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The company valuation and the profit multiple – Mr-Market markets, stock exchange, trading, economy

You know what P/E, KUV, P/S mean and what they don’t mean? Really?

That may well be and then I congratulate them personally. But I say it frankly and freely, when I see how the majority of normal investors argue on stock market Twitter, then exactly this understanding is missing, because things are not as interpreted by “common sense”, which is often on the wrong track on the stock market anyway.

Let’s take a fundamental look at the issue.

First of all, “multiple” simply means “multiple”, so we are talking here about a company value as a multiple of earnings. And if the company is listed on the stock exchange, the market capitalization – which is calculated from the price x the number of shares – is the company value and the so-called P/E ratio or P/E is the “profit multiple”.

In the following I will work with examples and have to simplify the very complex reality of company valuations.

The following simplification rules apply here:

First, there are many ways to value a company, especially in off-market M&A, and depending on the industry and the type of company (start-up or established company, for example), one must necessarily choose different approaches, because for a start-up, for example, a profit multiple makes no sense. For our purpose here, however, we are looking at *only* the earnings multiple, which for publicly traded companies is also called in German KGV or in American P/E (from Price vs Earnings).

Second, “profit” is a very broad word, even more so in times of IFRS. Are we talking about pre-tax or after-tax profit, EBIT, EBITDA or some other “creative” way of calculating profit? For our purpose here, let’s just call it “profit” and it doesn’t matter what it is exactly.

Third, tax effects are always an important factor when negotiating a company’s value as well; we’ll pretend here that there are no tax effects.

Fourth, future profits have to be discounted into the present -> because instead of investing the money for future profits, you could invest it. So, for our purpose here, we pretend that there is no interest rate and therefore no discount factor.

Fifth, the profit multiple can of course only be expressed as a P/E ratio for listed companies, because only there is a “price” that visualizes the value of the company on a daily basis. For our purposes and for simplification, I use the abbreviation P/E ratio here as a synonym for all profit multiples, including those of unlisted companies.

If we take all these preconditions for this thought experiment as given, we now have the basis to show quite simply what the market actually values with the P/E ratio (earnings multiple) and why.

Let’s make it concrete and imagine a concrete company that you – yes, exactly you – want to buy. You are in negotiations with the owner.

Company A

Company A has no business anymore, it is practically closed down, but the company still owns a lot of goods in the warehouse, which currently have a market value of 1 million.

What would you offer the owner for it?

First of all, there is no more multiple here, because within a year they will sell the entire stock.and there is no repeatable gain. So is the multiple here 1?

Of course not, because why would you go to the trouble of buying a company with goods at the market value of 1 million for 1 million? You do want to make a profit, otherwise there is no point in wasting your time and besides, you still have your own costs when you sell.

So you might offer 500,000 to the company owner, then add your costs on top of that and you are left with profit.

So the P/E ratio in the scenario of a company without any future is 0.5, so to speak, although this is a skewed formulation here because we are not talking about operating profit but liquidation of inventories – i.e. book values. But for the simplified representation here it is OK.

Company B

Company B has a very stable business, which is expected to remain stable for years and also the profit of 1 million per year will remain stable. But you can’t expect growth either, the company will probably just keep running.

What would you offer the owner in return?

Now you have to calculate how many years of profit you are willing to pay to acquire this company. In simple terms, these are the years you have to wait until you get a return on your investment.

Quite clearly, the more stable the business, the more years they are willing to wait. The more uncertain the business, but still with no growth prospects, the less they are willing to wait.

After all, with every year of “waiting” the risk increases in the abstract that something negative will happen after all and the business model of company B will be destroyed.

When such companies change hands in the private sector – i.e. what we call small and medium-sized businesses – P/E ratios (earnings multiples) of 4-7 have become commonplace, as you can also see -> here at the SME Entrepreneur Exchange.

So, as an example, you are willing to wait 5 years until your investment in the company pays off and so your offer to the owner of the company is 5 million.

Company C

If the old company owner manages to sell his company to the stock exchange at a P/E of 5 instead of selling to you, he has a good chance to get there rather a P/E of 7-12 for the same business, which is then paid by the subscribers at the IPO. This motivates to go public, but on the other hand the administrative effort and costs are so high that it is only really worthwhile for larger companies.

The difference in valuation is due, among other things, to the higher visibility of the figures of listed companies, with which also comes greater security for investors. And if you remember company B, you are willing to pay more if the profit development is more secure in the long run. In addition, the market provides you with many more interested parties in your company than you could achieve in a direct, off-market sale, and more demand means higher, enforceable prices.

Company D

In Company D, a founder with a brilliant idea sells you his company, which is currently making 1 million in profit. Due to the great business model and the strong growth, you can assume that the profit will increase strongly and double every 2 years, if not more.

Now it becomes quite difficult, because now you have to You make a lot of assumptions. Simply to say that is also a P/E of 5 is nonsense and the seller will not sell the company like that, because that is much too cheap.

Because not only the profit today is sold, but also the immense potential, which can generate a profit of 5 million in 5 years, for example. So you would get the company almost for free.

On the other hand, you can’t simply extrapolate the growth into the future, because with potentials there are immense risks and, by the way, *you* have to develop the opportunities first, the seller sells you only the present and not the future, which you have to conquer. And you don’t want to pay the seller for an entrepreneurial service that you have to provide in the first place.

In short, a potential is worth something, but it cannot simply be extrapolated indefinitely and must therefore be heavily discounted. And clearly, in the reality of the M&A business, a profit multiple for such a company is *not* an appropriate way to determine the value of the company, you then use other techniques. But as said above, let’s stick to the example here.

In the end, you might offer the owner a multiple (P/E) of 20 in private, and on the stock market you might call a P/E of 30 or 40. That makes sense.

So this company might go over the “counter” for 30 million and that’s mainly because of positive expectations.

Company E

Now we come back to Company B with its stable earnings, which in the over-the-counter environment you might have appreciated with a P/E ratio of 5.

But now the company’s CEO has an inconvenient truth for you. Yes, the company has stable profits and yes, they will pretty much last another 5 years, but all the company’s technology is outdated, competitors are coming and most importantly, there is a fear that the legislature will impose all sorts of levies and aggravations on the company’s business in about 10 years.

Do you still pay a multiple of 5? Absolutely not!

The reason to invest in the company is the future and with such a negative future expectation you will ask yourself if you want to invest in this company at all!

In reality, if you imagine the scenario real, you will probably not do it anymore – why waste time with it? And if you do, then for a multiple of 2 or 3, because the purchase only makes sense for you if you can be *really sure* to get your investment back via profits.

Transferred to the stock market, this information turns a company that may have been worth a P/E ratio of 12 into a P/E ratio of 6 or 7, i.e. a valuation without any future prospects.

So ….. I hope the point has been made.

You have seen that it is your *expectation* of the future that determines the price you are willing to pay for the company. Not the profits of the past, but the expected profits of the future!

In all the cases above, the present profits were 1 million, the difference in valuation is not the past, but the *future expectation*!

And the higher the P/E ratio (the multiple) you are willing to pay, the more positive your future expectation is and the more certain

he assumption is that profits will grow.

If this expectation is high, as in the case of company D, then you are prepared to pay a high multiple (P/E ratio). And otherwise not and if there is no more future, the valuation becomes more and more like that of company A, where you only use the value of the liquidation of the existing assets as a benchmark.

And still another important realization lies in above explanation: The P/E ratio is *no* yardstick for whether a share is attractive or not!

Because the P/E ratio only describes the consensus of discounted earnings expectations in the future, it is a snapshot. And whether the P/E ratio is 10 or 40, these expectations may turn out to be too high, too low or just right in the future.

So if you buy stocks with low P/E ratios, you are buying companies that the market doesn’t think have much of a future. No more and no less.

To believe that the market is wrong about this is rather naive without a really deep knowledge of the industry and company. It is possible to be smarter than the market when valuing individual companies, but this requires knowledge and experience in company valuations as well as intensive knowledge of the industry and the competitive environment. Ideally, insider knowledge as well.

The vast majority of investors who operate with P/E ratios and P/B ratios for the fundamental valuation of shares, however, do *not* have this sophisticated knowledge, especially since the time required for this is not even possible for investors with a job.

And publicly known fundamental data are also unsuitable as a basis for being smarter than the other market participants. Nevertheless, people are terribly fond of imagining it and writing long “analyses” because it serves their ego – we are all a bit “Buffett” and “investment heroes”, aren’t we?

So anyone who thinks that a stock with a P/E ratio of 12 would be “cheaper” than one with a P/E ratio of 30 has fundamentally failed to understand something, and unfortunately far too many continue to do so.

Both shares are rather valued exactly as the swarm intelligence market considers appropriate, taking into account all known facts. And this can turn out in *both* cases in the future as too optimistic or too pessimistic! In both cases, it is not clear in advance in which direction the market is wrong.

If you don’t believe that, you can compare Amazon’s P/E ratio over 20 years, I’ve often written about it….

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Buffett’s best advice? Make it simple instead of complicated, look for comprehensible business models that will last!

Value investors can largely get by without complicated mathematical formulas, in that adherents of value-based investing simply rely on common sense. And on patience.

In principle, the simpler and more boring the business model, the more interesting it is for value investors. You buy shares in solid companies run by honest and capable people, and at a price that is below fair value, i.e. does not (yet) reflect the company’s earnings potential….

“Make it simple, not complicated: pick companies with comprehensible business models that will last.
(Warren Buffett)

Warren Buffett believes that you should not dwell on market forecasts or charts, but above all read the companies’ annual reports. There you will find everything a value investor needs to know about the company, and there he will find the figures and data he needs to evaluate the company and determine its fair value. And he advises only putting money into companies whose business you understand.

“You should put your money into companies that even an absolute moron could run. Because at some point, that’s inevitably what’s going to happen.
(Peter Lynch)

Do like Warren Buffett, don’t make it unnecessarily complicated. Intelligent investing is not a science, it is solid craftsmanship using a few but important rules. You don’t have to be able to work magic to make money in the stock market over the long term.

“If you want to invest in a company, you should be able to explain why. And do it in simple language that a fifth grader could understand, and fast enough so the fifth grader doesn’t get bored.
(Peter Lynch)

Peter Lynch advises buying what you know. And that in a double sense: not only brands or products from one’s own environment, but companies that one knows, that one has understood, that one can explain. Not in every detail, but so well that you can explain quickly and to the point what the company does and how it earns its money. And what makes it special compared to its main competitors.

“If a company does well, the stock will eventually follow.
(Warren Buffett)

In the long term, stock market prices always rise

At the same time, one should (also) not concern oneself with the search for perfect timing, the best time to enter. Because in the long run, it hardly makes a difference at which point in time you invested in shares, in the long run, prices rise almost unstoppably. Economic progress, the growth of the world’s population and the (also therefore) globally increasing prosperity are reflected in the share price development.

“In the long run, stock markets will provide good news. In the 20th century, the U.S. went through two world wars and other traumatic and costly military conflicts, a depression, several recessions, stock market panics, oil shocks, virus pandemics, and the resignation of a presi

IDENTIFIED. Nevertheless, the Dow Jones rose from 66 to 11,497.
(Warren Buffett)

Wall of Worry. Or: Was there something?

