead, where expertise within molecular biology and adjacent areas should lead to a prosperous future for long-duration investors in Qiagen.
And the best thing is, this value creation can be captured as a shareholder due to the recent modest valuation of the shares.
The full session is available exclusively to members of MOI Global.
Members, log in below to access the full session.
Not a member?
Thank you for your interest. Please note that MOI Global is closed to new members at this time. If you would like to join the waiting list, complete the following form:
About the instructor:
Henrik Andersson has worked within a framework of investing in quality franchises in a concentrated portfolio setting since the early 2000s. After five years as an assistant fund manager and analyst at Handelsbanken Asset Management, in 2003 he launched a discretionary portfolio named European Quality with 15 holdings, inspired by Peter Cundill’s approach of “never shoot into the broom”. That later branched out to a family of funds named the Selective Funds. In 2011 he joined Didner & Gerge, an employee-owned asset management boutique, to launch a Global Equity Fund together with a colleague. D&G Global is now applying these same principles in trying to identify sustainably great companies with an appealing valuation starting point. Over the years, an increased emphasis has been put on corporate leadership with a clear preference for owner-operated companies with a history of outstanding operations.
S&U: Well-Run, Family-Owned Specialist UK Lender at Deep Discount
October 18, 2022 in Audio, Discover Great Ideas Podcast, Equities, Europe, European Investing Summit, European Investing Summit 2022, European Investing Summit 2022 Featured, Ideas, Member Podcasts, TranscriptsDaniel Gladiš of Vltava Fund presented his investment thesis on S&U plc (UK: SUS) at European Investing Summit 2022.
Thesis summary:
S&U is a small specialist non-bank lender based in Birmingham, UK. The main business (Advantage Finance) has a long and successful track record. The second, younger business (Aspen Bridging) offers a logical addition and has good growth potential. The company is family-owned and managed, with very good corporate governance and shareholder distributions. It is a simple business and offers a combination of a conservative balance sheet, an attractive growth profile, and a deeply discounted valuation.
The full session is available exclusively to members of MOI Global.
Members, log in below to access the full session.
Not a member?
Thank you for your interest. Please note that MOI Global is closed to new members at this time. If you would like to join the waiting list, complete the following form:
This session is also available as an episode of Discover Great Ideas, a member podcast of MOI Global. (Learn how to access member podcasts.)
About the instructor:
Daniel Gladiš, based in the Czech Republic, has amassed a market-beating track record since starting VLTAVA Fund in 2004. VLTAVA Fund is a value-oriented, research-driven investment fund focused on investing in good companies run by quality management. Previously, Daniel was Director and Chairman of the Board of Directors of ABN AMRO Asset Management (Czech) from 1999–2004. He was also Director and founder of Atlantik finanční trhy, a.s., a member of the Prague Stock Exchange. Daniel is a graduate of VUT Brno and has authored the best-selling books Naučte se investovat (Learn to Invest) and Akciové investice (Stock Investments).
AcadeMedia: Leading Education Company in Northern Europe
October 18, 2022 in Audio, Discover Great Ideas Podcast, Equities, Europe, European Investing Summit 2022, European Investing Summit 2022 Featured, Ideas, Member Podcasts, TranscriptsJosé Antonio Larraz of Equam Capital presented his investment thesis on AcadeMedia (Sweden: ACAD) at European Investing Summit 2022.
Thesis summary:
AcadeMedia is the leading independent education company in Northern Europe, offering services in the preschool, compulsory, upper secondary, and adult segments. With more than 90,000 students, the company has facilities all over Sweden as well as pre-schools in Norway and Germany.
Due to political risks related to changes in compensation levels and regulations on profitability for the compulsory segment in Sweden, the company is trading at historically low levels, with an FCF yield of roughly 14%.
Jose believes AcadeMedia is a high-quality business with recurring revenue, low cyclicality, and high cash flow generation capacity, which can be reinvested in a sector with solid growth prospects.
The full session is available exclusively to members of MOI Global.
Members, log in below to access the full session.
Not a member?
Thank you for your interest. Please note that MOI Global is closed to new members at this time. If you would like to join the waiting list, complete the following form:
About the instructor:
José Antonio Larraz is a founding partner of Equam Capital. Jose has 15 years of experience as a partner in Capital Alianza Private Equity, investing in Spanish private companies in the middle market. He has investment experience in chemical, food, retail, outsourcing and telecommunications sectors, having participated in the board of directors of six different companies. Jose has 4 years of experience in financial advisory, corporate finance and M&A at Lehman Brothers in London and New York and He is a Professor at Instituto de Empresa since 2008. Jose holds a degree in Law and Business Administration from ICADE University and MBA from Insead.
