Kissig’s Stock Report: Only Winners? VW lets Porsche loose on the stock market

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. 77 as of 02/25/2022

Only winners?! VW lets Porsche loose on the stock market

Rumors have been around for a while, but now the key data of “Project Phoenix” have become public. This is the working title under which the Volkswagen Group is preparing for an IPO of the sports car manufacturer Porsche AG – and this is electrifying investors.

But… some will ask themselves, because there is already the listed Porsche Automobil Holding SE. But although it contains Porsche, it is not a Porsche. Sounds confusing? It is. A bit.

A few years ago, a friend bought his first Porsche. He went to the Porsche Center and put together his dream car, a Macan. The wait was almost a year, and we had many conversations about the car during that time. And we’ve been to the Porsche Center several times, had cars left there for weekend trips, and my friend has really enjoyed the service.

(But not a) Peter Lynch pick

He was so “turned on” that he immediately bought Porsche stock. Basically, a classic Peter Lynch buy. After all, the stock market legend advises investors to buy shares in companies whose products you like yourself and where you can assume that many and more and more other people will feel the same way.

These criteria undoubtedly apply to Porsche automobiles. And yet Peter Lynch would not have bought the shares of Porsche Automobil Holding SE. At least not for these reasons. Because this company does not develop Porsches, it does not produce Porsches, and it does not sell Porsches. Even if it says Porsche on it, it doesn’t have a sports car in it. Not anymore. Peter Lynch would have known that, because he analyzes stocks in great detail before buying them. The average private investor doesn’t. And that’s why he buys the wrong stock. Because if you want to buy a stake in sports car manufacturer Porsche, you have to buy Volkswagen shares. And they have a choice between ordinary and (non-voting) preferred shares.

It took me some effort to explain to my friend that by buying shares in Porsche Automobilholding SE, he was not taking a stake in the sports car manufacturer, but in the asset management company of the Piëch and Porsche families. An oversight, but not an isolated case. And in an indirect way, my friend somehow achieved his goal after all. Only in a highly diluted way. Because Porsche Automobilholding SE is the major shareholder in Volkswagen with 31.4% and holds 53% of the voting rights. Volkswagen, in turn, owns 100% of Porsche AG, which builds the sports car.

VW law and veto right

As if this construction were not confusion enough, there is also the so-called “VW law”. According to this law, important votes at the Volkswagen Group do not require the two-thirds majority stipulated in the German Stock Corporation Act, but rather a four-fifths majority.l majority. And the state of Lower Saxony holds 20.2% of the voting rights, giving it a de facto right of veto over important decisions.

From this constellation, it is easy to see that Porsche AG’s proposed stock market plans are about much more than the IPO of a subsidiary. We therefore take a closer look at the tangled web of interdependencies and try to understand why the respective players might have an interest in this and who hopes to gain what in the end. After all, this is not entirely unimportant, especially from the shareholders’ point of view


tangle Dr. Ing. h.c. F. Porsche Aktiengesellschaft is a German motor vehicle manufacturer based in Stuttgart-Zuffenhausen. The company’s origin is a design office founded by Ferdinand Porsche in Stuttgart in 1931, which after 1945 merged into an automobile factory that produced mainly sports cars. In 1984, the company’s non-voting preferred shares were floated on the stock exchange for DM 780 each, with an opening price of DM 1020. The ordinary shares remained in the hands of the Piëch and Porsche families. The Piëch name took hold because Ferdinand Porsche had two children: Ferry and Luise. And Luise’s husband was called Anton Piëch.

From 1993 to 2002, Ferdinand Piëch, Ferdinand Porsche’s grandson and the main shareholder of Porsche AG, was Chairman of the Board of Management at Volkswagen and then Chairman of the Supervisory Board of the VW Group until April 2015.

This period also saw the separation at Porsche into an asset management company, which held large blocks of shares in Volkswagen, and a Porsche car production company.

After outsourcing car production, Porsche SE further expanded its stake in VW during 2007 and 2008 in order to gain control over VW. VW was struggling at the time, while Porsche was bursting with strength. So the small sports car manufacturer wanted to swallow the global corporation. A coup de grâce – that failed.

The acquisition of the stake was financed by bank liabilities of 10 billion euros. And the whole thing took place at a time that is now written in the history books as the real estate and financial crisis. In other words, at a time when the global financial system was on the brink of the abyss, banks had to take refuge under government rescue umbrellas and there were hardly any loans left. And those who had extended loans demanded them back as quickly as possible. Today, in a time of global money glut, it’s hard to imagine that 13 years ago it was exactly the other way around: there was a worldwide liquidity shortage. And that lasted for months and years.

Shortly before, Porsche had bought VW shares, making maximum use of its credit leeway. The plan did not hold out because the banks themselves experienced liquidity problems and thus cut Porsche off. As a result, Porsche had to announce in May 2009 that it was now aiming to create an “integrated automotive group” with Volkswagen. Volkswagen then acquired a 49.9 percent stake in Porsche AG from Porsche SE in December 2009 and then took it over completely on August 1, 2012.

So today the sports car manufacturer Porsche AG belongs to the Volkswagen group, but the Volkswagen group belongs to the Porsche family (including the Piëchs). 53% of it, anyway.

But VW is struggling. After briefly becoming the world’s

s largest automaker, the diesel scandal

became public in September 2015 and sales figures plummeted. This was followed by lawsuits, court proceedings, billion-euro settlements and fines, and recalls. The scandal spread further and further, and several corporate leaders lost their posts. Just as the situation was easing, the Corona pandemic came on the scene and sent sales figures worldwide plummeting once again. In China in particular, which is now Volkswagen’s most important sales market, orders failed to materialize.

And as if that were not enough, the end of combustion engines is on the horizon. More and more countries are heading for a ban on internal combustion engines, so carmakers are also having to look to alternatives to gasoline and diesel. Here, the electric drive is leading the way, while hydrogen is more of a niche product.

In addition, there have been disruptions in global supply chains for the past year and a half, and there are major shortages in the chip sector in particular. Car manufacturers in particular are repeatedly shutting down production because individual components are missing. This increases waiting times and prices, both for new cars and used ones. But that’s only small consolation; the production shortfalls weigh more heavily.

All new, all electric

The VW Group made an early and complete commitment to electric drive. But with that comes problems.

Until now, the key elements of automotive engineering have been design and the drive motor. Both are absolute core competencies of German manufacturers. But in the future, the key element of the engine will be eliminated, because electric motors are comparatively simple and tend to be mass-produced. Battery technology will prove to be the new core competence, because here it is a matter of range, weight and space. And about performance and charging times.

Unfortunately, Germany is not among the leaders in battery technology. And whether it will be possible to maintain its leading position on the world market on the basis of design alone is highly doubtful. Therefore, all manufacturers must invest heavily in battery technology and at the same time convert all models to e-drive.