Source: Stock Exchange Online

In the process, equities beat all other forms of investment by far over the long term. The chart shows the development until the end of 2018, when prices once again fell sharply. In 2019, the stock markets boomed, 2020 brought the “corona flash crash” followed by a V-shaped recovery, and in 2021 the stock markets continued to rise, while the wheat was already being separated from the chaff in the technology sector. And since mid-November 2021, the stock markets have been rattling hard, and since mid-February, the Ukraine war has once again put prices under noticeable pressure. And yet the stock markets are proving robust, despite the interest rate turnaround, the energy price shock and all the other bricks in the “Wall of Worry”. From this development, we can learn that market timing is a negligible factor for sustained stock market success, while another character trait contributes significantly to success: patience, the “supreme virtue of the investor” according to Benjamin Graham. Based on the S&P 500, the risk of losing money with stocks is statistically reduced to zero if you hold out for at least 12 years and do not sell your stocks. Clearly, patience is rewarded!

“The best time to invest is when you have money. Indeed, history suggests that it is not timing that counts, but time


(Sir John Templeton)

So investors should go for the simple, straightforward companies and then take their sweet time until they perform well. Stock prices will almost inevitably follow the progress in operations.

My reading tips
▶ “Buffett.The Story of an American Capitalist” by Roger Lowenstein
▶ “The Tao of Warren Buffett” by Mary Buffett and David Clark
▶ “The Essays of Warren Buffett: The Most Important Lessons for Investors” by Lawrence A. Cunningham
▶ “Investing with Warren Buffett.Secure Profits with the Focus Strategy” by Robert G. Hagstrom
▶ “How Warren Buffett Reads Corporate Numbers” by Mary Buffett and David Clark
▶ “How Warren Buffett Does It: 24 Simple Investing Strategies” by James Pardoe
▶ “Warren Buffett.Life is like a snowball” by Alice Schroeder
▶ “Warren Buffett – The Capitalist of the Century” by Gisela Baur
▶ “Warren Buffett: His Way. His method. His strategy.

” by Robert G. Hagstrom

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Photonics specialist Nynomic defies all odds and continues to rev up mightily

presented. According to preliminary figures, the 2021 financial year shone even brighter and the forecasts, which had been raised twice during the year, were again exceeded in the end. Group-wide sales amounted to €105.2 million, 34% above the 2020 figure of €78.6 million. EBIT was around €13 million, exceeding the 2020 figure of €8.0 million by 63%, so that the EBIT margin increased accordingly from 10% to 12%. Nynomic also posted another record figure for its order backlog: At the end of 2021, orders with a volume of €73.5 million were on the books (Dec. 31, 2020: €72.6 million).

But there’s much more to Nynomic than bare numbers. It’s a pie-in-the-sky equity story that’s actually still in its infancy….

Nynomic is a leading full-service provider in the field of non-contact optical measurement technology. For several years, the company has been set up as an investment holding company and is active through its eight internationally positioned subsidiaries. Through these, it has access to the most important sales markets, benefits from local customer support and a well-developed sales and logistics network.

As a systems provider, the company serves a large number of original equipment manufacturers (OEMs) in various end markets along the entire value chain, from individual components to complete devices. Thanks to its successfully implemented buy-and-build strategy in recent years, Nynomic’s diversified product portfolio enables it to serve numerous fields of application in both the B2B and emerging B2C sectors, such as around the “smart home” megatrend. The measurement technology is used, for example, in medical technology, the chemical industry, pharmaceuticals, agriculture, environmental technology, the semiconductor industry and a wide range of applications in the entire industrial sector.

Nynomic AG was founded in 1995 as m-u-t GmbH Meßgeräte für Medizin- und Umwelttechnik and is based in the Rolandstadt Wedel near Hamburg. The company’s origins lie in the system integration of spectroscopy in medicine and biotechnology. In July 2007, the company was listed on the German Stock Exchange and a number of form acquisitions were made. In 2014, the operational business of m-u-t AG was outsourced to m-u-t GmbH, turning m-u-t AG into a purely strategic financial holding company. This led to confusion between AG and GmbH in the external presentation, so that in 2018 the holding company m-u-t-AG was renamed Nynomic AG.

Focus on Life Science, Green Tech and Clean Tech

Nynomic is a manufacturer of products for permanent, non-contact and non-destructive optical measurement technology. The smart photonics solutions are built on a technology platform based on spectral sensor technology. They can be scaled into different application areas and represent high efficiency increases and high customer benefits due to their good adaptability to the customer’s processes.

To this end, the company is using the technology shift based on miniaturization as the basis for above-average growth in the medium term compared with the market. The company is increasingly focusing on cyclically robust independent markets as a full-range supplier in the Life Science, Green Tech and Clean Tech segments.

Nynomic AG has e

in a clear marketing concept as a system supplier from components to equipment. It is globally positioned with independent brands and subsidiaries. As part of the implementation of the buy-and-build strategy, it is planning disproportionately high growth and increasing synergy effects to boost profitability in the Group.

Life Science

The segment accounted for 23% of the Group’s total sales in 2020. The products in this segment are primarily used in the pharmaceutical industry, medical technology and biotechnology. Optical sensors, spectroscopy systems and automation solutions for laboratories and research facilities form the core product group and address a wide range of application areas. Patent and licensing rights in the field of analysis technology will open up future potential, for example in the field of research.

Green Tech

GreenTech contributed 16% of Group sales in 2020. Especially for applications in the field of “intelligent farming” and environmental technology, Nynomic develops and produces individual solutions for agriculture in this segment. Increasingly industrialized and automated agriculture is optimally aligned through efficiency-enhancing processes such as sensor-based analysis of soils and plants, automatic fertilizer application, and remote-controlled animal feeding.

In addition, the use of spectroscopic sensors can help producers meet regulatory quality requirements. The use of solar modules is also subsumed under this segment.

Since the beginning of the year, the shredding of male chicks has been prohibited. With Nynomic’s fully automated spectroscopy-based solution, the sex of chicken chicks can be determined at a very early stage already in the egg, so that female eggs for egg production can be separated from male eggs at an early stage.

This is a prime example of the use of Nynomic’s measurement technology. Here, unlike classical techniques, the properties of objects are analyzed rather than mere geometry. Attributes such as color, temperature, density or chemical composition can be measured in a non-contact and non-destructive manner. The measurement systems are marketed both via independent brands and via white label products.



By far the largest segment is Clean Tech; it contributed a whopping 61% of Group sales in 2020. This segment covers a wide range of solutions for the industrial sector. The broadly diversified application fields range from individual optical sensors to customer-specific complete solutions. Target markets include the chemical industry, food applications and semiconductors. Automated inspection of production processes can also make wafer and display production more efficient and ensure a higher quality standard.


All product solutions of the Nynomic Group are based on a technology platform of spectral sensor technology. This measurement technology enables non-destructive and non-contact analysis of product characteristics by measuring the wavelength reflected from an object. Using a coupled database, these values can be specified and the element uniquely assigned.

The process

is universally applicable and can be easily integrated into various customer process chains. Based on all common spectroscopy processes, application solutions can be designed for a wide range of end markets and applications.

Thanks to Nynomic’s vertical integration, it is possible to choose between standard products as well as highly specific complete systems that can be used within the production process to increase efficiency.

Furthermore, Nynomic accompanies its customers along the entire value chain in various end markets. As a result, the company has already gained extensive experience in a wide range of industries and has strong solution expertise in the field of process-integrated online measurement technology.

Involved in the process already at the early stage of product development, the end user benefits from Nynomics’ technology and know-how leadership. Close customer relationships developed from this often result not only in long-term contracts, but also in exclusive supplier status.

Markets and sales

Nynomic’s subsidiaries and sales network result in a highly pronounced international distribution of sales. In addition to the production facilities, which are mainly located in Europe, a large number of subsidiaries and sales offices exist on other continents, enabling local and direct customer support.

In 2020, the Group generated around 61% of its sales in Europe. Nynomic generated the remaining share primarily in the U.S., which as an important core market accounted for approximately 26% of sales in 2020, and in Asia with a 13% share.

Nynomic accompanies its customers along the entire value chain and offers different manufacturing depths and individual product modifications through its subsidiaries. Nynomic AG acts as the overarching financial holding company and performs strategic functions within the Group. All subsidiaries have a similar technological focus and support vertical integration.

Avantes Holding B.V.

Avantes Holding B.V., integrated in 2008, forms the basis for optical measuring cells and spectrometers. Specializing in the miniaturization of spectroscopy equipment and software solutions, the company develops and manufactures spectrometers, light sources for UV/VIS/NIR, fiber optics and accessories. In addition, the group performs customization of equipment. Through its own subsidiaries, the Avantes Group has access to all major markets and enables local customer support for OEMs. Products of the company can be found, for example, in the biotechnology, chemical and food industries as well as in thin-film analysis in the field of solar cell production. tec5


tec5 AG has been part of the Nynomic Group since 2007 and manufactures high-quality products for detector array spectroscopy of OEM components as well as drive electronics. Furthermore, the company serves the next step of value creation and combines, among others, individual components of Avantes B.V. to complete systems. These are sold directly to OEMs and industrial customers as standard solutions under the company’s own name. Here, too, there is access to the most important international end markets through subsidiaries.

m-u-t GmbH

The operativelye subsidiary m-u-t GmbH is the nucleus of the company. It manufactures products for permanent, non-contact and non-destructive optical measurement technology. Based on the products of other Group units, m-u-t GmbH modifies them with its own know-how to create innovative applications. The resulting customized solutions are subsequently produced and marketed, for example as series devices. The company has a wide range of products, including sensors, laboratory automation, medical technology and spectroscopy.


Through APOS GmbH, Nynomic offers spectroscopic measurement systems specifically for the wood processing industry. APOS is technology and know-how leader in this niche market and focuses on applications with high scalability. Typical fields of application are in the wood-based materials industry, biomass power plants and other bulk material applications.

LayTec AG

The globally operating LayTec AG is a market-leading supplier of process-integrated measurement technology with a focus on laser and LED production. Since the acquisition of the company in 2017, the company’s specific solutions are also increasingly used in the fields of photovoltaics, surface coating and in the semiconductor industry. For example, products can be used for in-situ process control of light-emitting diodes and semiconductor lasers. In addition, as optical in-line metrology, they enable real-time analysis of manufacturing processes in the solar cell industry. Another LayTec product, a measurement system for VCSEL lasers (Vertical-CavitySurface-Emitting Laser), is used for example in smartphones for Face ID technology. Spectral Engines


Spectral Engines GmbH develops and produces extremely compact spectral sensors on a low cost basis, which can be used in industrial applications as well as in the consumer sector. Through this acquisition, Nynomic laid the foundation for its entry into the end-user device market for the B2C segment. Spectral Engines’ products can be deployed cost-effectively in mobile devices and are thus primarily targeted at applications in the smart home, smart industry or smart agriculture sectors. A fast and at the same time reliable measurement is guaranteed with the help of a patented MEMS interferometer and is already used, for example, as a food scanner via smartphone. PerApp and associated cloud-based software, data reconciliation takes place in real time, which is continuously optimized by machine learning.

Following the majority acquisition of 75% in May 2018, Nynomic acquired the remaining shares in the company at the end of May 2020. In the same year, a partial transfer of business operations from Finland to Germany and the incorporation of Spectral Engines Oy into Spectral Engines GmbH took place.

