Monday, April 13, 2099

Valuation of all stocks listed in Holland AEX All Share AAX: Benjamin Graham Defensive Investor method

Warren Buffett: "Well, start with the A’s." Click on the companies below for Graham Evaluation:

Aalberts Industries 2018
ABN AMRO 2018 
Accell Group AEX:ACCEL NL0009767532
Ahold Koninklijke AEX:AH, NL0010672325
Accsys Technologies AEX:AXS, GB00BQQFX454: Too small, making a loss, but growing sales.
Aegon AEX:AGN, NL0000303709
AFC AJAX AEX:AJAX NL0000018034
Air France-KLM PSE:AF, FR0000031122
Akzo Nobel AEX:AKZA NL0000009132
Altice AEX:ATC, NL0011333752
AMG Advanced Metallurgical Group NV 2018
Amsterdam Commodities ACOMO 2018
AND International Publishers
Apollo Alternative Assets AEX:AAA1, GB00B15Y0C52
Aperam AEX:APAM LU0569974404
Arcadis AEX:ARCAD, NL0006237562
ArcelorMittal AEX:MT, LU0323134006
ASM International AEX:ASM NL0000334118 2018
ASML Holding NV
ASR Nederland a buy under 30 Euros?
Batenburg Techniek
BAM Koninklijke Groep 
Basic Fit ?! don't buy above 7,50
BE Semiconductor AEX:BESI, NL0000339760 2018
Beter Bed Holding AEX:BBED, NL0000339703

Berkshire Hathway run by Warren Buffett

Bever Holding: Small real estate fund, neg. cash flow, selling at 3,8 under 5,5 Euro book value. Plans to make money in near future. Buy?
BinckBank buy under 3 Euros
Boskalis Westminster Koninklijke AEX:BOKA, NL0000852580
Boussard & Gavaudan Holding Ltd. An expensive hedge fund.
Brill, Koninklijke kopen onder 22 Euro
Brunel International AEX: BRNL, NL0010776944
Coca-Cola European Partners
Corbion AEX:CRBN, NL0010583399
Core Laboratories AEX:CLB, NL0000200384
Ctac buy under €3,20
Curetis loss making biotech company = too difficult pile. Price fell from 7,14 to 5 June 2016-June 2017
Docdata: Now a  holding for the https://www.ease2.com/ Internet of Cars app, under construction.
Delta Lloyd now part of NN Group.
DPA Groep N.V. buy at €1,4
DSM Koninklijke 2018
Dutch Star One 2018
Esperite: Stem Cell Bank losing money hand over fist. Price fell from 3 to 0,70 June 2016-17
Eurocastle NPL Non Performing Loans in Italy 10% dividend FFO Funds From Operations pretty good, selling at 8,55 which is 7% under Net Asset Value
Eurocommercial Properties: Buy under 40?
Euronext buy at €30
Fagron compounding 
ForFarmers a Graham Defensive Pick up to €6,50
Flow Traders outside my circle of competence, seems like a buy under €30
Fugro's Graham Value has decreased, buy at €10?
Gemalto buy under €35
Galapagos is a clinical-stage biotechnology company, not profitable (yet?).
GrandVision : Don't buy over €20
Groothandelsgebouwen N.V. buy under €50
HAL Trust
Headfirst Source part of Value8 holding. Figures? Earnings 2017 before Amortization 0,30?
Heijmans losing money check August 17 2017
Heineken, buy under 60?
Holland Colours buy under €70
Hunter Douglas, good balance sheet, buy if under €70
Hydratec buy at 55 sell at 65
ICT Group NV buy under 9 Euros
IEX Group Sales 2m, losses 600k, not for the defensive investor
IMCD buy under 35 Euros
ING Bank buy under 15 Euros
Intertrust too little history: Earnings per share 2016 Euro 1,3 x 15 = 19,5 Euros: Price = 19,86 Euros
Inverko used to be Newconomy, is for sale, garbage (disposal) Price = 0,60 Euros
Kardan made a loss 5 out of the last 5 years including 2016 and first Q 2017. Almost bankrupt?
KAS BANK cheap now under 10 Euros ?
Kendrion buy at 25 Euros
Kiadis Pharma bleeder, not for Defensive Investor, no sales
Klepierre French Retail Real Estate 5% dividend
KPN not for the Graham Defensive Investor
Porceleyne Fles Koninklijke Check under 5 Euros.
K. VolkerWessels check after August 31st, 2017
K. VOPAK buy under 35
K. Wessanen 
K. VolkerWessels
Lavide taking over childcare company sept 2017 
Lucas Bols buy under €15
Nedsense lege beurshuls prijs 5,6x intrinsieke waarde
New Sources Energy fraud
Neways 2018
NN Group 2018
Novisource turnaround
NSI Nieuwe Steen Investments HNK = Het Nieuwe Kantoor
Nedap NV Nederlandsche Apparatenfabriek
OCI NV buy under 16 Euros
Oranjewoud not a Defensive stock...
Pharming back of the envelope math
Philips Electronics buy around 20?
Philips Lighting
PostNL
Probiodrug loss making biotech, not a stock for the Defensive Investor
Randstad
Refresco Group  buy around 12 Euros?
RELX Group (formerly Reed Elsevier)
RoodMicrotec shareholder financed
Royal Dutch Shell
SBM Offshore 
Sif Holding
Sligro 
SnowWorld
Stern Groep buy under 25 Euros?
Takeaway.com making a loss, not for the Defensive Investor. Prijs 10x verkoop.
Tetragon investment fund including CLO (Collateralized Loan Obligations) NAV $20, price $12,44
Thunderbird Resorts: Negative book value and losing money.
TIE Kinetix Shares Outstanding: 2013:933 2014:1127 2015:1227 2016:1830
TKH Group
TomTom
Unibail Rodamco a buy?
Unilever after Kraft Heinz bid
Value8 Rat in mi Kitchen
Van Lanschot
Vastned Retail check after share buybacks May 15th
VNC = too difficult pile: Geert Schaaij + Selwyn Duijvestijn 
Volta Finance fund including CLO (Collateralized Loan Obligations)
Wereldhave, buy! 2018
Wolters Kluwer
Yatra Capital Indian Real Estate, losing money, stopping? Book 7,5 E, Price 5,75 E.

