Christopher Rossbach of J. Stern & Co. presented his in-depth investment thesis on Henkel (Germany: HEN3) at European Investing Summit 2019.

Thesis summary:

Henkel is a leading consumer goods and adhesives company. It is the world’s largest supplier of adhesives with an estimated 14.0% global share,. It has a solid franchise in Home and Personal Care, operating primarily in the laundry, hair care, and bath & shower categories with a consolidated No1 and No2 position in Western and Eastern Europe and a significant presence in select overseas markets. Henkel is an underappreciated asset with a leadership position in its targeted markets. The company was historically a collection of under managed assets but following a change of management in 2008, it embarked on a multiyear transformational program, turning into a stable, high value business. Recent increased competitive pressures and operational mishaps in the consumer business have been a headwind, but we believe the management team is taking the right steps to address these through €300m in incremental investments & a strategic review of the Beauty portfolio. The slowdown particularly in the auto & electronics end markets has also created headwinds for the Adhesives business. The unlevered balance sheet provides strategic optionality.

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About the instructor:

Chris Rossbach is Managing Partner of the London-based private investment firm, J. Stern & Co. Established to provide investments for the Stern family, it is devoted to long-term investments for families, charities, institutions and other long-term investors with a multi-generational approach. J. Stern & Co. builds on the Stern family’s 200 year old banking tradition with a conservative approach and institutional-level analysis and resources. It manages bespoke concentrated global equities portfolios and funds following a strict fundamental investment approach, looking for quality and value, based on its own proprietary analysis, with a long-term investment horizon. Prior to co-founding J. Stern & Co., Chris had senior investment roles at Merian Capital, Magnetar Capital, Lansdowne Partners and Perry Capital. Chris holds a BA from Yale University and a MBA from Harvard Business School.