Why Baidu Deserves a Spot in a Value Investor´s Portfolio

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)


More Color on RCI Hospitality

I felt I had to shed a little more light on a conviction buy of mine, RCI Hospitality (RICK). While I have briefly outlined the thesis for investing in RICK, I feel to better comprehend the rational behind taking a position in the company requires a little more detail.

I have decided against publishing the article on my own page in favor of SeekingAlpha. Due to the large audience on this platform authors are usually confronted with critical feedback on their argumentation, which I consider essential for the investment process. This is not a click and bait action of any kind. Compensation on this article will be minor since even on Seeking Alpha this stock is underfollowed and the write-up will generate only few views upon which compensation is based on.

Going forward I hope I can evoke similar feedback for my ideas on Investing0711.com and am able refrain from publishing my ideas on 3rd party websites.

Finally, here´s the link to the article: http://seekingalpha.com/article/3985498-rci-hospitality-holdings-sin-stock-50-percent-upside-assuming-zero-growth

Here´s a brief update on recent released Q3 sales figures of RICK: http://seekingalpha.com/article/3987995-rci-hospitality-holdings-reports-solid-sales-disappoints-capital-allocation.

RCI Hospitality Stripped Down

RICK (long): 94 shares, 9.58€/Share

I recently purchased 94 shares of RCI Hospitality (RICK) and briefly want to update you why I did so. After having talked about the Greenwald Valuation for companies in my last article (before my creative time-out) I have been busy finding companies that are undervalued according to exactly these standards. At the end of this search was RCI Hospitality, a value investment gem. The company, as the title of this blogpost might hint, is active in the adult entertainment business and runs several what they call “cabarets” aka. strip clubs across America. Their business model results in the holding of a large real estate portfolio. The firm is a small cap with a market capitalization of about 80 million as of last week. Due to its size it is largely ignored by analysts. The combination of a lack of analyst-attention and what some people would call dubious industry might have created this very attractive opportunity. Currently RICK trades at a P/B of just 0.7 and a P/E of 9.0 and a free-cash-flow yield north of 15%. Continue reading

More of the Good: IBM

Wie erwartet hat sich das U.S. Wachstum weiter verlangsamt und betrug im zweiten Quartal nur noch magere 0,2 %. Erwartet wurde ein GDP-Wachstum von 1 %. Dies bestärkt meine Entscheidung CSX aufgrund der hohen Bewertung verkauft zu haben. Die Erlöse aus dem Verkauf der CSX Aktien wurden für eine Aufstockung meiner IBM Position zu USD 170 pro Aktie verwendet. Mehr Kapital in IBM zu investieren war aufgrund der Continue reading

Kauf: International Business Machines

IBM (long): 10 shares, 129.07€/Share, 2.99% YoC 

Am 20.1. war es wieder an der Zeit! Quartalszahlen von IBM. Und wie zu erwarten gefiel WallStreet nicht was ihr geboten wurde. Zum wiederholten male wurden IBM Aktien nach vermeintlich schwachen Zahlen stark abverkauft. Eine perfekte Gelegenheit meine vorhandene Position von 7 auf 10 Aktien zu einem Kurs von EUR 130,4 auszubauen. Bei heutigem EURUSD Continue reading