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

Saturday, May 26, 2018

Krka Group update: Benjamin Graham Defensive analysis of intrinsic value

 Krka, d. d.  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 €1 300 million, based on 2017 and Q1 2018 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: €944m current assets / €314m current liabilities of 3 easily 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 €122 million, while the net current assets are €630 million. Krka Group passes this test.

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 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 increased 30% since 2007. Krka Group passes 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 an estimate of 2018 profits)  are €6 / €59 = 10% 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 €6 EPS x 1,5 x €46,75 Book Value) = €79 Price (wat de gek ervoor geeft) is € 59 May 26th 2018.  

Dividend: 2,8/59 Euros is 5% note that the dividend has been increasing during the past years.

Conclusion: Krka Group is a defensive stock.  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

Wednesday, May 23, 2018

ABN Amro intrinsic value using Benjamin Graham Defensive method


SECTOR: FAIL ABN AMRO 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 even decades ago. 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 260 million Euros. ABN AMRO's Operating Income of  9  billion, based on 2017 figures, passes 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. ABN AMRO 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. ABN AMRO 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 5 years. EPS for ABN AMRO have been increasing. In the past, ABN Amro (and many other banks) failed.

Earnings Yield: PASS The Earnings/Price (E/P) ratio, based on the lesser of the current E/P or the E/P using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,6%. Stocks with high Earnings Yields are more defensive by nature. ABN AMRO's Earnings Yield of 11% passes this test.

GRAHAM NUMBER: PASS The geometric average of 1,5 x book value and 15 x EPS is the Square Root of 1,5 x 22,8 Euros x 15 x 2,5 Euros = 35,7 Euros.

DIVIDEND: ABN AMRO pays a dividend of 50% of earnings, was  1,45/24,3 = 6%.

Conclusion: Price is not as good as 14 Euros after Brexit vote in 2016, but ABN Amro still looks like a "BUY". (Note: I don't understand banking.)

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

Monday, May 21, 2018

Aalberts growing exponentially (as a company should) log. vs linear scales

When you see a linear graph of anything growing by a certain percentage per year, it seems growth is increasing, whilst the rate of growth is not. Using a logarithmic scale helps to avoid drawing incorrect conclusions. Compare the 2 for Aalberts Industries below:



The buy / sell points are the same, but you can really see the 2009 opportunity best in the logarithmic graph.
Warren Buffett's partner, Charlie Munger, said Value Line logarithmic charts over a long period of time are the most valuable investing tool he can think of (Berkshire Hathaway Annual Meeting 1996-1998 somewhere). Superinvestor Peter Lynch made longterm logarithmic charts of 15x Earnings Per Share (EPS) versus share price. 
The Peter Lynch chart shows that even if you buy a wonderful company that enjoys fantastic growth after you have bought it, the stock price can sometimes be too high at the moment you bought it. An example shown below is Walmart (ticker WMT), where the stock price in 2000 was the same as the stock price 14 years later even though the earnings per share increased 600%. 