LemnaTec GmbH

LemnaTec GmbH is a specialist for hardware and software systems in the field of digital plant phenotyping. Thanks to complex sensor technology, the company’s solutions enable the contactless analysis of plants, with the help of which essential growth and quality characteristics (including size, shape and color as features for shoot and root growth) can be determined as well as physiological parameters (including water and nutrient content of the leaves or phytochemistry).tosynthesis). In modern industrial agriculture, such analyses provide fundamental indicators for breeding and optimizing seeds and crops, which means that the areas of application range from agrochemistry to agricultural and plant research to practical breeding and include small-scale applications in the laboratory as well as large-scale installations for greenhouses and open-air plants.

Sensortherm GmbH

Sensortherm GmbH is a specialist in the field of infrared measurement technology and offers numerous applications of non-contact, precise and fast temperature determination. With more than 30 years of experience, the company is one of the industry-wide technology leaders in this market. In particular, the pyrometers developed by Sensortherm are among the world’s most powerful measuring instruments of their kind, thanks to their ability to process and output signals completely digitally. The pyrometers are sometimes required for monitoring and controlling the process temperature in laser systems and are thus of central importance in the steel industry, for example, in order to enable the best possible product quality by preventing temperature deviations.

Image Engineering GmbH & Co. KG

Image Engineering GmbH & Co. KG has been part of the Nynomic Group since 2021. The company is one of the world’s leading manufacturers of image quality testing equipment. With its test charts, analysis software, and measurement and illumination equipment, Image Engineering offers its customers the ability to test and evaluate the image quality of their cameras, which is especially important in applications with high image quality requirements.

Customers come from (product) areas including photography, cell phones, automotive and ADAS systems, security, broadcast, machine vision, medical/endoscopy, and scanners and archiving.

MGG Micro-Glühlampen-Gesellschaft Menzel GmbH

MGG Micro-Glühlampen-Gesellschaft Menzel GmbH is a specialist for high-precision miniature incandescent lamps. With its manufacturing program, the company offers more than 5,000 different lamp types as standardized catalog goods. In addition, the company develops and manufactures light throw, lens and special lamps for customer-specific requirements. The most common applications include infrared technology, electrical engineering, aerospace, medical technology, telecommunications, machine tool control and defense electronics, as well as optical metrology and spectroscopy.

Successful buy-and-build strategy

The many acquisitions and subsequent…

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Kissig’s Stock Report: China Shares Xiaomi and Between Total Loss and Opportunity of the Century

As part of my cooperation with Armin Brack’s“Aktien Report“, I take a look at interesting companies at irregular intervals. The issues of the “Aktien Report” and/or “Geld Anlage Report” reach their readers on Saturdays free of charge and “hot off the press” in the email inbox and one can subscribe ▶ here to the “Geld Anlage Report”. Bonus for the readers of my blog: a few days later I may then also publish the analyses here.

Stock Report No. 80 from 11.03.2022

China shares Xiaomi and Between total loss and opportunity of the century

China has been one of the global growth giants for decades and thanks to the opening of the country for Western products and companies, it is the most important growth market for many companies from the USA and Europe. And in some cases, it is already the corporate focus, as is the case with the Volkswagen Group.

In Chinese, the word crisis consists of two characters: Weiji and Jihui, meaning opportunity and risk. This does not go back to the communist rulers, but rather recalls the wisdom of a Confucius. The counterplay of forces that nevertheless belong together, Jing and Jang. Every end means a new beginning, every risk brings opportunities.

And when looking at China, there are always two sides. The country is politically stable, but civil rights according to Western standards are not granted. Private economic activity is encouraged, but the state regulates everywhere. Separation of powers and the rule of law hardly exist. And yet the Chinese have many more freedoms and opportunities than they did 50, 30 or 20 years ago.

Yet China’s self-image is that China is the natural navel of the world, that China is naturally chosen to rule the world. That the Mongols overran China and ruled for centuries – a freak of history. That the Europeans, especially the British, brought the country to its knees militarily several times in the 19th century and were able to impose their will on the country with a handful of soldiers and merchants (who today would rather be called opium smugglers and pirates) – a brief period of irritation. And that the United States and the Soviet Union were the only two superpowers for 50 years – a historical interlude of no consequence.

China sees itself as a global power, a global center. And the West, led by the United States, has supported China’s resurgence. On the one hand, as an antithesis to the Soviet Union, because their common border, thousands of kilometers long, has always been good for conflicts and quarrels, and on the other hand, of course, because there was a lot of money to be made from it. Vladimir Ilyich Lenin once put it this way: “The capitalists will sell us the rope with which we will hang them. And as is so often the case, every statement, even if it sounds outrageous, contains a kernel of truth.

China’s rise as a world power was accompanied by the fall of the Soviet Union and later Russia. But the rising China thus also became the biggest rival of the world power USA, and it was not only under President Trump that the conflict increasingly intensified. A real economic war broke out between the U.S. and China. And under President Joe Biden, only the tone has changed; the U.S. continues to be tough on the substance.


4> Read Sunzi!

Part of this conflict is also about the sovereignty over the data. The Chinese philosopher and general Sunzi wrote “The Art of War” over 2,500 years ago, and the thirteenth chapter is about the use of spies, i.e., data acquisition. Sunzi wrote,“Spies are an extremely important element of war, for on them depends the ability of the army to move.”

Sunzi’s teachings are timeless. Napoleon had a copy that accompanied him on his campaigns, and at the Frunse Academy, the Soviet counterpart to West Point, “The Art of War” was required reading for every prospective officer.

The basic ideas are as relevant and correct today as they were 2,500 years ago. Even though today information is collected via drones, satellites and networks and analyzed by computers and artificial intelligence. Control over data is the key element in war, in business and on the battlefield.

That’s why more and more nations are demanding that global companies store and manage data locally. Microsoft was one of the first companies to set up such local data centers, including in Germany. So that the data of German citizens can no longer be sent around the world and stored in the U.S. or elsewhere and filtered and analyzed along the way by every intelligence agency in the world and every other halfway capable hacker.

The fight over the data caused the greatest tension, especially between the U.S. and China. Trump threatened to ban TikTok in the US. China is forcing its companies operating in the U.S. or listed on exchanges there not to give U.S. authorities any access to data. And the U.S., in a counterattack, is working to ban Chinese companies that don’t provide them access from U.S. exchanges.

And the companies? They’re caught between a rock and a hard place, with almost no choice but to get it wrong. Not a good climate for them.

China’s regulatory crackdown

Freedom of expression is one of the highest goods. In totalitarian systems, it is suppressed because it is also a powerful weapon against the oppressors. Propaganda is the antithesis, i.e. manipulated truths.

For a long time, China has dared the balancing act between more and more freedoms for its citizens, and therefore increasing prosperity, and at the same time holding on to a totalitarian regime. The Communist Party holds the reins tightly, and its power has been increasingly threatened. By increasingly self-confident citizens who enjoyed and used their new freedoms, as well as their increasing prosperity. There were more and more billionaires and companies with enormous power and the CP reacted. It put a short leash on entrepreneurs, enacted laws, and curtailed businesses. The impact was enormous, as Western investors withdrew more and more of their money, and as companies had their freedoms and growth opportunities curtailed, their stock prices continued to fall since last summer. After years of above-average returns, China stocks became money-losing machines.

And now Russia

In February 2022, Putin’s army attacked Ukraine. The West responded with unprecedented economic sanctions against Russia and Putin’s confidants, and while the war is still ongoing a new world order is crystallizing that is reminiscent of the Cold War. A new bloc will be formed between the USA and its allies, above all the Europeans and the Russians. Militarily and economically.

Putin as Russia’s ruler has proven to be absolutely unreliable and has gambled away all trust. Western corporations are turning their backs on the country in droves, the sanctions are excluding Russia from the world financial system and the country must now go its own way and do so with new cooperation partners. Supermarket shelves are empty, the ruble is plummeting, and the economy is plummeting by double digits. Bad for Russia’s citizens and the companies affected, but Russia’s economy hardly carries any weight globally. If it weren’t for its high energy reserves and the resulting exports of oil, gas and coal, Russia would hardly matter.

And China?

China is dithering. Understandably so. It rejoices as a “laughing third” over the tensions between Russia and the West and tries to extract maximum advantages from this situation. Thus, China does not publicly condemn Russia for its war of aggression against Ukraine and even admonishingly raises its finger in the direction of Washington. But it is also trying at all costs to avoid being drawn into the war and thus being targeted by the U.S. sanctions bazooka.

China is desperate to get cheap Russian oil and natural gas; the necessary pipelines have long been in operation. And it is also interested in taking a financial stake in Russian companies and projects in the energy sector where Western companies have just pulled the plug.

On the other hand, the U.S. and the EU are much more important to China than Russia. China depends on its economic relations with the U.S. and the EU, without which it cannot offer its citizens prosperity and prospects. And these are the (only) cornerstones that support the Communist Party’s claim to power.

Therefore, China does not openly side with Russia. But neither does it turn its back completely on the Russians or participate in Western sanctions against Russia. The danger of the West imposing sanctions on China as well, thus pushing it into an economic ice age, is omnipresent. And this comes at a time when new Corona outbreaks in China are leading to renewed hard lockdowns and stunting an already suffering economy.

JPMorgan, out of this mix, branded China “uninvestable

” in a study. On March 14, it advised clients to avoid China at all costs over the next 6 to 12 months. And they massively downgraded 28 leading Chinese Internet companies, including Alibaba, Tencent, Pinduoduo, Baozun, Meituan, Netease, Weibo, Dingdong or

A hammer. After all, JPMorgan had seen “clear business opportunities

” here just a little less than a month earlier. Lousy timing. In both cases. After the positive commentary, the share prices continued to fall sharply, while after the negative commentary, the prices of Chinese shares rose rapidly. In some cases by 50% in one day.

However, this was not due to JPMorgan’s recent about-face, but to the about-face of China’s government.

End of the regulatory crackdown?

According to media reports, China’s government wants to loosen the reins on regulation again and thus give companies more leeway.

Furthermore, Chinese and U.S. authorities are said to be working on a joint solution to give Chinese companies listed on U.S. stock exchanges a new perspective on U.S. stock markets.

Both factors have caused great uncertainty among foreign investors in recent months and have led to massive outflows of funds from the shares of Chinese companies. The share price losses have also led to large losses of wealth among Chinese shareholders and thus increased resentment against the government.

Furthermore, China is facing a speculative bubble in the real estate market, where a lot of money from Western creditors is also on fire. Defaults on interest payments on bonds are accumulating, and China can hardly avert the impending collapse on its own and by its own efforts without the backing of the global financial system. The threat of Western sanctions against China alone could lead to a meltdown here. In this respect, any signal of easing is welcome and can lead to recovery rallies.

However, they do not change the fundamental problem. Putin’s war of annihilation in Ukraine continues, China cannot and will not distance itself too much from Russia, and therefore the sanctions sword continues to hover over China and Chinese companies. Even with regard to regulatory intervention, so far there is only lip service and the concrete implementation of the new “laissez-faire” remains to be seen.

Similarly, the negative impacts of the new Corona outbreaks persist, with bottlenecks in semiconductors and chips and disruptions in global supply chains. All factors that also have a massive negative impact on Chinese companies.

