Turning Point Brands (TPB) is a textbook low risk, high return investment with immediate catalysts. Based on conservative assumptions I estimate that Turning Point Brand´s equity provides at least 80% upside to today´s valuation. The company is in the business of selling other tobacco products, which among others includes moist snuff, chewing tobacco, cigars, cigarette paper and liquid vaporisers. A 2016 IPO has provided relieve to TPB´s sky-high pre IPO debt load. Further refinancing and deleveraging of the balance sheet, which is supercharged by utilisation of loss carry-forwards, will reveal true earnings power of the business in 2018. Fetching a conservative multiple on 2018e earnings of 15x, implying an earnings yield of 7%, I arrive at a fair value of USD 23 per share. Continue reading
Selling some few hours prior to a neat 20% rally sucks (See the RCI Hospitality chart below). I guess we´ve all been there and we cannot undo our decisions. What we can do is trying to avoid similar unnecessary letdowns in the future.
To do this I will try to put down some principles that might keep me from hastily hitting the sell button Continue reading
There was recently a major change in my portfolio that was left unexplained until today. I quietly sold off my entire RCI-Hospitality-Holdings (RICK) holdings after having beat the drum for the company for quite some time. Therefore, I feel that I owe an explanation of why I have done so.
As you might have noticed I was quite fond of RICK´s insanely cheap valuation. The position was bought at levels of USD 8 and USD 10 per share respectively. In my Seeking-Alpha analysis of RICK I determined the company to be worth anywhere between USD 12.50 on the low- and USD 16 per share on the high side. Continue reading
Shoutout an alle Value Investoren, die die es werden möchten und jeden anderen Interessierten im Raum Stuttgart! Um sich und die örtliche Valueszene ein wenig kennen zu lernen ist am Freitag, den 4. November 2016, ein Treffen in Stuttgart geplant. Wir wollen mit möglichst vielen Gleichgesinnten zusammen essen, trinken und uns über Value Investmentkonzepte bzw. Ideen oder auch alles andere unterhalten. Los geht es um 19:00 Uhr im Lumen. Unter folgendem Link findet Ihr die Adresse und weitere Details:
Wer dabei sein möchte bitte kurz im obigen Link zusagen. Wir freuen uns!
WEBCO Industries is a classic Graham net net, or in Buffett´s words a cigar butt with one last puff remaining. Buying the equity provides investors with 63% upside to NNCAV and 120% upside to liquidation value. The business of WEBCO is unattractive yet good enough to earn meaningful profits over the cycle. WEBCO manufactures tubes for various end users in different industries such as upstream/downstream oil, agricultural and auto/trucking among others. In simple words raw materials are purchased and then processed into tubing solutions. Continue reading
I have been interested in Baidu for quite a while and today decided to open a position in the company by buying 6 shares at a price of USD 163. I will increase the position when prices turn more favorable.
On SeekingAlpha I have outlined why shares are a buy at current levels in detail. You´ll find the pitch including my valuation model here:
For all the folks in a rush, here´s a fast track introduction as to why Baidu may be suitable for a value investor´s portfolio despite being an internet company and Chinese:
- Sum of the parts valuation results in value of USD 255 per ADR
- or 60% upside until end of FY2017
- Baidu search is significantly undervalued trading at 11x FY2017 after tax profits while growing at a > 20% clip
- Comparable businesses command multiples in excess of 20x profits
- High search margins are buried under large investments into O2O and iQyi
- Sale of online-to-offline businesses and Chinese Netflix pendant iQyi will reveal true earnings potential or provide upside optionality if turning profitable.
Here´s a brief update on what Chinese think of the company and its services. Headline here is that Baidu is unloved but there is no alternative for it, which will ensure growing profits for years to come.
I am currently long Baidu (BIDU)
Yesterday I closed out my position in Philip Morris Inc (PM) with a net gain of 31% including dividends. I still believe the tobacco industry is an excellent place to be due to an addictive product resulting in a very inelastic demand curve helping big tobacco to grow revenues despite shrinking cigarette volumes. Further little CAPEX requirements pave way for robust cash flows in the industry.
Nevertheless, at some price even the best business becomes an attractive sell. As of yesterday PM traded at around 25x earnings and 20x FCF, which is considerably higher than multiples demanded by the company in the past. Average P/E ratio over the past 5 years Continue reading