Aalberts Graham Defensive Analysis:
SECTOR: [PASS] Aalberts is 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. Aalberts' sales of €2,694 million, based on 2017 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. Aalberts' current ratio €994m/€757m of 1.3 fails the test.
LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that meet this criterion display one of the attributes of a financially secure organization. The long-term debt for Aalberts is €640 million, while the net current assets are €237 million. Aalberts fails this test.
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 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. Aalberts' EPS growth over that period of 240% passes the EPS growth test.
EARNINGS YIELD: [FAIL] 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. Aalberts's E/P of 5% (using the average of last 3 years) fails this test.

GRAHAM NUMBER VALUE:  [FAIL]  The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. Aalberts has a Graham number of √(15 x €2,2 EPS x 1,5 x €13,7 Book Value) = €26,7

Dividend: Aalberts currently pays a dividend of 65 cents. 0,65/42 = 2%

Conclusion: A bit too much debt, price (koers) a bit too high at the moment. Start buying only if near 30 Euros.

Question: What is Aalbert's Return On Equity that allows it to grow at this rate? Answer: Around 20% from 2002-2008 and 15% between 2010 and today. You can see that in the steepness of the logarithmic line of the Graham Value, higher ROE is steeper line?

Old chart September 2012 when the price was 11 Euros, now 42 Euros...

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

Saturday, May 19, 2018

Wereldhave and Mr. Market's mood swings?


Wereldhave cut the dividend from €3,08 to €2,52 and also booked less profit in 2017 due to revaluation impairments.

It is hard to imagine that the same shopping malls have gone up in value from €50 to €70 and down to €30 in a few years.

It seems like you can buy a €uro for around 60 cents.

SECTOR: [PASS]  Wereldhave is a store real estate company. 


SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. Wereldhave's income of €264 million, based on 2017 sales, passes 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. Wereldhave's current ratio €86m/€175m of 0,5 is too low.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL] 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 Wereldhave is €1 632 million, while the net current assets are - €89 million. Wereldhave fails this test.

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 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. Wereldhave's earnings have grown over the past 5 years. 

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. Wereldhave's E/P of 7,3% (using this year's estimated Earnings averaged with the past 2 years) 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. Wereldhave has a Graham number of (15 x €2,5 EPS x 1,5 x €48 Book Value) = €52 

Dividend: €2,52/€33 = 8% 


Conclusion: Wereldhave has a lot of debt (which is normal for real estate companies) and good dividend.  This might be a buy. Rotterdam real estate baron Aat van Herk agrees.

See www.beterinbeleggen.nl for valuation of great companies.

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

Friday, May 18, 2018

Dutch Star One guesstimate of intrinsic value per ordinary share


Dutch Star Companies ONE

Dutch Star One is Other People's Money (OPM). The company sold stock without owning anything. With the proceeds of the stock offering minus expenses, it hopes to buy a Dutch private company and the shareholders of Dutch Star One will then own that company.

Until that happens Dutch Star One is not a compounding snowball, but a melting ice cube.




Rough math:

Initial Public Offering (IPO): 5,5 million shares sold for €10,30 per stock is roughly 5,5m x €10,3 = €56m and €55,4m according to the website: https://dutchstarcompanies.com/

Outsiders could not buy "special shares", they were given to insiders for their work and iniative. There are 200k of these x €10 = €2m cost.

Expenses of setting everything up, administration, etc. is estimated to be around €2m (€1,75m on the site?).

So if we take €55m invested minus €2m + €2m expenses, you get €51m value.

€51m/5,5m ordinary shares = €9,3 per share. The stock price has dipped recently from €11 to €10 per share, if it goes far under €9,- Dutch Star One could be a buy, even if it hasn't bought a company yet.

Note: I am a novice and haven't done much work on this. I could be wrong.

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

Wednesday, May 16, 2018

Royal DSM showing up in Graham Defensive stock screens due to abnormal profit?


DSM has recently been increasing Earnings per Share, Price has led the way. In 2017 it sold Patheon and booked a profit of €10 per share and an increase in book value. Without that sale, profit would have been €4, so that is the number used here. The €10 number is used for stock screens, so DSM has shown up as a Graham Defensive stock.

SECTOR: [PASS] DSM is 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. DSM's sales of €8 632 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. DSM's current ratio €5 432m/€2 228m of 2.4 passes this test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that meet this criterion display one of the attributes of a financially secure organization. The long-term debt for DSM is €3 509 million, while the net current assets are $3 204 million. DSM just fails this test.