Beware of value traps!

On the other hand, the valuations are considerably lower than those of U.S. stocks and European companies. However, there is a reason for this. Their causes lie in the increased risks. And only if you as an investor are prepared to accept these risks and also assume that the supposed undervaluation will also decrease, only then should you invest in these stocks.

And we are talking here about the maximum risk, a total loss.

A bargain that remains a bargain is not a bargain. “
(Martin Whitman)

On the other hand, there are no absolute certainties. Benjamin Graham once said that, in essence, investment and risk are synonyms. There is simply no return without risk.

Investing is a game of probabilities, not certainties. “
(Ken Fisher)

So before seriously considering stock investment in China, you have to be completely clear about the risks. One must know what one is doing. You have to weigh the opportunities and the risks. And if, at the end of these considerations, you think the risks are justifiable, then of course you have to pick the right stocks, because not every China stock that has crashed is a good investment opportunity just because its price used to be significantly higher.

Therefore, we will now take a closer look at two China stocks and see how they have performed recently.



Xiaomi is an incredible success story. Founded in April 2010, Xiaomi Corporation is a smartphone manufacturer focused on affordable high-end smartphones and the development of MIUI, its own highly customized operating system based on Android. The core of the company consists of smartphones, IoT,…

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Kissig’s small cap analysis on GESCO: The pearl divers of the German Mittelstand

In the magazine“Der Nebenwerte Investor” from Traderfox you will find regular analyses from me on German small caps. The magazine is paid and who would like to order it or one of the other of Traderfox, ▶ here to the overview. Subscribers receive the new articles, not only those written by me, directly after writing in advance in their email inbox and the magazine with all articles then appears every 14 days.For the readers of my blog, the whole thing also has a direct benefit: after publication of the magazine I may publish one of my analyses then also here. Many thanks for this to Simon Betschinger, founder and CEO of Traderfox.Article from “Der Nebenwerte Investor” Issue 05/2022 from 03/25/2022GESCO

: The pearl divers of the German Mittelstand

GESCO is an industrial holding company founded in 1989 with 11 subsidiaries. The portfolio companies operate with a strong focus on niche markets in which they have established leading market positions. They are “hidden champions” with technology leadership. The formerly formative but crisis-ridden automotive sector was divested, freeing up fresh resources for a new orientation. And the new strategy is paying off, as GESCO has been delivering successes non-stop ever since.

GESCO offers its shareholders access to leading companies in the technology-driven German SME sector. The companies have a successful history and are established players in their respective target markets, some are even global market leaders.

Acquisition strategy

As a long-term investor, GESCO acquires successful companies in three strategically attractive segments: Mechanical and Plant Engineering, Metal and Plastics Processing, and Electrical Engineering and Automation.

Acquisitions are primarily made as part of succession solutions, through management buy-outs (MBO) and management buy-ins (MBI), as well as in the case of group spin-offs. The acquisition targets must meet certain requirements: at least EUR 20 million in sales, a positive cash flow, a solid equity base, the headquarters must be in Germany and the company must have a convincing position in a niche market.

The companies in the network operate independently, but GESCO supports its subsidiaries in financing, administration and also at a strategic level.

Succession problems as an opportunity

The numerous unresolved succession issues in the German SME sector offer GESCO considerable potential for external growth. Companies are founded every day, but the transition within the family is becoming increasingly rare.

This is where GESCO comes in, as it does not act in the style of a financial investor, aiming for quick returns and resale as quickly as possible. Rather, it offers companies a “new home”.

Management participation as a guarantee of

success In the course of succession planning, the mostly new management participates in the company with 10% to 20%, depending on the size of the company. This decisive entrepreneurial component of the GESCO model ensures that interests are aligned: The management is just as long-term oriented as GESCO AG as the majority shareholder and thus also benefits directly from the company’s success. Internal growth through positive development of the subsidiaries is the twoite component in GESCO’s success model alongside the acquisition of further attractive subsidiaries.

Next Level strategyWith

its “Next Level” strategy, GESCO has initiated a comprehensive transformation of its business model. The strategy takes the hidden champion claim seriously and includes excellence programs to develop the Group’s medium-sized companies to the next level.

The aim is to position GESCO Group for the future, create added value at all levels and achieve above-average values in sales growth, margin and cash flow.

The portfolio architecture is of decisive importance in this context. In addition to the Dörrenberg Group, two other larger companies are to be established as new anchor holdings. This can be done through acquisitions or by further developing an existing company. In addition, a group of basic shareholdings will continue to make relevant contributions to sales and earnings. This makes the portfolio more balanced and resilient.

GESCO systematically and sustainably develops the Group companies into hidden champions. With programs for operational excellence, for the active development of market presence and product portfolio, and for sharpening management skills and corporate culture.

2020: The big upheaval

As part of the Next Level strategy, GESCO had successfully sold a group of six subsidiaries and closed its Mobility Technology segment in December 2020. In February 2021, the majority stake in VWH GmbH was also sold as part of a management buy-out.

The disposal of a large part of the previously 17 shareholdings also shook up the balance sheet considerably, but also created the scope to acquire new shareholdings in the established business areas. In addition, the Group’s net debt was reduced by around two thirds and provisions for pension obligations and leasing liabilities were significantly reduced.

3 Segments

Three companies are allocated to the Production Process Technology segment. The MAE Group is the world market leader in automatic levelers and wheel presses. Sommer & Strassburger GmbH & Co. KG manufactures process equipment, especially for the pharmaceutical, food, water technology and chemical industries. While GESCO holds 100% of the shares in these two companies, it only holds 90% in Kesel Group, which is active in the development and production of machine tools and clamping systems.

In 2020, the three companies generated combined sales of just over 54 million euros with 411 employees.

The Resources Technology segment also includes three subsidiaries. With sales of 152 million euros, Dörrenberg Group is by far the largest investment in the GESCO Group. It is involved in the production of and trade in tool steel, steel foundry, cast products as well as coating and hardening. GESCO holds a 90% stake here, while it holds 100% in the other two segment companies. SVT GmbH develops equipment for loading and unloading ships, tankers and tank wagons with liquid and gaseous substances. Pickhardt & Gerlach Group is a leading refiner of strip steel; it nickel-, copper-, brass- and galvanizes steel.

In 2020, the three companies, with 737 employees, brought it to a g

e combined sales of 226 million euros.

The third segment, Health Care and Infrastructure Technology, brings together six companies. The Setter Group produces paper and plastic rods for the hygiene and confectionery industries. Franz Funke Zerspanungstechnik GmbH & Co. KG manufactures turned parts from brass, aluminum and steel. W. Krömker GmbH is the European market leader for articulated crane systems and an innovation leader for the development and manufacture of high-quality products for medical technology and was acquired as the latest addition to the portfolio in June 2021. AstroPlast Kunststofftechnik GmbH & Co. KG develops and produces plastic injection molded parts. GESCO holds 100% in all companies, while the remaining two are 80% owned by GESCO. Haseke GmbH & Co. KG develops and produces support arms and building systems, and at Hubl GmbH everything revolves around the development, design, manufacture and assembly of machine cladding and frames, covers, housings and components made of stainless steel sheet.

In 2020, the segment generated sales of just under 137 million euros with 627 employees.

Brand new: INEX-solutions

The lineup is no longer entirely up-to-date, however, as GESCO announced on March 18 that it was combining two subsidiaries under the umbrella of a new holding company. The previous 12 subsidiaries have now become 11.

Initially, INEX-solutions GmbH, which was founded as a holding company, will be assigned the two stainless steel specialists Sommer & Strassburger GmbH & Co. KG and Hubl GmbH. The newly created stainless steel group primarily addresses the growth sectors of pharmaceuticals/biotech, semiconductors, food/water technology and chemicals. Growth drivers for these sectors are the growing and aging world population, increasing digitization and rising food demand.

All four industries are already addressed by S&S and Hubl in different weightings and processed in parallel. By bundling the application know-how of both companies, new solution possibilities for plants with extended scopes are created.

The now substantial size of the company also plays an important role, as many customers are significantly larger than S&S and Hubl alone and prefer a strong partner with extensive capacities. The attractive business area of INEX-solutions is to be strengthened both through organic growth and inorganically through the acquisition of suitable companies, thus further increasing customer attractiveness.

Record year 2021

GESCO had already presented preliminary figures for the past financial year 2021 a week earlier. And after raising its forecasts several times during the year, it was able to close 2021 as the most successful in the company’s history.

Despite a still challenging environment, consolidated sales in 2021 increased by 23% year-on-year to EUR 488 million (previous year: EUR 397 million). Consolidated net profit for the year rose disproportionately to sales by 361% to 26.9 million euros (previous year: 5.8 million euros).

The main reasons for the very good result in the 4th quarter were the realization of projects despite the supply bottlenecks and the positive effect of the profit and loss transfer agreement with the Setter Group on the tax rate.

In addition, the companies succeeded in reducing the considerable

hen price increases in materials are compensated by forward-looking price adjustments. In view of further price increases for raw materials and materials, GESCO Group’s proven pricing power is a sign of strength.

However, the significant improvement in the Group’s key figures in 2021 is also due to the progress made at the subsidiaries, not least as a result of the excellence programs introduced, which have now had a visible impact. Existing efficiency potential can therefore be increasingly leveraged at the individual companies and also in the Group as a whole.

Earnings per share from continuing operations were 2.48 euros (prior year: 0.54).

Attractive divid

ends Since the IPO on 24 March 1998, investors have been participating in the economic success of GESCO Group within the framework of a transparent and calculable dividend policy. Shareholders have received a distribution in every financial year up to 2020. In doing so, GESCO is guided by a ratio of around 20% to 60% of consolidated net income after minority interests.

However, in the wake of the Corona pandemic and the cost burden associated with the Group downsizing, GESCO had suspended the dividend for the 2020 financial year. However, it is to remain at this one-time suspension.

The company will provide information on the amount of the dividend, which will be proposed by the management to the Annual General Meeting in August 2022, on the occasion of the publication of the 2021 annual financial statements.

Bullcase vs. Bearcase

There is a lot going on at GESCO and most of it sounds promising. This makes the departure of CFO Kerstin Müller-Kirchhofs, who is leaving GESCO AG when her contract expires on April 22, all the sadder. The Executive Board and Supervisory Board paid tribute to her major contribution to the success of GESCO Group and the outgoing CFO confirmed that she was leaving the Group for “purely personal reasons”. The timing is well chosen here, as GESCO is in a better financial position than it has been for a long time, even though the Ukraine war is significantly disrupting global supply chains and has not gone unnoticed at GESCO. So far, however, the company has been able to master these additional hurdles very well.

GESCO focuses on budding and established market leaders with further development potential. The broad industry diversification acts as a safety cushion. On the other hand, it prevents the leveraging of synergy effects. In the development of its subsidiaries and in acquisitions, EGSCO is therefore paying more attention to closing the gaps and also generating further potential for the Group in this way. In doing so, GESCO follows the needs of its customers, as demonstrated by the merger of the two stainless steel specialists Sommer & Strassburger GmbH & Co. KG and Hubl GmbH into the new stainless steel group INEX-solutions GmbH. Further reinforcements through acquisitions are likely to be forthcoming here.

