[birdienumnum]

Warren Buffet and 3G Capital are buying out Heinz in its entirety by offering $ 72.50 per share to current shareholders, whether they want it or not. This means that Heinz will be taken private, its shares will be delisted from the New York Stock Exchange.

 

I think it is not out of the question to see Heinz reappear on the stock market in a few years. After all, 3G Capital bought Burger King a few years ago and recently reintroduced it on the stock market. By then, Warren Buffet and 3G will be helping themselves to the cash register since, as the new owners, they will be able to freely decide on the amount of the dividend!

[birdienumnum]

Thanks Jerome :D

 

I am several years ahead of this dear Warren and am lucky to have made a considerable capital gain given that my HNZ line was important. On the other hand, I am not very happy because I had left with HNZ for at least 20 years and Mr. Buffet did not call me to ask my opinion!

 

The most annoying thing about all this is that good deals are hard to find at the moment, after a nice rise in the US or Swiss market to name just two.

I'm looking at KO maybe, after the mini correction of the last few days. We'll see when I receive the cash from this (forced) sale.

 

 

 

 

[birdienumnum]

It's quite interesting to note that spin-offs are quite trendy at the moment. There are big ones, like MDLZ and KFRT from KFT, and lesser-known ones, like Hyster Yale (HY) from Nacco (NC). Hyster Yale, an American manufacturer of "forklifts" is also an interesting value, "under the radar" as I like them.

Some activists like Nelson Pelz are adding another layer, since they are pushing certain boards of directors to split the company into several parts in which they have just acquired enough voting rights to obtain a seat on the board of directors (example at the moment: Ingersoll Rand).

Some spin-offs are done in preparation for the sale of a business that a company no longer wants. This was once the rumor regarding the spin-off of Mead Johnson (MJN) from Bristol Myers Squibb (BMY). To my knowledge, BMY still owns MJN…but who knows?

So the next big split is Abbott (maybe I'm forgetting others?). I have an ABT line, I'm happy with it, but to be honest, I don't know what the outcome will be. I don't know why they're doing this split. In my opinion, it will all depend on the value of the 2 separate entities compared to the combined value. If a company separates a rotten business, it will have a positive impact on the price of the original stock but the price of the new stock will go down. The case of Mueller Water (MWA), a spin-off of Walter Industries (WLT) is an example of an unsuccessful spin-off...it seems that Walter wanted to separate itself from its business by offloading a large debt to MWA.

Well, in short, I have not analyzed the ABT case and do not intend to do so since in any case it is, as is very often the case in the stock market, a question of perceived value rather than real value! Example at the moment: MDLZ is really not popular, everyone agrees that we should bet on KFRT and sell MDLZ. This encourages me to take an interest in MDLZ, when the dividend is confirmed and when there is the first dividend increase...maybe...we'll see.

[birdienumnum]

First of all, congratulations to the winner and a big well done
to all competitors!!!

Rereading the competition announcement, it's true that you say "composed solely of actions"... that reminds me
bad memories of tests at school (or college) where I obviously read wrong...who knows...maybe I failed
a brilliant academic career…:-)

Well, otherwise between Clero's hyper conservative and classic portfolio (which is likely to gain in real terms in the event of a very strong correction) and Sovanna's less defensive portfolio (because of potassium and gold), there is Arnaud and myself.

Maybe you put together the best of the 4 of us. If there is a correction from 10-20% in the last quarter, I will be curious to see how these 4 portfolios perform vs. your hybrid selection.

[birdienumnum]

For my part, I consider that investing in a real estate company is like investing in a piece of a building, office or apartment. I therefore ask myself the question of knowing if, at a given time, it is appropriate to invest in this piece of building, land, etc. given the market conditions. At the moment, there is a bit of overheating.

More concretely, I look at 3 things in a real estate company: the level of debt, the portfolio of assets AND ABOVE ALL the net inventory value compared to the stock market capitalization (which gives the famous discount or premium). If there is a discount, good conditions are there to not fail in the long term. However, the management of the real estate company must be good and the portfolio of assets must be perfect ("rental, rental, rental").

I parted ways 3 months ago with the only real estate company I had (a little reluctantly) because at the moment I am wary. All the real estate companies are at a price well above their net inventory value. I am waiting for a correction to get back into them.

Regarding French real estate companies, there are of course the "usual suspects" like Klepierre, Unibail Rodamco, Fonciere des Regions and Foncieres des Murs. My favorite is Frey, a lesser known company that is interesting because of its specialization in shopping centers.

[birdienumnum]

Thank you. But this is just a virtual portfolio in the sense that it was kind of like my "value/dividend" portfolio from 3 months ago. I own most of the stocks in this portfolio but I acquired them much earlier. Some of them were years ago.

