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Econocom: Owner-Led Turnaround With Shrinking Share Count

October 13, 2022 in Audio, Discover Great Ideas Podcast, Equities, Europe, European Investing Summit 2022, European Investing Summit 2022 Featured, Ideas, Member Podcasts

Louis d’Arvieu of Amiral Gestion presented his in-depth investment thesis on Econocom (Belgium: ECONB) at European Investing Summit 2022.

Thesis summary:

Econocom is a widely forgotten European small-cap. It was an investor darling until 2017 and then suffered a toxic mix of mismanaged succession as well as internal and external shocks.

Econocom’s businesses are solid and earnings have remained resilient. The company’s founder has quietly taken advantage of the situation to buy back 20% of the shares and additional shares for himself over the last five years.

The dividend yield is 5%. Earnings have started growing again and leverage is limited, while the shares recently traded at a P/E ratio of 6x. Louis views Econocom as a resilient long-term investment case.

Louis originally presented Econocom at European Investing Summit 2021.

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About the instructor:

Louis d’Arvieu joined Amiral Gestion in 2005 and serves as a fund manager for the Sextant funds. Run by Julien Lepage, Amiral is an independent asset management firm based in Paris with a fundamental investing approach. Its goal is to deliver high & sustained performance over the long run and to support businesses in a responsible manner.

The content of this website is not an offer to sell or the solicitation of an offer to buy any security. 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 website. BeyondProxy’s officers, directors, employees, and/or contributing authors may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated herein.

Merlin Properties: Iberian REIT Leader With Attractive Portfolio

October 13, 2022 in Audio, Discover Great Ideas Podcast, Equities, Europe, European Investing Summit 2022, European Investing Summit 2022 Featured, Ideas, Member Podcasts

Alirio Sendrea of Invexcel presented his in-depth investment thesis on Merlin Properties (Spain: MRL) at European Investing Summit 2022.

Thesis summary:

Merlin Properties is a diversified REIT leader in the Iberian market. The company’s quality office, logistics, and shopping center portfolio trades at a deep discount to net asset value.

Merlin is managed by a talented team that has credible plans to deliver value-accretive developments in logistics and data centers over the medium term.

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About the instructor:

Alirio Sendrea, CFA is Head of Research at Invexcel, a multi‐family office based in Spain. He is a generalist investor in European Equities with 17-years of experience in Financial Services, Shipping, Information Services, Alcoholic Beverages and Business Services, working with entrepreneurial families and leading global companies.

The content of this website is not an offer to sell or the solicitation of an offer to buy any security. 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 website. BeyondProxy’s officers, directors, employees, and/or contributing authors may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated herein.

Stabilus: Competitively Advantaged Supplier to the Automotive Industry

October 13, 2022 in Audio, Discover Great Ideas Podcast, Equities, Europe, European Investing Summit 2022, European Investing Summit 2022 Featured, Ideas, Member Podcasts

Santiago Domingo Cebrian of Magallanes Value Investors presented his thesis on Stabilus (Germany: STM) at European Investing Summit 2022.

Thesis summary:

Stabilus provides gas springs, hydraulic dampers, and electromechanical systems to automatically open or close a car’s tailgate. The company is an important supplier to the automotive industry, with ~62% of revenue from the auto sector and ~38% from industrial applications. Stabilus products are used to control the movement of parts, such as tailgates, doors, or bonnets.

The company is a high-quality supplier to the auto industry, with best-in class margins and strong cash generation. Strong profitability results from market leadership, technology investments, and highly automated gas spring production (the company even designs and manufactures its own production lines). The latter gives Stabilus a competitive edge in cost, quality, and flexibility.

Stabilus has a strong financial profile with net debt to EBITDA of less than 1x. The shares recently traded at an EV-to-EBITDA multiple of only 6x and an FCF yield in excess of 10%.

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About the instructor:

Santiago Domingo is an investment analyst at Magallanes Value Investors. Magallanes is an independent equity-only asset management firm, following value investment philosophy and controlled by its founders. Magallanes’ aim is to preserve and increase its clients’ capital by outperforming the market in the long term. Prior to Magallanes, Santiago worked as an equity portfolio manager for Solventis Asset Management, as an analyst for a start-up called OralSurgeryTube and in Endesa’s finance 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.

The content of this website is not an offer to sell or the solicitation of an offer to buy any security. 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 website. BeyondProxy’s officers, directors, employees, and/or contributing authors may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated herein.