The GESCO companies have so far been able to pass on the enormous price increases for raw materials and supplies to their customers. This shows their pricing power due to their strong competitive positioning. Global supply chain disruptions have recently eased significantly. However, the Ukraine war is once again shaking things up in Europe in particular, and this is also presenting GESCO with new challenges. Nevertheless, the company appears to be well prepared for this as well.


e strategic realignment of GESCO Group is paying off. Even though the record result from 2021 was positively influenced by some one-off effects, GESCO continues to steer a successful course. As part of the Next Level strategy, efficiency potential is also increasingly being leveraged in the individual subsidiaries, thereby improving margins.

GESCO is therefore an attractive opportunity for shareholders to participate in the hidden champions of the German SME sector. With earnings per share of EUR 2.48 in 2021, the price-earnings ratio is below 10 and the share is trading below its book value. A constellation that is otherwise almost only found in problem companies with weak growth. GESCO was one of these for a few years, but those days are now over. The share price could soon find this out as well…

The 4 most important things to know about Gesco

  1. GESCO focuses on emerging and established market leaders with development potential. The broad industry diversification acts as a safety cushion.
  2. The focus is on the strategically attractive segments of mechanical and plant engineering, metal and plastics processing, and electrical engineering and automation.
  3. 2021 was GESCO’s most successful year to date and the company is now focusing on leveraging efficiencies in its portfolio and further acquisitions to continue the success story.
  4. The share is flying under the market’s radar and is valued comparatively low. This offers catch-up potential and additional share price opportunities.

Disclaimer: Have Gesco on my watch list and/or in my portfolio/wiki.

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Strength gives birth to strength! – Mr-Market markets, stock market, trading, economy

Naturally, I focus on strong stocks, promising investments and interesting trading setups in my articles in the premium section. That’s right, because we’re here to make money, not lose it.

What sometimes gets lost in the positive messages, however, are the messages of what *not* to do, where it’s better to *leave your fingers out*.

Every now and then I remind you of this, so 2015 in -> Lower always goes and only at zero is the end! also in the free area. After that, by the way, Peabody went bankrupt completely, now the stock is back on the stock market as a “zombie” in the new company shell, the old investors still lost everything.

Now it is 2022 time also in the free area again to remind and that I want to make today with 3 shares, which have quite quality, with which however for years the worm is in it and which one should not actually touch for years.

Because the basic problem is that especially supposedly “safe” stocks that start to fall attract a lot of interest from investors who underestimate how long and deep often fundamental structural problems can last and who are under the mistaken belief that everything is always just a dip.

At the level of broad indices or ETFs, this is true; everything is ultimately just a “dip,” and in the long run the stock market rises. But at the level of individual companies, that’s fundamentally wrong, individual companies – no matter how strong and stable they appear – can also slowly disappear whimpering into nirvana. And this happens again and again, the streets of the stock markets are paved with such “investment corpses”.

With the first example, I therefore deliberately use one that I have repeatedly critically discussed in the premium sector in recent years:

Kraft Heinz (KHC)

For it is definitely worth reading again what I explained in 2019 in the premium area to the basic problem of such shares:

Ask currently a private investor interested in the stock market and you will reliably get an argumentation along the line: you always need ketchup, they will come back. And after all, Buffett is in.

Then we still have a 5% dividend and a P/B ratio of 0.72, real “value” and of course the others who don’t see that are idiots. And then you buy, because this is a brilliant opportunity and you are the reborn Benjamin Graham, who can recognize “true values” – in contrast to the majority of the market. By the way, the more “opinionated” the investor is, the more secure this argumentation is.

…. “Papperlapapp Buffett!” is what I say to that! ….

So my point is not to talk up a bust here, my point is to make it clear that we don’t know and are no smarter than the instítutional investors in the market who are still driving KHC’s price down the way they are valuing KHC.

And now let’s look at what’s happened to KHC since 2019 and it’s not much.

On the positive side, this could be slowly bottoming out, but still, as an investor, it’s been losing years, while the indices have gone up massively, the SPX from 2,952 in July 2019 to 4,818 at the max – almost 2,000 points!

And they were losing years *even though* the stock had already fallen massively for two full years before that, since 2017 in fact. Despite this langen period, no real rebound was possible because KHC’s problem was not a dent, but a fundamental problem in the business model.

So what helped them that Buffett was in? Papperlapapp! And what to think of the argument that KHC is “value”? Hogwash!

Because even if KHC was really “value” as of today, they could have doubled their portfolio with attractive investments between 2017 and 2022, instead of halving it with KHC, just because they tell themselves that they will come back someday.

What is “come back” even worth? Investors who argue like this are simply understating the massive collateral losses of *not* having been in better investments, coming back to 2017 levels just isn’t enough and doesn’t justify anything in hindsight when markets double and triple in that time!

And how to avoid such traps as KHC? Not with “opinion”, opinionated investors are self-absorbed beginners, because opinion does not count in the market. Nor with “value romanticism”, that doesn’t help either.

What helps are a few hard basic rules of trends and market technique. I don’t want to analyze the top formation at KHC in depth now, I just want to show one central point among many, where everyone with sense *had* to see that one better becomes cautious here. And that was the crash into swelling volume after a failed rebound in 2018, see the purple arrow above.

Henkel (HEN)

But now to a similar, albeit less extreme, case. Henkel also reached its high in 2017 after a long rally, a year after Kasper Rorsted stepped down as CEO and moved to Adidas.

Now, one can argue fundamentally for a long time and can wonder if Rorsted was so “irreplaceable” or had just hollowed out and squeezed the company – a bit of both probably.

You can also talk about -> “visionary” Bagel-Trah, who I’ve always viewed with a fair amount of skepticism, having been passed around as a “role model” for female entrepreneurs by virtually every glossy magazine. That was and is far too much advance praise for someone who has a lot to learn first and presumably came to the position of head of the Supervisory Board through family ties. And for me personally, she also brought with her too much “sustainability romanticism” for me as an investor to put my money on it.

One can talk about many things at Henkel, about the fact that the company has perhaps lost its “bite” and what that has to do with the people. And about a bigger problem in the corporate strategy.

All of this is interesting but not compelling because we have an incorruptible judge who told us that 2017 and 2018 at the latest broke an upward trend that had existed since 2011.

And since then there has been nothing to get at Henkel, every now and then opportunities came up, like when the next CEO change came in 2019, but in the end it all came to nothing and Henkel has actually been “dead money” in the portfolio for 5 years now.

With this example, I simply want to show how long it can take when a company is really in trouble.

Nevertheless, you can always bet on countermovements with a toe in the water, if the charts indicate this.But you have to know what you’re doing, the share price has something to prove to you and if it can’t, you’re out again.

And that’s the key point, it’s rarely worth spending your energy and capital on such stocks waiting for a turnaround. In the time it would have taken to earn a *multiple* in Microsoft (MSFT), Thermo Fisher Scientific (TMO) and Deere (DE) shown below, especially as an investor. Such stocks as Henkel are “Dead Money” until they can seriously prove otherwise and a new uptrend is established. And that can then be clearly seen.

3M (MMM)

Which brings us to the third example, actually a strong stock in the “consistent growth” category and something I’ve had in my investment portfolio for a long time myself, unlike KHC and HEN.

However, MMM also has structural problems that started in early 2018 and again, it now takes years and in the end the stock has not really gotten back on its feet since then, the uptrend remains broken.

MMM is certainly not a bad stock today either, but again the question is allowed, why should one do that to oneself in the depot, just because one thinks that yes, the stock will come back at some point?


We haven’t seen any real “cucumbers” here, but three actually high-quality stocks that haven’t really gotten going for years after long rises.

Unlike examples like 2015 Peabody, these are not “it’s not over until zero” candidates, and it may well be that the stocks will eventually re-establish a 10-year uptrend. Right now, KHC may even be developing such an opportunity.

The point is that the problem was well seen in the prices and there was no reason to tie up one’s capital and time in such stocks.

The comparison made instinctively by investors to the old highs in the sense of “they will come back” is completely misleading, because it undercuts what one’s own portfolio would have done with strong stocks in the uptrend.

And that is what I want to visualize for you now. I contrast KHC, HEN and MMM with the three investment stocks of MSFT, TMO and DE. HEN has the problem of the wrong currency, I have solved this with an OTC rate from the US:

Really take a look at the comparison chart. Six stocks that all have quality, no real “cucumber” among them. But three are in uptrends since 2017 and three are not. It’s that simple!

You could have written “books” of fundamental considerations on this and still probably ended up falling into the trap of giving MSFT, TMO and DE too little credit and KHC, HEN and MMM too much.

But the difference in portfolios over 5 years is brutal, downright life-changing when you look at the fact that the better three have tripled on average, while the worse three have lost perhaps 40% on average.

The fact that the worse three will eventually “come back” and regain their 2017 levels is beside the point. It doesn’t change what one missed, because who is stopping them from buying the three stocks again now, if they start to run again now?

They will come back? Fiddle-dee-dee!

And there was an incorruptible judge who always told us that: The market with its sp

iel on the square, with its trends.

So let’s buy strength consistently, because strength gives birth to new strength….

If KHC, HEN and MMM show real strength again and establish new uptrends, they can become interesting for us again. If->Then!


Your Michael Schulte (Hari)

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Mutares in crisis mode: Gold-rush mood at the restructuring specialist?!

deal flow is picking up again after the major capital increase in the fall filled the coffers to the brim. The skyrocketing prices in all sectors, including and especially energy sources, and the Ukraine war with its massive impact on supply chains and the availability of raw materials and supplies as well as labor and grain is sending additional shock waves through the European economies. Hardly any company is not feeling the restrictions and suffering and all the more companies are facing an uncertain future. In terms of current and future situation, company succession or “simply” as a division of a group that wants to focus on other areas.

For Mutares these are “gold digger times”. Malicious tongues might speak of crisis profiteers, a friendlier formulation would be “restarter enablers”. The truth lies somewhere in between and also offers interesting perspectives for investors…

Mutares acquires marginal activities of groups, companies with weak earnings or those for which a sale is intended in the course of corporate succession. The focus is on European companies with sales of €50 million to €500 million, which already have an established business model and show high development potential.

The share price has still suffered the aftermath of a large rights issue in recent months, but Mutares had good reasons to raise so much additional capital now of all times.

Mutares is a specialist in the restructuring of ailing companies. It either buys companies out of insolvency or when they are about to become insolvent, or it buys peripheral activities of large groups that want to dispose of them but do not want to close them down. Mutares takes over these companies for small money and sometimes even gets a dowry on top to subsequently restructure them and turn them into industry leaders through targeted add-on acquisitions and significantly increase their value. In this “harvesting phase”, the repositioned subsidiaries are then put on display and sold at the highest possible profit.

There is usually about five years between purchase and sale, and Mutares has on average increased its invested capital sevenfold in the past. This sounds quite lucrative, but the business model involves not only extraordinary opportunities but also considerable risks, and investors should carefully consider how they personally assess the risk-reward ratio.

The Mutares business

To do this, of course, you have to understand the way Mutares makes its money. Mutares is not an investment company. It takes over new subsidiaries and puts them into separate subsidiary limited companies. This reduces the risk for the parent company if the restructuring goes wrong and ends in losses. In this case, the invested capital may be lost, but no further capital can be injected.