I also have a bunch of other positions that are not detailed because they don't fit the spirit of this site. For example: Alleghany Corporation (Y) and Markel (NKL) which are both called "mini Berkshire" or "next Berkshire".
These two companies, like Bershire Hathaway, do not distribute dividends. They distribute them from time to time in the form of free shares (1 share for 50 shares).

I monitor my positions using apps on my smart phone. A quick glance allows me to see any abnormal movement compared to the market trend of the day. Paradoxically, I don't look much at my already acquired stocks. Especially defensive stocks such as MO, DEO or Nestle. I don't care if Nestle gains or loses 2-3%. From more than 4% I start to look at what is happening more closely.

On the other hand, I constantly watch (almost obsessively) the titles on my watch list.
I always have a watch list up my sleeve. Especially during earnings announcement periods. That's when you can get some good deals. A bit like the sales for my wife.

[birdienumnum]

Quick overview of my portfolio after 3 months (June 21 – September 21)

For information purposes (because I am not trying to beat the market), the S&P500, CAC40 and SMI indices
all three climbed well during this period: +10.2%, +13.4% and +9.9% respectively.

This development makes me cautious for the coming weeks. To illustrate my distrust I will take MCD: McDo announced Friday morning an increase in its dividend of 10%. What did the stock do that day? …..Well nothing!!! +0.6%….Why? …..My interpretation is that the stock is correctly valued or even overvalued in relation to the risk/benefit hence the market's non-reaction to such news. I maintain my purchase price on MCD of USD 85-87.

MCD +6.9%
CLX +0.5%
KMB +5.7%
HNZ +5.3%
WDFC +10.4%
RPM +12.9%
KMP +10.3%
BIP +7.7%
PFE +8.5%
BMY -3.4%
JNJ +4.0%
SYY +6.4%
EMR +10.0%
ETN +27.4%
MAT +11.9%
DEO +12.1%
PM +7.6%
MO +0.5%

SEV -3.4%
THEP +9.0%
FP +17.1%
RAL +12.2%
DG +1.9%
SGO +9.2%

Nestle +7.7%
Swissre +7.5%
Komax +2.2%
Rieter +27.6%
Inficon +6.7%
Swiss Life +30.2%
Zurich Insur. +14.3%
Rock +10.6%
Novartis +8.9%
Geberit +15.3%
Sika +6.5%
SGS +9.3%
Forbo -7.6%
Bossard +5.4%
Bucher Indus. +8.8%

Among the best performers are Eaton (+27.4%), Total (+17.1%) and Swiss Life (+30.2%).
For these 3 values, I believe I have recognized an overreaction of the markets for XY reason (for example the leak in the North Sea for Total). This will end up paying off.

The only stocks with a downward trajectory, Bristol-Squibb Myers (-3.4%) and Forbo (-7.6%) weigh down the result a little. For BMY, the stock fell sharply following the end of clinical trials for a new drug against hep C. The stock has recovered since then, I am not worried, it happens from time to time, I have seen others! As for Forbo, the stock declined following an announcement of disappointing results. To be monitored.

Small slip of the tongue for the title SGS: its French competitor is called Bureau Veritas and not CGG Veritas (which is also a good company).

[birdienumnum]

Come on, come on, ladies and gentlemen!

A little effort…you’re not going to let me win by default, are you?!?

[birdienumnum]

Not an easy exercise, the market being already relatively high.

Come on, I'm going:

1) Kinder Morgan Partners – as I mentioned in my portfolio, this pipeline company charges its customers (the oil majors) a certain price for each barrel that passes through its pipes. This is a business model that is extremely resistant to economic conditions and fluctuations in the price of a barrel. The company increases its dividends year after year

2) Francois Freres Cooperage – a producer of barrels for wineries and distilleries. Instead of investing in Diageo or Pernod Ricard, which have had a great stock market performance, I prefer to invest in this small stock that still has potential and should not suffer too much during a recession (people drink more during a crisis… at least they don’t drink less)

3) Pro Share Ultra Gold (UGL) – this ETF has gold bullion as its underlying asset but has the particularity that the daily price of this ETF varies twice as much as the price of the underlying asset. This position is certainly the most speculative of the 5 values. I am not a fan of gold but my reasoning is that gold could increase again with inflationary fears and the end of the world looming (again). As it is only a game, there is no problem entering this position, but in reality I could very well burn my fingers here

4) IVF Hartmann – Small Swiss company unknown to the general public which manufactures medical products such as dressings (under the brand Dermaplast). Small cap with very little liquidity, “under the radar” (as I like them) and which should withstand a weak economic situation.

