After a decent run up I sold a half position in TPB as it overshot my previously defined price target.
Due to the lack of better investment opportunities I am willing to hold on to half a position despite what I believe is now a fully valued price for the OTP company.
In my writeup of the company I claim TPB to be a compounder in the making, which I still consider true. However, the company as of late has been actively pursuing M&A opportunities in Vaping Products which I consider much riskier than further building their smokeless tobacco offerings. The vaping industry is relatively new, faces deep pocketed competition from incumbents such as Imperial Brands, Philip Morris but also upstarts such as Juul, while facing an uncertain regulatory future.
I am thus discounting growth in the vaping segment with a higher rate than growth in the smokeless segment and believe an EV/EBITDA in excess of 10x is a decent valuation to start exiting a successful investment.
Today I sold my stake in Chinese search giant Baidu. The reason behind it is straight and easy: Valuation exceeded my Price Target of around USD 255 per share. In my opinion a margin of safety is not given at this price. Further share price appreciation hence will be based on shaky growth assumptions, that I am not willing to pay up for. (especially in a market where European Junk-bonds yield lower than 10-year treasuries, a levered tec-fund can raise capital at 7% and the only justification to hold on to stocks is the fear of missing out on yet another rallye)
The Investment in Baidu yielded a 43% CAGR with only very little risk of permanent impairment of capital.
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
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
RICK (long): 154 shares, 8.42€/Share
Much has happened to RCI Hospitality (RICK) after having pitched why I bought into the firm. Since last week the price dropped below 8 USD, which translates into a FCF-yield just short of 20%, I decided to up my position by 70 shares. Due to a shortage of cash I sold my CB&I holdings to finance the purchase. This shifting out of CB&I into RICK has two reasons. First, I believe RICK is valued much more attractively and its real-estate portfolio, takes a lot of risk out of the equation. Second the recent developments at CB&I (impairment and selling of their nuclear segment) haven´t exactly bolstered confidence in the current management to create shareholder value. Continue reading
Profit: 57,11% CAGR: 41,8%
U.S. Eisenbahngesellschaften hatten einen schweren Start ins neue Jahr. Nach einem ausgezeichneten Jahr 2014, von Wachstum der Frachtvolumen beinahe über alle Segmente geprägt, stiegen die Aktienkurse wie auch der von CSX in unbekannte Höhen. Continue reading
Profit: (5,2%) CAGR: (44,76%)
Vor Börsenstart am heutigen Montag wurde von Mattel folgende Nachricht bekanntgegeben:
Mattel Replaces CEO After Slump Extends to Five Quarters. In a preliminary report of results, the company said earnings last quarter amounted to 52 cents, excluding some items. Analysts had projected 91 cents on average, according to data compiled by Bloomberg. Sales fell 6 percent to $1.99 billion in the period.
Offensichtlich ist die Entwicklung der Umsätze und Gewinne deutlich schlechter als meine zuvor aufgestellte Schätzung. Continue reading