As a holding company, Mutares provides consulting services for its subsidiaries. For this purpose, Mutares sends its own management consultants to the company to simplify and restructure the processes and make the company fit again. Mutares charges consulting fees for these services, which flow independently of the success of the restructuring. The more subsidiaries Mutares has and the more sales they generate, the higher the fees.

nd the commissions that accrue to Mutares.

In addition to the fees, Mutares receives profit distributions from its subsidiaries, at least from those that are already or again profitable. And sometimes lends money to the subsidiaries at interest rates attractive to Mutares. The dividends, fees and interest income together feed the basic dividend, which Mutares has set at one euro and intends to increase regularly.

Mutares then has transactions as a third revenue stream. On the one hand, “bargain purchases

” are taken when the seller of a company gives Mutares a restructuring premium along the way. Maliciously, one could also say that the seller buys himself out, because in return Mutares assumes the obligation to negotiate and enforce structural changes such as layoffs or plant closures with the employees and unions, if necessary.

And at the end of the joint path, Mutares then receives sales proceeds when a subsidiary is divested. This second revenue stream is less predictable and more susceptible to fluctuation, so the performance dividend fed from this can also fluctuate from year to year.


The corona year 2020 also left its mark on Mutares, which was nevertheless able to expand its activities. In 2021, the number of transactions has increased again and Mutares is now aiming for an average of one purchase or sale per month.

At the same time, the current situation of Corona burdens and expiration of Corona aid, cheap money, threatening interest rate increases and more and more companies with succession problems offers almost paradisiacal conditions for Mutares. Doesn’t sound like a problem, but Mutares simply has too little money to take advantage of the many opportunities.

Until now, Mutares has often been able to acquire companies with little or no capital of its own due to the still manageable size of its acquisition targets. In the meantime, however, Mutares is moving to a level where sellers expect a significant equity investment of their own, due to its great success in recent years. Therefore, Mutares needs additional equity, as the alternative would be to miss out on the many lucrative opportunities that arise and grow purely organically.

Furthermore, Mutares’ business model entails that each new purchase weighs on earnings, as it initially generates negative margins (between 5% and 20%) and thus operating losses. This reverses only after some time, when the restructuring bears fruit.

Capital increase and uplisting

The Executive Board recognizes “enormous opportunities” in the current economic situation, especially on the buy side, and therefore wants to increase its headcount even further. To this end, (faster) expansion into neighboring countries is also planned.

To this end, Mutares has increased the company’s share capital against cash contributions by issuing just over 5 million shares at a price of €19.50 per share. In doing so, the company got rid of all shares, even though the Executive Board and major shareholders had declared in advance that they would only participate in the capital increase to a certain extent; Mutares CIO Laumann spoke of a “real subscription rate of 99%”, i.e. without the underwriting by the syndicate banks. The aim was to increase the free float of Mutares. For together with the capital increase, an uplisti

The shares were listed in a higher segment of the Frankfurt Stock Exchange, the Prime Standard.

This is accompanied by increased publication and reporting obligations and the higher stock exchange segment makes the Mutares share investable (more) for institutional investors, especially from the Anglo-Saxon region and especially there Mutares wants to present itself more strongly to investors in the future.

Through the capital increase, the company received gross proceeds of approximately €100 million and Mutares intends to use the net proceeds from the capital increase for platform acquisitions of new portfolio companies, add-on acquisitions to strengthen existing portfolio companies as part of its buy-and-build strategy and investments in existing portfolio companies.

Revenue target raised from three to €5 billion

There is talk in the market of potential deals worth more than €7 billion (target company revenue) that Mutares is said to have on the table right now. For comparison, Mutares has recently increased its mid-term planning and now aims to achieve sales of €5 billion in 2023 instead of €3 billion (again, this is based on the sales of the subsidiaries).

This revenue mark is not entirely unimportant, as Mutares is targeting net income at holding level of 1.8% to 2.2% of group revenue in the medium to long term. At the midpoint, this would thus amount to a surplus of around €100 million at the revenue floor of €5 billion targeted for 2023. To put this in perspective, net income was €20.8 million in 2019 and €27.1 million in 2020.

Platform model

Mutares either acquires the new companies as a new platform investment or affiliates them to such an existing one. The focus here is on the three segments Automotive & Mobility, Engineering & Technology and Goods & Services.

There have been a number of transaction announcements in recent weeks.

On 9/29/21 Mutares announced the closing of the acquisition of Innomotive Systems Hainichen GmbH. The acquisition strengthens the Automotive & Mobility segment and has numerous synergies with the portfolio company KICO GmbH. The company, which has production sites in Germany and China, employs a total of around 450 people and generates sales of €120 million. As a leading supplier of aluminum hinges for automotive applications, Innomotive Systems Hainichen manufactures sophisticated and high-precision door hinges in steel or aluminum as well as complex hinges for hoods, liftgates and tailgates.

On 04.10.21, Mutares announced the sale of its subsidiary Norsilk to Protac, a French company of Groupe Rose. Norsilk had been acquired by Finland’s Metsä Group in 2015 and, after a successful restructuring process, was integrated into Donges Group in 2019, part of the Engineering & Technology segment.

On 11.10.21, Mutares announced the successful completion of the acquisition of Rasche Umformtechnik GmbH & Co. KG. The company manufactures steel forgings for the automotive, aerospace and agricultural industries, among others, and generates sales of approximately €30 million. As an add-on investment for PrimoTECS, which belongs to the Automotive & Mobility segment, Rasche will provide additional access to smaller series sizes with manual forging presses and will expand the

Further drive the growth of the Group. In the course of the aggressive growth strategy and the implemented buy-and-build approach, PrimoTECS now grows to a consolidated turnover of around 150 million euros and can further expand its customer network and product portfolio with the help of its 180 employees.

On 22.02.22 Mutares successfully completed the acquisition of Toshiba Transmission & Distribution Europe S.p.A. from Toshiba Group. The engineering-procurement-construction (EPC) service provider for power transmission and distribution is an add-on investment for the Balcke-Dürr Group. The company, which has been renamed Balcke-Dürr Energy Solutions, and the Toshiba Group will continue to work together as technology partners in the handling of existing projects as well as in new business opportunities. Balcke-Dürr Energy Solutions is a renowned provider of turnkey projects in the energy sector, operating mainly in Europe and the Mediterranean countries. It delivers turnkey projects such as high- and medium-voltage switchgear, battery storage systems, smart grids solutions and renewable energy installations, and has completed projects worth over €350 million in recent years. The add-on acquisition enables Balcke-Dürr to enter the renewable energy business, which is in line with Balcke-Dürr’s strategy to develop into a sustainable solution provider.

On 28.02.22 Mutares successfully sold its subsidiary BEXity to Raben Group; the deal had already been advised for the end of 2021. Raben Group is one of the largest logistics companies in Europe, headquartered in the Netherlands. BEXity is a leading logistics company in Austria and was acquired by Österreichische Bundesbahnen-Holding Aktiengesellschaft (ÖBB) in 2019. The company’s offering includes cross-border transport logistics in the general cargo and charter sectors, as well as warehousing services. BEXity has a nationwide network in Austria with around 650 employees and generated revenues of approximately €180 million in 2020. Within only two years, BEXity’s business, which was loss-making at the time of the acquisition, was transformed with the help of the Mutares team and led into sustainable profitability. The most important measures for the successful turnaround included the reorganization of the company, the repositioning on the market as the new BEXity brand and as a quality leader, the focus on profitable customer segments and process optimization. In addition, the then subsidiary in the Czech Republic was already sold in April 2020 in order to fully focus on the Austrian sites.

On 03.03.22 Mutares signed an irrevocable offer to acquire Vallourec Bearing Tubes (“VBT”) from Vallourec. The business will strengthen the Engineering & Technology segment as a new platform investment. The transaction is expected to close in the second quarter of 2022, following consultation with the works councils and subject to approval by the antitrust authorities. Vallourec Bearing Tubes is headquartered in Montbard, Burgundy, in France, and employs more than 200 people, generating sales of approximately €50 million. The company is a European leader in the manufacture of bea

n seamless precision steel tubes manufactured to the most demanding standards. VBT offers a comprehensive product range and customized dimensions according to customer requirements. As the second largest player in the European bearing tubes market, the company supplies its products to various industries such as engineering, equipment manufacturing and oil and gas. With the acquisition of Vallourec Bearing Tubes, Mutares underpins its strong position in the French market and secures a promising asset which, as a platform, synergistically complements the existing portfolio, especially with regard to PrimoTECS.

On 03.03.22 Mutares also signed an agreement to acquire the Sheffield business of Allegheny Technologies Incorporated (ATI). This acquisition will strengthen the Engineering & Technology segment as a new platform investment. The transaction is expected to close by the end of the first quarter of 2022, subject to customary regulatory approvals and other conditions. A change of name of the company to Special Melted Products Limited is planned. Headquartered in Sheffield, UK, the company employs approximately 190 people and expects 2022 sales of approximately €80 million.ATI Sheffield uses vacuum induction melting, secondary remelting and rotary precision forging to produce a range of robust, quality products in low-alloy steels, stainless steels and nickel-based superalloys. Thanks to its extensive in-house capabilities in metallurgy and the forging process,…

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Broker Pools Part 2: Netfonds | Price and Value Aktienblog

Today I can finally (with a little delay, which is partly due to more research and the fact that I became a father) continue my little mini-series and come to the analysis of Netfonds. Netfonds is a Hamburg based company and started in 2000. Today Netfonds is the second largest broker pool in Germany as well as the largest independent liability umbrella and has over 4800 partners. Growth has been both organic and through acquisitions and has been remarkably high, growing at an average of 15% per year since 2015. Netfonds only listed on the stock exchange in 2018. According to the press release, the listing probably took place at a price of 29.50€, but this sank quite soon in the direction of 20€. In the meantime, however, the shares have risen again to 29€, which values Netfonds at around 60 million €, together with the 3 million € capital increase even slightly more.

Business areas

In order to understand the company, let’s first take a closer look at Netfonds’ business areas, as these are quite diverse and offer more than a classic broker pool. Here there are two possible ways of classification: via the defined 4 segments or by looking at the relevant subsidiaries.

  • Wholesale: wholesale for financial products (funds, insurance) – the classic broker pool business, margin is achieved through better purchasing conditions in the course of bundled market power. In 2019, this segment contributed 70% of revenue (though probably less share of gross profit).
  • Technology: outsourcing and software that help consultants. These service offerings and licenses can be booked by partners, Netfonds gets better gross margins from this than wholesale and ideally can also better retain partners to its own platform. Software as a Service usually has much more attractive return potential than trading, and lower margin pressure, so the area should not be underestimated. Revenue share 19% .
  • Regulatory: Essentially the liability umbrella (see subsidiary NFS). Here Netfonds is the largest independent provider and is recording clear growth. At the same time, the annual report explicitly refers to high regulatory barriers to market entry, which also explains the comparatively higher profits in this area.
  • Marketing & Products: Netfonds writes in the annual report: “Netfonds currently manages approx. 3 million
    insurance contracts in the wholesale segment, i.e. more than all insurtechs combined and approx. €14.6 billion
    investment volume (assets under administration, incl. fund advisory). Due to this
    high market volume, Netfonds represents an important market access for product providers such as insurers,
    custodian banks and investment companies.
    This creates economic
    opportunities and possibilities for the company in the medium to long term to achieve higher
    value added and thus consistently higher margins through an intelligent product mix.”