Mercedes-Benz: Global Leader in High-End Automotive Segment
October 18, 2022 in Audio, Discover Great Ideas Podcast, Equities, Europe, European Investing Summit 2022, European Investing Summit 2022 Featured, Ideas, Member Podcasts, TranscriptsOle Søeberg of Nordic Investment Partners presented his investment thesis on Mercedes-Benz Group (Germany: MBG) at European Investing Summit 2022.
The full session is available exclusively to members of MOI Global.
Members, log in below to access the full session.
Not a member?
Thank you for your interest. Please note that MOI Global is closed to new members at this time. If you would like to join the waiting list, complete the following form:
About the instructor:
Ole Søeberg is the founder of Nordic Investment Partners, a family office for three families. Ole has nearly four decades of investment experience in asset management, investor relations, and investment banking.
Lloyds Banking Group: Dominant UK Lender With Improving Outlook
October 14, 2022 in Audio, Discover Great Ideas Podcast, Equities, Europe, European Investing Summit, European Investing Summit 2022, European Investing Summit 2022 Featured, Ideas, Member Podcasts, TranscriptsStuart Mitchell of S. W. Mitchell Capital presented his investment thesis on Lloyds Banking Group (UK: LLOY) at European Investing Summit 2022.
Thesis summary:
Lloyds Banking Group has been a frustrating investment. Stuart first purchased the shares in the depths of the Great Financial Crisis at £22, with a price target of £100. The shares briefly rose above £80 before falling back to £45 recently. Stuart still, however, believes that shares are worth well over £100.
Lloyds is the dominant UK bank, with 17% market share in lending. The bank has the lowest cost-income ratio in the sector (57%), boasts the most excess capital (16.3 % CET 1), and has a coherent strategy to develop its asset management business through a joint venture with Schroders and Cazenove.
Like other banks, Lloyds has faced a number of headwinds over the past twelve years. In the wake of the Global Financial Crisis, politicians across the world looked for ways to strengthen the banking system. The result was a significant increase in bank regulation. Above all, banks were forced to hold significantly more equity capital than in the past.
Lloyds also had to face much lower interest rates, the principal policy tool used to manage the crisis. This was difficult for the banking sector to cope with: funding costs take time to fall, while customer account balances remain essentially fixed.
The outlook appears to be improving. Rates are rising, and this will dramatically boost revenue. At the same time non-performing loans remain relatively stable. Just as importantly, regulatory intensity could be stabilizing. Investors may recall the (controversial) decision in March 2020 by the Prudential Regulation Authority that banks should suspend payments as the pandemic took hold. This mandate has been removed and the conservative government is thought to be more supportive of the industry.
At a tangible book multiple of less than 0.8x, Lloyds shares appear undervalued as the group may once again earn a return on equity in excess of 14%.
Read a related article by Stuart on finding bargains in European banks.
The full session is available exclusively to members of MOI Global.
Members, log in below to access the full session.
Not a member?
Thank you for your interest. Please note that MOI Global is closed to new members at this time. If you would like to join the waiting list, complete the following form:
This session is also available as an episode of Discover Great Ideas, a member podcast of MOI Global. (Learn how to access member podcasts.)
About the instructor:
Stuart Mitchell is the Managing Partner and CIO of S. W. Mitchell Capital and the Investment Manager of the SWMC European Fund, as well as a number of managed accounts.
Prior to founding SWMC in 2005 Stuart was a Principal, Director and Head of Specialist Equities at JO Hambro Investment Management (JOHIM, now Waverton Investment Management). At JOHIM he set up and managed the Charlemagne Fund, a long/short European fund, and the JOHIM European Fund, a long only European fund. The JOHIM European Fund rose by 133% since inception in December 1998 until March 2005 compared with 8% for the benchmark index and was number 1 rated by Micropal within its sector and three star ranked by S&P.
Upon leaving university in 1987 Stuart joined Morgan Grenfell Asset Management (MGAM) and soon afterwards assumed responsibility for managing the continental European equity assets for MGAM’s British pension fund clients. Stuart was appointed a director of MGAM in 1996. He was then made Head of European Equities and was responsible for $27 billion of equity assets. Whilst at MGAM he managed the Morgan Grenfell European Fund which rose by 123% from January 1990 to June 1996 compared with 85% for the benchmark index and was awarded 1st place by Micropal (5 year awards) in 1996.
Stuart was born in Scotland and educated at Fettes College and St. Andrews University where he read Medieval History. He is also a graduate of the Owner/President Management programme from the Harvard Business School. Stuart speaks English and French.
Samuel Weber Updates Lanxess, Swatch, Holcim, Deutsche Bank
October 14, 2022 in Audio, Discover Great Ideas Podcast, Equities, Europe, European Investing Summit 2022, European Investing Summit 2022 Featured, Ideas, Member Podcasts, TranscriptsIndependent wealth manager Samuel Weber updated his investment theses on four ideas he had presented at previous editions of European Investing Summit.
