Stand maart 2018 inleg 2 400 Eur, Graham Waarde 4 287 Eur, korting 28%

In februari had ik Assured Guaranty niet meegerekend (staat nu wel in grafiek). Winst (en Graham Waarde) bij NN Group is sterk gestegen na Delta Lloyd overname. We hebben aandelen bijgekocht in markt dip van februari.

Stand februari 2018 inleg 2 350 Eur, Graham Waarde 3 943 Eur, korting 21%

We hebben Steinhoff gekocht, niet een Graham Defensive aandeel (teveel risico door schulden). De boekwaarde van Berkshire Hathaway van Warren Buffett is geschat op $140 per aandeel, hoger dan nu, door belastingsverlaging in de VS van 33% naar 21%.

De korting is afgenomen doordat veel koersen gestegen zijn. We hebben nu 262 Euro cash (8,5%) per persoon en kunnen volgens de "value averaging" methodiek profiteren van toekomstige koersdalingen.

Comments, questions or E-mails welcome: ajbrenninkmeijer@gmail.com

Investing Inner Scorecard Ansgar John 2017

Mistake of omission:
Not buying Footlocker at $30 at Earnings Yield of 13% and passing Graham Defensive Criteria. Group process avoiding "retail" regardless of price.

Selling some Hibbett Sports at $10 after buying at $9 at height of maximum panic. Sell decision should be part of continuous portfolio optimization.

What is missing is a framework of "continuous portfolio optimization" Turtle Creek Canada, "active sizing" Alex Roepers, "buying on a scale" Walter Schloss
To do: 1

Today Steinhoff Holdings opportunity cost? Selling at a PE of 2 , earnings yield about 50%?

Not selling Seneca Foods eventhough management is mediocre, not shareholder friendly, allocating capital into a dying industry (canned foods).

Not understanding Interdigital business model. Take more time for in depth study. Best companies and why? Visual finance plus study with RM.

Looking at stock prices to much and not enough at underlying companies, moats, unit costs.
Thursday: stock price day and track 9% swing minimum.

Thal... Holdings buybacks best scenario

Eerste vraag is hoeveel warrants zijn er? Warrants give people the right, but not the obligation, to buy shares at a certain price before expiration. I don't know if there are more warrants and what the price is at which shares can be bought.

13 september 2017: 500 000 warrants used to buy new Thal. shares. So there were 500 000 more shares after this day, than before. I don't know what the people paid for these shares.
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The longer the share price of Thala... Holdings stays low, the more positive it is for longterm shareholders due to current and possible future buybacks.

The company has sold WG P its main company. At 20,6 million shares outstanding, this would be the situation:

Net cash                                               $21,3m
Shares in The Local Shopping REIT   $9,3m (at cost)
Autonomous Robotics Limited            $8m (at valuation of current offer)
Other                                                    $0,7m 
Total                                                     $39,3m
Per share: $1,91 book value per share or 1,41 GB Pounds

The company has been buying back shares under book value:
208 250 shares @ 1,05 GBP = 0,219m GBP
  80 000 shares @ 0,079 GBP = 0,079m GBP
110 000 shares @ 0,99 GBP = 0,109m GBP
400 000 shares @ 1,00 GBP = 0,4m GBP
798 250 shares    for     0,807m GBP

Shares today: 20,6m - 0,8m = 19,8m shares outstanding

Total book value = $39,3 - 0,8m GBP = $38,2m per share $1,93

Current budget to buyback more shares = 1,6m GBP (of original 4m GBP)

@ 1 GBP per share = 1,6m shares

After that:  19,8m shares - 1,6m = 18,2m shares outstanding
Book value $38,2m - 1,6m GBP = $36m
Book value per share = $36m / 18,2m shares = $1,98 = 1,46 GBP

@ todays share price 0,94 GBP, does a 6% lower buyback price make a big difference?

Shares 1,6m GBP budget / 0,94 GBP per share = 1,7m shares

After that: 19,8m shares - 1,7m = 18,1m shares outstanding
Book value $38,2 - 1,6m GBP = $36m
Book value  per share = $36m / 18,1m shares = $1,99 = 1,47 GBP

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Best scenario? Extra huge buyback of 10m GBP at 1 GBP per share?

Number of shares: 18,2m - 10m = 8,2m shares after major buyback

Book value: $36m - 10m GBP = $22,46m

Per share $22,46 / 8,2m = $2,74 per share or 2,02 GBP per share

You might be able to buy a Pound for 50 cents?

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Overhead costs in the year?

Stand januari 2018, inleg €2 300, Graham Waarde €3 880, korting 24%

Soms heeft de aandelenkoers een effect op de Graham waarde. We zagen dat bij Joy Global toen we net begonnen en afgelopen maand met Genesco. Genesco Earnings report uitreksel:

"Fiscal 2018 third quarter results reflect a goodwill impairment charge of $182.2 million, or $8.13 per diluted share after-tax, related primarily to the sustained decline in the Company's market value to a level below book value." 

Dat is een boek verlies (ze zijn niet dat bedrag in contant geld kwijtgeraakt), maar het heeft een invloed op de boekwaarde dat $8 per aandeel is gedaald, waardoor de Graham waarde ook daalt.

We hebben een plukje Assured Guaranty gekocht met een grote korting.