EdiliziAcrobatica: Clear Competitive Advantage, Low Capital Requirements

October 12, 2022 in Audio, Discover Great Ideas Podcast, Equities, Europe, European Investing Summit, European Investing Summit 2022, European Investing Summit 2022 Featured, Ideas, Member Podcasts

Massimo Fuggetta of Bayes Investments presented his investment thesis on EdiliziAcrobatica (Italy: EDAC) at European Investing Summit 2022.

Thesis summary:

EdiliziAcrobatica carries out building exterior renovations, maintenance, and related activities using a specialized technique based on a double-rope safety tool. This avoids the use of scaffoldings or fixed-aerial supports.

The business is highly profitable and rapidly growing, with a clear competitive advantage and low capital requirements. The shares are attractively priced at 12x 2021 earnings and less based on estimated 2022 earnings.

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About the instructor:

Massimo Fuggetta is the Founder, Chairman, and Chief Investment Officer of Bayes Investments.

Massimo started his investment management career in 1988 at JP Morgan Investment Management in London, where he rose to become Head of the Global Balanced Group, with responsibility for international balanced portfolios. In 1999 he left JPMIM to become Chief Investment Officer, Director General and then CEO at Sanpaolo IMI Asset Management in Milan. He left the company in 2001 to start Horatius, an investment advisory company incorporated in 2004, which in 2007 became an asset management company. He left Horatius in 2012 to go back to London, where in 2014 he founded Bayes Investments.

Massimo holds a Doctorate (DPhil, 1991) and Master’s Degree (MPhil, 1987) in Economics from the University of Oxford. He graduated in Economics at LUISS, Rome in 1984. He taught Behavioural Finance in the Master in Economics course at Bocconi University in Milan in 2000-2002 and in the same period served in the Editorial Board of the Financial Analysts Journal.

In 2012 Massimo started the Bayes blog, which has acquired popularity in the value investing community.

The content of this website is not an offer to sell or the solicitation of an offer to buy any security. 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 website. BeyondProxy’s officers, directors, employees, and/or contributing authors may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated herein.

Attractively Valued IT Services Firms: Datagroup, Marlowe, Volati

October 12, 2022 in Audio, Discover Great Ideas Podcast, Equities, Europe, European Investing Summit 2022, European Investing Summit 2022 Featured, Ideas, Member Podcasts

Alejandro Estebaranz of True Value presented his investment theses on Datagroup (Germany D6H), Marlowe (UK: MRL), and Volati (Sweden: VOLO) at European Investing Summit 2022.

Thesis summaries:

Datagroup competes in the IT cloud services sector and has an equity market cap of €480 million. The business is resistant to downturns, with recurring income comprising ~85% of total income. Datagroup has grown revenue at ~15% annually, with a combination of organic growth and M&A. It has less than 3% market share, leaving ample opportunity for share gains. The insiders are highly aligned with shareholders, and dilution related to stock-based compensation has been low. The shares recently traded at 7x EV/EBITDA and less than 10x P/FCF, an attractive valuation for a high-quality growth business. Alejandro estimates FCF of €40 million in 2022 and €50 million in 2023. Assuming a 5% FCF yield, the stock may be fairly valued at €75 per share in 2022 and €110 per share in 2024, as compared to the recent price of €55-60 per share.

Marlowe competes in the compliance, industrial, and software sectors and has an equity market capitalization of GBP 750 million. The business is resistant to downturns, with recurring income comprising ~85% of total income. Marlowe has compounded the top line at ~20% annually. Insiders are highly aligned, with low wages and a 15% minimum return hurdle. Management has pursued a roll-up model, with ~5% organic growth and additional growth from M&A. Alejandro estimates FCF of GBP 50 million in 2023 and GBP 60 million in 2024. Assuming a 4% FCF yield, the stock may be fairly valued at GBP 12 per share in 2023 and GBP 15 per share in 2024, as compared to the recent price of GBP 7-8 per share.

Volati is a stable industrial equipment company with eighteen consecutive years of growth. The business is resistant to downturns. Volati has compounded the top line at ~25% annually (spinoff-adjusted), with a combination of organic growth and M&A. Insiders are highly aligned, with 65% ownership of the equity. The large market offers ample opportunity for M&A, with acquisitions typically available at ~6x EBITDA. Comparable companies recently traded at ~25x FCF and ~15x EBITDA, even as Volati has a better growth profile. Alejandro estimates FCF of SEK 6 per share in 2022 and SEK 8 per share in 2023. Assuming a 5% FCF yield, the stock may be fairly valued at SEK 120 per share in 2022 and SEK 160 per share in 2023, as compared to the recent price of SEK 105-110 per share.

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About the instructor:

Alejandro Estebaranz has served as the CIO True Value fund (ISIN: ES0180792006) since its inception. True Value, based in Spain, is a long-only equity fund founded in 2014. It focuses on underfollowed small- and mid-cap public companies, seeking good businesses with good management teams. He holds a degree in mechanical engineering and a degree in industrial engineering.