Samuel commented on Lanxess (Germany: LXS), Swatch Group (Switzerland: UHR), Holcim (Switzerland: HOLN), and Deutsche Bank (Germany: DBK).
Access the original presentations as follows:
- Lanxess (2021)
- Swatch Group (2020)
- Holcim (2018)
- Deutsche Bank (2017)
The full session is available exclusively to members of MOI Global.
Members, log in below to access the full session.
Not a member?
Thank you for your interest. Please note that MOI Global is closed to new members at this time. If you would like to join the waiting list, complete the following form:
About the instructor:
Samuel S. Weber is an independent wealth manager based in Zug, Switzerland. He is a passionate value investor, who is focused on generating long-term, market beating returns by investing in high-quality opportunities in the stock market (www.samuelsweber.com). Samuel holds a master’s degree in strategy and international management from the University of St. Gallen and is a member of the Board of Trustees of HBM Fondation.
Patrizia: Capital-Light, Owner-Operated Real Estate Asset Manager
October 14, 2022 in Audio, Discover Great Ideas Podcast, Equities, Europe, European Investing Summit 2022, European Investing Summit 2022 Featured, Ideas, Member PodcastsGokul Raj Ponnuraj of Bavaria Industries Group presented his investment thesis on Patrizia SE (Germany: PAT1) at European Investing Summit 2022.
Thesis summary:
Patrizia SE is a top-three European real estate asset manager with a strong balance sheet (25%+ of market cap as net cash). The shares recently traded at 0.35% of AUM and 0.7x book value, despite having an owner-operator who has compounded book value per share at 15.5% over the past decade.
Patrizia has transformed from being a capital heavy real estate operator into an asset light investment manager with 56 billion euros of AUM. It is now a scaled-up platform as the firm has grown AUM at 24% CAGR (including inorganic) over the last decade. Over 80% of their AUM is in perpetual or 10 year+ vehicles and that provides strong resiliency to the business through a predictable management fee stream.
Patrizia has a conservative culture anchored by 54% ownership by the founder. Over 80% of the real funds are in the Core & Core+ categories compared with just 20% in the higher risk value-add segment. They do not accrue carry income to the financial statements until realized except in special-purpose vehicles where IFRS forces them to. The leverage on their properties is also lower than that of peers, with an average of 35% LTV.
The long-term performance of their funds is healthy with 4.2% outperformance versus the benchmark. The valuation marks are conservative as they have always used a long run average discounting rate even when interest rates fell below zero. The unaccounted carry provides buffer to the current valuations.
In a normal year, transactions are 10-15% of AUM and that provides Patrizia with lucrative fee income along with an ability to book carry income. With the current market uncertainty, I believe that the transaction and performance fee streams should be weak for the next few quarters. Management expects to get to 250 million of management fees yearly in the medium term and that should provide strong stability to profitability.
The firm does not need any capital for growth, and Gokul Raj expects strong dividend payouts going forward. On incremental AUM, the firm will be able to earn almost 20 bps per year, and thus if the firm is able to grow the AUM to 80 billion as the management wishes, strong growth in operating profits appears likely. Once the bearish sentiment around Europe turns around, Patrizia’s shareholder returns should come from all three levers – revenue growth, margin expansion and valuation re-rating.
The market cap of Patrizia is around 900 million euros. Net cash on the balance sheet is around 250 million euros. Their co-investment portfolio is worth 550 million euros. The majority of this is linked to Dawonia which is a solid Munich residential real estate portfolio that is marked at a 3%+ rental yield. With increasing cost of construction and undersupply in Munich, there should not be a big markdown in this value.
Hence, the asset management business, with 56 billion of AUM, is available at a paltry 200 million euro valuation (35 bps of AUM), several times cheaper than private market transactions in the alternate asset management space. On traditional metrics, P/B is 0.7x, tangible P/B is 1.2x, EV/ EBITDA is 6x, and the dividend yield is 3%. While we await markets to value them as an alternate asset manager, there is strong downside protection due to the assets. Thus, the risk-reward is asymmetric for an investor at the recent price.
Catalyst. Dawonia portfolio sell-down at recent market value could release 500 million euros of capital, leading to net cash on balance sheet rising to ~80+% of the recent market cap. The end date for the portfolio is 2023 but could be extended if market conditions are not favorable.
Risks. There will be headwinds in transaction and performance fees along, with potential markdowns in the co-investment portfolio. In the long term, the company needs to fix its cost structure and demonstrate operating leverage to get a high valuation. The cost-to-income ratio is still elevated despite scale. The management has slightly overpaid for inorganic growth in the past. They may be spreading themselves thin with expansion into newer asset categories and geographies. The firm should attract strong investment talent to be successful, and their conservative culture might prove to be a deterrent.