Jaar resultaat: Begin Graham Waarde 2 januari 2017 was €2 347 per machinist. Inleg was 12 x €50 = €600 per persoon. Begin Waarde plus inleg is: €2 347 + €600 = €2 947
Eind Graham Waarde is: €3 882 per persoon. 
Toename van de Graham Waarde boven op inleg is: €3 882 - €2 947 = €935
Gemiddelde inleg is €600 / 2 = €300. Gemiddelde waarde waarmee toename is verdient = begin waarde plus gemidddelde inleg =  €2 347 + €300 = €2 647

Rendement oftewel Toename in percentage van gem. waarde: €935 / €2 647 = 35% 

Dit zal hoogst waarschijnlijk niet behaald worden volgend jaar. De Graham Waardes van onder andere National Nederlanden en Assured Guaranty (die financieel zijn en dus geen Graham Defensief Stocks) zijn zeer twijfelachtig. 

Assured Guaranty Graham Defensive Analysis

Assured Guaranty, bond insurance company:

Graham Number:  Wortel ( 15 x Winst per Aandeel x 1,5 x Boekwaarde per Aandeel)

Value = Wortel ( 15 x $6,95 Winst per aandeel x 1,5 x $58,32 ) = $94 Value

Price = only $35 = 60% margin of safety (korting).

The company insures (assures) loans from governments. Puerto Rico has gone bankrupt, so this costs the company money, but less than Mr. Market seems to think.

Total exposure is $4,8billion but $2 billion of this is after 2030.  The company's income from investments is $400 million a year, higher than the total loss when spread out. 

The company is using cash on hand to buy back its own shares at a discount, which increases the value of shares which are sold back. 

The CEO, http://assuredguaranty.com/about-us/our-people/board-of-directors/dominic-frederico is experienced and the company survived the financial crisis of 2008-2009 quite well.

Fits the Graham Defensive Analysis, except for the fact that it is a financial company. 

Proposal: Buy 25 more shares Assured Guaranty at $35 which would be 2% of our portfolio. 

Value Investors Kahn Brothers are also share holders:  https://en.wikipedia.org/wiki/Irving_Kahn

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Detailed Analysis by www.validea.com

SECTOR: FAIL AGO is in the Financial sector, which is one sector that this methodology avoids. Technology and financial stocks were considered too risky to invest in when this methodology was published. Although times have changed since then with respect to the risk of financial stocks, several of Graham's criteria, like the Current Ratio and Debt to Current Assets, do not apply to financial companies. As a result, the company will not be able to pass this methodology, although we will include the remainder of the analysis for informational purposes. SALES: PASS The investor must select companies of "adequate size". This includes companies with annual sales greater than $1 billion. AGO's sales of $1,782.0 million, based on trailing 12 month sales, pass this test. CURRENT RATIO: FAIL The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. AGO is a financial stock so the current ratio analysis cannot be applied and this criterion cannot be evaluated. LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: FAIL Long term debt must not exceed net current assets. Companies that meet this criterion display one of the attributes of a financially secure organization. AGO is a financial stock so this variable is not applicable and this criterion cannot be evaluated. LONG-TERM EPS GROWTH: PASS Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 10 years. We have data for 9 years, and have adjusted this requirement to be a 27% gain over the 9 year period. Companies with this type of growth tend to be financially secure and have proven themselves over time. AGO's EPS growth over that period of 403.8% passes the EPS growth test. P/E RATIO: PASS The Price/Earnings (P/E) ratio, based on the greater of the current PE or the PE using average earnings over the last 3 fiscal years, must be "moderate", which this methodology states is not greater than 15. Stocks with moderate P/Es are more defensive by nature. AGO's P/E of 5.53 (using the current PE) passes this test. PRICE/BOOK RATIO: PASS The Price/Book ratio must also be reasonable. That is, the Price/Book multiplied by P/E cannot be greater than 22. AGO's Price/Book ratio is 0.60, while the P/E is 5.53. AGO passes the Price/Book test.

Krka Group: Benjamin Graham Defensive analysis of intrinsic value

   Website: https://www.krka.biz/en/ 

Shares on Polish stock exchange:  SI0031102120

SECTOR: [PASS] Krka Group is a pharmaceutical company and neither a technology nor financial Company, and therefore this methodology is applicable. 

SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. Krka Group's sales of €1 200 million, based on 2017 sales, pass this test.

CURRENT RATIO: [PASS] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. Krka Group's current ratio: €848m current assets / €317m current liabilities of 2.7 passes the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [PASS] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for Krka Group is €116 million, while the net current assets are €131 million. Krka Group passes this test.

LONG-TERM EPS GROWTH: [FAIL] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. Krka Group has consistently made money, but earnings have only increased 15% since 2007. Krka Group fails this test.

Earnings Yield: [PASS] The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. Krka Group's E/P (using the current 2017 profits)  are €4,5 / €9 = 8,5% and passes this test.

Graham Number value: [PASS] The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. Krka Group has a Graham number of √(15 x €4,5 EPS x 1,5 x €44 Book Value) = €66,7 Price (wat de gek ervoor geeft) is € 53 December 7th 2017.  

Dividend: 2,75/53 Euros is 5,1% note that the dividend has been increasing during the past years.

Conclusion: Krka Group is a defensive stock. The increase in earnings over the past 10 years is slightly lower than Graham stipulated. The stock probably won't make you rich over-night but should help increase your wealth over time.

Comments, questions or E-mails welcome: ajbrenninkmeijer@gmail.com