The content of this website is not an offer to sell or the solicitation of an offer to buy any security. 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 website. BeyondProxy’s officers, directors, employees, and/or contributing authors may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated herein.

Universal Music Group: World’s Largest Owner of Music Rights

October 11, 2022 in Audio, Discover Great Ideas Podcast, Equities, Europe, European Investing Summit, European Investing Summit 2022, European Investing Summit 2022 Featured, Ideas, Member Podcasts, Transcripts

Pieter Hundersmarck of Flagship Asset Management presented his investment thesis on Universal Music Group (Netherlands: UMG) at European Investing Summit 2022.

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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:

Pieter Hundersmarck is the global portfolio manager for Flagship Asset Management, a specialist global investment management boutique based in Cape Town, South Africa. Flagship (est. 2001) is one of South Africa’s most awarded boutique asset managers, with deep experience across asset classes in developed and emerging markets. Pieter has been investing internationally for over 15 years. Prior to Flagship, he worked at Coronation Fund Managers for 10 years, and also co-managed a global equities boutique at Old Mutual Investment Group. Pieter holds a BCom (Economics) from Stellenbosch University and an MSc Finance from Nyenrode Universiteit in the Netherlands.

The content of this website is not an offer to sell or the solicitation of an offer to buy any security. 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 website. BeyondProxy’s officers, directors, employees, and/or contributing authors may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated herein.

S3E03: Buffett’s Essay, How Inflation Swindles the Equity Investor

October 11, 2022 in Audio, Podcast, This Week in Intelligent Investing

It’s a pleasure to share with you Season 3 Episode 3 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!

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In this episode, co-hosts Phil Ordway, Elliot Turner, and John Mihaljevic discuss Warren Buffett’s famous 1977 essay, “How Inflation Swindles the Equity Investor”. The co-hosts examine equity investing in the context of an inflationary environment.

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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]
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A Technical Guide to the Bayes Investments Valuation Model

October 10, 2022 in Commentary, European Investing Summit, Letters, Skills

This article is authored by MOI Global instructor Massimo Fuggetta, founder, chairman, and chief investment officer of Bayes Investments, based in London.

Security analysis cannot presume to lay down general rules as to the “proper value” of any given common stock. Practically speaking, there is no such thing.

I hadn’t yet read Ben Graham when, many years ago, I began working as a portfolio manager for a large global asset management company. Their investment process was heavily reliant on the input of security analysts. Each of them followed a number of companies in a certain sector. Their task was to calculate the “proper value” of each stock and condense it into a Dividend Discount Rate.

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October 9, 2022 in Twitter

Volkswagen: Global Auto Leader Undergoing Transformation

October 8, 2022 in Audio, Discover Great Ideas Podcast, Equities, Europe, European Investing Summit 2022, European Investing Summit 2022 Featured, Ideas, Member Podcasts

Roshan Padamadan of Luminance Capital presented his in-depth investment thesis on Volkswagen (Germany: VOW3) at European Investing Summit 2022.

Thesis summary:

Volkswagen is a leading Germany-based global auto company that produces and sells a multitude of automotive brands to meet various customer preferences.

The group is going through a genuine transformation, leveraging economies of scale and scope in its move to electric vehicles, as well as investing in the battery and charging stations ecosystem. With experience of selling in over 150 countries, Volkswagen’s “New Auto” strategy is worth watching.

The shares recently traded at a P/E ratio of only 4x, a dividend yield of 6+%, with a special dividend on the horizon due to the listing of Porsche AG.

Listen to this session:

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About the instructor:

Roshan Padamadan is Chairman at Luminance Capital. He is a global investor and splits his time between New York, Singapore and India. Previously, he served as COO, Risk and Compliance officer at Sixteenth Street Capital, based in Singapore. His erstwhile Luminance Global Fund had a global unconstrained investment strategy, looking at special situations and deep value. Prior to launching Luminance in 2013, Roshan also spent more than seven years with the HSBC Group, including more than three years with HSBC Asset Management, as a Product Specialist. He worked for the highly commended Offshore Indian Equity team which ran US$5+ billion from Singapore, including a US$100+ million award-winning India hedge fund. Roshan has earned an MBA in Management from Indian Institute of Management, Ahmedabad. He holds the CFA, FRM and CAIA charters and speaks over five languages.

The content of this website is not an offer to sell or the solicitation of an offer to buy any security. 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 website. BeyondProxy’s officers, directors, employees, and/or contributing authors may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated herein.
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