Lanxess: Specialty Chemicals Leader, With Far More Profitable Future

October 15, 2021 in Audio, Diary, Discover Great Ideas Podcast, Equities, Europe, European Investing Summit 2021, European Investing Summit 2021 Featured, Ideas, Member Podcasts, Transcripts

Independent wealth manager Samuel Weber presented his investment thesis on Lanxess (Germany: LXS) at European Investing Summit 2021.

Thesis summary:

Lanxess is a leading specialty chemicals company with sales of EUR 6.1 billion in 2020. The company has 14,800 employees in 33 countries. The core business of Lanxess is the development, manufacturing and marketing of chemical intermediates, additives, specialty chemicals, and plastics.

The company is in the middle of a multi-year transformation and should in a few years generate around EUR 1.5 billion in EBITDA from highly attractive segments that are characterized by significant barriers to entry, high returns on capital, and long-term growth potential. Furthermore, side projects may create significant value in the future.

Mr. Market values the company based on its past economic profile and systematically ignores its far more profitable future. Lanxess can be bought at around 4x 2025 EBITDA, excluding any value from the aforementioned projects. The management team is capable, honest, and shareholder-oriented and may create far more value than is envisaged even by optimistic market observers.

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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 (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.

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.

Do & Co: Airline Catering Leader, Likely to Keep Gaining Market Share

October 15, 2021 in Audio, Diary, Discover Great Ideas Podcast, Equities, Europe, European Investing Summit 2021, European Investing Summit 2021 Featured, Ideas, Member Podcasts

José Antonio Larraz of Equam Capital presented his investment thesis on Do & Co (Austria: DOC) at European Investing Summit 2021.

Thesis summary:

Do & Co is a gourmet entertainment company specializing in airline catering. The company operates in three business units: airline catering (74% of revenue), event catering (14%), and restaurants, lounges and hotels (12%).

Despite the great impact of the Covid situation on the business, the company has been able to demonstrate the flexibility of the business to adapt to different market environments (revenue dropped by more than 70% in FY20 but the company maintained a healthy 7% EBITDA margin and breakeven operating cash flow). By focusing on the premium segment and despite the difficult environment, the company has gained important contract awards with major airlines (representing >50% of pre-Covid revenue), and prospects appear solid for continuing to gain business in the coming quarters.

Assuming conservative airline traffic recovery scenarios, José estimates 70-100% upside potential for the shares over a three- to four-year timeframe.

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About the instructor:

José Antonio Larraz is a founding partner of Equam Capital. Jose has 12 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.

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.

GlaxoSmithKline: Recent Laggard; Prospects Improving Under New CEO

October 15, 2021 in Audio, Diary, Discover Great Ideas Podcast, Equities, Europe, European Investing Summit 2021, European Investing Summit 2021 Featured, Ideas, Member Podcasts, Transcripts

Stuart Mitchell of S. W. Mitchell Capital presented his investment thesis on GlaxoSmithKline (US: GSK) at European Investing Summit 2021.

Thesis summary:

GlaxoSmithKline has underperformed the pharma sector by almost 20% over the last three years. The strategic direction of the group has been somewhat unclear following the sale of the oncology business to Novartis for $16 billion in 2015 and the subsequent purchase of Tesaro (also oncology related) for $5 billion in 2018.

The outlook is starting to improve. The company, since 2017 led by Emma Walmsley, plans to split the group into two separate consumer health and biopharma divisions. Both businesses seem to be recovering strongly. The consumer health division, which accounts for 30% of revenue, is a world leader in oral health (Sensodyne), pain relief (Voltaren, Advil, Theraflu), and vitamins (Otrivin and Robitussin). The business should be able to grow by at least 2% per annum, driven by strong growth in these – and other – global brands. GSK foresees an increase in the profitability of the division from 21% in 2020 to the “mid to high 20s” by 2025.

The new biopharma division (70% of sales), of which just over a quarter encompasses vaccines; ViiV Healthcare (HIV therapies) just under a quarter; and one-half other pharmaceuticals. The business has been thoroughly restructured since the arrival of CEO Walmsley. The vaccines business should continue to grow at 6% per annum as the roll-out proceeds of Shingrix (shingles vaccine) in Europe and Japan. ViiV should also grow at some 6% per annum with the introduction of new, less toxic, double-dose regimes.

All in all, GSK expects biopharma revenue and operating profit to grow by more than 5% and 10%, respectively, from 2021 to 2026. The biopharma margin is also expected to expand from 20% in 2021 to 30+% by 2026. Costs are expected to be cut by a further £1 billion by 2023.

GSK shares recently traded on a rather modest 13x 2022E earnings and a 10% FCF yield. With the group about to be split up, one may regard a sum-of-the-parts valuation as more than a theoretical exercise. Stuart believes that the group could be worth at least £20 per share.