5) Vinci – the value is under pressure at the moment for fear that the French government will take a little more money under motorway concessions. Even if this happens, the car park and concessions model generates a huge cash flow.

[birdienumnum]

I have to say that at the moment I'm not very inspired by the mood of the markets either.
During the last “correction” I took the opportunity to strengthen myself on DG, RAL and SGO.

There, I am also waiting for a correction of the style 10-20%….well, it's been a long time since we talked about Greece on a daily basis….Greece
usually comes up every 3 months…and then there’s Spain…so I’m waiting for all these great financial people to come back from vacation and for them to
everyone starts to freak out….the end of the world is getting closer again….and bang…I pull the trigger…

If there is a correction, I will look at cyclical stocks and even US Growth stocks which have already corrected quite a bit. My favorite growth stocks are COH, CMG and SBUX.
Otherwise every time FCX, ETN reach 4% dividend yield, I support…

[birdienumnum]

Very nice wallet! The kind to put on autopilot…

Why don't you have positions in EUR if your reference currency is the EUR? Of course, the situation in Europe is the one we know, but there are some nice values being sold off in my opinion.

A+

birdie

[birdienumnum]

Ton premier point concernant les hedge funds peut preter a la controverse. En tout cas, j’aime a croire que Cramer a raison…et j’irai meme jusqu’a dire que les hedge fonds ne servent a rien (sur le plan de la macro)…tout comme les agences de rating. Ces derniers en particulier nuisent a l’efficience des marches….mais n’est-ce pas l’inefficience et l’irrationalite de l’Homme qui creent de bonnes opportunites d’achat?!

Pour ce qui est du taux de distribution supperieur a 50%, tout a fait d’accord avec toi. Ce qui n’empeche pas des valeurs tres defensives telles que Pfizer, France Telecom, etc. de couper leur dividendes a un moment T car les fondamentaux du marche ou de l’entreprise ne garantissent plus un dividende perenne.

[birdienumnum]

Hello,

I find the question very relevant.

A few years ago, I invested in British and French companies on the NYSE, therefore in USD. My only real motivation to buy ADRs rather than directly, at the time, was the strength of the EUR/CHF vs. USD/CHF (my reference currency being the CHF). Today this motivation is no longer relevant with the fall of the EUR or the GBP against the CHF.

Note that in terms of taxation, the withholding tax on the dividend for an ADR is the same as for the title on its domestic market. For example, the withholding tax is 30% on the Sanofi (SAN) title that I hold in the US.

In terms of dividend yield, in theory, there should be no difference between the two because any difference would create an arbitrage opportunity and the prices would readjust...well that's the theory...because the dividends are the same in local currency but the dividend payments made to ADR holders are not "hedged" and if the currency fluctuates greatly between the decision of the board of directors and the detachment of the dividend for the ADR, there may be differences.

There are also some risks in holding ADRs. For example, a company may get tired of the US reporting constraints and the overall cost of being listed in the US. In such a case, the company may want to delist from the US stock exchange. This happens from time to time (and there are also fashion effects) and I don't know what happens to the holder: do they offer him cash or shares of the reference country?

Well, all that is blah blah... basically, it is better to buy securities on their reference market rather than on a secondary market such as ADR in the US, especially if the reference market is in the same currency as the investor's reference currency.

A+

[birdienumnum]

Hello Jerome,

I actually noticed a lot of common points between us while reading your blog, your approach, your recommendations, etc... and allow me to congratulate you on your site because it is obvious that it takes up a lot of your time!

Regarding volatility, what I wanted to say is "we have to deal with it" and not be afraid of it. Since the financial crisis we have moved to the debt crisis, the EUR crisis, etc....for at least 3 years, it is clearly the macro that dictates the markets and the volatility is high, people are afraid, the markets are schizophrenic, in short...it's nonsense but we have to deal with it and have enough cash (and balls for these gentlemen) to enter the markets when they have corrected or capitulated (I am thinking for example of March 2009).

Otherwise, I too have been doing stupid things and dragging around skeletons since I started (which I have never sold)….my biggest fault is not knowing how to sell at a loss…I also think that this is the hardest thing for the investor.

[birdienumnum]

Phil13,

I advise you to sell WMT. 40% of capital gain on such a title is an EXCELLENT result considering that the title has nothing
been doing for ten years and has recently climbed. But mainly: the distribution sector is very complex, the margins
are not high, growth mainly comes through internationalization but the latter is very competitive, capital intensive and complicated (nothing to do with the franchise model at MCD for example). This does not mean that I have no position in the sector (I own Casino in particular through the holding company Rallye) but I have not (yet) made such a capital gain

[Author]

Posts