This costs a lot of money, because car manufacturing is very capital-intensive. After designing the car, a production line has to be set up and factories built for it – or existing factories converted. Rising interest rates will become an important factor here after not playing a role for years. Risk also plays a role. Because if a new model turns out to be a flop, the automaker will still have made the investment and will then have a worthless factory on its hands. And this is no small risk, as VW is currently experiencing in China. Although it is one of the hottest manufacturers there, at least for combustion engines, it can hardly get rid of its electric models. The Chinese prefer to turn to domestic manufacturers of electric cars.

At Porsche, all new models will soon be launched only as electric variants. The sports car manufacturer’s margins are high and profits lush. This will not change with the electric models, because Porsche feeds off its brand, its nimbus, its history.

In response to the chip crisis, all manufacturers have reprioritized their production. The low-priced models b

are left by the wayside, and the premium models are preferred. This is understandable, because the companies earn much more money with them than with mass-produced models. This also plays into Porsche’s hands as a high-margin premium manufacturer.

Project Phoenix”

Porsche is the yield grenade in the VW Group. And is currently more or less dragging the other brands along with it. Porsche is virtually disappearing within the VW Group, but would attract much more attention as an independent company. And it would probably also be valued much higher by the stock market than is currently the case.

A blueprint for this could be Ferrari. They were spun off from the FIAT Group and floated separately on the stock market. In the last five years alone, the share price has quadrupled. It is understandable that Porsche is expected to do the same.

And now things are getting more concrete: According to a company statement, the parent company VW is “in advanced talks” with Porsche Automobil Holding SE about a possible IPO of Porsche AG. VW and Porsche Holding SE had already negotiated a key point agreement. However, the conclusion of the key points agreement is still pending and requires the approval of the Board of Management and Supervisory Board of Volkswagen AG as well as Porsche Holding.

Exactly what a new structure might look like is still completely unclear. However, Porsche Holding let slip that the transaction could also include the acquisition of ordinary shares in Porsche AG by Porsche Holding. In other words, in the event of an IPO, shares in Porsche AG could end up both on the stock exchange and parts back at Porsche Holding.

The news is creating excitement on the stock market, driving up the share prices of VW and Porsche Holding by double digits. However, a quick IPO is hardly to be expected. After all, in addition to the still outstanding approvals of the boards, the details have to be finalized. And the mood on the stock market has to be right. After all, the parties involved would like to make a lot of money on the sale of Porsche shares, so stock market turbulence of the kind currently prevailing would do little to drive up prices.

Winner: Porsche AG

The sports car manufacturer is likely to benefit. As a listed company, it receives more attention, analysts and stock market news focus on it. Furthermore, it would no longer be so strongly integrated into the group and could act more freely and agilely. This creates room for maneuver, both entrepreneurial and price-driving. At the same time, the company would remain part of the VW family and would continue to be involved in platform developments through contracts, as well as benefiting from the conditions of the global corporation in purchasing.

Winner: Volkswagen

If Porsche wins, VW must lose, right? Probably not. Because Porsche is currently just one brand among many in the group, and its successes are lost in the group balance sheet. As an independent listed company, but one in which the VW Group still holds a controlling majority, Porsche would remain part of the group balance sheet. Sales would continue to be recorded in full, as would costs. Only at the end something changes: there the minorities are deducted, i.e. the share of profit (or loss) attributable to the remaining Porsche AG shareholders.

So everything would remain the same, but less profit would end up in the VW group? Doesn’t sound great at first.

But on the other hand, VW is making a lot of money by selling its shares. In one fell swoop. And the VW Group urgently needs this money because it has to convert all its brands to e-models and thus convert all its subsidiaries’ factories at the same time. The billions from a Porsche IPO would really help here.

In addition, a listed Porsche subsidiary would probably be valued significantly higher on the stock market…

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Livechat Software | Price and Value Stock Blog

Today I’m writing again – about Livechat Software, a very interesting company from Poland. However, the post is a bit atypical – I did have a small position and I think it is a very good quality company, but I also sold this position earlier this year.

But what is so interesting here?

  • Incredible profitability: more than half of sales remain as NET profit.
  • Historically very good growth:

Growth (source:

  • plus 3% dividend yield, which is usually found in average, barely growing companies.

Ok, so this looks exciting in principle. So exciting that I directly bought a small (1%) position with the following consideration. The company should be able to maintain and probably increase the dividend yield of 3% in the long term without any problems. If the growth of the past is only approximately reached again, then this will rise in a few years already to over 5%. If Livechat could manage to grow some of its new products to a similar size as its core Live Chat product, then this would be a top-notch company with outstanding quality and low valuation that could still multiply in price, as in that case profits could multiply as well.

The big question, which I also asked myself relatively quickly at the beginning, is whether the growth can continue like this. To this later, first I want to introduce the company briefly.


LiveChat is a small software company from Poland that specializes in live chat. Maybe you’ve seen this on the Internet before, when a chat window pops up on a website and invites you to chat or ask questions. This can be a chatbot, but since chatbots are usually quite poor, it is more often a real person from the sales team or customer support of the company whose website you are currently visiting. This is basically a smart way to get in touch with your potential customers (as it is very easy for the user) and according to Livechat statistics show clear advantages for conversion rates and user satisfaction.

There is definitely a lot of competition in this field, and from different sides. On the one hand there are a lot of providers who offer the basic functionality for free with freemium models and often also in the “premium features” are significantly cheaper than Livechat (e.g. Tiledesk) or are open source (like chatwoot ). On the other hand, established, large providers of enterprise software in the field such as Zendesk, which offer the entire range of customer service.

What is the competitive advantage or niche of live chat software here? Well, firstly, the target audience: small businesses that have too little potential to be actively targeted by larger software companies (like Zendesk), but who are willing to pay some money for professional customer service with readily available contacts and good integrations with other enterprise software. Here, it’s critical to target these small businesses (whose revenue potential is often less than $100 a month, so active selling isn’t really an option).

ch is worthwhile) to acquire cheaply. Exactly this is an absolute strength of Livechat Software, not least by the “hack” to name the own product simply like the category of the software and to achieve thereby automatically with google very good organic results. At the same time, Livechat Software has the ability to offer many integrations with other enterprise software, analytics, support, etc. due to the significantly larger financial resources compared to freemium providers, which is very valuable for enterprise customers.

For me, the gist is: Livechat offers good software at premium prices and manages to do that first against competition from freemium vendors, and second without a significant sales force. Sales is often by far the biggest item for SaaS companies, so not having it enables the terrific margins that Livechat software achieves.


LiveChat’s main product is, as mentioned, live chat. However, the company is currently expanding into adjacent areas of customer contact between companies and end customers and now has 4 products


  • LiveChat
  • HelpDesk
  • ChatBot
  • KnowledgeBase

LiveChat – Revenue by Category H1 21/22 (Source:

So by far the largest block of revenue is still LiveChat, even if in the meantime Chatbot and Helpdesk also make a small contribution. Just two years ago, by the way, it was virtually only live chat. Revenues, by the way, are primarily in dollars, with the American market actually also being the largest market at 40% – while the home market of Poland only contributes 2%.


LiveChat’s financials are exceptionally good and pleasing. I’m not sure I’ve ever caught a company with over 50% net return before, and at Livechat, pleasingly, almost all of that flows through into free cash flow as well. There is no debt, but a moderate cash position that is regularly distributed again as dividends. Here’s an overview:

From the 2020 Financial Report of Livechat Software

One thing that immediately strikes the trained observer here, of course: what about taxes? Shouldn’t corporate income tax in Poland be 19%? In fact, on a pre-tax profit of 107 million zloty, only 7 million taxes were paid.
In principle, I always pay attention to such things – because an unnaturally low tax rate is sometimes an indication of an artificially inflated profit. In this case, however, the reason is different – the Polish government encourages spending on research and development with tax rebates. Here is a brief description of an investment agency of the Polish state:


As far as I understand, this rebate is not limited in time. However, as you know, there is the initiative for global minimum taxation. Since I am not an expert, I would assume that with the introduction of the minimum taxation, this will be readjusted, and software companies may have to pay the full tax rate again, or at least the 15% minimum tax.

or live chat, at least revenues from abroad (i.e. almost everything) must be taxed at 15%. So there is potential for a future net profits charge here, but no red flag.

Growth and My Bellyache

At the current valuation, with a price-to-earnings ratio of over 25, it’s clear that as an investor you have to expect some growth. Not only to justify the price, for an investment I would also like to see significant upside potential or get in at a significant discount to the fair price. If growth remained high as before – no problem. But if it were to drop into the low single digits – more likely.

Why do I see major warning signs here? First, there is the growth in customer numbers.

Livechat customer count at the beginning of the year:

2016: 13500
2017: 18000 (+34%)
2018: 23000 (+28%)
2019: 26000 (+12.5%)
2020: 28000 (+7.7%, comment: not a good KPI, give revenue now)
2021: 32000 (+14.3% , Corona influence?)
2022: 34000? (+6%?)

This series of numbers shows quite impressively how the core of the livechat model, the cheap organic acquisition of customers, has weakened in the last years. And just when the growth drops from almost 30% to just over 10%, what is done? Introduced a new pricing model. This in itself is not objectionable and very understandable – B2B software often thrives on strong price discrimination (big customers pay more for little extras). However, changing the pricing model is one thing that cannot be repeated at will. This graph shows the evolution of ARPUs after the decision:’

Source: In

a nutshell, you can see that after the change, ARPUs (Average Revenue per User) increased significantly, but now the increase is getting smaller and smaller


The second potential growth driver is actually more interesting: the introduction of new products.


is some potential here, as Livechat has programmed additional software to complement its core product


  • A chatbot that is well integrated with live chat and can be set to automatically answer standard queries and relieve human chatters.
  • Helpdesk, to manage customer queries well internally.
  • Knowledge Base, to collect and manage knowledge articles

How does it look there? Chatbot in particular was able to grow very well at the beginning and the market will certainly continue to grow structurally. However, the relative growth rates of Chatbot have already fallen quite sharply, so I assume that the initial growth was mainly driven by cross-selling, whose potential is slowly being exhausted (because e.g. Chatbot is more suitable for larger customers). Thus, it is impossible to estimate whether a success via organic search results similar to Livechat promises success here and will ever work.


Helpdesk is also developing nicely, but also from a very low base – here it is still too early to make a judgment. I can well imagine that cross-selling chatbot and helpdesk alone will each generate 10-15% of sales.

tze from Livechat, but as a growth potential for the company as a whole, that’s a bit low for me.

Lastly, the point at which I did decide to exit: In the last quarter, the monthly recurring revenues of the company increased only by a meager 1% , as almost no more:

In addition, in contrast to previous reports, no more customer figures were communicated


Now, of course, you can argue that a quarter can be weaker, that it could be a counter Covid effect, that there is still clear growth for the year. And yes, that is exactly why I will keep Livechat on my watchlist and watch it very closely. However, without a position of my own, because without being able to assess the reason for the slowing customer growth, it’s too hot for me. However, if helpdesk or chatbot can establish themselves as stronger growth drivers, I would be happy to be back (at the right price). Let’s see…

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The stalled boom after the pandemic – Mr-Market markets, stock market, trading, economy

Pandemic? Was there something? No one wants to read about that at the moment, all eyes and ears are on the East, on Russia and Ukraine.

And yes, we in the community are now discussing the events in the East and the implications, not only for the stock markets, but also for our lives in Europe. And some people don’t sleep as well these days as they did in the years before, the escalation is progressing with nuclear threats from “Putin’s People” and it seems like there is no real way out of it.

Just *because* this is so, I want to set a counterpoint with today’s article for the free area and not also contribute text to the war in Ukraine. I’m deliberately *not* talking about Russia, but want to draw attention to a medium-term opportunity that seemed to be just getting going before it was again temporarily eclipsed and destroyed by the war in the East.

Nevertheless, the mechanisms behind it are intact, and as soon as the fog of war lifts, they will probably prevail all the more.

For the pandemic goes and becomes endemic. And with the end of the pandemic and the fall of most travel restrictions, a boom in tourism and aviation is possible that could eclipse anything that has ever been seen before.

People are simply starved for travel after 2 years of the pandemic, simply to get “out” for a change, and at the same time the supply has been thinned out by suppliers during the crisis to cut costs. As far as employees are concerned, the tourism industry is likely to experience some of the problems that we already know from restaurants – the old employees are gone and new ones cannot be found.

This actually creates the basis for a strong swing of the pendulum to the other side, after tourism and aviation as an industry had to suffer the most from the pandemic.

How something like this happens can already be observed in the private jets, the Wirtschaftswoche describes here the current boom, which is fed by several fundamental logics:

-> Why you can hardly buy private jets .

First, the pandemic, a trip in a private jet relieves from problems and risks that a trip in a “sardine bomber” simply brings with it.

Second, in general, the increasingly torturous procedures in the major hubs that make travel by mass airliner a nuisance – not the flight itself, but the before and after, from time spent to standing in line.

Third, the growing affluence among the top 10% percent, which was also promoted in the pandemic by what we also do here: Stocks!

I consider the trend to the private airplane as fundamental and durable and with new drives and lighter materials, also the airplanes will become ever cheaper.

A trend towards individuality, which, by the way, will also be triggered by autonomous driving. As soon as this is really complete and you can simply be driven from A to B without intervention, mass transport will lose its only advantage for the individual, apart from costs perhaps.

The wheel-rail system is already dead, so to speak, it just doesn’t know it yet and politics lacks the imagination of what the autonomous “becoming dangerous” will trigger in terms of structural breaks. The policy inveis once again stoking and promoting declining industries, as it is well practiced at doing.

But back to tourism, even if there were no boom at all, even if travel demand were simply to return to old levels without overshooting, the reduced supply is likely to lead to scarcity prices, which in turn will catapult the margins of tourism companies upwards.

This will also happen here, at the moment the bookings for the summer are increasing significantly, but there is still some free space, also because the war creates new uncertainty. But let’s wait and see what happens when all the limits and, with luck, the worries fall and everyone gets the same idea.

Which is why, for a tactical investment for 1-2 years, the whole sector of private aviation and tourism definitely still offers opportunities, because this, unlike other sectors, has not yet returned to the pre-Corona highs.

However, the pressures now coming from the warlike conflict in Europe have now depressed the sector again, as Murphy puts it:

“Anything that can go wrong will go wrong.”

So, of course, airlines now have new problems, routes are getting longer and some destinations have to be taken out of the schedule, cargo flights are cancelled and Russian tourists are also largely eliminated, which is likely to be an issue, especially in the luxury sector.

All of this creates another temporary dip in a sector that was actually just getting ready to start its recovery rally. However, in the medium and long term, this is more likely to increase the chances, because the boom has been postponed, not canceled. It would only be lifted if the war were to extend to NATO territory, something that is not completely unthinkable, but cannot be a yardstick for us when investing money, because then we would have completely different problems than our portfolios.

As proof and example for the said, I want to show them now charts of well-known companies. You can see the opportunities that had already developed until 2 weeks ago, but also how the war in the East has now temporarily taken them off the table again and has broken off the recovery.

First of course Lufthansa (LHA), the structure showed a “double bottom within a double bottom” and pointed clearly upwards, but then came the escalation with Russia with its burdens:

Then of course the hubs like Fraport (FRA), which would also benefit from a tourism boom, but now are also burdened once again:

And of course the cruise companies like Carnival (CCL), they still have a lot of upside, are also less affected by what’s going on in Europe and yet have been turned away. That’s triggered by the herd effects of the market, which come from ETFs, among other things. When tourism ETFs are sold, everything that is included is also sold, regardless of whether there are direct effects or not:

And most recently, the “shovel manufacturers” for aviation, the engine builders like MTU Aero Engines (MTX) with a similar picture. A breakout already in progress was stalled:

These are just examples, there are many other names we discuss with us. And of course, we also had the winners of this war on our radar, stocks like

Rheinmetall (RHM) and Hensoldt (HAG) and have been for a long time, but that is another topic.

This article here in the free area is only to show them that a tactical opportunity had developed in the sector, which has now been stalled for now by the war.

So today, these stocks belong on the watch list, because the driver that will provide a boom – the population starved by the pandemic for vacation and distance – does not go away and is now currently only overlaid by the war. The fact that the driver has not gone away can also be seen from the fact that some of the declines due to the war are still quite restrained and are more due to general uncertainty.

So let’s keep our feet still at the moment, but remain vigilant, because this tactical opportunity is still lurking for the liberation blow, which is quite likely to come at some point.

Just so there’s no misunderstanding, these stocks, with the exception of MTU Aero Engines (MTX), are *not* likely to be long-term investments, the travel business is too cyclical and too little value is being created there in the long term. But tactically, with a view to 1-2 years, there are opportunities here, when people’s pent-up demand will really take off after the pandemic.

Let’s keep an eye on that, wait as investors now for the escalation in the East, but as citizens of Europe keep our fingers crossed that a solution is found that ends the bloodshed and gives Europe a new security architecture. My short-term hope for this is very low, but as we all know, hope dies last, because Hope springs eternal.

And one more thing, let’s not talk about “Russia’s war”, because ordinary Russians are not our enemies, they want to have a full life with their loved ones just as much as we do.

This is Putin’s war and a small clique of imperialist fanatics around him – “Putin’s People”. And this war brings terrible suffering not only to the citizens of Ukraine, but also to ordinary Russians. Let’s never forget that.

Let me conclude by quoting Yoda on this


“Fear leads to anger, anger leads to hate, hate leads to unspeakable suffering”.

Behind the media facade of the “strong man” Putin has always been fear, the tragic development follows from it.

Yours Michael Schulte (Hari)

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

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Kissig’s Kloogschieterei: Brief musings on inflation, supply shortages, interest rates, war, sanctions, energy prices and recession fears

Nevertheless, as an investor, you have to think about it, even if the news and/or facts can change again quickly and old assessments have to be thrown overboard and new considerations have to be made. Particularly since the effects on the society and the economy are not necessarily also the same as on the stock exchange prices…

I will outline my thoughts on some aspects of how the situation was before the outbreak of war, how it has changed and what the effects will be in the short, medium and long term. It is clear, of course, that my thoughts will become fuzzier the further they look into the future.

“When the facts change, I change my mind.”

(John Maynard Keynes)

A really powerful quote. However, it also depends on the relevance of the changes, of course. Facts change all the time, you don’t have to react to them all the time. When the wind changes, it is a fact and a new situation prevails. But the relevance has to be classified differently, depending on whether there is only a lukewarm breeze or a storm is brewing.

I therefore try to include the relevance of the changes in my considerations. That’s easier said than done, because there are so many parameters in flux at the moment that it’s easy to lose track of them all. And I’m not one of those “perma-bears,” or crash prophets, who spin every negative development into a doomsday scenario. I remain fundamentally positive. But as the saying goes:“A realist is an optimist who has thought things through”. That’s why I want to be clear about the “new reality”.

In doing so, I do not claim to be right with my short-term considerations or to have all aspects on the screen. Too much is in motion for that. I hope rather for an exchange of thoughts with you, in order to arrive at better and more founded opinions for me. Because I am not at all clear about the implications yet. This is also part of my conclusions, which (must) be at the end.

!!! Furthermore I would like to make a restriction: I concentrate in my remarks on the economic effects; thereby the human aspect, the cruelty and the suffering of the war comes certainly too briefly. I am not blind to this, nor am I indifferent. But at this point they are not “my subject” and I will not always mention them; not even in the places where it would actually be appropriate. !!!

1. inflation

Inflation has caught up with us. For a long time, the central banks turned the money spigot on as far as it would go and flooded the economy and the stock markets with liquidity. We did not experience “normal” inflation, but asset price inflation. Real estate and stock prices were booming, while prices for goods and services remained rather stable. The Corona slump in the economy even turned into a growth stimulus in many sectors, while some industries (tourism, events, hospitality, travel, flying) have been down for two years.

But a year ago, prices for raw materials and construction materials began to climb sharply as a result of disrupted global supply chainsand because production had been massively shut down in many places during the early days of Corona. The chip shortage with the subsequent production stoppages, as with hardware manufacturers and car producers, is just one symbol of the many bottlenecks.

2. disruptions in global supply chains

This brings us to the second problem area. The disruptions are persistent and have been going on for a long time. There are many causes. There have been repeated severe corona outbreaks in the ports (especially in China) and the ports have been closed as a result. As a result, container ships were jammed in front of them; they were not unloaded and reloaded. This lengthened the time needed for delivery and thus the availability for containers and ships decreased, while at the same time the costs skyrocketed (the freight rates).

As production stoppages in factories became more frequent and logistics disruptions also occurred on land (trucks, rail), unloaded containers could no longer be fully loaded as usual. The average volumes transported therefore fell. In some cases, containers remained completely empty and were stacked in the ports – they were therefore missing for transport.

In addition, the Corona restrictions are an enormous burden for the seafarers. They are separated from their families for months and are often not allowed ashore in the ports. In some cases, they are not paid. As a result, many of them do not renew their contracts, and thus there have been and continue to be significant staff shortages.

Experts see relief on the supply front and expect the situation to ease significantly in the second half of 2022. But.

The Ukraine war is a new disruptive factor. Europe’s logistics routes often depend on Ukraine, there will be detours, delays and cost explosions. Ukraine’s ports are closed, not only for grain exports. Furthermore, sanctions against Russia and Russian companies have been imposed by the West. Our airspace is closed to Russian planes, that also creates imbalances in global supply chains.

And then we are seeing the largest refugee movement in Europe since World War II. Ukraine is home to 40 million people, and several million of them are fleeing westward. Many of the truck drivers on our roads are Ukrainians and they are now missing. Because they are among the refugees or because they are defending their country.

3. sanctions

The West has imposed unprecedented sanctions on Russia, Russian companies, Putin and Putin’s oligarch friends. The assets of the Russian Central Bank have been frozen (gold, dollars, euros), depriving it of nearly 80% of its available reserves, which it could have used to support the ruble. Furthermore, the main Russian banks have been disconnected from the Swift system, leaving them without access to the (Western-dominated) world financial system. As a result, many Western corporations are ending their involvement in Russia. They are closing their branches and ceasing operations. Microsoft, Apple, Starbucks are just some of the best known.

The US has imposed a ban on Russian energy and stopped/banned the import of Russian oil and gas. In Europe, and especially in Germany, this is much more difficult, because Europe is dependent on Russian energy. gas (and diesel) is dependent. In Germany, Russian gas has a 40% market share.

Putin’s countermeasures are the ban on exporting foreign currency from Russia and also products and food may no longer be exported. Energy is largely exempt, but Western corporations are nevertheless no longer buying Russian oil.

And the sanctions spiral continues.

4. energy prices

Energy prices had already risen sharply since summer 2021 and gas storage facilities in Germany were largely empty. Russia met its delivery obligations but did not increase supplies either. Because of the Corona outbreak and the slump in the economy, Germany’s and Europe’s energy orders were significantly too low. Foolishly done/ done.

The oil and gas deliveries to Europe were Putin’s threat to appease the West. But now things are going differently than they did with the annexation of Crimea a few years ago. The West is pulling together and showing Putin its teeth. Both sides would lose with a supply stop for Russian natural gas. Europe, because it is dependent on natural gas and cannot easily get the quantities it needs elsewhere, even at much higher prices. And Russia, because gas supplies are the only way it can still obtain foreign currency.

Europe must therefore prepare itself for high energy prices for a long time to come. The U.S. is in a more favorable position here because it is now the world’s largest oil producer and also one of the largest gas producers. Thanks to the fracking boom. They’ve long wanted to talk Europe, and especially Germany, into using their LNG as a substitute for Russian natural gas, but that used to be uneconomically expensive. Not anymore. In the U.S., new LNG terminals are being built on the West Coast, more LNG transport ships are being ordered, and Germany, after years of hesitation, has decided overnight to now reach two LNG terminals at once.

The price of gas has risen extremely in Europe, while in the USA it has increased only moderately in comparison. This, of course, gives domestic U.S. companies a permanent significant competitive advantage on the world market.

5. risk of recession

Europe is facing a refugee crisis and a price shock that will not only drive inflation strongly, but will probably keep it at a high level for some time. The U.S. is again much less affected here.

Many companies are ending their exposure to Russia, leading to significant (one-off) write-downs. Uniper is such a “prime example”, but it is also not an isolated case. Here, the globally active companies are particularly affected. And of course the financial sector; the banks have granted loans in Russia and to Russian companies, and they can/have to write them off now. But they are also indirectly affected.

Let’s take oligarch Roman Abramovich. He is subject to Western sanctions, his assets are frozen or confiscated. He is the owner of Champions League winner Chelsea FC. Although Abramovich has put the club up for sale, Chelsea FC is affected by the sanctions. They are allowed to play, but not to operate in the transfer market. They are not allowed to sell tickets for home games, had to close their fan store, etc. A blatant wcompetitive disadvantage, which causes the value of the club to plummet. And thus puts the lending banks under additional stress.

Chelsea FC and soccer are just one example where sanctions against Russian oligarchs are hitting second-tier companies and banks. The same is true for basketball, football, etc.

So a lot of values are being “plucked” at the moment, a lot of things are being shuffled around and many companies will have to make adjustments to their balance sheets. In addition to the one-time write-offs, there will then be the lack of ongoing revenue. McDonald’s is closing all of its 850 stores in Russia. This will not leave the balance sheet and income statement unscathed. And when the concrete effects are reflected in the quarterly reports, shareholders will not be happy at all.

After the corona boom, growth rates have shrunk back to normal levels in 2021. That was foreseeable, that was known. And yet investors have interpreted this as weak growth, especially in high-growth stocks. For the past year, many of these former stock market high-flyers have been on a nosedive, often losing more than 50%, sometimes even more than 75%. It is therefore quite possible that there will also be significant price falls for standard stocks when the effects are concretely reflected in the company figures.

In the USA in particular, much (almost everything) depends on private consumption. The strong price gains on the stock market have provided many Americans with money. But that hasn’t been going on for some time. And Americans rely heavily on equities for their retirement savings. If prices continue to tumble, and not just for high-growth stocks, this could lead to consumer restraint. That would have a dampening effect on prices, but it would also be harmful to the economy.

6 Interest rates and the central banks’ dilemma

Central banks see price stability as one of their main objectives, and high and rising inflation rates are thus increasingly coming into focus. It was a foregone conclusion that the Fed would begin its interest rate turnaround in March and raise rates significantly in the near future. The ECB is lagging somewhat behind here, with a first interest rate step expected toward the end of 2022.

The outbreak of war and the noticeably cooling economy are now becoming an additional problem. Inflation is high today, and interest rate changes by central banks take around 18 months to take effect. So anyone who raises interest rates today will generate changes in the economy in the fall of 2023.

In this respect, interest rate adjustments by central banks always (!) come too late. And they do not combat the actual problem, but create new ones – in the future – due to the time delay. Therefore, they are rather of a psychological nature. And the stock market (and the economy) is 90% psychological.

When central banks stop their bond purchases, they withdraw liquidity from the market. In doing so, they raise interest rates on the bond market and reduce demand for equities. When central banks raise interest rates, they signal that there is a problem. They make borrowing more expensive for companies, citizens and states (!). And that doesn’t fit in at all with the spending boom in the public sector: more money for armaments, more money for infrastructure, more money for the energy turnaround, more money to cushion social hardship (especially because of the

energy price push), more money for refugees (in Europe).

I am at a loss here as to how the central banks (want to) solve their dilemma. They have to raise interest rates significantly to fight inflation. But they can’t raise interest rates significantly because they will stall the economy. And because they make it more expensive to invest in new energy sources and infrastructure and defense, which are needed everywhere.

My conclusionsI

have touched on and briefly described many problem areas. My remarks are by no means conclusive!

The sanctions against Russia are hitting the country hard. The economy will crash by double digits in 2022, the ruble is plummeting, the war in Ukraine is devouring billions, store shelves are…

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Kissig’s small cap analysis on JDC Group: On the way to becoming Europe’s leading insurance platform

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.

JDC has several faces. One is a fund distributor and broker for high net worth individuals, one is an insurance distributor and broker pool, but one is also a fintech company that is digitizing these businesses and business processes. JDC Group operates in a highly fragmented market, but has managed to become one of the market leaders. This is also due to the fact that, as an insurtech company, it relies on a platform solution that is independent of the group in its latest business segment. And this has been very well received on the market.

The company has been listed on the stock exchange since 2005, when it was still called Aragon AG. From an issue price of 8.50 euros, the financial services provider went as high as 30 euros before the financial crisis and then tough competition pulled the plug on the company and its share price. Ten years after the IPO, the share was listed at 2 euros in 2015. By then, however, Aragon had long since turned the tide.

By the end of 2012, the company had already recognized that its buy-and-build strategy had failed.

As a result,

the company sold various subsidiaries and shrank down to its successful core business, renaming itself JGC Group in 2015 after its successful subsidiary Jung, DMS & Cie.

JDC Group AG stands for intelligent financial sales, coupled with new consulting technologies in times of digital natives. Its advertising slogan is “Best Advice. Better Technology.” Pretty pithy slogans, but they were followed by equally powerful actions.

Advisortech division

JDC divides its business into two divisions. In the “Advisortech” division, the Jung, DMS & Cie Group offers modern consulting and administration technologies for customers and consultants. Insurance sales and administration are highly fragmented and struggle with digitization. A large number of insurance companies employ many thousands of independent insurance agents, but also cooperate with group independent insurance brokers. Initially, insurance companies relied on their own isolated solutions to digitize their processes. This did not go down well with the brokers because they had to maintain an increasing number of different systems, which made the actual advantage of digitization absurd. Instead of simplifying and accelerating the processing procedures, the time and effort required to maintain and update the software and technology grew enormously. And as a result, the time left over for sales and customer support was constantly decreasing.

As a result, more and more brokers joined forces to form so-called broker pools. These pools, in turn, entered into cooperative agreements with a few insurance companies, thus standardizing the selection and standardizing the processes for the brokers in the background. For the insurance companies, this was both an opportunity and a risk. The larger a broker pool became, the better the conditions it could offer its members.

sion of the market. Furthermore, the insurance groups came under pressure, because if they lost a large broker pool as a partner, they subsequently also lost the customers served by these brokers.

Parallel to this development, consumer platforms such as Verivox or Check24 developed into sales portals for insurance companies as well. Customers were thus able to compare rates and take out insurance policies directly online. The entire industry came under pressure to digitize.

This is where JDC established itself as a technology provider and partner for brokers and sales. The solutions from the “Advisortech” business unit help advisors to serve their customers even better and generate more revenue as a result.



In the “Advisory” segment, the JDC Group brokers financial products to private end customers through its subsidiary, the FiNUM Group, via independent advisors, brokers and financial distributors. It now has more than 16,000 affiliated sales partners who manage a portfolio of more than EUR 4.5 billion and achieve product sales of more than EUR 1.5 billion per year. This makes it one of the market leaders in German-speaking countries.

Insurance platform

Essentially, the JDC Group today acts as a broker pool and platform. In addition to its own portfolio of insurance policies, it buys up other broker pools. These brokers are connected to the own platform and their existing contracts are transferred to the platform. The JDC Group then receives a steady flow of portfolio commission from this.

JDC relies on its own technology, which is offered as a white label solution. This means that the product is customized for each new partner, but in the background everything runs on the JDC platform.

JDC has been able to announce a number of major cooperations and takeovers in recent years. These include Albatros, Lufthansa’s own brokerage subsidiary, and Comdirectbank, as well as BI Secura, an insurance service provider belonging to the pharmaceutical company Boehringer, and Insure Direct 24, the digital subsidiary of Nürnberger Versicherung.

With each new cooperation partner, the insurance portfolio and the volume processed via the insurance platform increase. This also creates the network effects typical of the platform, because the more partners use the platform, the more new partners are interested in it. Success feeds success.

Finanzguru and Banca Mediolanum

This also includes the finance app Finanzguru, which offers digital multibanking. Finanzguru will offer its customers the management and conclusion of insurance policies through JDC Group.

Furthermore, Italian financial group Banca Mediolanum has selected JDC as the exclusive processor of its German insurance business, allowing JDC to take over German insurance policies on its platform.

Success with the Spark

assen… JDC scored a major success when the Sparkassen organization chose the JDC platform. This was rather surprising, because until then the Sparkassen had been closely associated with the Hypoport Group, whose platform for real estate loans was used. And Hypoport’s Smart Insur insurance solution was in pole position, but the internal conflict within the savings banks association had a different outcome. In the end, Provinzial, which belongs to the savings bank group, joined insurance company JDC. It offers an insurance platform for 120 savings banks, and the partners expect the joint venture to generate 1 million customers within the next 5 to 7 years, resulting in an increase in sales of 100 million euros.

…and Versicherungskammer Bayern

After Provinzial, Versicherungskammer Bayern is now also cooperating with JDC Group. The financial service provider provides the IT for the online tools of the largest public insurer. In addition, Versicherungskammer has invested a good 10 million euros in JDC Group, acquiring 6% of the shares as part of a capital increase. Both plan to cooperate extensively on the S-Versicherungsmanager, the IT system to support the sales of public insurers in the private customer business of the savings banks.

Cooperative banks are now also on board

At the beginning of February, JDC scored another major success. JDC signed a 5-year contract with the subsidiary of R+V Versicherung to pilot a bancassurance platform for the Volks- und Raiffeisenbanken.

R+V is the second largest insurance group in Germany and will use the JDC insurance platform as a white label including the customer management system iCRM and its own end customer smartphone app for a hybrid intermediary model within the cooperative financial group. A pilot group


several Volksbanks is already scheduled to launch in a few weeks. JDC Group CEO Stefan Bachmann commented: “We are looking forward to the pilot within the cooperative financial group.This step confirms JDC’s digital bancassurance approach as a strong platform partner for insurers in the German banking market.

Hypoport loses out – again

What he didn’t say was that JDC also outperformed competitor Hypoport in the cooperative sector. That’s because the fastest-growing sector on Hypoport’s EUROPACE mortgage platform is credit unions and cooperative banks, so Hypoport had a natural head start in establishing its insurance platform. But JDC once again knew how to convince.

These many collaborations and new users of JDC’s white label insurance solution prove JDC’s great success in bundling the fragmented sector on its platform. In doing so, it wins the portfolios of smaller broker pools as well as those of large corporations and associations.

Germany’s fourth-largest broker pool

In terms of commission income in 2020, Fonds Finanz was the largest broker pool in Germany. Fondsnet has catapulted up to second place with a near doubling of income. Netfonds followed after an increase of 26%, ahead of JDC, which grew by a good 10%.

However, if the commission income is adjusted for the “liability umbrella” area, where the companies are active as regulatory service providers for third parties, the JDC Group would be in second place with 120 million euros in income, behind Fonds Finanz with 190 million euros. Netfonds, with 90 million euros, would have to admit defeat to Domcura with 100 million euros, while “whiz kid” Fondsnet would only come in at 50 million euros.

This shows that the market is fiercely contested and that the major broker pools are actively driving the consolidation of the still highly fragmented industry.


JDC builds dabut also continues to expand its range of offerings to make its platform even more attractive. For example, JDC Group subsidiary Jung, DMS & Cie. has just expanded its cooperation with insurtech Thinksurance to offer banks a digital sales channel in the area of commercial insurance for corporate customers.

The aim of the intensified cooperation is to map the consulting process for banks in commercial insurance holistically and digitally. This includes everything from needs analysis, rate comparison, and the tendering of complex risks to documentation. The consulting and brokerage process is to be mapped holistically with data transfer and back interface, commission flows are secured and audit-proof billing and resubmissions are handled in one system.

Another customer in the area of bancassurance is Sparda-Bank.

High scalability

Initially, however, the many new cooperations mean a leap in costs. JDC needs significantly more staff to migrate the many contracts and to adapt the white label solutions to the customers, i.e. to individualize them.

At the same time, revenues will only start to flow with a time lag, so that costs will predominate over the first 12 to 18 months. These then fall over time, while revenues increase steadily. This results in a high degree of scalability, as revenues increase while costs are incurred primarily in the migration stage and eventually fall back to a low level that needs to be maintained for care and maintenance.

But for now and until the end of 2023, these successes are not yet showing up in the business figures, at least not positively. And the purchase of insurance portfolios is also weighing on earnings. The purchase costs are capitalized as intangible assets in the balance sheet and subsequently amortized over 10 or 15 years. This leads to an increase in EBITDA, but not in the bottom line. Nevertheless, the newly acquired insurance portfolios naturally represent a value and generate a steady flow of commission income.

These effects somewhat distort the comparison of the share with competitors and mean that the JDC share always appears to be valued higher in a comparison of key figures.

High volatility

This is not currently the order of the day on the stock market, and the fintech sector in particular is certainly not. In the one and a half years between the low point of the corona at 5 euros and the end of September 2021, the share price increased more than fivefold. However, the threshold of 26 euros has proved insurmountable several times since then. In the sharp correction in January, the share even plummeted to 20 euros, but has since recovered significantly. However, the share is likely to remain highly volatile for the time being in view of the turbulent phase on the stock market.

Shareholder structure

The shareholder structure of JDC Group is interesting. The largest shareholder with 26.9% has been Great-West Lifeco Inc. for the past 3 years. The Canadian insurance-oriented financial holding company operates in North America (Canada and the United States), Europe and Asia through 5 wholly owned regionally focused subsidiaries.

Furthermore, JDC’s management holds a significant 10.95% stake in its own company and Versicherungskammer Bayern holds 6%, while JDC’s shareholding is

ckurchases itself holds 3.7% of its own shares. The free float thus accounts for 52.45% of the 13.2 million shares and the market capitalization is around 292 million euros.

Strong 9-month figures

In mid-November, JDC had presented its business figures. According to these figures, sales rose by 19% year-on-year to €103.1 million in the first 9 months of 2021. In the 3rd quarter, sales climbed by 25% to 34.4 million euros.

Sales in the Advisortech business unit rose by 26% to €27.9 million in the 3rd quarter, up 18% year-on-year to €84.3 million in the first 9 months. The Advisory business unit increased its sales by 22% to 8.9 million euros in the 3rd quarter and thus by 23% to 26.2 million euros in the first 9 months.

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose by 45% to 5.3 million euros in the first 9 months….

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Kissigs Aktien Report: Sofi, Upstart, LendingClub – Are you ready for the Comeback?

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. 78 from 05.03.2022

Sofi, Upstart, LendingClub – Are you ready for the comeback?

In a few years, the world economic crisis of 1929 will be celebrated for the hundredth time and it has to be used as a comparison for every stronger economic slump. So also today. A little bit, at least. Because we are witnessing an act of war that Europe has not seen in 75 years and the West is responding with unprecedented economic sanctions against Russia and Putin along with his confidants. These sanctions affect Russian companies directly, but also Western European companies, both indirectly and directly. Shell, BP, BASF subsidiary Wintershall and others have put their Russian holdings up for immediate sale or have already written them off completely. RWE, Uniper and other energy companies are under pressure because they obtain a significant share of their energy supplies from Russia.

The sanctions and the effects of the war in Ukraine will therefore also hit our economy and the stock markets are reacting negatively accordingly. And this after a phase in which share prices had already corrected significantly.

For many young stock market players, these price losses feel like a threat to their existence. For the first time, they experience that the stock markets do not start a countermovement after a few days or weeks and soon mark new all-time highs again. “Buy the dip

” almost always works. But not this time.

Here, a look at the major stock market indices distorts the picture. The big tech heavyweights are holding up pretty well, which may also be due to their multi-billion share buyback programs. The sharp price falls are more likely to hit the second-tier stocks and especially the growth stocks. From the all-time high of a year ago, share price losses of 70 or 80 % can be seen in the portfolios.

Sir John Templeton and risk control

The Fear and Greed Index is currently in the lower quarter, i.e. it signals “extreme fear. And the Volatility Index has also shot up sharply, meaning that increased risk premiums are being priced into prices.

In such uncertain stock market phases, one can find orientation and support from stock market legends. Star investors like Sir John Templeton, whom the U.S. stock market magazine ‘Money’ named “arguably the greatest stock picker of the century” in 1999. Templeton established his legendary reputation in the bear market of 1939 at the height of the economic crisis at the beginning of World War II. At that time, when all investors were throwing their stocks on the market at any price, he borrowed $10,000 and cross-bought companies whose stock prices had fallen below $1. When he sold those stocks after a few years, he was a rich man because almost all of those stocks had risen significantly in price.

Invest in the time of greatest pessimism.
(Sir John


Templeton was a contrarian investor. He liked to buy when others sold and drove prices down. This is how he explained his excess returns, because if you buy the same stocks as everyone else, you get the same results as everyone else.

As a contrarian, he swam against the tide. And that paid off. But that doesn’t mean it always pays off for everyone. Because most investors don’t really understand the concept. They simply grab the “falling knife” because they think buying into price drops is contrarian investing. But it isn’t.

Contrarian investing is also about the difference between price and value. Just because a stock has fallen sharply doesn’t make it cheap. Even after the price has halved, a stock can still be completely overvalued. Buying it at this point just because it now costs half as much as it did some time before has nothing to do with investing, but is akin to gambling. The contrarian investor buys quality companies that can be had (too) cheaply due to the price slump.

Templeton pounced, and on credit, too, when everyone else was selling their stocks. He bought all the stocks below $1, knowing that he would lose his invested capital on some or even many of them. His reasoning was simple: with the vast majority of stocks, the companies behind them would survive the war and the value of their shares would eventually multiply.

In terms of individual stocks, Templeton was taking a high risk of total loss. It could have hit any company. But he bought a variety of different stocks, he spread his risk. And in the overall picture, he reduced his risk considerably. Even if half of the shares had become worthless, there was a very high probability that he would achieve very high price gains with the other shares and thus recoup his losses many times over.

He bought at the peak of pessimism and focused on risk control.

Benjamin Graham and the Margin of Safety

Benjamin Graham made a lot of money in the stock market in the golden 1920s, but he lost everything in the “great crash.” This experience fundamentally shaped him and was the foundation on which he built his legendary reputation. He is considered the forefather of fundamental analysis and was later Warren Buffett’s teacher and mentor.

Graham did not focus on risk control, he focused on risk avoidance. He analyzed a company based on its annual reports and determined its fair value. And only if its share price was 30% or more below that value did he buy the stock. He thus coined the concept of the margin of safety.

When losses are minimized, average profits produce above-average results. “
(Benjamin Graham)

After that, all the investor needed was patience. This is because Graham was convinced that the market would eventually recognize that the stock was undervalued and the price would rise to its fair value.

The “highlight” of this approach is that it is not necessary to search for the “hot” stocks with multiplier potential, which are always associated with higher valuations and increased risk.

It is not the case that the risk of a stock market crash goes hand in hand with the risk of a stock market crash, but rather that investors would ultimately achieve above-average returns even with average returns if they minimized the risk.

Templeton, Graham and risk

This brings us back to today. There is no shortage of risks right now. The other day, we were talking about disrupted supply chains, production losses due to chip shortages, soaring commodity and material costs, soaring inflation and with it the prospect of rising interest rates and an end to central bank liquidity injections. Whew…

For a few days now, there has also been a war in Europe and the risks have increased massively. A burning nuclear power plant and the threat of NATO being dragged into the war, thus bringing the nuclear card into play, are not exactly easing tensions. Stock prices are falling, especially in Europe, because Ukraine is on our doorstep, while the U.S. is on the other side of the globe. In a war with purely conventional weapons, that is “relaxed far away.”

In most cases, the outbreak of warfare causes prices to rise. The background is psychology. The stock market abhors uncertainty, so prices fall before the outbreak of war, but as soon as facts are established, they show signs of recovery. The risks become more tangible and calculable, and are therefore priced in.

Currently, this pattern is not really working. Because it’s not yet clear whether the war will spread, whether NATO countries will also intervene, and therefore NATO against Russia. This is an enormous escalation scenario and creates great uncertainty. And thus for share price losses.

And yet we are far from capitulation on the stock markets. The bears are dancing, but there is no panic mood. There are more sellers than buyers, so prices are falling. But there is no sell-off.

So it is not (yet?) the time for a general stock market turnaround.

And yet, it might already be a good time to take a closer look at some bombed-out stocks. Companies whose share prices have fallen significantly, where there is no (more) euphoria, whose share prices have come under pressure in the general stock market situation, but where there are operational reasons for optimism – and where the market just values the opportunities far too low.

Such companies exist. Let’s look at three that have similarities. They are U.S. companies with no direct negative impact from the Ukraine war or Russian sanctions, all are fintechs and belong to the group of growth stocks. And yes, they were all sky-rocketed by the stock market some time ago with sometimes insane price-to-sales multiples.

This also means that they have all deflated sharply for similar reasons: slowing growth momentum (the extraordinary corona-induced growth rates are falling back to normal), rising interest rates are causing value discounts in the discounted cash flow models, and the market is no longer willing to pay up the multiples previously paid. Value stocks smell morning air, growth stocks stink. Rightly so. But not always

SoFi Technologies So

Fi went public in early June 2021 through a SPAC merger, using a special purpose acquisition company (SPAC) called Social Capital Hedosophia Holdings Corp. V led by famed financier Chamath Palihapitiya.

The FinTech is a fast-growing U.S. personal finance company that offers consumers a range of financial products directly through its app and website.

SoFi was structured around three operating segments: Lending, Technology Platform and Financial Services. The lending segment accounts for by far the largest share of revenue and deals with personal, real estate and student loans.

The technology platform consists primarily of Galileo Financial Technologies, which SoFi acquired in April 2020 for $1.2 billion. This is an API and financial processing platform used by a number of fintech companies including MoneyLion, Skrill, Robinhood, Interactive Brokers, Chime and Shipt.

SoFi’s financial services include the stock trading app and the fledgling SoFi credit card, which offers 2% unlimited cash back on all purchases when users redeem this for a SoFi product. This cross-selling of multiple financial products helps SoFi increase sales while minimizing churn.

The new banking license is likely to prove a game-changer in this regard. The Office of the Comptroller of the Currency and the Federal Reserve recently approved SoFi’s applications for a full banking license. Following SoFi’s acquisition of Golden Pacific Bancorp (GPB), SoFi’s banking subsidiary will operate as SoFi Bank National Association. SoFi will contribute $750 million in capital here and pursue its national, digital business plan while retaining GPB’s community banking business and presence, including GPB’s current three branches.

With a national banking license, SoFi will not only be able to lend at even more competitive rates and offer high-interest checking and savings to its members, but also introduce and distribute new financial products and services.

SoFi released its 2021 financials on Tuesday, including Q4 results. The company reported non-GAAP quarterly earnings of $4.6 million on an EBITDA basis and adjusted revenue of $280 million, up 54% year-over-year.

Non-GAAP net income was $30.2 million on adjusted revenue of $1.0 billion, a 64% increase over 2020.

SoFi posted record growth in products and members for both the full year and the quarter. It added 377,000 new members in Q4 and 3.5 million new customers for the fiscal year, an 87% increase over 2020. SoFi recorded 906,000 new products on its platform in the quarter, up 51% year-over-year, tripling the number of financial services products.

The company’s financial services sector experienced rapid growth. The total number of products increased 155% year-on-year, from 1.6 million to 4.1 million, primarily due to growth in the SoFi Invest and SoFi Money offerings.

SoFi recently launched a number of new products, including a high-yield checking and savings account. In the earnings release of the U.

ntercompany states that credit products also increased by 18% in the quarter, with growth mainly attributable to personal loans.

There are also few signs of slowdown in the outlook for 2022. SoFi expects to grow adjusted net revenue 55% year over year to $1.57 billion and generate adjusted EBITDA of $180 million….

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KSB – favourable after realignment

KSB is a pretty exciting case from my point of view. The stock was considered a “value” when I started investing, but has only brought losses since then. Strictly speaking, it has been more of a value trap for the last 10 years. Of course, there are many reasons that spoke in favor of the stock back then – and others that explain its poor performance. So what are the arguments for and against KSB?




  • