Markus Matuszek of M17 Capital Management presented his investment thesis on Ceconomy (Germany: CEC) at European Investing Summit 2022.

Thesis summary:

Ceconomy, Europe’s leading consumer electronics retailer (brands: MediaMarkt, Saturn), is resolving several challenges: (a) a shift away from its bricks-and-mortar business towards online, fueled by the COVID-19 pandemic; (b) a simplification of its governance structure as a consequence of settling a dispute with the MediaMarkt founder family; (c) a multilayered transformation aiming at new store formats, a ramp-up in logistics and strengthening its competitiveness towards an enhanced omnichannel business concept; and (d) achieving sustainable cost savings of over EUR 100 million per year (+29% of normalized EPS).

Ceconomy shares recently traded at 2.4x normalized EPS with a dividend yield of 14%, not considering its equally depressed minority investments which represent almost 50% of the market capitalization.  Given the company’s ample and unused debt facilities, Ceconomy is well-positioned to benefit from the expected cyclical upswing post the soft consumer climate, while providing significant downside protection.

Listen to this session (we apologize for the audio quality issues):

slide presentation audio recording

About the instructor:

Markus Matuszek is an investor and entrepreneur. He is the founder, CEO and Chief Investment Officer of M17 Capital Management, who invests into long/short value positions as well as private opportunities, biased towards European ideas. His group also acquires ownership positions in companies and seeks to maximise their long-term potential by working with management and other shareholders. It invests its own capital and works with a select group of co-investors. Markus aims for controlling positions yet is flexible in holding periods and transaction structures. His focus is to invest in stable companies which are undergoing change and he does not shy away from distressed situations or structural dislocations, provided the risks are acceptable and he believes in a company’s long-term value creation potential.

Prior to M17, Markus ran asset management and advisory firm Hermes Capital Management as well as he was a managing partner at hedge fund Gabelli & Partners. He has been investing in listed securities, private companies and real estate over 20 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/M&A and risk 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 long-term jury member for the CFA Institute’s Research Challenge in Switzerland as well as for EMEA.

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