Listen to this session:
![](https://moiglobal-com.s3.eu-west-1.amazonaws.com/manualofideas1/wp-content/uploads/gokul-ponnuraj-dbw2.jpg)
slide presentation audio recording
About the instructor:
Gokul Raj Ponnuraj is a value investor with a focus on small and mid-cap compounders and spin-off’s with a bias towards emerging markets. He has been investing in the Indian markets since 2006 and in global markets since 2017. Gokul Raj manages the public equities portfolio at Bavaria Industries Group. The firm uses its balance sheet assets (permanent capital) to invest in opportunities with an attractive risk-reward trade off. Gokul Raj holds a Master in Finance degree from London Business School and a CFA charterholder.
Pandora: Steadily Growing Jewelry Retailer With Global Footprint
October 14, 2022 in Audio, Discover Great Ideas Podcast, Equities, Europe, European Investing Summit 2022, European Investing Summit 2022 Featured, Ideas, Member PodcastsJean-Pascal Rolandez of The L.T. Funds presented his investment thesis on Pandora (Denmark: PNDORA) at European Investing Summit 2022.
Thesis summary:
Pandora was founded in 1982 by Danish goldsmith Per Enevoldsen and his wife. Pandora started with a single store in Copenhagen by importing jewelry from Thailand. In 1989, Enevoldsen hired in-house designers and established a manufacturing site in Thailand, providing affordable, hand-finished jewelry for the mass market.
Pandora’s collection grew to include an assortment of rings, necklaces, earrings and watches. The idea of developing a charm bracelet concept that women could style in a personal way, became a reality in 2000, when the group launched its signature bracelet expanding quickly abroad.
In 2008, the Danish private equity group Axcel bought a 60% stake from the founders, listing the company in 2010. Since, Pandora has built the world largest affordable jewelry brand with a high level of brand awareness.
Pandora designs, makes, and markets hand-finished and contemporary jewelry from materials such as silver and gold, with 54% sourced from recycled metals. The group offers charms (51%), bracelets (20%), and rings (15%).
Charm bracelets are the signature products of Pandora, helping repeat purchases of charms. From the purchase of raw materials right through to sales, Pandora controls each step, allowing a high gross margin and pricing power. Pandora has the exclusive rights to reproduce charms based on Disney films until 2025. In 2021, Pandora announced a collaboration with Lucasfilm (Disney) to launch a collection of Star Wars inspired jewelry. Partnerships (10% of sales), also include Harry Potter (Comcast-NBCUniversal).
Pandora jewelry is sold in over 100 countries (Europe 48%, North America 30%, China 5% APAC ex-China 13%) through 6,800 points of sale, including more than 2,600 concept stores and online stores accounting for 26% of sales.
Pandora produces its jewelry at two facilities in Thailand is building a large one in Vietnam. Pandora is the world N°1 affordable jewelry player, with DKK 25.9 Bn 2022 (e) sales, 26,000 employees and 102 mn pieces of jewelry sold p.a.
The market tapped by Pandora is expected to grow by 4% annually by 2026 (source: Fortune business insights) driven by GDP growth. Positioned within the affordable jewelry segment with average €20-40 price range, Pandora competes with brands like Bijou Brigitte, Chamilia, Biagi, and Soufeel. Pandora is now seeking to boost lab-grown diamonds sales as part of a sustainability drive but also as a way to boost growth and lower production costs
Since 2010, the company has seen five CEOs. The task of the current management team, which started in 2017, is to reboot the relevance and reach of the Pandora brand, reduce costs in order to return Pandora to growth, as 2019 saw a 4% decline in sales and a 33% decrease in EBITDA. This includes significant long-term investments in Pandora’s digital presence. The commercial reset involves reducing promotional discounting days, decreasing inventories at wholesale partners and lowering the number of design variations by eliminating non performing products.
Under the new management team (2019), sales showed 3% CAGR despite Covid shutdowns, with EBITDA up 17% p.a., reflecting a better product mix management. Over the last five years, net debt increased by DKK 1Bn, resulting from DKK 26Bn of free cashflow, DKK 4Bn of franchisees’ acquisitions, DKK 10Bn related to share buybacks and DKK 10Bn to dividends. Its 2021 48% ROCE exceeds its 4.5% WACC.
Jean-Pascal expects a 7% EBITDA CAGR by 2026, with over DKK 25Bn of cumulated free cash flow (current FCF yield is at 15%), after capex of DKK 4.3Bn.
The shares recently traded at 4.7x 2022(e) EBITDA, 7.5x net earnings, and 1.3x sales. Parvus AM owns 5.4% and Blackrock owns 3.5% of the equity.
Listen to this session:
![](https://moiglobal-com.s3.eu-west-1.amazonaws.com/manualofideas1/wp-content/uploads/jean-pascal-rolandez-dbw5-1024x1024.jpg)
slide presentation audio recording
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.