    In German: The margins on the product side are considerably higher than in the normal net fund business.At the same time, distribution and customer access is a key challenge for product providers – Netfonds, with its large network, is therefore ideally positioned to increase the depth of value creation here and to profit from the opportunities offered in the financial business.The company is also able to take a larger share of the often very juicy profits. This is likely to include the real estate business NSI and the newly acquired robo-advisor Easyfolio. This area is still very small, but is currently showing good growth and could become a strong earnings generator in the medium term.

The classification into subsidiaries additionally gives a good picture of the specific things Netfonds does. In addition, there are no more precise figures on the self-defined growth areas, but at least an annual result of the individual subsidiaries.

Therefore, to understand the earnings potential, one needs to have an understanding of at least the most important of these. For example, last year there was the strange effect that more income taxes were paid than profits were generated. If you look at the individual subsidiaries, this becomes understandable, for example, the young real estate division (for which there is no profit transfer agreement) made start-up losses. The problem is that these are of course included in the consolidated accounts, but could not be offset for tax purposes against profits from profitable areas.
So what are the most important companies?

Presentation of Netfonds subsidiaries (Source: Annual Report 2019)

NFS Netfonds Financial Services

NFS essentially provides a liability umbrella for independent financial and investment advisory


That is, Netfonds assumes regulatory responsibility for advisors who shy away from the high expense of obtaining their own BAFIN permit. Since the background for this was also not quite clear to me here once the explanation of Wikipedia


The term ” liability umbrella ” describes the exception regulated by banking supervision law in section 2 (10) sentence 1 of the German Banking Act (KWG). According to this, “an enterprise which does not engage in banking business within the meaning of section 1 (1) sentence 2 and which, as financial services, only provides investment or acquisition brokerage, placement business or investment advice exclusively for the account and under the liability of a deposit-taking institution or a securities trading enterprise which has its registered office in Germany or which, pursuant to section 53b (1) sentence 1 or (7), has its registered office in Germany, does not require a liability umbrella”. 1 Sentence 1 or Paragraph 7 in Germany (contractually tied agent)” does not require a permit from the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, BaFin) if “the deposit-taking institution or securities trading company as the liable company notifies this to the Federal Financial Supervisory Authority”. In this case, the activity of the contractually bound intermediary is attributed to the liable company (under civil law). Consequently, claims cannot be based directly on Section 2 (10) KWG.

This concerns (as the name “Financial Services” already suggests) just not the pure insurance brokers, but the investment. The partners here are, for example, asset managers and private bankers. Since the current situation at many traditional banks is rather difficult (look at the tragedy at Commerzbank & Deutsche Bank) and the resulting internal pressure on customers and bankers does not cause enthusiasm, Netfonds can profit from a certain trend towards independent advice. Moreover, Netfonds is clearly the top dog and has little competition in the field. Netfonds itself writes:

<blockquote>383 financial advisory firms with a total of more than 500 advisors are affiliated with the NFS liability umbrella. The company benefits from the current market environment of the banks. Numerous restructurings and job cuts, especially in the private banking sector of German banks, are ensuring steady growth and high new partner potential. There is equally good acquisition potential in the target group of asset managers. Rising expenses for operating their own KWG license are prompting more and more asset managers to use the NFS liability umbrella instead of their own license. (GB 2019, P. 26)

NFS Capital

NFS Capital offers fund lay-ups – meaning fund managers can launch a fund under the umbrella of Netfonds, which then helps manage the regulatory and administrative hurdles. In 2019, it was the top-performing subsidiary, so this division, with 17 fund mandates (according to the 2019 AR), is highly profitable.

NFS Netfonds Financial Services and NFS Capital can probably be considered the most important subsidiaries in terms of valuation. Together, both are consistently strong revenue generators in the Netfonds group. Even more, when Netfonds acquired the outside shares in both companies at the end of 2017 (49% and 51% respectively), the paid for it with a capital increase of 665,000 shares at 1€ to then 2.1 million share . Based on this, the two subsidiaries would be valued at a total of 1.33 million shares, representing 63% of the share capital.

NFS Hamburger Vermögen

Hamburger Vermögen is a proprietary asset manager of the Netfonds Group. It offers standard strategies and the possibility for advisors to set up their own asset management strategies, which can then be offered to clients. The assets managed here are growing very strongly and already exceed €1 billion. Hamburger Vermögen is also clearly and consistently profitable, with a nice upward trend over the last few years.

NSI Netfonds Structured Investments

NSI is a subsidiary active in the real estate business. This activity has only been built up in the last few years and has still brought in losses in 2019, but according to the statement at the AGM, a profit is already virtually certain for this year. Specifically, apartment buildings are bought up here, possibly divided up and renovated, and then resold via the Netfonds partners as a capital investment. These properties are now a substantial item on the balance sheet, which raises the question of risk. According to Netfonds, however, this is narrowly limited: on the one hand, there is no obligation to assume losses, and on the other hand, only rented residential properties are purchased, so that a certain reliable cash flow can be achieved even if the properties remain in the portfolio for a longer period. The holding period is expected to be 0.5 to 3 years.

The balance sheet item “Land for sale” has increased from € 4.3 million to € 15.1 million from 2018 to 2019, here one can safely assume a decent margin and even further growth: If one were to turn over €10 million a year at a margin of 10%, one could already make a profit of €1 million – and that is realistic with an inventory of €15 million and a good sales pipeline. If you continue to grow and can, for example, turn over €30 million at a margin of 10%, then it could already be €3 million, an order of magnitude that is not realistic for me either. seems unlikely.

I am curious about the development and see high profit potential, at least in the short term, the market for real estate, driven by low interest rates, does not seem to cool down noticeably.

NVS Netfonds Insurance Service

This is the insurance broker pool of Netfonds. This is one of the largest in Germany, but as the table below shows, not the best profit driver for the group. However, things could get interesting here starting next year: Netfonds is part of a consortium that offers collectively agreed long-term care insurance – CareFlex – for all employees in the chemical industry. Hundreds of thousands of contracts (and customer contacts) are involved here, so this area could well have more to offer. More on this below.

Finfire Solutions

Finfire is responsible for the digitalization and automation of processes and was created by joining forces with competitor Maxpool. Here, the platform is programmed for the consultants. Since then, the company has been investing in the expansion of the platform and thus its own digitization, and these investments are also cited as the reason for the lagging profits. The platform is also intended to replace and standardize old systems, some of which are bought in externally. But the important thing is that the platform, its functionality and usability, is a decisive factor in competition. If the conditions are very similar for most providers, then the question as a customer is rather how good the software platform offered is. The competition also offers good platforms and you have to be able to keep up and ideally be even better.
Netfonds actually only has a minority share of 49% in Finfire, which is accounted for “at equity”.


This subsidiary was bought in 2018 (alright, the minority shares will be paid in 3 tranches until 2021) and since the end of 2019, the 20 or so employees have also moved into Netfonds’ premises. V-D-V stands for Versicherungs-Daten-Verarbeitung (insurance data processing) and offers services and software for processing insurance data. According to its own statements, the company is “the market leader for insurance data processing and a service provider for very well-known major customers.”
Unfortunately, the result has been negative so far since the takeover, but it was made credible at the Annual General Meeting that it is hoped that positive effects such as the relocation will soon put the company in the black here.

The following table shows the profits reported in the annual financial statements for important subsidiaries:

Earnings in € thousands in
selected subsidiaries
2017 2018 2019
NFS Capital 671 471 480
NFS Netfonds Financial Services 600 176 379
NFS Hamburg Assets 132 158 229
Finfire Solutions 47 257 80
NVS Netfonds Insurance Service 104 -118 -106
V-D-V -58 -332
NSI + NSI real estate companies -264 -362
Argentos 354 58 60</td>


Let’s get to the hard figures: What has Netfonds turned over and earned over the last few years?

Netfonds Group 2016 2017 2018 2019
Balance sheet total 21.834,00 € 25.960,00 € 41.403,00 € 56.261,00 €
Equity 4.739,00 € 5.802,00 € 11.487,00 € 10.718,00 €
Equity ratio 21,70 % 22,35 % 27,74 % 19,05 %
Employees >120 >160 194 214
Gross consolidated sales 70.137,00 € 85.986,00 € 93.607,00 € 113.279,00 €
Net consolidated sales
(gross operating profit)
14.377,00 € 17.118,00 € 20.188,00 € 26.466,00 €
EBITDA 1.907,00 € 2.585,00 € 1.386,00 € 3.439,00 €
EBIT 1.217,00 € 1.891,00 € -165,00 € 1.171,00 €
EBT 1.173,00 € 1.830,00 € -339,00 € 304,00 €
Consolidated net income 833,00 € 1.267,00 € -719,00 € -396,00 €

The figures show that the business has almost doubled in terms of gross profit between 2016 and today. You can also quickly see a peculiarity of the broker pool business: the revenue (which includes commissions passed through to advisors) is significantly higher than the gross profit the company actually earns for the incurred…

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The always same problem of investors – Mr-Market markets, stock market, trading, economy

Many new investors are currently flocking to the stock market in Germany as well, driven by the need to find a little return somewhere in the age of zero interest rates and inflation.

And a hungry financial industry is just waiting to attract these new investors. It’s like in the old days of Westerns when the uninitiated step up to a poker table and ask with interest, “Is this the five-card game?”

The poker pros then look at each other, avoiding any grin, and the one with the watch on the gold chain in his vest says with an emphatically friendly smile, “Sit down, you know how to play poker!

And the offer that is made to new investors is huge, it serves all their conscious and unconscious needs. There forecasts are offered and whispering prophecies, deep “value analysis” of a share “to the reason” go, Charts peppered with colored lines, so that one does not know already at all more where the price is represented at all, “hot Tipps” for the newest “10-Bagger” and much more besides. There are “renowned experts” at every corner and the number of followers on some platform is raised to a quality criterion, as if the number of flies … Well, you know, I don’t have to go into that in depth.

The investors are then in the candy store and all seem to want only their best, which is then true again with a different meaning.

A few years later, these investors then have, in the best case, a mixed investment history and, in the worst case, they are disappointedly gone again because “the stock market is crap”.

That’s the way of the world and it is for a reason. The reason that in reality all the “value analyses”, prophecies and thousand indicators are if at all at best only half the battle, that these only a *control illusion* pretend.

Because the real art of investing is the ability to move purposefully and profitably in uncertainty.

But the uncertainty remains and all attempts to eliminate it are doomed to failure from the start. And offers for the inexperienced can be reliably recognized by the fact that “security” is promised; nothing can more reliably pick up the insecure investor’s soul.

That is why really experienced investors are no longer looking for security and the “holy grail”, but have learned to live successfully with uncertainty.

And the real, difficult problem investors face is typically *not* addressed and that is our psychology, which has not prepared us humans evolutionarily to think systemically in probabilities and scenarios.

Instead, we think in the face of uncertainty in the way that was necessary in evolution to ensure our reproduction, which is unfortunately rather counterproductive in the market. We are “hairless monkeys” and still think this way in the face of crises and risks, which is why we here at Mr. Market lovingly and mockingly call these thought structures our “monkey brain”.

We all carry this “monkey brain” around with us, each of us, including me. But you can learn to recognize it and rise above it. It improves decisions in uncertainty and is the *central factor* that stands between success or failure in the marketplace. Any indicators or the differences of techniques are secondary to that and if you don’t af you don’t want to recognize how wrong our instinctive reflexes are when it comes to investing money, you will never be able to find consistent success apart from lucky hits.

Quite specifically in the last few weeks, this has been seen again among investors. To do this, one must recall how our instinctive behavior toward severe risk is evolutionarily polarized. I have already used the following example of the water hole in the savannah in -> The knife carrier, the bald head and the face of the Chinese.

Because our risk behavior is evolutionary polarized to survive in any case. So if there is an important water hole for us and next to it a bush and it rustles so that there could be a lion in it, then we are trained to be hesitant in such moments, because our survival depended on it at that time!

Better 100x too long hesitated than 1x dead! That was and is the right risk management for the savannah, that was “inbred” into us. For the stock exchange it is however grottenfalsch!

Because who thinks in such a way at the stock exchange, hesitates always too long and is always too late, upward as downward. Well, does this sound familiar to anyone?

The desire in us to wait until “the coast is clear” is overwhelming, to wait until the lion is gone for sure! For the savannah a perfect behavior, for the stock exchange the guarantee to miss a good part of a bull market and then to be the last to enter before the prices fall again!

Because we like to feel “safe”, we wait until the market has already run too far and all those who wanted to buy, have already done it. That’s why the market then turns down after we security seekers have also bought, we “bagholders” who then get the buck.

And such a classic moment we had in the market now also in mid-October on 14.10. I had prepared them here also in the free area with the article -> The 4th quarter – Yesterday, Today, Tomorrow on the fact that the correction in the course of October should be to buy.

I also clearly showed the signals on Twitter -> here and -> here.

Nevertheless, many will have hesitated, then the courses have taken off on 14.10. but with power and one has waited as a man of the savannah further to “play it safe”. 5 days later, however, all-time highs were already reached again and the hesitants had once again waited too long.

This is exactly the monkey brain, this is exactly the behavior in the savannah when in the bushes could be a lion. We must simply recognize that our instinctive behavior for the stock market *is usually wrong and a contra-indicator*!

The correct thing to do here would have been instead to be already in, but to have hedged just below the recent lows. Or to be so agile and prepared that one would have bought directly into the first thrust on 14.10.. Both were sensible approaches, simply waiting until the “coast is clear” on the other hand was not, that is a guarantee of losses.

All this, all these psychological problems are always a topic with us at Mr. Market, because it is the central problem of all of us, we all have this evolutionary imprint to deal with uncertainty. If you can’t and don’t want to see that, a thousand other indicators won’t help you either, you’ll always see the same

make any mistakes.

You do not have to join us, look for your teachers and coaches wherever you want. But one thing I can tell you with certainty: Choose sources that also deal intensively and competently with the psychological side of stock market trading and do not just indulge mechanistically in numbers or colorful line satisfaction. Because our psychology is the central factor that accounts for at least 50% of success or failure in investing. Theorists don’t get you anywhere here, neither do number fetishists, if it were otherwise, accountants would be the most successful traders in the world – but they are not.

The real problem that lets many investors fail looks at us in the mirror and is the unreflective action reflexes of evolution, which are completely unsuitable for a reflexive system event.

And if they now believe that this would only affect the traders, the “evil gamblers”, then they are completely mistaken. The self-proclaimed investors are particularly affected, wonderfully last to admire during the Covid crash in March 2020. There one has first the situation schöngeredet, with 20, 25 and 30% minus then nevertheless cold feet get and then that suppressing from outside looked away, as the courses rose again. Too late, both up and down – once again.

And because this is not so easy to accept and not everyone is prepared to recognize and tackle their own weaknesses, comparatively little is said and written about it. Because it is easier to sell clicks and subscriptions with the illusion of control of the “secret indicator”, “hot tips” or the “secure system”.

Stupid question, why does someone with “safe system” need to catch customers with ads at all? Why isn’t he in his own Gulfstream already on his way to a private island in the Bahamas? Exactly.

The man of the savannah waited in front of the bush until the risk of the lion had really disappeared. And that was the right thing to do.

The modern investor in the reflexive market, on the other hand, coldly evaluates opportunities and risks, and if the opportunities outweigh the risks, he marches straight through the bush and secures himself with armor (risk management) in such a way that the lion’s bite can never become life-threatening.

Because to chances also always belong risks, the art is to deal with it and *not* to avoid these!

That is the way! You can train it, but it will not be given to you.

Your Michael Schulte (Hari)

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Kissig’s performance update: How the stock markets and my wikifolios performed in March

March started with brutal price losses due to the Ukraine war and the resulting sanctions by the West. In recent days, however, there was a virtually “V-shaped” recovery in stock prices, even though the data from economy is becoming more and more negative. The stock markets and the economy are not in sync, the stock prices anticipate the development for 12 months.

Earnings Season is nearing its end and most companies could report strong 2021 results. But the outlook for 2022 is often omitted or subject to massive caveats. The stock market often reacts(s) with dismissal, yet company leaders don’t announce anything that you can’t/couldn’t think for yourself with a normal dose of common sense. Many things are already included in the share price, especially negative ones, so that positive surprises can quickly lead to sharp price jumps.

However, investors should definitely select between speculative flash in the pan stocks that are only in a bear market rally and those stocks where the companies are fundamentally sound and will continue to perform well in the current uncertain times. With such companies in the portfolio, there is no need to fear these challenging times, even if one or the other share price should go under for a short time. Top companies are always in demand, both among global champions and among hidden champions in the small cap sector…

Putin has dropped all masks and inhibitions. In the future, no politician in the West will be able to claim that he did not know. Putin, and therefore Russia, are not a reliable partner, not an

option for the future (anymore). Without the energy sector, Russia is a global dwarf – a dwarf that has nuclear weapons. Unfortunately, this must always be kept in mind.

The Ukraine war, however, brings further insights besides the massive dependence on Russian energy supplies: the Russian army is vastly overestimated in the West. It is poorly positioned strategically, it is poorly equipped militarily, and the sanctions imposed by the West for years have largely destroyed Russian arms production. The Russians have almost nothing left but discarded military scrap. This does not reduce the threat from the east, as has been shown. But, this too is a new insight, NATO offers many advantages, it is gaining a new appreciation and Europeans will have to learn again to defend themselves. The days of simply relying on “big brother America” are over.

Furthermore, the Ukraine war has ended the era of globalization

, according to BlackRock CEO Larry Fink. In the future, production will again be more local, there will be much stricter controls on what can be supplied to whom, both in terms of defense technology but also IT, etc. Asia as the “workbench of the West” has thus also become somewhat obsolete, and the Europeans will hardly make the mistake of turning to Africa as a low-wage region. At least not on a large scale. China has long had its claws into the continent, and replacing Asia with Africa would not eliminate the West’s strategic dilemma, but only shift it.

From these developments

here will be a lot to deduce in the coming months and years, and there will be sectors and companies that will benefit massively and those that will go under. As an investor, I don’t have to know and position myself perfectly here. “My job” is much easier. I still “just” need to invest my money in the companies and management that presumably makes the best and smartest decisions for their company. Or as Warren Buffett defines investment success, “Good business, good management, good price


It is exactly this cherry-picking that I enjoy so much and I think I will stay true to my hobby for a while longer….

ツStock market performanceIn


past month, the stock markets fluctuated quite considerably and dropped significantly in Germany and Europe – the Ukraine war is much closer here than in the USA and Europe is dependent on Russia’s energy, while the USA is largely self-sufficient in energy. In the USA, the losses were rather moderate. Technology stocks performed better overall than value stocks, which may also have been due to the more moderate interest rate hike projections that have emerged in the meantime. However, it is quite possible that the central banks (i.e. the Fed) will turn the interest rate screw faster than some people think, as inflation rates are continuing to rise significantly worldwide.

Dow Jones: +2.36 % (YTD: -4.06 % // 1 year: +5.43 %)

S&P 500: +3.09 % (YTD: -5.16 % // 1 year: +14.19 %)

NASDAQ: 4.06 % (YTD: -9.52 % // 1 year: +14.49 %)

DAX: -1.79 % (YTD: -9.94 % // 1 year: -4.68 %)

MDAX: -1.98 % (YTD: -11.25 % // 1 year: -1.75 %)

SDAX: +0.33 % (YTD: -12.29 % // 1 year: -7.13 %)

TecDAX: +2.36 % (YTD: -16.68 % // 1 year: -2.93 %)

Development of my WikifoliosSo much

for my

short monthly review. Now we come to the development of my three wikis:

Kissigs Nebenwerte Champions ▶ to the wikiInvested

capital: €2,740,100,-144

.49 (28.02.22: 130.00) +11.0 %Return

since start on 19.08


20: +44.3 %Return

in 2022: -3.1




in 2021: +17.3 %


in 2020: +27.0 % (as of 08/19)

Kissigs Quality Investments ▶ to wikiInvested

capital: €898,300.-111


81 (02/28/22: 109.14) +2.4 %Return

since start on 08/13


20: +11


7 %Return

in 2022: -16





Return in

2021: +24.0 %Return

in 2020: +7.0 % (as of 08/13)

Kissig’s turnaround speculations ▶ to wikiInvested

capital: €107,200.-77


96 (02/28/22: 83.51) -6.8 %Return

since start on 12


10.21: -22.1 %Return

in 2022: -14.0



Return in 2021: -9.4 % (as of 12.10.)

My small cap wiki has again performed best, although small caps tend to be among the bigger losers during correction phases. This is mainly due to the high weighting of Energiekontor, PNE and Funkwerk, which have made significant gains in recent days. The two energy stocks had already outperformed in February. Likewise, the two new additions Befesa and JDC Group were able to make pleasing gains, while I would have preferred Jungheinrich

in time.

I remain convinced of the company, but the short-term price situation for steel is having a very negative impact and the disruption of supply chains is also having a very negative impact. This time I “timed” it right; I just hope I don’t miss the timely re-entry (and for that I’m still waiting for another price setback) so I don’t miss the next cyclically driven price upswing.

There was a moderate recovery in Quality Investments

. The financial sector continued to bleed and so did the Alternative Asset Managers, which I had previously weighted highly. I reduced them in exchange for a significant increase in Berkshire Hathaway, which, with its broad positioning in the industrial and insurance sectors, should be one of the winners of the renaissance of value stocks in a rising interest rate environment. Online business models, on the other hand, are currently not at all in vogue and are posting further share price losses. Rising interest rates and high comparative figures from the previous year are clouding the outlook, especially since many offline retailers are reopening and customers (want to) enjoy presence shopping again, at least in part. So the headwind continues – for now.

And in my turnaround speculations

, there were again significant losses. There is no easy and fast money in this segment.

I would like to thank the investors who have shown their trust in me with their investments and who have already invested almost €3.75 million in the three wikis together

. This is €150,000 more than a month ago and is mainly due to the strong performance of Nebenwerte-Wiki.

In the future, I will continue to do my best to generate sustained above-average returns with the wikis. My average annual target return is 15% – however, all three wikis are plenty far away from that this year.

Disclaimer: Have the mentioned stocks on my watchlist and/ or in my portfolio/ wikifolio.

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