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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.

Read a recent article by Stuart on European banks.

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.

Euronav: Tanker Giant Positioned to Take Advantage of Industry Cycle

October 15, 2021 in Audio, Diary, Discover Great Ideas Podcast, Equities, Europe, European Investing Summit 2021, European Investing Summit 2021 Featured, Ideas, Member Podcasts

Alirio Sendrea of Invexcel presented his investment thesis on Euronav (Belgium: EURN) at European Investing Summit 2021.

Thesis summary:

Euronav is the world’s largest publicly listed crude oil tanker operator. The company owns a quality fleet of large crude carriers (VLCCs and Suezmaxes), operated by an experienced management team focused on value creation.

In this presentation, Alirio walks us through the tanker industry’s supply-demand dynamics and explains why Euronav is well-positioned to take advantage of the industry cycle.

For additional background, see Alirio’s article on oil tankers, dated October 2019.

Also, see Alirio’s recent article on areas of concern in a speculative market.

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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.

MTU: Leading Supplier of Aero-Engine Sub-Systems With Strong Order Book

October 15, 2021 in Audio, Diary, Equities, Europe, European Investing Summit 2021, European Investing Summit 2021 Featured, Ideas

Katerina Kosmopoulou of J. Stern & Co. presented her investment thesis on MTU Aero Engines (Germany: MTX) at European Investing Summit 2021.

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About the instructor:

Katerina Kosmopoulou is a Partner of J. Stern & Co.. She is a senior investment analyst, portfolio manager as well as leading the firm’s ESG efforts. Katerina is the deputy portfolio manager for the firm’s World Stars investment strategy.

Prior to joining J. Stern & Co. in 2013, Katerina was a Senior Equities Fund Manager at RCM, Allianz Global Investors in London, Frankfurt and Munich. She was part of the firm’s Global Equities team, managing various fundamental, bottom-up driven strategies. She has over 20 years of equity investment experience and has previously covered the Global Consumer Discretionary and Staples, Energy as well as the Industrials and Materials sectors.

Katerina is a Greek national and is fluent in English, Greek, German and French. She holds a BSc in Business Administration from the University of Bath and a MSc in International Securities, Investment & Banking from the University of Reading. Katerina is a CFA Charterholder and a member of the Board of Directors of the CFA Society of the UK.

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.

Gregor Rudolph-Dengel on the Opportunity in “Re-Opening” Stocks

October 15, 2021 in Audio, Equities, Europe, European Investing Summit 2021, Ideas

Gregor Rudolph-Dengel of Allianz Global Investors presented his thesis on post-COVID re-opening stocks at European Investing Summit 2021.

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About the instructor:

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.

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.

Barco: Attractively Valued Projection and Visualization Systems Leader

October 15, 2021 in Audio, Equities, Europe, European Investing Summit 2021, Ideas

Sebastien Lemonnier of INOCAP Gestion presented his investment thesis on Barco (Belgium: BAR) at European Investing Summit 2021.

For additional background, see Sebastien’s original session on Barco, dated 2017.

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About the instructor:

Sebastien Lemonnier started his carreer in 2003 as financial analyst at Tocqueville Finance. He was promoted as european fund manager in 2006 running the UCIT fund Tocqueville Value Europe and pursued his carreer for Mansartis, a Paris based multi family-office in 2012. He joined INOCAP Gestion in 2017, managing the UCIT fund Quadrige Europe Midcaps that is currently 5 Stars rated by Quantalys. Sebastien holds a Masters Degree in Financial Management from Panthéon-Sorbonne Paris. He is married and got one daughter born last November 2020. As a hobby, he plays tennis that he was used to play in competition when teenager and is currently supporting with a President responsability the French tennis academy CDHN that train of the best French young tennis players.

Read an article in which Sebastien highlights his timeless investment principles.

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.

JDE Peet’s: Busted IPO of Market-Leading Pure-Play Coffee Roaster

October 15, 2021 in Audio, Discover Great Ideas Podcast, Equities, Europe, European Investing Summit 2021, European Investing Summit 2021 Featured, Ideas, Member Podcasts

Adam Crocker of Logbook Investments presented his investment thesis on JDE Peet’s (Netherlands: JDEP) at European Investing Summit 2021.

Thesis summary:

JDE Peet’s is the world’s largest pure play coffee roaster and #2 in global CPG coffee market share, with dominant presence in Europe and attractive growth in the rest of the world. Notable brands include Peet’s, Jacobs, L’Or, Stumptown, and Intelligentsia.

