Sayonara Sawai, Sayonara Ateam | Price and Value Stock Blog

A few years ago (specifically 2017), when it became increasingly difficult to find classic value stocks among German second-line stocks, I chose Japan as a small investment focus and invested in a few stocks there. These were the two IT service providers Toho System Science and Minori Solutions (sold with 25% and 100% profit, respectively), the CAD software specialist Argo Graphics (sold in 2018 with almost 50% profit, since then still significantly increased…) as well as Sawai Pharmaceutical and Ateam. The latter were my highest weighted positions in the process, but in contrast to the others they were rather disappointing. I have now decided to check off this chapter for the time being, to learn from it and to reflect on the whole thing.

Sawai Pharmaceuticals

Sawai has more or less gone sideways since my purchase (at just under 6000 yen), while profits in America have been severely limited by competitive pressure (look at the prices of Mylan and Teva!) and in Japan by the constant “drug price revisions” of the government as a quasi-monopoly customer. Each year, more generics were brought to market and production volumes were increased (often with fewer employees), profits were definitely made and the valuation is still favorable. Here are the figures:

Revenues 123492 132428 168068 184341 182537 179345
Operating income 23186 20539 22293 25990 26793 24789
Net Income 17155 15914 14017 19376 19279 18313
Diluted EPS Excl Extra Items 465,25 431,39 360,26 442,32 440 417,92
Dividends Per Share 120 130 130 130 130 130


You can see nicely how revenues have increased initially (due to the acquisition in the US), but earnings per share still remain below its record level. If you adjust the profit for the amortization of the acquisition of the US business, Sawai trades at a very moderate P/E ratio of around 10-12.
I think it’s quite possible that the valuation will also jump significantly at some point, because actually Sawai is not a bad company, and definitely still cheap. The share price is 5100 yen, and the dividend yield of 3% is not bad at all. But I realized that so far I had underestimated the impact of the government’s price cap and expected a swing to a new growth path soon. However, if the Japanese government does not want to allow its companies to make more profit than necessary and can constantly enforce price cuts, then this is a considerable risk. To assess this better, I would probably need Japanese sources, which I don’t have. Therefore, I have left here.

Did I do something wrong?

I’m not sure – the valuation is still cheap, the stock has held up very well compared to, say, Teva or Mylan, and even its biggest domestic competitor Nichi-Iko has given up a third of its share price in the period. I got off lightly with my single-digit loss.

ommen. The fact that it is difficult to predict market dynamics makes investing difficult, and I foolishly invested here at the very moment when it was becoming increasingly difficult for generic manufacturers (after they had earned very well for a long time). Maybe I’ll look back in five years and selling now was the biggest mistake – I don’t know. (After all, it’s a stable, profitable company not particularly hit by Covid19).

Still, I see little reason to be sure that Sawai can steadily increase its profits over the long term and earn high returns on capital as long as the government keeps depressing prices so regularly and has found a good way to shift profits from the companies to society in the form of the health insurance companies. So I also see limited potential here, and probably harder for me to assess than I expected.


When I invested in Ateam in 2018 I thought “what could go wrong?”. The company actively and profitably growing in the promising online space (platforms and mobile games) got for a price-to-earnings ratio of about 12.

Presentation of the company’s performance at the time of my purchase

Ok, I was aware that the then larger part “mobile games” sells quite short-lived products from which you can make money for a time, but which will eventually expire and have to be replaced by new ones.
However, the second largest area, online platforms / comparison portals, was growing so strongly at the time that I assumed it should easily compensate for this. But the reality was: the existing games came under much more pressure than I had expected, the new games were not big hits, and the growth of the platforms slowed down. The numbers now:

quarterly revenue growth by segment (source Ateam IR)

So the games fell further and further behind, and contrary to my hopes, no new hits were produced. “Lifestyle Support” (online platforms), on the other hand, caught some of it, but also fell back slightly even before Corona. Some of the newly launched sites were discontinued again because they did not perform sufficiently well, other hopefuls like Qiita have good user growth but still have problems with monetization.

On the cost side, the development of new apps has apparently become significantly more expensive due to higher requirements, but it is not possible to generate ever higher revenues in the competitive environment. The new strategy here is to now develop not only for cell phones, but for all types of end devices. This is probably still more expensive, but has a better chance of bringing in the money (or decent profits) again due to the larger market.

The short-term outlook is mediocre: After the loss in the past Corona year, there should be slight growth and a black 0 again next year. Notable profits from new games can’t be expected for the year, if they don’t come the following year anyway. Corona has apparently hurt the wedding planning site quite a bit and that should continue for a bit longer,even the comparison sites for financial products have suffered. So in the short term there will probably be little progress, with remaining high but un

sure potential for later years. So I decided to exit with a painful loss of more than 50% and keep the company on the watchlist for that long. If hit games can be produced again (or at least “Lifestyle Support” finds its way back to nicely profitable growth) the stock is still strongly undervalued.

What was my mistake?

For one thing, I expected that at least moderately successful games would continue to be released, even though I knew that was a bet. Well, I lost that bet.
I also didn’t expect growth in “Lifestyle Support” to dissipate as quickly as it has – even before Corona, there was stagnation in most areas. Maybe I could have taken these two points as warning signs and got out earlier?
But probably my biggest mistake was to have chosen a high weighting in this rather risky investment due to the high proportion of games. With a new hit game, it probably would have been a big win – so it’s a big loss. And what is the number one rule of investing?

1.never lose money!

What’s the number


2.never forget rule number 1!

Well… remember Tobi, remember!

To summarize: Both are actually not bad companies, but due to a deterioration in external market conditions, growth has been curbed and valuations have not progressed accordingly. At least with Ateam, however, I see chances (and risks) that it will come back – though certainly not next year.

Tidying up

The two sales, however, have another background: At the time, I turned to Japan, as I hardly saw any attractive stocks left in Germany. In the meantime, the situation has improved somewhat: on the one hand, there are definitely stocks that I find attractive. On the other hand, I recognize more and more that higher valuations are acceptable for good, profitable companies and that I can also feel comfortable with such. To do that, however, I need to understand the company better and more deeply – and that, in turn, is comparatively easier with German small caps than with Japanese ones.

My private portfolio had grown to almost 20 positions (including Wizz Air and Sixt which I reduced to one share at the beginning of April in order not to expose myself to the Corona risks) – to follow them reasonably is then also increasingly difficult. Therefore I am happy when I can reduce it again a bit.


Where did I reinvest the money? I have Grenke bonds (in the short term also shares), bought some shares of Doccheck and of Lang&Schwarz and increased Tick TS a bit.On occasion I hope to be able to write more about it.

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The dual mandate and a schizoid stock market year – Mr-Market Markets, Stock Market, Trading, Economy

The stock market year 2021 is slowly coming to an end, but there is still a hurdle in our way with the FED meeting next Wednesday 15.12.21.

Because there the Fed decides on monetary policy, it is expected that it significantly reduces the stimulus (tapering) and perhaps even real interest rate increases for 2022 in prospect.

There are often misunderstandings about the Fed’s monetary policy, because anyone who has grown up in the tradition of the Bundesbank automatically associates monetary stability with the central banks’ mandate. This is still formally the case with the ECB, which was founded in the tradition of the Bundesbank but is now increasingly distancing itself from it and, with the support of politicians, is also subsuming political issues that are actually alien to monetary policy, such as climate change, into its tasks.

But the FED has since 1977, since the times of high inflation – which Paul Volcker later broke – a “dual mandate” for monetary stability *and* full employment!

A stable, good employment situation near full employment (which does not mean 0% unemployment) and thus a humming economy, is thus an equal goal of the FED beside the monetary value stability! That is an important difference to many other central banks which have primarily the money value as mandate!

The stock market has therefore always been an important factor for the FED over the last 20 years – even if it is not directly mentioned in the mandate, one simply cannot separate cyclical issues from it. The high dependence of many U.S. citizens’ pensions on their 401k stock savings plans adds to this. A prolonged bear market there means retirement poverty in many cases.

Which is why the FED has flinched every time things got really serious. And that’s been the case for more than 20 years, ever since Greenspan took the helm.

Most recently, the Fed has become more and more of an “auxiliary” to Wall Street, and that was possible because inflation was never a problem. If one factor of a dual mandate is not a problem, one can concentrate fully on the other factor, and that was the economy, which leads to full employment. And so the FED has simply “printed away” every bear market, such as Covid’s most recent one, with a flood of money.

So the FED has become the reliable “cavalry” of Wall Street. The last attempt to break away from this was Jerome Powell’s pirouettes in Q4 2018, the market then twisted his arm at Christmas 2018 and got what it wanted after all, the 2019 rally was the result.

By the way, because this dual mandate is what it is, the unemployment numbers every beginning of the month are also so important to the market because they effectively help determine FED policy.

Now, however, inflation is stupidly back and with inflation rates of 5% or 6%, the Fed *must* act, it cannot do otherwise in its dual mandate!

The problem is only, as strongly as the stock market is now inflated and how much the economy now correlates with it, a conflict of objectives arises. Because a too fast braking of the money flood can hit straight during the Pandemie the economy, to which the FED is just as obligated!

Therefore, it was a bit “wishful thinking” on the part of the Fed to describe inflation as “transitory”, i.e. temporary.I don’t want to. Because that would have spared her a difficult balancing act, which she now has to undertake after all. That’s not something you like to do.

So on Wednesday of next week, the Fed will quite certainly start tapering, i.e. reducing the stimulus. That has to be now in the face of inflation and the market knows since August and he has also priced in. That would not be a problem.

What is a problem, on the other hand, are the far more aggressive tones that have been heard from the Fed recently, implying that in 2022 there may not only be a sharper tapering, but perhaps also a first rate hike.

These tones are a problem for the market and especially for interest rate sensitive stocks, which also affects growth stocks with high multiples, because their high valuation is based on a discount factor that hardly exists at zero interest rates.

And if you think that this is new for the market, you are wrong. Because this discrepancy, this concern about a changed interest rate policy was already involved in the whole year 2021 to create an almost “schizoid stock market year”.

In the following chart you see on the one hand the NASDAQ100 of the 100 largest tech stocks, so there are the big names like Apple (AAPL), Microsoft (MSFT) or Alphabet (GOOGL) included, but also many well-known tech companies like NVidia (NVDA), Cisco (CSCO) or Intel (INTC).

These are almost all corporations that earn immense amounts of money and whose valuation may also be high, but which show every month with immense cash flow that there is real substance here. These corporations can almost not care if the FED raises interest rates, the valuation is backed by profits, they are usually swimming in money and idR also need to pay little or no interest on debt.

So these corporations have become something like “safe havens” for many funds and investors and those who simply invested in these tech corporations all of 2021 are now sitting here with around 20% annual gains and a fat grin on their face.

On the other hand, they’re looking at the ARK Innovation ETF, from the hyped fund manager -> Cathie Wood .

In it are many interesting future stocks of the category Teladoc (TDOC), Palantir (PLTR) or Coinbase (COIN), which usually do not yet really make profits and are highly valued mainly because of high expectations for the future.

However, it is precisely such stocks that are particularly affected when interest rates rise. On the one hand, because they themselves are often still carrying financing that has to be serviced, and on the other hand, because the future valuation is subject to discounting by the interest rate level – the higher the interest rate level, the less future profits are worth in the present.

Those who joined in the hype on these stocks at the beginning of the year in 2021 have had a frustrating 2021 in which nothing was to be gained and are in the 20% minus range if they simply held these stocks.

So two investors bought tech stocks in 2021. One the big blue chips, the other the smaller future stocks and the difference between the two portfolios is glaring!

Exactly that was the schizoid stock market year 2021 and that has just to a good extent also with the expectation to the monetary policy, which runs now next Wednesday on its dissolution and will surely lead to strong movements of the market.

What k

o come 2022 then?

Well, you know my attitude to it, forecasts are difficult, especially concerning the future, which is why I do not make any. For the big “white predictions” others are responsible, if you want to pay attention to something like that, you are rather wrong here at Mr. Market anyway.

But nevertheless, some things can be said, not as a whitewash, but derived from historical patterns. We will also discuss this intensively in the community, until 22.12.21 I am active with daily articles, then the blog goes on Christmas vacation for 2 weeks.

Which will also soon bring them back to the question of good intentions for 2022. And maybe they also want to invest once in their knowledge and skills in the matter of the market and therefore I want to make here now the only kind of advertising, which I allow myself from time to time.

Strictly speaking, it is also not advertising, but the honest documentation of the letters of members who write to me at the extension.

The last time I did this was in -> Rattling with Sugar Pieces half a year ago.

So here it comes, the real feedback from real members in the last 7 days. So all comments have been received in the last week! Many members have been paying members for many years, some now for almost 10 years. This longevity, this working together for success, is a trademark of Mr-Market anyway.

Read a cross section of what was written to me last week about Mr-Market by those who need to know – because they are renewing their membership.

And then consider joining, the turn of the year is actually ideal for reading in and making a fresh start!

Dear “Hari”,
thank you very much – as every year, but I like to repeat myself – for your not only competent, but also empathetic guidance through the stock exchange year. I wish you and your family happy holidays and in all respects a good and successful new year.

Thank you Hari – as every year very instructive and a super support (time factor) besides the professional life.

Hi Michael,
I read your analyses daily. They help me a lot in classifying the current stock market and world situation!!!
Thank you very much and many greetings

Dear Hari,
just admirable what you are doing!!!
I thank you for the impressive accompaniment in 2021 and continue to be particularly pleased about the diverse thought-provoking impulses away from the stock market events. Alone these differentiated contributions justify m.E. already the subscription amount in these times of the aggravation and “Alternativlosigkeit”.
I wish you a peaceful Christmas and a good slide into the year 2022. Stay healthy!…

Dear Hari,
on this way many thanks for your tireless efforts to classify and interpret the stock market events almost daily, showing the opportunities and risks, but also ways and possibilities to meet them. The live stream and the weekly outlook are the biggest help for me not to despair even in stormy weather. Happy Advent, Merry Christmas and all the best for 2022 to you and your loved ones.



thank you very much for your invaluable help.It was again an interesting year and very gladly I will renew my membership


A day without Mr.Market is not a real stock market day. I would like to give my son the opportunity to read along, because he should learn right from the beginning how to invest money properly. That’s why I have given him as a group member.


regards and I look forward to another year of membership


Dear Hari,
I would like to take this opportunity to thank you and the columnists for your great work. I notice more and more how my thinking structures are changing and I am learning bit by bit. My development is far from over and I hope to remain a member of Mr. Market for many more years.
I wish you happy holidays and a happy and healthy year 2022.

Thank you for the last five years of Guidance. It has helped me become consistently profitable. Merry Christmas to you and your family.

Dear Mr. Schulte,
thank you for your special way of teaching and all the excellent information in this blog. My personal growth, including a much improved investment return, is based in large part on your blog. In particular, one of your last articles – Serenity – has it all when you approach such topics.
A heartfelt thank you. I wish you a Merry Christmas, continued good health and a blessed New Year.

Mr. Market has become a daily companion for me, an important source of information and learning, even beyond the stock market. Thank you for the daily work you do here Mr. Schulte!

So what are they waiting for? Use the turn of the year for a new beginning!

Your Michael Schulte (Hari)

*** Please pay attention to the -> Legal Notice <- when using the contents of this post ! ***

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Kissig’s analysis of small caps: Muehlhan in upheaval

In Traderfox’s “Der Nebenwerte Investor” you will find regular analyses by me on German small and mid caps. “Der Nebenwerte Investor” is paid and who wants to order this magazine or one of the others from Traderfox, gets ▶

. 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.

Muehlhan AG is a specialist in surface protection and industrial services in the wind power, oil and gas, marine and construction sectors. At least until recently. That’s because Muehlhan divested itself of two business segments at once in order to focus more strongly on promising areas in the future and to improve its margins. In addition, the shareholders’ attention is naturally focused on the cash that has been filled to the brim as a result of the sales, since the company has so far remained cagey about how it will use it. In addition to acquisitions, dividends are also at the top of the wish list.

Muehlhan is one of the leading providers of specialty services related to surface corrosion protection, especially for ships, infrastructure facilities such as bridges, oil rigs and wind generators.

Corrosion protection

Muehlhan’s business segments are not sexy. But important. Over time, corrosion destroys even the best steel and requires constant care. The best-known example is probably the Golden Gate Bridge in San Francisco, which is so famous precisely because of its striking red paint. Clock designer Joseph B. Strauss actually wanted the bridge to be painted gray. But when the orange-red anti-corrosion paint was applied, he and above all the residents liked it so much that they stuck with this temporary solution. And this corrosion protection has to be constantly renewed, about every seven years, because otherwise the Bay Area landmark would be eaten away relatively quickly by wind and weather. And that in the truest sense of the word.

But the Golden Gate Bridge is just one of thousands of structures that require regular maintenance. In recent years, there have been more and more reports of dilapidated bridges in Germany; more than half of them are affected. Many are in need of repair work and quite a few have to be completely replaced. This is very expensive, and regular corrosion protection is comparatively inexpensive. If it is done consistently and right from the start. The coating is initially applied to newly built objects and renewed at regular maintenance intervals, which are between five and ten years.

Broad performance spectrum

Bridges, however, are not the only structures that will not last long without regular renewal of the corrosion protection. The same applies to oil and gas pipelines, to oil platforms in the North Sea, and also to wind turbines, both on land but especially at sea. And Muehlhan, with its nearly 2,800 employees, is active in all of these areas.

In addition to corrosion protection, the company has expanded its range of services in the past. It now includes passive fire protection, scaffolding, welding, insulation and industrial cleaning. By contrast, the importance of the formerly dominant but still important Ship Newbuilding/Repair unit has declined over the years. As a result of the diversification

g, the Industry and Energy segments now make the highest contribution to sales.

Regionally, Muehlhan focuses on Europe, the Middle East and the USA, with Europe accounting for the lion’s share at around 85%. In this context, 35% of sales are generated in the Industry segment, renewables already contribute 25% and the remainder is distributed between Ship and Oil & Gas, each with 20%. Until mid-2021, at any rate.


Muehlhan acts as a holding company with various subsidiaries in which the active business is conducted. In recent years, some industries have been struggling, such as the shipping industry and also the oil & gas sector. With energy prices skyrocketing at the moment, it is easy to forget that for years prices were low, mainly due to oversupply from the fledgling aggressive fracking providers from the US. As a result, there were more frequent project postponements and increased price pressure among service providers.

A year ago, Muelhan announced the sale of its North Sea oil and gas business. Specifically, this involved activities such as surface protection, fire protection, insulation and scaffolding for customers in the oil and gas industry. Here, Muehlhan simply lacked the necessary size to be successful in the long term.

In addition, the company wanted to strategically realign itself and focus more strongly on the renewable energy sector, for example work on rotor blades, high-voltage activities, corrosion protection or service topics such as occupational safety. However, the project then dragged on because two of Muelhan’s competitors also wanted to divest their activities in this sector.

Sale of scaffolding

business In August, Muehlhan somewhat surprisingly announced the sale of its wholly owned subsidiary Gerüstbau Muehlhan GmbH to Brand Energy & Infrastructure Services, based in Ratingen, Germany, which is part of the US-based BrandSafway Group. The purchase price was EUR 28 million on a debt-free basis.

Scaffolding was a relatively stable, albeit lower-margin, business segment. Its addressees include traditional building construction or special scaffolds such as for grandstand construction or advertising signs. In addition, however, the scaffolding business was also closely linked to the Oil & Gas business areas and in this respect the sale of the division was not entirely surprising, at least at second glance.

Sale of the Oil & Gas business

At the beginning of November, Muehlhan was then able to announce the completion of the sale of Muehlhan Öl & Gas. It completed the sale of all shares in MDK Energy A/S (Denmark) and Muehlhan Industrial Services Ltd. (Great Britain) to the Altrad Group. The transaction further implements Muehlhan AG’s strategy of focusing on its core business. At the same time, the business will be transferred to a buyer who intends to further expand it.

Impact on business figures

The two sales will naturally have an impact on business figures in 2021 and beyond.

In September, the company said that without the sale of Gerüstbau Muehlhan GmbH, it expected sales and earnings from operations to recover in fiscal 2021 compared with the previous year. However, the sales of EUR 295.3 million and EBIT of EUR 12.4 million of 2019 should not yet be reached again

en. The pre-Corona level was therefore somewhat higher.

The deconsolidation result from the sale of Gerüstbau Muehlhan GmbH, which is expected to be between 18 and 20 million, will be added to operating earnings. The sale was completed on October 1 and the deconsolidation result will therefore be realized in the 4th quarter of 2021.

With regard to the sale of Muehlhan Öl & Gas, the company said it would not be necessary to adjust its EBIT guidance for fiscal 2021. The transaction includes potential earn-out components that can be realized in fiscal year 2022, if necessary.

Here, a premium on the balance sheet valuation could have been expected due to the recent strong increase in energy prices. On the other hand, the potential increase in value could also have been reflected more clearly via the earn-out component; no details are known on this to date. Accordingly, potential additional earnings can be expected in 2022.

Nine-month figures

At the end of October, Muehlhan presented its figures for the first three quarters of the fiscal year. Following a weak 1st quarter due to the pandemic, the remainder of the year through the end of September 2021 saw a largely return to normal. Sales from January to September 2021 increased by €28.8 million year-on-year to €225.3 million. EBIT also recovered significantly to €8.2 million, compared with €2.0 million a year earlier. EBIT margin improved accordingly from 1.0% to 3.6%, but did not quite reach the pre-pandemic level. The nine-month consolidated net income attributable to Muehlhan AG’s equity investors increased by EUR 4.1 million to EUR 3.6 million.

Cash flow from operating activities amounted to EUR 30.9 million. It was positively influenced by the payment received in connection with the sale of Gerüstbau Muehlhan GmbH. Without this cash inflow, cash flow would have been significantly lower than the previous year’s cash flow of 12.5 million euros.

The Ship business unit showed a decline in the reporting period. Sales decreased from 49.1 million to 41.4 million.

In the Oil & Gas business area, business recovered from the COVID 19 effects. Sales increased by 13.5 million euros to 60.1 million euros, thus reaching pre-pandemic levels.

In the Renewables business, sales increased again significantly by 19.4 million euros to 68.1 million euros. Sales have thus doubled within two years.

In the Building/Infrastructure business unit, the reduced activity in the Middle East had an impact. At 55.5 million euros, sales were only 3.0 million euros higher than in the previous year, which was affected by the pandemic.

In the Marine & Construction segment, sales decreased by 2.5 million euros to 106.1 million euros, also due to pandemic-related project postponements.

The Energy segment continues to grow. Compared to the same period of the previous year, sales increased significantly from 87.7 million euros to 119.1 million euros.

Forecast for 2021

The company had not adjusted its operating forecast for 2021. It continued to depend crucially on the further course of the pandemic. Excluding further negative effects from Corona restrictions in the final quarter, the Executive Board and Supervisory Board of Muehlhan AG expect the company to generates fiscal year 2021 sales of around 290 million euros. EBIT of between €7.5 million and €10.0 million is expected to be generated from the operating business. Added to this is the deconsolidation result of around EUR 18 million to EUR 20 million from the sale of Gerüstbau Muehlhan GmbH, which will be realized in the fourth quarter of 2021.


Muehlhan will present its annual report at the beginning of April. This will reflect the impact of the two major transactions. Even more interesting should be the company’s outlook for 2022 and also what will be done with the money raised from the sales.

It is quite possible that Muehlhan would like to strengthen its activities, especially in the future field of renewables, through acquisitions. However, a special dividend and/or significantly increased dividends for the next few years could also be in the offing in order to allow shareholders to participate in the sales proceeds.

Shareholder structure and takeover fantasy

The repositioning with the future-oriented Renewables segment and the now amply endowed cash position also make Muehlhan interesting for potential buyers. However, more than half of the shares are still in the hands of the founding family, with whom a potential buyer would therefore absolutely have to come to an agreement.


An adequate valuation is difficult. This is mainly due to the major upheavals, because the sale of the Scaffolding and Oil & Gas divisions has resulted in a loss of sales and earnings, but also in a cash inflow. In any case, one should not be blinded by the P/E ratio for 2021, as this is strongly positively distorted by one-off effects.

As a result of the sales proceeds, net debt has turned positive and net liquidity of a good EUR 19 million is expected for 2022. Thus, Muehlhan’s balance sheet is very solid. Cash flow, on the other hand, is positively influenced in 2021 and 2022 by the cash inflows from the two sales and the expected earn-out component.

Net income is expected to be EUR 4.10 million in 2022 and EUR 4.20 million in 2023. Earnings per share are expected to be EUR 0.21 and EUR 0.22, respectively.

However, these estimates are based on weak foundations. The serious impact of the two divestments and their precise financial impact cannot yet be estimated. The first clarity will come with the presentation of the annual figures at the beginning of April.

Bullcase vs. Bearcase

Muehlhan is well positioned in the competitive environment. It is confronted with a larger number of predominantly smaller competitors, but shines with comparatively strong financing power and a high level of cash on hand as a result of its sales. Added to this are the long-standing customer relationships and the brand name and tradition resulting from quality and tradition.

The capital intensity of larger and more complex orders limits to a certain extent the achievable return on capital employed. On the other hand, it also creates barriers to market entry for smaller competitors. This is another reason why Muehlhan has withdrawn from areas where it has not reached critical size itself.

The Shipping segment is likely to remain challenging. Despite a sharp rise in freight rates and correspondingly strong figures for shipping companies, shipbuilders are suffering from the disruption of the global

wide supply chains and overcapacities. As a service provider, Muehlhan could benefit from the expected market consolidation, as less diversified and financially weaker competitors could withdraw from the market.

The balance sheet is currently a black box, as the impact of the divestments is not yet reflected in the figures to date and the 2021 annual report will not be presented until early April. The same applies to management’s outlook, which should provide clarity on the future strategic direction and use of funds.

The valuation with an expected P/E ratio of 17 does not appear overambitious. Here…

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News from Tick TS / Presentation at MKK

I have already reported on Tick TS several times: In my original article, in an update from MKK and with a small AGM report from this year. From my original buy price (just under €17), the stock has now worked its way up to €29, but given that the dividend is now rising to €2, that’s still not much. (In fact, in my original post I had written:

[…] I consider a dividend yield of 5% to be a fair valuation. Since the profits are distributed, this would correspond to a P/E ratio of 20. If we assume earnings of €1.90 per share for 2020, the share price could therefore rise to €38 in two years.

I was actually not that wrong, in November tick TS reported a record profit of about 2€ per share:

tick Trading Software AG (tick-TS AG) closed the 2019/2020 financial year (01.10.2019 – 30.09.2020) with a net profit of €2,003 thousand (previous year: €1,655 thousand), according to the annual financial statements prepared today by the Executive Board. Earnings per share amount to EUR 1.99 (previous year: EUR 1.64) and earnings before taxes amount to EUR 2,926 thousand (previous year: EUR 2,371 thousand).
tick-TS AG’s revenues increased by 8.93% to EUR 7,308 thousand (previous year: EUR 6,709 thousand). The Company’s financial performance indicator, earnings before interest and taxes (EBIT), increased by 23.49% to EUR 2,928 thousand (previous year: EUR 2,371 thousand). Taking into account the profit carried forward from the previous year (EUR 76 thousand), the unappropriated profit amounts to EUR 2,080 thousand.
The dividend proposal of the Executive Board and Supervisory Board for the past fiscal year is expected to amount to EUR 2.00 per share after application of Section 268 (8) HGB (recognition of deferred tax assets).

Tick TS is currently my third largest position and I am very satisfied with it. Then recently there was also a forecast for the next (already started) fiscal year:

[…] For the further developments of its product portfolio as well as the timely implementation of stock exchange releases and projects, tick-TS AG plans to hire four additional employees in the areas of Development, Project Management and System Operations in the 2020/2021 financial year.

[…]. Assuming a stable regulatory environment and the continuation of increased trading activity on the exchanges, the Executive Board is cautiously optimistic that it will be able to achieve net income of EUR 1,800 – 2,100 thousand in the 2020/2021 financial year.

The increase in the number of employees clearly shows that the order situation is apparently well assessed and is a clear sign of optimism. The profit forecast, however, “only” envisages a result at around the current level, although many companies tend to plan more cautiously in order to increase the forecast in the event of a good performance rather than the other way round.

Munich Capital Market Conference

Also this year, Tick TS presented at the (virtual) MKK and a reader provided me with a summary of the presentation. This sounds very positive (especially regarding the outlook in the current environment with many new private investors) and lets me continue to expect a positive development. The presentation slides can be found here, and now here is the report:

Tick Trading presentation at mkk on 08.12.2020

-> The board members Carsten Schölzki and Gerd Goetz presented
-> According to Gerd Goetz, there were 52 participants in the presentation; this was significantly more than the 11 participants who attended the Tick presentation at the mkk event last year.

Carsten Schölzki

– Gerd Goetz has been a member of the Tick Management Board for some time and was previously Managing Director of HSBC Transaction Services GmbH for a long time.

– I have only been with the Tick for a year and have been a member of the Tick Executive Board since the beginning of 2020.

– I used to be managing partner of WWK GmbH in Berlin for a long time

– At Paypal, I was responsible for development with teams in Germany, India and the USA; and most recently I was CTO at figo GmbH

– Tick is an incredibly attractive company for me, because it is relatively small with 20 employees, but at the same time quite stable and profitable.

– Tick is amazingly old for a fintech; founded in 2002; we just came of age;

– What I really like is that 80% of our revenues are recurring;

– To me, we have a very attractive combination of flexibility, because we are so small, and stability, because of the high percentage of recurring revenue

– We are specialized in stock market access systems

– We do everything as SaaS

– We can expand our product portfolio modularly

– Our customers are banks and financial intermediaries;

– Sino was part of the founding team in 2002; HSBC is very important, we make most of our revenue with them; and Trade Republic is currently something they read about every day

– What do we do for our clients?

– The TBMX trading platform is the heart of our product range, because that’s actually what all our clients use; the TBMX runs as SaaS on our own servers and can be used directly as an API; but you also get a graphical interface for the TBMX from us, which is very good for trading; but we have also developed a white label app for the system in the meantime; the white label app is slimmed down in terms of functionality, because not everything fits on a small smartphone screen;

– We also have other products, a compliance system, settlement monitor, etc.;

Gerd Goetz

– We have generated a positive result in every year since our founding;

– We have a high equity ratio and pay a continuous dividend;

– We have a full distribution requirement in our Articles of Association, i.e. the entire profit is to be distributed to the shareholders every year in the form of a dividend; as far as I know, we are the only listed company in Germany that has a full distribution requirement of the annual profit in its Articles of Association;

– How can we afford that? Because we do continuous services and projects with our customers and because we don’t invest money in research and development without partners stecken; we only make new developments if a partner pays us for them.

– We want to hire 4 more people in the current fiscal year

– The figures for the past fiscal year (up to 30.09.2020) have not yet been audited, this will happen next Monday (14.12.2020), when we have the balance sheet meeting.

– We see a nice increase in the dividend; the magic 2 Euro number has fallen;

– We have only 1 million shares and 82% free float; yes we are an exciting company but have no shares on offer;

– For the current fiscal year, we expect earnings to be in a range between another record year or just below the level of the previous record year in 2019/20;

Carsten Schölzki

– The savings culture of the Germans – I can still remember opening a Knax account at Berliner Sparkasse when I was a child

– Saving was incredibly important to my parents and grandparents

– But the savings culture of Germans is changing, but very slowly; in 2014 there were penalty interest rates for the first time; since then interest rates haven’t really improved; still customers leave their money in savings accounts and call money accounts; but in 2020 this has changed a bit due to the corona crisis; although there have been some good reasons to move away from it for years, it only really took off during the pandemic

– The German Angst; at Paypal we talked about the cautious conservatives; because if you want to introduce anything new to the Germans that has to do with money, you have to explain a lot first

– for many normal savers the stock market didn’t seem very attractive in the past for several reasons
1.) at that time there were still interest rates
2.) there were rather negative scandals and that in both directions – either someone lost a lot of money or he was cheated
3.) the T-share didn’t increase the confidence of the Germans in the stock market either;

– Actually, this trend could have started a few years ago and the Corona crisis is now acting as a catalyst; suddenly there is a lot of trading going on; we are also noticing this in our turnover; we simply have a lot of new participants in the stock market who want to join in.

Gerd Goetz

– You can ask yourself why the increased trading on the stock market is important for us.

– Variable revenue used to be 20% of our revenue; of course, this figure is no longer correct for FY 2019/20, but is more like 30%; Actually, I wanted to reduce the share of variable revenue because a software company prefers to have steady revenue; then the only risk is the length of the contracts and possible terminations;

– We have a hybrid billing model with some customers; we get load-based compensation, which means more orders means more servers, more computing power, more revenue for us;

– We also grow with our customers if they want front ends – e.g., a new app or are just starting up; We are seeing a trend right now in Germany that new online brokers are being established.

– We are seeing tremendous growth in ETFs right now; we are happy to support that with our software solutions

– HSBC, comdirect, Trade Republic and sino, are customers we are growing with;

– We thought that these high turnovers on the exchanges could not be sustainable; however, there are now more and more voices saying that this is the new normal;

– The skyrocketing turnover on LSX is not only coming from Trade Republic, but also from other clients of the exchange

– These high turnovers are mainly on the marketplaces where market makers take care of retail clients (LSX, Tradegate, Euwax, Gettex, Quotrix); the consumer-driven market is growing extremely; Xetra, as an institutional trading venue, is also growing, but not as dramatically as the retail clients’ trading venues

– We have 52 participants in the call right now;

– There is something second that confirms this trend – the new financial blogs, podcasts, videos, etc.; e.g. Madame Moneypenny, which deals exclusively with women’s securities investments;

– The new generation of investors no longer care about the bank advisor or securities specialist; they look for their information on the Internet from these financial blogs, among others; the high follower numbers confirm this new trend;

– Pres. p. 16: This is the list of reasons for an ongoing boom in the capital market; and I have listed for you two reasons that could stall the boom;
1.) Social trading, fueled by the social networks;
2.) Interest rates remain low
3.) Gold is expensive and doesn’t pay dividends
4.) Art and vintage cars are selling off
5.) Banks want and require high cash balances to be invested or introduce negative interest rates
6.) Neobrokers are promoting ever cheaper trading
7.) Apps put your securities account in your pocket
8.) Gamification of securities trading

– The gamification of securities trading by the neobrokers leads over to the critical side of the boom; if consumers spend hours on the stock market by participating too easily, perhaps even become addicted, regulation could intervene;

– Many brokers live today from the reimbursements of the trading places; that there is payment for order flow in Germany, is seen very critically in other countries; here it could come also to a prohibition.

– The FAZ am Sonntag has just commented on the current trend in the article “Die neue Lust auf die Börse” (The new desire for the stock exchange); many of the new investors do not really notice the setbacks, because the majority of them are not invested in old economy stocks, but in the big tech companies, which have done very well this year;

We already know our November numbers; Sino has already released their November numbers; We see another complete increase in trade numbers across all clients and that makes us so confident in the forecast

What is the outlook for growth and with a European exp

ansion out?

– It is

difficult to forecast sales for the next 10 years; but we can look at the opportunities and risks;

– Opportunities: There are new and old players in the market who (want to) take more care of the private investors; they need both a connection to markets and a connection to a settlement bank and maybe also a front end;

– In Germany there are only two settlement banks that can take real volumes and big players; these are DWP Bank (of the Sparkassen, Volksbanken and some private banks) and HSBC Transaction Services (the former employer of Mr. Goetz) – there are no more; that is almost a duopoly; with HSBC we are very well wired and they are also indirectly part owners of us; we can support providers on the way to HSBC very well; I think that hardly any other partner succeeds as well as we do;

– We also see great potential in our white label app, but it has not really come to fruition yet; this app is a new front end and just right for customers who also need a face to the customer; that…

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2022 – A new beginning – Mr-Market markets, stock exchange, trading, economy

Did they pull the ripcord too late in the Covid crash March 2020? And did they then take far too long to get back in?

Did they perhaps enter 2021 too pessimistic and largely miss the rally in blue chips?

Or were they simply far too overloaded in terms of time to give the market the attention that would have made sense?

Have they perhaps even been listening to the crash prophets’ bells and whistles over and over again since 2009 and not sufficiently taken in the rally of the century out of the Lehman hole?

Have they perhaps traded too much in hype stocks in 2021 and in the end nothing has come of it except expenses?

Are they now perhaps uncertain and torn about how 2022 will turn out?

Maybe you already know that you should pay more attention to your investments, but you can’t find the time between your job and your family?

If only one of the above sentences applies to you, then you are a normal investor.

And if you now think that I want to tell you that if you join Mr. Market you will not make any mistakes and you will not be insecure anymore, then you are wrong. Yes, that will still happen.

But it will be less and it will happen on a higher level of knowledge, which will greatly improve your chances to avoid some unnecessary mistakes and in total to get much more positive results.

And they will find in us a competent, second set of eyes and ears for the market, something that will save them an immense amount of time. This is a key factor, especially for people who are heavily involved in their careers on the “highway of life”.

But maybe they think they already know enough about the stock market and investing because they read a few investment magazines? Or because they have been making the same mistakes over and over again for 20 years?

Look, many of them are educated and work in demanding professions that require more than just producing a bit of blah-blah.

If they then read articles in the normal media about their special field, in which they really know their stuff as an expert, what do they think?

With high probability: What a superficial nonsense! They will be frightened which there for nonsense is spread. And now I ask them: Why do they think that should be different to financial market topics? Hmm?

I guarantee you: it is *not* different with financial topics.

The media world is full of superficial nonsense on the subject of investment and the stock market, and it is particularly bad on the subject of the financial market, because it is often backed up by hidden economic interests.

And no, hidden economic interests are not those where they are openly told what they should pay for a service. This is completely transparent and the most normal thing in the world; they don’t simply pass on their expertise as doctors, tax consultants, lawyers, engineers, computer scientists, etc. without being paid for it. Or?

Covert economic interests like to come along under the guise of “free of charge” or even better, in a supposed “expert interview” in front of cameras and microphones.

Then this “expert actor” babbles on about imminent crashes and whispers about the future.htig of risks, because it creates the fears in the first place, which it can then calm down again at a cost with an idiotically designed fund. The supposed “expert opinion” was above all marketing.

And it works, multi millions flow into such financial products, which fetch humans with their fears, while only a small minority is so intelligent to spend for genuine, independent information a fraction of this money, which is thrown gladly into the throat to these vultures.

This disproportion shows the real state of knowledge about the financial markets and I guarantee them personally:

Even they know less than they think and only when these curtains have been pulled away, they will realize how clueless they were!

In any case, this is feedback I get quite often from members, namely how much they have learned and how they are fascinated to realize how ignorant they were before.

This is also not a guarantee for lasting profits, the market is too changeable and too treacherous for even the best in it to always be a winner. The market is never completely predictable, it is always full of surprises.

But you don’t have to be, even if you always flip a coin and are statistically only 50% right, you can still get rich if you reliably win more on the winners than you lose on the losers. And if you can then push this ratio to 60:40 in favor of the successful actions – which is quite feasible – then it becomes really interesting monetarily!

We cannot predict the future and we certainly cannot control it. But we can control our actions in the light of this uncertain future and that is completely sufficient to find long-term success! And success can be found in many ways, as a quiet investor as well as an aggressive trader, but without the willingness to deal with it will not work and you will remain dependent on the “expert performers”.

The year 2021 is now drawing to a close and the investment year 2022 lies ahead of us. There is some evidence that it will be a more difficult investment year than 2021, 2020 or 2019, a year in which we may also experience a deeper correction.

The past doesn’t repeat itself, but it does like to rhyme – even on the stock market. In the near past, if you think back to “third years” after a sharp downturn, 2011 comes to mind after the 2009 bottom, and also 2018, after the market had, after all, gone through a spring correction in 2016 and produced an extremely stable and strong year in 2017.

Here’s 2011, which is when the euro crisis started. Not a disastrous investment year, but not an easy one either:

And here is 2018, at the beginning there was the “Short Vola Crisis” in February and at the end Jerome Powell had communicatively disturbed the market until it could finally twist his arm on Christmas Eve 2018:

2022 will definitely be different, but maybe the year will rhyme as far as volatility is concerned. In any case, the risks are higher than in 2021 that we will experience significant swings and corrections in 2022.

And that might also increase the risk of making costly mistakes as an investor, while at the same time being in a highly volatile market.

nden Environment for Trader is also again more to get. One more reason to strive intensively for quality in the stock market media and ideally to get help on the side.

With the turn of the year you now have the chance for a new beginning, the chance to leave old mistakes behind and to laugh at the “expert actors” described above, because you see through their scam.

And they have the chance to find a competent support on which they can rely, which gives them more peace and which consolidates their decisions. A member wrote me just a few days ago the following lines about the extension


I should actually be able to deduct the cost of the annual subscription from my health insurance – or at least in my tax return as “medical expenses” – after all, you help me achieve enormous psychological stability in turbulent phases on the stock market. Your “therapy of excitement dampening” is priceless!

So they have the chance for a new beginning, in which they find real support and learn to avoid the gross beginner mistakes and to make more complex mistakes instead. A new beginning that is a lot of fun, because learning is fun, progress is fun, community is fun and success is fun.

How successful this is, I have shown them -> here and -> here with authentic voices of the members.

And as far as economic interests are concerned, it’s quite simple. Like any doctor, tax advisor, lawyer, engineer, computer scientist or other expert, I only give my expertise and support to those who express their serious appreciation with a contribution. After that happens, however, they have full access, with no hidden interests – they have a second set of eyes and ears to the market.

This is far more than the whispers of “expert performers.” But it’s also something that only a smart minority can recognize in value.

That’s how it will always be, unfortunately, because where do they think more insurance is brokered – by independent fee-based advisors or by commission-driven salespeople? I think the answer is clear.

And where do you think you get better advice as an insured person? That answer is also clear. This discrepancy clearly exists in the financial market as well.

You have the chance for a fresh start in 2022. The fact that they even read such an article to the end shows that they have already freed themselves from the clutches of the sellers.

The Mr. Market community will definitely be there in 2022 and will experience the year together, firmly underhooking each other, one way or another. Whether they want to be there is their decision alone.

Your Michael Schulte (Hari)

*** Please pay attention to the -> Legal Notice <- when using the contents of this post ! ***

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Kissig’s stock report: Burst takeover dreams: How do Nvidia, Softbank and ARM stand now?

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 publish the analyses here as well.

Stock Report No. 75 as of 02/11/2022

Burst takeover dreams: How do Nvidia, Softbank and ARM stand now?

The sparrows have been whistling it from the rooftops for some time, but since a few days it is now certainty: the sale of the British chip designer ARM Holdings to Nvidia has burst. This is a blow to the ARM parent Softbank Group in particular.

Softbank had acquired ARM in 2016 for around 29 billion euros and took it off the stock exchange. Despite Brexit and the Corona pandemic, business has developed successfully and Softbank concluded a sales agreement with Nvidia in September 2020. For the complete takeover of ARM, Nvidia was to raise $40 billion, both in cash and Nvidia shares.

The strong performance of the Nvidia share price thus also drove the purchase price ever higher to a peak of $75 billion. And even after the recent share price setback, the purchase price was still quite a bit higher than the original value of $40 billion.

But that is now all smoke and mirrors. The competition authorities in Great Britain and most recently also in the U.S. did not give the deal a chance, and so in the end Softbank and Nvidia had no choice but to announce the failure of their plans in a joint statement.

An end with horror

The companies had expected great things from the deal and so, at first glance, all three parties involved appear to be losers, while the competitors and enviers can feel like winners.

The competition authorities were not alone in their criticism. Rather, an illustrious crowd of competitors of Nvidia as well as customers of ARM have spoken out and pointed out the threatening monopoly position of Nvidia, which could have been created by the ARM takeover in the next few years.

Graphics-based applications are becoming more and more popular. In game consoles, where first Microsoft and later also Sony relied on Nvidia’s graphics chips, but also in online gaming and streaming. In addition, the Bitcoin hype also brought an enormous demand, since mining Bitcoins is power- and compute-intensive. Nvidia’s graphics cards bring the biggest and fastest success here. A success that is also closely linked to the success of cryptocurrencies.

Loser Nvidia?

About 19,000 employees work for Nvidia worldwide, which generated an annual turnover of almost $17 billion in 2021. AMD, Intel and Qualcomm are considered the toughest competitors. Graphics processors (GPUs) dominate Nvidia’s business, accounting for more than 85 percent of revenue.

Nvidia focuses on artificial intelligence, gaming, cloud data centers and autonomous driving. They do not maintain their own production facilities, but rely exclusively on contract manufacturers, the so-called foundries.

Another future field for

r Nvidia is the Metaverse. Here, an artificial digital world is created (virtual reality) in which you can customize your own avatar and move around freely. The second field of application is augmented reality, where certain information about things the user is looking at is displayed via an auxiliary device, such as glasses.

The Metaverse therefore not only requires fast connections (5G), but also enormous computing power to be able to create these virtual worlds smoothly. Nvidia’s high-performance GPUs and CPUs are therefore in great demand, especially in combination with the high investments made by Microsoft, Amazon and Alphabet, which are happy to use Nvidia components in their foray into the metaverse.

Autonomous driving represents another opportunity. Here, Nvidia is already working with more than 370 of the world’s most forward-thinking automakers, direct suppliers, developers and research institutions. It’s about combining GPU technology with artificial intelligence to adapt technologies for deep learning, natural language processing and finger control to enable a whole new form of driving. More powerful driver assistance systems and, eventually, self-driving cars.

Nvidia is increasingly becoming the dominant player in key future fields. The outcry from competitors was therefore quite loud when Nvidia agreed with Softbank Group on the purchase of the British ARM Holdings. ARM is one of the leading chip developers. Not only Nvidia and AMD belong to its customers, but also Apple relies on ARM with its new processors and boots out its long-time chip partner Intel for it. But Microsoft is also relying on ARM in the meantime.

The concerns of ARM customers are therefore quite understandable. They are increasingly competing with Nvidia and when one of these competitors takes over the common chip designer, the risk of knowledge leaks (or less diplomatically formulated: industrial espionage) increases considerably. Especially in the direction of the new parent.

Due to the failure of the ARM takeover, Nvidia remains one ARM customer among many. Nvidia does not need ARM to continue to be successful, because the success story will continue as a stand-alone company in the foreseeable future.

However, the failure does bring a great success for Nvidia, at least compared to the situation before the takeover attempt. The high competition hurdles that have now been piled up basically also apply to all Nvidia competitors. They now also have much lower chances of being allowed to take over ARM, since they would then also change from the pure customer role into a possibly competition-distorting role.

Furthermore, disappointed Nvidia shareholders should also not overlook the fact that very expensive conditions would probably have been imposed for the success of the takeover plans, which would probably have slowed down Nvidia’s successes in other areas considerably. A successful ARM takeover could easily have amounted to a Pyrrhic victory. Therefore, the new clarity should rather be a liberating blow for Nvidia, which can now concentrate on continuing its success story.

Loser Softbank Group?

Softbank Group is worth a lot of moneys gone down the drain. Money that Softbank would have loved to put into its two Vision Funds and the LatAm Funds in order to buy more startups and ventures. In addition, activist investors like Paul Singer are urging Softbank to finally take action against the immense discount of the share price compared to the book value and to buy back its own shares on a massive scale.

Share buybacks worth billions of euros had already led to a rally in Softbank’s share price at the end of 2020, pushing the price to over 80 euros at the beginning of 2021. Although Softbank is now buying back its own shares again, the double-digit billion amount from the ARM sale would have more than amply replenished the coffers.

Furthermore, Softbank Group would have gotten a good portion of Nvidia again through its share-based purchase price share. Softbank had been involved in Nvidia before and made spectacular profits. Investors were hoping for a repeat performance.

From this point of view, Softbank is now doubly screwed and stands there with its pants down, especially since its other investments are under water in rows (Didi, Uber, WeWork, to name just a few). From this point of view, quick exit proceeds and, above all, high profits are not to be expected at the moment.

Nevertheless, Softbank can be thankful from another point of view that the ARM sale has fallen through. Since a sale to another of the “usual suspects” would probably also be lengthy and difficult due to competition law hurdles, Softbank has presented its Plan B: it wants to take ARM public in the form of an IPO.

Such an IPO, in which Softbank sells a part of its shares to interested investors, would also bring Softbank a few billions into its coffers, while at the same time keeping the largest part of AMR. Therefore, it also participates most strongly in the expected successes of the next few years.

In addition, ARM will be valued by the stock market after the IPO and Softbank could sell blocks of shares to investors at any time to further replenish its coffers.

And of course there is another option: regardless of the IPO plans, financial investors could also be interested in ARM and offer Softbank a takeover. A chunk of more than 50 billion dollars, which ARM is likely to weigh in at least, would be too big a bite even for industry giants Blackstone, KKR or Apollo Global Management, and several private equity firms would therefore have to come together to make a joint bid. An option that is not off the table even after a successful IPO.

This consideration shows that Softbank Group may not have been able to bag a quick buck by bursting the ARM deal, but they are still not left empty-handed. ARM Holdings is one of the most valuable assets in Softbank’s portfolio and the Japanese have several ways to make money with it.

Loser ARM Holdings?

And that leaves ARM itself. And the chip designer is the real winner of the situation in my view. Although it is now unclear who the future owner will be, whether it will be many investors via stock market investments or whether interested parties from the private equity business will still enter the conversation, the importantgst message is: ARM remains independent. They will not be taken over by one of their customers and thus they will not lose their biggest competitive advantage – besides their technology leadership. They can enter into contracts and cooperations with any interested party and do not have to take into account the concerns of any individual. And they don’t run the risk that their other customers will gradually drop out because they don’t want to be dependent on an Nvidia subsidiary and thus on their direct competition.

So you could almost say that things couldn’t have gone any better for ARM

My conclusion

The takeover fiasco has left three losers. At first glance. On closer inspection, however, all three come out of the number without serious bruises and can even profit from the situation in one way or another.

That wasn’t the plan, but in the words of Warren Buffett, if all the plans work out, it will have been too easy.

A door has closed for Softbank Group, Nvivida and ARM. But they all have a number of alternative paths open to them, and whether or not these end up being better remains to be seen. In any case, the chances are not bad


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

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Review 2020 | Price and Value Aktienblog

First, an oft-heard phrase that no annual review can spare:

2020 was truly an extraordinary and unexpected year.

If given only a news overview and no stock market data, I would have expected that the performance of stocks this year must have been subterranean. Corona crisis (with complete lockdowns), election uncertainty in the U.S., structural change in many traditional industries (automotive powertrain technology, digitalization, retail), attacks on the monopolies of tech giants, Brexit unresolved until near the end….

But interestingly, new investors are flocking to the stock markets, even the old-economy DAX is higher than at the beginning of the year, a bubble is forming in tech-growth companies and IPOs are popping so much that people are suddenly cheering the strange construction of SPACs (here’s a good explanation)… And I myself am standing there at the end with a significant profit (price-and-value Wikifolio +31%, private similar), which I had certainly not expected.

In the Coronacrash in March I learned once again that market timing doesn’t work for me at all, and I’m definitely not good at it. I sold Sixt and reduced Wizz Air, but in retrospect that was the wrong decision – in the long term I am actually still convinced of both companies, but the prices have risen again too quickly for me, so that I now have the feeling that I missed the entry point. In the wikifolio, I imposed on myself an investment ratio of at least 90% to avoid the temptation of market timing in the first place, and had rebalanced directly. Privately, I waited in April/May with a little more cash for an even deeper fall, which of course did not come. However, due to my otherwise high conviction in my stocks, I did not sell anything else, and became more active again in early summer (e.g. I added even more to Protector).

Personally, we had an addition to the family in the summer and I also took parental leave. Since kindergartens were then also open again, this gave me some time for research and blogging, among other things, so that I could dig a little deeper and analyze for Netfonds and JDC. I was also able to enjoy the time otherwise, and the lockdown has been bearable for us at least most of the time. One positive side was that I was able to “visit” a lot more AGMs, as they were mostly online and thus did not involve travel. Apart from that, however, I’ve been blogging less than I’d like, started several articles and didn’t finish them. This will probably remain so in the next year, because a deeper analysis to make and write down otherwise actually cost me a weekend approximately – which in view of my private life just also belongs to large parts of the family.

My list of invested or very closely followed stocks has now grown to about 20 companies, a figure I would actually like to push. On the other hand, I constantly get new ideas from other investors (be it by following wikifolios, blogs, forums or e.g. ValueDACH), some of which I don’t even put on the watch list due to lack of time. Should I create the resolution to reduce the listier? I have decided not to do it, but I want to sort out more rigorously if the development of a company falls short of my expectations. But especially some smaller positions have always been successful for me, e.g. this year I made “trades” like Lang&Schwarz or DocCheck, which I sold again after a very fast price gain.


My private portfolio continues to have very large overlaps with my wikifolio, however, mainly because of the limited possibilities of trading via Lang&Schwarz also a considerable divergence. Also, as I said, I did not manage to finish an analysis for all stocks for the blog as well, so here is a list of my current positions:

large position (more than 5% of assets)
  • Protector Forsikring
  • Mutares
  • Admiral Group
  • Haier (D-shares)
  • Tick TS
  • ABO Wind

Together these 6 make up more than 70% of my portfolio assets, so I am quite concentrated. The stocks have all performed very well and some of them have only become such large positions because of this (e.g. ABO Wind), but I still see good potential in all of them.

medium positions (1%-5%)
  • Netfonds
  • Helma home building
  • Einhell
  • Hornbach Holding
  • Mix Telematics
  • Burford Capital
  • Ework
  • Funkwerk
  • Adesso
  • Naked Wines

The medium positions have partly fallen back from the group of large positions (Mix Telematics for example) due to a less good development of the share prices, but partly also interesting companies that I either do not find good enough or not cheap enough to be here in the long term with a very high stake. I have already started articles from some of them and just need to find time to finish them.

small positions (<1%)
  • Wizz Air
  • KSB (Preferences)
  • Rakuten
  • Sixt (preferences)
  • Beta Systems
  • Blue Prism
  • Short Grenke Put (38€, March 21 – I wrote after the shortseller attack at a price of 41€ and got 11€ for it…)

With portfolio positions of less than one percent, you have to ask yourself if this makes sense at all. After all, it consumes time to deal with such companies, but the probability that it changes something in the overall return is vanishingly small.
In part, this can be seen as a very serious watch list, in Aktine such as Wizz and Sixt I had reduced about to banish the Corona risks in the tourism sector from the portfolio, but have the medium-term goal to re-enter when the risk is better to assess. Even now, there is still a realistic risk that the summer travel season will be significantly affected by Corona, not to mention business travel, which is important for Sixt.
It is also partly the case that with Blue Prism (high-growth) or KSB (which I would classify under turnaround / anti-cyclical) I have entered categories in which I have little experience and am therefore only in with limited exposure.


Actually, I want to invest for the long term. However, sometimes opportunities arise where companies are looking for good nac

hrichten suddenly look favorable or I want to research later, but already get in. If the price then rises quickly, then I do not hold the usually rather small position too long but sometimes simply take profits. Or if the research doesn’t excite me after all. This year, for example, I was lucky with DocCheck, and even luckier with Lang und Schwarz. And after the short attack on Grenke, I bought bonds for the first time (at 62% of par, then sold in December at 96%) after reading the short report, which in my view was not particularly well done, and also shares – which I then sold to write a put and profit from the enormous option premium. Bonds that have been beaten down in such a way have their charm, maybe there will be opportunities again. In any case, it was an exciting experience.

But I also made a mistake: during the crash I tried to hedge my portfolio against the crash with a rather expensive S&P put. It expired worthless, and since I don’t know market timing, I should have just left it



What will 2021 bring? I don’t know, and especially regarding the economic development I think there is still no clarity. An opening of public life will probably bring a lot of money back into the economic cycle, which until then “lay fallow” and could not be spent (the savings rate has probably risen above 16%!). The Bundestag elections could cause uncertainty in sensitive sectors if, as it looks, stronger climate protection becomes one of the most important campaign issues, because the CDU/CSU is already under pressure to adjust its course. But the expiry of the Corona aid programs could also lead to problems, more insolvencies and unemployment. And who knows if it won’t all turn out quite differently.

So I continue to try to find strong companies that are not too expensive. My focus tends to shift towards quality, but I also continue to try to find stocks that are simply cheap. Timing the market in any way doesn’t work for me (as I saw again in 2020) and I don’t want to waste time in that.


I have one more piece of news: I already created a Twitter account 5 years ago, but only used it to share my posts automatically – so interested Twitter users could follow the blog without subscribing to the RSS feed or checking the website. So far, though, I haven’t really used it much else. That’s going to change now – I’ve completely said goodbye to Facebook as a network and discovered Twitter for myself personally, so I’ve resolved to use my blog account more actively again.

So if you are a Twitter user, feel free to follow me here: .

There I will probably also share smaller comments and assessments that are not important and big enough for the blog.

Finally, a happy, successful, and of course healthy new year 2021

to all!

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Security as a life corset – Mr-Market markets, stock exchange, trading, economy

If you want to be seriously and permanently successful on the markets and not just land a few lucky hits, you also need the right thinking structures, called the “Mindset”.

Especially the related questions and problems are always a topic for us on Mr-Market, read what I wrote to the members last summer for example:


There are educated and quite intelligent people who cannot make out of their abilities in life what would have been easily possible. And sometimes an almost panic fear of mistakes, a compulsion to always “do everything right”, clearly stands in their way. This is also associated with a massive risk aversion, because everything that is new or unknown also represents a risk compared to what is familiar.

This aversion to change and even the smallest risks causes the most extreme variants of this type to reject everything that has to do with change early on, so that these people are already in danger of losing touch with the modern world in middle age. A microwave oven – “we don’t need that.” A dishwasher – “we don’t need that”. A fax – “we don’t need that”. And certainly not a computer or a cell phone – “we don’t need that crap.”

The fear of making mistakes and the worry that something could “go wrong” outside of the daily grind makes such people live permanently in inner anxiety before tomorrow and never enjoy life in the here and now.

The ideal image of these people is the world in amber, in the perpetual allotment garden where every day is like the next – just no change!

Loriot once took aim at this type in “Oedipussi”, the couple portrayed in it can’t get away from gray as a color in life – “we’d like to have the ash gray”.

In the morning, they worry that the store might be closed for lunch shopping. At the store, you worry about getting home on time so that lunch is on the table on the minute – a “drama” if not. Then you worry about missing an “important” show on TV, and so on, and worry about this and that and so on and so forth.

One worries however not only, one waited also always for something. For the news, for going to bed, for the morning, for the stores to open, for Friday, for the evening and so on and so forth.

There is only one place and state these people hardly ever know: To *be* in the here and now and to enjoy life and the moment.

These are deeply risk-averse people who have forgotten what it is like to run happily into the world, full of curiosity about the wonders that await them. They are people who have lost their childhood or never had one.

Consequently, for these people, investing money is only “right” if it is “super-safe”, they already know what that means, the savings book ala Olaf Scholz. But also to change a job, to give up something to get far better, to take risks, to get involved in something and to consider life as something dynamic is completely foreign to these people – the thought of it fills them with naked fear and panic, yes panic!

Díese people have a “mistake-avoidance compulsion” and they have psychologically much more, the However, as I said above, this is not the topic here and should not be analyzed psychologically – I am trying to describe a type in a tangible way, not to analyze it. The pursuit of the chimera of absolute security and permanence at any price is, however, in any case their life corset, which does not allow any movement.

What do these people therefore love? Everything that gives them a foothold and appears predictable and reliable. Uncertainty and change, on the other hand, is a massive threat to their inner being.

These people are permanently running away from something and miss out on living – suicide out of fear of death could also be said in a figurative sense.

Now not everyone is that extreme, actually only a small minority, but facets of this personality structure they have certainly experienced. That these personality structures are deeply incompatible with what is happening on the stock markets should hopefully be clear.

Worse, the whole uncertainty which goes out from the stock exchanges, this missing safe soil, the missing clear laws to which one can adhere and which guarantee a certain result, all this indeterminate and changeable of the markets, is for such people a single, frightening threat!

These thought structures are widespread as less extreme variant and meet us in their facets permanently at each street corner.

Think of the overkandidelten German “data security”, only yes no mistake make and everything with endless check lists and paper orgies secure!

Or think of the German vaccination campaign with its bureaucratic processes, again just don’t make a mistake!

In 2020, we saw how mobile vaccination teams preferred to throw away vaccine doses instead of simply freely vaccinating the leftovers to those who were available at the time. And just recently, towards the end of 2021, we saw old people idiotically turned away again by vaccination centers because they “dared” to line up for a booster 2 days before the 6-month expiration. Shortly after that, the time opening finally came, something that could have been obvious to someone with an IQ above a vine snail even before that. But no, that was too much for some vaccination centers, because “the Stiko and so” and of course the immunity breaks in exactly after 6 months and not a day earlier – eye-rolling.

Just don’t make a mistake! Don’t deviate from the process! Just yes leave everything perfect! “We choose the ash gray” because there is no risk associated with it.

That is also strength, typically German strength, when it comes to delivering perfection in detail. But it makes everything that is dynamic and eludes a detailed specification infinitely tedious. And stock exchanges are exactly that: dynamic, changeable, always in motion and therefore for many people more of a threat than a promise.

SpaceX, for example, shows how things can be done differently with its prototyping. Dare to do things, allow mistakes and learn from them, and suddenly in 10 years you can do what the bureaucratic state space colossi would not have been able to do in 50 years.

It’s the Pareto principle in action, entrepreneurship in action, doing things “well enough”, paying attention to progress rather than perfection at every step.

Just look how someone is seen here who went bankrupt with a company. A “Gescheiterter”. And in the US, he is someone who starts over and does it better!

But this requires a culture of mistakes, the realization that mistakes are an integral part of a good learning process, that you can’t develop as a person without mistakes! But this does not work with a panic fear of mistakes.

And this brings us to the core, which is also centrally related to our ability to be successful on the stock markets.

For those who are too afraid of mistakes and seek absolute security will avoid all risks and thus also opportunities. He will always choose “ashen” and will never warm up to the stock markets and will always run into the arms of some pied pipers who sell him “security” and a comfortable feeling.

So work on your ability to deal with losses (mistakes), losses are part of the process, even for investors. Learn to see them as a necessary part of the process, the prototyping of SpaceX building the Starship, so to speak.

Learn to accept mistakes, limit them, and then wipe their mouths and move on without it weighing on them in any way. Learn to detach yourself from an exaggerated need for security, because success is only possible in dealing with risk and for that you have to allow risk and failure in the first place!

To say it quite clearly:

If you want to avoid mistakes at all costs because you can’t stand “failure” on a small scale, you are blocking your path to growth, both as a person and financially!

To success belongs error culture, to learning belongs error culture, already with children nothing goes forward without errors and their correction! Because we humans can only learn and grow if we allow mistakes and take them as an incentive to do things better the next time.

However, error culture does not mean simply surrendering to everything without a safety net. A skydiver leaves the plane only with a parachute, and a high-wire artist works only with a net. Nevertheless, both are risky activities that require courage to engage in, as well as the rationale to provide protection in the event of a fall.

And error culture does not mean to suppress errors and to redefine the failed trade as an investment, because it is too painful to realize the loss. It means to face the mistake and to learn from it, if there is something to learn. And then to look forward!

This applies to life and also very specifically to the stock exchange, because the fact that the stock exchange culture in Germany is so particularly bad has to do centrally with this missing error culture, with an exaggerated need for security after a security which is looked for as “individual case justice” in the detail jumble and leaves in the society only everything stifling bureaucracy.

For successful Börsianer applies completely clearly:

Do not be afraid! Dare something! Try something new! And for all your daring, make sure you have a safety net.

Because life is there to be lived and at the same time it must be protected. Because it is our only one.

A life without daring is no life and a life without self-protection is over too quickly.

It is definitely the same with stock market trading.

Yours Michael Schulte (Hari)

*** Please note when using the Contents of this post the -> Legal Notice <- ! ***

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Kissig’s Stock Report: Berkshire Hathaway at an all-time high

As part of my cooperation with Armin Brack’s“Aktien Report“, I take a look at interesting companies at irregular intervals. The issues of “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 “Geld Anlage Report”. Bonus for the readers of my blog: a few days later I may publish the analyses here as well.

Stock Report No. 76 from 18.02.2022

Berkshire Hathaway at all-time high: even Buffett wouldn’t buy now. Or would he?

Warren Buffett is considered the most successful investor in the world. Not only because he has outperformed the S&P 500 Index in most years, but because he has accomplished this feat over more than 70 years.

If you look at shorter periods in the stock market, there are many inverstors who have earned higher returns than Buffett. Like Ark Invest’s Cathie Wood in recent years, who has had spectacular success with high-growth stocks. But for the past year, the prices of the former high-flyers have been collapsing, and Wood’s five Ark ETFs are burning through their shareholders’ money at the same pace. So violently, in fact, that on a three-year horizon, Buffett is now ahead of Wood.

High inflation thanks to rising prices and the imminent turnaround in interest rates are fueling classic value stocks and making growth stocks less attractive. As a result, the share price of Warren Buffett’s Berkshire Hathaway is climbing from one new all-time high to the next.

It is the most expensive stock in the world, with only a few percent separating it from the magic $500,000 mark – for ONE share! The B-share price is much more investor-friendly at $315.

Buy cheap.

.. I think we’ve all heard the saying “buy cheap, sell dear.” It’s absolutely true, and it applies to the stock market as well. Unfortunately, you never really know when a share price is “cheap”. Cheap compared to its historical prices? If so, the share has probably fallen sharply recently. Which is not necessarily a good reason to buy, because there could be solid reasons for this price drop.

Or is the stock “cheap” in relation to its “fair value”? This is the concept of value investing that

Benjamin Graham made so popular. You value a company and divide that value by the number of shares issued. And you compare that value per share to their current price, which is the price per share. If the price is significantly below the value, you buy the share. If the price is significantly higher, you don’t buy it.

Myth of all-time highs

When a share reaches an all-time high, this means nothing other than that the price has never been higher in history. In terms of price, the share has never been more expensive. This is a fact, but it still says nothing about its value and thus its valuation.

But let’s stay with the share price for now and the question of why investors are buying the stock at this new all-time high in the first place.

To get to the answer, let’s start with a few “silly” thoughts and ask ourselves what “all-time high” actually means.

  1. No one has ever paid more for this stock.
  2. At every point in the past, the stock has been cheaper.
  3. Every furthere price increase in the past generated another all-time high.
  4. Every buyer in the past is in the plus with his purchase.

Such a simple insight, but nevertheless groundbreaking. Because it plays no role in one’s own considerations. So dominant is the label “expensive” when a stock marks a new all-time high.

This ubiquitous way of looking at things is nothing more than an outgrowth of the almost ubiquitous “anchor effect

“. I like to write it into the ground, and rightly so.

At the all-time high, the anchor is every previous price. No matter which one you pick. The stock looks expensive because every previous price was lower. Einstein would now torment us with his theory of relativity and he would also be right. In relative terms, i.e. compared to past prices, the stock would be expensive. But is it therefore also expensive in absolute terms? Well, it depends

value or price? Better value!

I hope you noticed how elegantly I took the curve back to the starting point: the question of a stock’s value, its valuation.

And if you missed that elegance, or don’t care about it, that’s no big deal either. We’ll be back here in any case. So moving on

Warren Buffett has been steering the fortunes at Berkshire Hathaway for nearly 60 years, with the stock price rising from around $50 to $485,000. So in that time, the stock has marked zillions of new all-time highs, and every purchase at a new all-time high has paid off for the buyer!

Although not necessarily always the next day. And there were also longer lean periods in between, when Buffett was written off and his investment style was ridiculed as outdated and no longer in line with the times. Between 1996 and 2000, before the Internet bubble burst, was such a phase. Value stocks were out, growth stocks were in. Deutsche Telekom shot up to over 100 euros. That’s right. People really did pay more than 100 euros for a single share in the former federal authority.

In bear markets, the good stocks crash along with the bad


But only the good ones recover.
( Jeremy S. Siegel)

After the bubble burst and many stockbrokers went bust – as did most of the hyped and vastly overleveraged Internet starlets – Buffett’s investment style showed its strengths again. Not that Berkshire Hathaway’s stock price couldn’t fall, or even crash. That happens, too. That’s because the company has many leading stock companies in its portfolio, and when their prices crash, so does Berkshire Hathaway’s.

But the good stocks recover, as Jeremy Siegel knows. And so does Berkshire’s share price.

Value vs. Growth

There is a kind of connection between value stocks and growth stocks. Sometimes one perfoms better, sometimes the other. In the past, you could pretty much spot the cycles, which mostly lasted between eight and 10 years. But since the 2009 financial crisis, growth stocks have been consistently ahead. And so far, every proclamation of a change in favorites has been just another false breakout. Growth stocks have continued to stay ahead.

There are good reasons for this

Reasons. For one thing, their flagships are highly profitable. Apple, Microsoft, Alphabet are earning huge amounts of money, and they are using it to buy back their own shares on a massive scale. Both of these factors support the share prices of these cash flow monsters.

And then there is the extremely low level of interest rates. If you understand interest rates as a reflection of economic development, then interest rates fall during economic downturns and rise when the economy is booming. Value stocks and growth stocks behave in a similarly cyclical manner. The lower interest rates, the cheaper future earnings (discounted to today). And the higher the interest rates, the more valuable the current profits of the companies.

The ongoing low-interest-rate phase has therefore made value stocks per se less attractive than growth stocks. And that is why every price slump in growth stocks has so far proved to be a new entry opportunity, and the price slump was quickly bought back up.

But now the central banks are changing the rules of the game: interest rates will rise.

And with that, the long spurned value stocks are moving into the favorite’s chair after all.

Berkshire Hathaway: Value or Growth?

A few days ago, Warren Buffet filed his 13F with the U.S. Securities and Exchange Commission, disclosing his stock positions at the end of the past quarter.

There were few surprises in Q4 2021

, with only one change among his ten largest positions: dialysis specialist DaVita slipped out and energy multinational Chevron rose. Apple remains the largest position with a weighting of 47.6%, ahead of Bank of America (13.58%), American Express (7.49%), Coca Cola (7.16%) and Kraft Heinz (3.53%). Moody’s, Verizon, U.S. Bancorp, Chevron and Bank of New York Mellon follow in the other positions.

Together, these 10 positions account for nearly 80% of Buffett’s portfolio. So it’s very focused, even though he holds a total of 44 U.S. stock positions. In addition, there are some foreign stocks, such as his “Japan bets.” As of summer 2020, Buffett had invested more than $6 billion in five major companies, Itochu, Marubeni, Mitsubishi, Mitsui and Sumitomo. These stocks are not covered by the 13F. And neither are the many unlisted companies owned by Berkshire Hathaway.

As a common thread, Buffett reduced pharmaceutical stocks in Q4 2021. At AbbVie and Bristol-Myers Squibb, he again sold more than three-quarters of his remaining holdings, having already reduced significantly here in the previous quarter. He had already completely exited Merck in the previous quarter. He also completely disposed of generics specialist Teva Pharmaceuticals, where Buffett had been counting on a turnaround for years. Now he pulled the ripcord and sold his entire share package – with a corresponding loss. With Teva, Buffett’s own warning came true: “Turnarounds seldom turn


But Buffett also made further sales in the financial sector. He further reduced his holdings in Visa and Mastercard, for example, and a complete exodus is also imminent at insurance broker Marsh & McLennan. After Buffett in the two preceding quarters first 30% and then 20% had sold, he reduced his remaining existence now by 85%.

He has bought in Chevron, and then there are two new positions in his portfolio: Buffett and one of his colleagues.

an investment lieutenant, joined Nu Holdings, the parent of NuBank, before the IPO. And at Activision Blizzard, Berkshire Hathaway acquired shares for around one billion dollars at the end of 2021. Which has now earned Buffett criticism after Microsoft made a $68 billion takeover bid in January. The – malicious – insinuation is that Buffett’s longtime and close friend Bill Gates, founder of Microsoft, tipped him off in this regard.

But this is absurd! Buffett would never have gone for it. He has stated so many times that the only reason he and Berkshire would never have invested in Microsoft

was because of his closeness to Bill Gates and that he wanted to avoid even the mere appearance of a conflict of interest. Tens of thousands of percentages of profit have slipped through his fingers by sticking to his ironclad principles, so he would hardly risk them now for a quick buck.

“Ittakes 20 years to build a good reputation, and only five minutes to lose it.If you take that to heart, you act more deliberately.
(Warren Buffett)

Unrecognized Assets

Buffett’s U.S. stock positions, however, at $331 billion, account for only about 45% of Berkshire Hathaway’s total assets. That’s in addition to the lavishly filled cash account of about $150 billion and a number of unlisted companies.

In January 2016, Buffett had completed the acquisition of Precision Castparts

for $37 billion. Meanwhile, the purchase price turned out to be too high, not only because of the Corona losses, and there was a hefty write-down. After the acquisition, Berkshire had delisted the company, so it no longer shows up in the 13F.

Similarly, there’s the billion-dollar Duracell, which Buffett received in exchange for his then-$4.7 billion Procter & Gamble stock; General Re, Berkshire Hathaway Energy (formerly MidAmerican Energy), or Burlington Northern Santa Fe (BNSF) railroad; and a host of smaller companies, such as Nebraska Furniture, See’s Candies, and Hamburg-based motorcycle accessories retailer Detlev Louis, which Buffett acquired in 2015. And, of course, direct insurer Geico



is the largest of the U.S. railroads, and Buffett had put about $30 billion on the table for it at the end of 2009.

BH Energy

is not only one of the largest energy network operators in the U.S. and also a major operator of gas and coal-fired power plants, but for years has been one of the strongest investors in renewable energy. The company plans to invest around $24.4 billion by 2024, the lion’s share of which will go into the further expansion of green energy generation.

Berkshire’s investment portfolio is broadly based. Technology stocks dominate, but that’s solely because of the high weighting of Apple. This is Buffett’s largest investment and also his most profitable to date. As Apple continues to buy back its own shares on a massive scale, Buffett’s stake keeps growing. Currently, he already owns 6.25% of the iPhone company. Also in this sector are his positions in VeriSign and Amazon

, in which he invested a good billion some time ago.

Buffett’s other major investments

s positions are subject to share buyback programs. The companies are thus converting their enormous cash flows into “passive gains” for their shareholders and, in most cases, also paying out tidy dividends…

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Lang & Schwarz – Profiteer of the Retail Investor Boom

As already mentioned in my last post, I bought shares of Lang&Schwarz – directly after the half-year figures at a good 32€. After a strong increase, I set a stop loss in December, which was triggered (very narrowly), but then bought back at least half the position after the last announcement. Here are my thoughts:


What does LuS do? Most German investors should be very familiar with the company, as it is a major player in the German capital market. Business activities here include:

  • Issuing structured products: This is where certificates and similar securities are sold; in particular, LuS is responsible for issuing Wikifolio certificates, for example. In this respect, I have had points of contact with the company for some time through my wikifolio. From the 2019 AR we know that e.g. turbo certificates are particularly profitable (turnover Issuing 30% decrease + turnover Tradecenter 30% increase = decrease in trading profit by 15%).
  • Broker: here LuS operates classic market making and brokerage.
  • TradeCenter: a platform for over-the-counter trading of securities
  • LS Exchange: The trading system of the Hamburg Stock Exchange. For example, all trades of the enormously fast-growing and now probably one of the most valuable fintechs in Germany TradeRebuplic are executed via this system.

Why is this business interesting? There is an enormous amount of money to be made with financial services (if you do it right), and that will be the case with LuS this year, for example. However – and I’ll come back to this later – this business is extremely volatile and not very predictable, as you can see in the business figures. In contrast, market making and the operation of trading platforms is rather stable. Trading platforms also have very clear economies of scale and scope, as the marketplace with the most volume is also the most attractive for all market participants. However, LuS often occupies niche markets here and unfortunately cannot be compared to the quality of a real exchange operating company.


31.12.06 31.12.07 31.12.08 31.12.09 31.12.10 31.12.11 31.12.12 31.12.13 31.12.14 31.12.15 31.12.16 31.12.17 31.12.18 31.12.19 LTM
Total Revenues 26,19 26,1 19,94 255,97 416,2 577,89 125,23 122,36 257,33 250,13 196,25 292,91 290,55 244,78 425,62
Net Income 6,97 (0,45) 0,02 (0,03) 14,47 6,71 (0,19) 0,99 4,98 5,99 4,73 7,86 0,28 0,71 16,76
Diluted EPS Excl Extra Items 1,95 (0,15) 0,01 (0,01) 4,81 2,13 (0,06) 0,32 1,58 2 1,5 2,5 0,09 0,23 5,33
Total equity 13,48 13,03 6,39</td> 6,36 20,2 26,01 22,02 23,38 27,5 27,64 30,73 34,96 29,89 27,45 41,85
Tangible book value 12,83 12,24 5,34 5,06 18,92 24,87 20,96 22,45 26,67 26,63 29,8 34,12 29 26,72 41,36
Tangible book value/share 4,1 3,91 1,72 1,62 6,28 7,91 6,72 7,13 8,48 8,91 9,47 10,84 9,22 8,49 13,15


The table above shows the development over the last years, I deliberately took a quite long time series to show the volatility of sales. For me the following things stand out here


  • There were almost never serious losses – though quite a few years with a result close to or slightly below zero.
  • There were some very good years in between, but even in retrospect I can’t say exactly why those years were so particularly good
  • Total assets have been rising sharply over time, especially since 2013. This is mainly due to the business with certificates like the Wikifolios (which are of course hedged, i.e. LuS buys the corresponding securities when an investor buys a certificate)
  • Most recently, there were two years with extreme tax rates. This was due to a problem with special tax regulations and their interpretation, but this has now probably been resolved.
  • Salaries have a strong result-dependent component – this helps to avoid making too significant losses and is probably normal for the market, but as a shareholder I honestly don’t like it when “my” employees simply earn twice as much in good years. Especially since profits often depend on external factors such as volatility and the level of spreads.

Conclusion: business is extremely volatile and difficult to predict , but the long term trend shows that the company can make very good money.


What are the prospects? Given the erratic earnings, one might think that after the Corona frenzy, a return to the rather tepid numbers of 2018/2019 is on the cards. However, I don’t think so. Especially with over-the-counter trading, certificates and neobrokers, the real question is how the retail investor segment will perform – and that exploded in 2020 year (here’s an interesting article with more detailed numbers on that). I’ve overheard people talking about stocks (and bitcoin) in public several times this year. After years of the trend went rather in the direction of boring, passive ETFs or people wanted to know nothing about the stock market at all. By the way, you can see the same development at competitors and related companies:

Share price of LuS since one year, compared to Tradegate (blue), mwb (dark green), Baader (light green), Flatex (red)

These active retail investors are of course worth their weight in gold for Lang&Schwarz: They trade comparatively often off-exchange and usually with sums in which the order commission is more important than the spread (on which LuS earns). As mentioned, LuS has two pearls at the same time: Wikifolio functionates via the issue of LuS certificates, and in them you can only trade at Lang und Schwarz prices and spreads. Here, just the first Wikifolio has exceeded the €80 million invested volume (congratulations Christian Jagd!), and the trend seems to me still positive.
The second is TradeRepublic, who do all their trades through LS Exchange. Finanz-Szene estimated just the other day that the number of customers could already be over 300,000, the app has almost 30000 ratings on Apple and is ranked 7th in “Finance”, on Android there are 13,000 ratings and over 500,000 downloads – a tremendously strong development. Next up is expansion into the French market. Both of these factors are especially important because they will not simply disappear overnight but will actually grow, in contrast to the third success factor of this fiscal year, high volatility.
This leads to generally higher trading activity, and this can be felt across the industry: Tradegate, mwb and Baader, as well as Flatex, for example, are reporting similarly high growth and profits. However, as they have not yet presented more up-to-date figures, the most recent development in particular cannot really be compared.

This surprised me: In November and December, the results rose even further, although there was no major news in December after Biden’s election victory and the vaccine approval. For me, the only plausible explanation is that structurally there is still a very high pace of growth, and this in turn should be driven primarily by the new investors. One concern here is: are TradeRepublic – sales really well profitable if you have to pay 1.50€ per trade as a refund, and at the same time the sales per trade are lower?
Let’s look at the numbers:

Latest numbers

In the latest figures you can see how strong the Corona year is going for LuS (and everyone else in the broker sector on the stock exchange):

  • Net income TEUR 23,842 in the first three quarters of 2020 (previous year: TEUR -501).
  • Profit from ordinary activities EUR 13,612 thousand in the third quarter of 2020 (first quarter of 2020: EUR 8,739 thousand, second quarter of 2020: EUR 12,384 thousand)
  • Consolidated earnings per share EUR 3.01 in the third quarter of 2020 (prior-year quarter: EUR 0.37)
  • Consolidated earnings per share EUR 7.58 in the first three quarters of 2020 (prior-year quarter: EUR -0.16)

I would have expected the third quarter to be rather weak due to the relaxation of infection control measures, but it was still surprisingly strong – stronger, in fact, than the first two quarters, which were impacted by the Corona crash. That the third quarter continues to show strength gives me confidence that this year is not just a one-off outlier, but that profits could stabilize at a higher level overall.

New numbers, including number of trades, have now come in early January:

The Lang & Schwarz Group generated earnings from trading activities (net interest income plus net fee and commission income and net trading income) of EUR 28 million in the fourth quarter of 2020 (fourth quarter of 2019: EUR 5 million). This meant that a result from trading activities of EUR 82 million was achieved for the full year 2020, compared with EUR 18 million in the previous year.

[…] with EUR 28 million haven our fourth quarter of 2020 alone, however, we generated a higher result from trading activities than in our best year ever overall (full year 2017: EUR 25 million). December 2020 surpassed all previous records and marked the strongest month in our 25-year history in terms of turnover, with around 4 million trades (on-exchange and off-exchange) on a turnover of approximately EUR 10 billion. We have managed to continuously increase turnover throughout the year. In the fourth quarter, it was around EUR 25 billion (fourth quarter of 2019: EUR 7 billion), almost as high as in the entire previous year. The number of trades even rose to over 10 million (fourth quarter of 2019: 1.4 million). In this context, the success of Lang & Schwarz Exchange is well worth mentioning. We are visibly consolidating our position as the No. 3 trading venue in Germany (on-exchange and off-exchange) for private customers. The total number of trades in 2020 increased to over 27 million, up from 5 million in 2019, with a turnover of approximately EUR 78 billion (previous year: EUR 26 billion).”

Worth noting: I would have strongly assumed that December would be weaker due to lack of news like the US election and the holidays. That it is the strongest month so far points to clearly structural growth by TradeRepublic.
As suspected, the order sizes at TradeRepublic (or the other additional sales) are obviously much smaller than from previous sources, but overall it does not look bad:

Lang&Schwarz Tradegate
Turnover/Trade 2019 5200 6833
Turnover/trade 2020 2900 6045
Sales/trade Q4 20 2500
Trading profit/trade 2019 3,6 3,5
Trading profit/trade 2020 3
Trading profit/trade Q4 2,8

Of course, one has to be careful here, because the figures from Lang&Schwarz include various revenue sources and probably also the very profitable certificates (and these will also grow compared to the previous year). If the order sizes have dropped so much, especially due to the success of TradeRepublic, then they should be below 2000€ on average. If one assumes that half of the trades in 2020 came via TR (without being able to derive this seriously!) and the structure of the other order flows has changed only slightly, it could also be under 1000€. That LuS seems to make nevertheless adequate profits makes me courage. It might be mainly due to the tendency of higher spreads, maybe also due to more off-exchange trading. Perhaps there are also economies of scale in trading or something similar.

Of course, it would be nice to be able to make more detailed comparisons. But with the thin data base, that’s difficult. I hope that the annual report and perhaps the figures of our competitors will provide some more details.


Not necessarily negative at first, but keep in mind the risks:

Regulatory: Lang&Schwarz operates in a highly regulated area of the capital market, which is currently experiencing a small upheaval: more and more trading is done via platforms like LS Exchange, gettex or Trade

gate and over-the-counter trading. The revenue model is shifting from a fixed transaction fee to a trading profit from (exclusive) brokers like LuS, who then pays a rebate for the “order flow”. I could well imagine that at some point this model will be changed by legislation, especially since this business model is probably already not allowed in some countries.

Business Risk

: Another risk is a painful bursting of the tech bubble. Many small investors prefer to bet on the current “hot” topics: Corona vaccines, hydrogen, electric cars, fast-growing software, cryptocurrencies… I am relatively sure that these (at least as a whole asset class) have high potential to wipe out entire fortunes. In the 2000/2001 and 2008/2009 crashes, many shareholders got out of the stock markets, trading activity and equity exposure dropped. I hope not, maybe the majority will be smart enough to invest at least the majority in solid blue chips or ETFs. In the best case, a much stronger shareholder culture establishes itself similar…

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