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 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. DSM's EPS growth of 50% passes this test.

Earnings Yield: [FAIL] 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. DSM's E/P of 6% (using last years earnings) fails this test.

Graham Number value: [FAIL] The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. DSM has a Graham number of (22,5 x €4,4 EPS x €40 Book Value) = €65 and fails this test.

Dividend: DSM pays a dividend of 1,85/88 = 2%

Conclusion: There is no easy conclusion to be made here. I didn't predict the good results over the past years. 

See www.beterinbeleggen.nl   

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

Tuesday, May 15, 2018

Brenninkmeijers profiting from Insight, Information and Improvement




After around 2 decades of working on an issue that has puzzled many retailers especially colleagues at C&A (and the founder and planning department at IKEA for at least 10 years), I am moving on to a new chapter in life.

Insight

The insight was that you could make a higher Return on Equity in retail partly as result of having much lower Gross Margin percentages than your competitors. (Gross margin is referred to as “Buyers Calculated Profit” (BCP%) at C&A).

The cutting in half of the BCP% at C&A to just 25% in 1906 led to what the Brenninkmeijers called a Snowball effect. After decades of uphill struggle, making money became relatively easy. The C&A “Sneeuwbal System” is very similar to the Walton family’s “Productivity Loop” and what Jeff Bezos of Amazon, refers to as the “Flywheel of Growth”.

Information

Throughout the twentieth century, C&A colleagues shipped boxes of detailed sales information from the stores by car and truck to datacenters every day, long before the IT and barcode revolution reached other retailers. By quickly knowing on a weekly basis exactly which items (styles) were selling, profitable decisions could be made 52 times a year. This led to a fast fashion advantage with a constant flow of new designs driven by real-time customer demand. Competitors, on the other hand, who only knew what had been sold once or twice a year when they counted inventory, were left in the dust.

An added advantage of C&A’s information edge was that Opportunity Costs and contribution dollars could be directly calculated at style level as is customary in every industry except retail. For other retailers, this was impossible because they only tracked the total daily sales amount and an estimated average gross margin percentage. In contrast to C&A, they had no idea what they were actually selling in real time.

Garbage in, garbage out

In the last years of the twentieth century, C&A somehow adopted the sub-optimal planning, pricing and evaluation systems of competitors who used average gross margin percentage targets. This led to a false belief at C&A that gross margin percentages needed to be increased above 50% to remain profitable, even-though new entrants were successful with much lower BCP%s. This led to lower sales, losses, and layoffs at C&A. I have put it down to the original framework being “lost in translation” when C&A merged the European country companies and the operating language was switched from German to English. Retail communication can be confusing in English. You might say “This low margin style creates a high margin.” which is a lot more clear in German “This low “Handelspanne %” style generates a high “Deckkungsbeitrag $”.

At IKEA, the founder Ingvar Kamprad asked his planning department: “What the hell are percentages anyway?” Ingvar owned factories using dollar contribution and tracked sales at style (SKU) level so he couldn’t understand why somebody would make decisions based on gross margin % targets. The answer to his question is that a gross margin percentage is a sub-optimal workaround only used because long ago most retailers lacked Information Systems.

Opportunity Cost? That is the question!

If you don’t base merchandising decisions on gross margin or average operating expense percentages, the obvious question would seem to be: “What are the actual costs involved in selling articles and how do I allocate them?”

When I asked my uncle who was CEO of C&A Global between 1960 and 1988 about this, he replied that I was asking the wrong question. “Small differences in operating expense are much less relevant than substantial Opportunity Costs incurred when choosing to sell a low dollar contribution (BCP Fund €) option instead of something that generates more contribution dollars. The question is: “What is the Opportunity Cost of choosing option A instead of option B?” See Opportunit├Ątskosten : https://de.wikipedia.org/wiki/Deckungsbeitrag

Improvement

Understanding that dollar-based contribution is more effective than standard retail average gross margin % planning “isn’t rocket science” as a cousin recently remarked. Together we created a booklet entitled: “Breakthrough: C&A’s Secret Formula Re-Discovered” and sent it to a number of colleagues and cousins. In the cover letter, he wrote: “we have moved away from the clear commercial thinking of our forefathers. ..I find this interesting and important.”

It pleases me that we have discovered this mistake and things are starting to improve. I hear from old colleagues at C&A that they are once again putting the ideas into practice.

I have also been able to explain the Opportunity Cost and Dollar framework to academics, teachers and top retail executives in the Netherlands through a Master Class at the University of Amsterdam and teaching at the Hoge School Zwolle.

Now a group of a more than a dozen experts including 2 CFOs using input from Professor David E. Bell of Harvard Business School and Dr. Bianca Groen of the University of Amsterdam, has written a paper detailing what I have summarized above. The paper also includes insights from ALDI where decisions were never based on gross margin percentages, but always on Euros. See “Reframing Retail” at www.ProfitperX.com

We have also given “Counting Cash” seminars at C&A Europe to 2 groups of trainees and a class at the Brenninkmeijer Draiflessen center in Mettingen.

It has been interesting to learn what an eye-opener the Opportunity Cost and Dollar Contribution system is for people teaching retail at polytechnics and Universities. Some can’t grasp it all, it is fascinating.

On the other hand, relatively new E-commerce companies are also enlightening because they have also always tracked things at the item level. Some E-commerce companies like Takeaway.com even present gross margin dollars as their top line, that is their actual sales. What C&A calls Sales they refer to as “Gross Merchandise Value (GMV)” and only mention it in footnotes in their reports. Gross merchandise value (GMV) is the combined “Sales” of on the one hand suppliers (Cost Price) and the other hand stores (Gross Margin dollars aka BCP Fund in Euros).

Closing this chapter and moving from Push to Pull

For me personally, it is time to move on. I support my cousins working for Cofra Holding who are a force for good, but I am no longer working for C&A and would like to learn new things.

My goal is no longer to actively try to share these retail insights. They are described in my 2001 Masters thesis (which didn’t include the essential element of Opportunity Cost), a number of other documents, a game, a Youtube video (5 minutes): https://youtu.be/ThM4vwnZFWw a training manual, a booklet, Wikipedia edits, a mobile app, a newspaper article in the Volkskrant and the paper “Reframing Retail” that I have helped create. (My wife jokes that the only thing missing is “Rekenen in Centen in plaats van Procenten; The Musical”).

Now I am moving “from push to pull”. If you want to discuss the ideas feel free to ask me, but I will try not to bring it up if you don’t.

My focus has shifted. Together with www.WarrenBuffett.nl I am setting up a public equity value investing fund to help people increase their wealth by maintaining a margin of safety. Buffett explained the insight and results of value investing in a speech he called “The Superinvestors of Graham- and Doddsville”. Take the time to read it, it is just a few pages. Chances are I also be telling you about Value Machines Fund, using my money-making-machine which spits out Eurocents to help clarify things. Please feel free to reach out to me by email or telephone!

Ansgar John Brenninkmeijer
Amsterdam, Spring 2018
Email: ajb@ValueMachinesFund.nl
Mobile: +31-6-2954768

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

Monday, May 14, 2018

Acomo Amsterdam Commodities intrinsic value


Acomo has been growing (through acquisitions) and pays a good dividend. In 2017 the lower dollar had a negative effect on results. If the price goes towards €20 again it could be a good buy although it is more expensive than the Graham Number.

SECTOR: [PASS]  Acomo is 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. Acomo's sales of €709 million, based on 2017 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. Acomo's current ratio €240m/€140m of 1.7 fails 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 Acomo is €21 million, while the net current assets are €100 million. Acomo passes this test.

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 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. Acomo's EPS growth was more than 160% over the past 10 years, Acomo passes this test. 

Earnings Yield: [FAIL] 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. Acomo's E/P of 6% (using the last 3 years Earnings) fails this test.

Graham Number value: [FAIL] The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. Acomo has a Graham number of (15 x €1,4 EPS x 1,5 x €7,6 Book Value) = €15,4 

Dividend: €1,1/€23 = 5%

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

Tuesday, May 08, 2018

Neways Electronics intrinsic value estimate


SECTOR: [PASS]  Neways is in electronic manufacturing services (EMS) 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. Neways' sales of €439 million, based on 2017 sales, fails 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. Neways' current ratio €107m/€107m of 1.4 fails 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 Neways is €11.7 million, while the net
current assets are €45 millionNeways 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. Neways made a loss in 2012.

EARNINGS YIELD: [FAIL] 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. Neways' E/P of 7% (using average of last 2 years earnings and an estimate for 2018) 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. Neways has a Graham number of (15 x €0,9 EPS x 1,5 x €7,4 Book Value) = €12,61 and fails this test.

DIVIDEND €0,35/€13,4 = 2,6%

Conclusion: Neways seems priced just above intrinsic value. 

See: www.beterinbeleggen.nl for more in depth, qualitative analysis of "good" companies.

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