Since the company’s IPO in May 2020, the shares have traded down due to concerns about near-term margins and growth under a new CEO. The recent valuation of 13.5x EV/EBIT overlooks the company and industry’s consistent growth and sustainably impressive margins over decades (peers historically trade in the high teens or above).

As JDE Peet’s delivers on its mid-single digit revenue goals, fueled by industry volume growth and a trend toward premiumization in coffee, trading multiples are likely to recover toward historical levels. Longer-term, as leverage is reduced below the 2.5x target, potential exists for growth-enhancing M&A.

JDEP offers an opportunity to own a quality business below market multiples.

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About the instructor:

Adam Crocker, CFA is Founder and Chief Investment Officer of Logbook Investments, a value fund with core positions based on insights from books. Logbook launched in 2016 and is seeded by his former employer. Prior to Logbook, Adam was a co-manager at Metropolitan Capital Advisors, a long/short equity fund founded in 1992. Before joining Metropolitan, he was an analyst at Morgan Stanley Investment Management conducting research on behalf of growth and value investment teams. He began his career in Leveraged Finance investment banking at JPMorgan. Adam is a 2005 graduate of the Value Investing Program at Columbia Business School and has an undergraduate degree in Economics from Columbia University.

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.

Just Eat Takeaway.com: Well-Positioned Food Delivery Business

October 15, 2021 in Audio, Diary, Equities, Europe, European Investing Summit 2021, Ideas

Roshan Padamadan of Luminance Capital presented his investment thesis on Just Eat Takeaway.com (Netherlands: TKWY, UK: JET, US: GRUB) at European Investing Summit 2021.

Thesis summary:

Just Eat Takeaway.com is a leading global online food delivery company, connecting tens of millions of consumers with their local restaurants. JET benefits from an attractive business model with powerful network effects.

As global players coalesce, JET is likely to be one of the survivors. Roshan expects the current competitive wars to subside in the foreseeable future.

Roshan views JET management as intelligent capital allocators, exiting markets and consolidating markets based on common sense-metrics around competitiveness and long-term profit potential.

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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.

Future plc: Highly Successful Buy-and-Build Strategy in Media and Publishing

October 15, 2021 in Audio, Equities, Europe, European Investing Summit 2021, Ideas, Transcripts

Markus Matuszek of M17 Capital Management presented his investment thesis on Future plc (UK: FUTR) at European Investing Summit 2021. Markus also discussed his framework for finding “buy and build” champions.

Thesis summary:

Future plc publishes content for a variety of verticals, such as technology, games, TV and entertainment, women’s lifestyle, real life, music, creative and photography, sports, home interest, and B2B sectors in the U.S. and the UK.

Future’s business model is to create and optimize revenue streams in digital ads, e-commerce, paid content, ticket sales, and media sales, both through organic growth as well as through acquiring and integrating content and companies. At the beginning of the company in 1985, the company focused exclusively on magazines, books and similar content – yet thanks to its business model, the group is pushing the business mix toward media and, as a consequence, toward higher margins (media represents about 68% of total revenue, at ~85% gross margin, while magazine has only ~60% gross margin). In addition, management has been successful at lowering overhead and indirect costs.

Future’s buy-and-build strategy has produced a revenue growth CAGR of 55% over the last five years, with cash flow growing 126% annually over the same period – resulting in a CAGR of 92% in adjusted diluted EPS. Future’s conservative leverage of 1.2x EBITDA leaves ample room to continue its M&A growth path and to support its operational plans for top and bottom-line improvement.

Despite all these successes, the market seems to question Future’s capability to continue its strategy – a view that is not substantiated. Markus estimates that Future’s recent share price is ~25% below its near-term value and could reach GBP 120-150 per share by 2025.

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About the instructor:

Markus Matuszek is an investor and entrepreneur. He is the founder, Managing Partner and Chief Investment Officer of M17 Capital Management, who invests into long/short value positions as well as private opportunities, biased towards European ideas. Prior to that he ran asset management and advisory firm Hermes Capital Management as well as he was a managing partner at Gabelli & Partners. He has been investing in listed securities, private companies and real estate over 18 years with a solid track record. Earlier in his career, Markus was a senior advisor / interim manager with extensive advisory and hands-on work in strategy, restructuring, organizational change, corporate finance and risk management, M&A advisory, private equity, real estate and investment management in Western Europe, Eastern Europe and the US. He started his professional career with McKinsey & Company. His education includes a M.A. in finance, accounting and controlling from the University of St. Gallen (Switzerland), a master degree from CEMS and dual MBAs from Columbia Business School and London Business School (with honors). Furthermore, he studied at the Warsaw School of Economics and University of Geneva and received several merit-based fellows and scholarships. He is also a CFA charterholder and a jury member for the CFA Institute’s Research Challenge in Switzerland as well as for EMEA.

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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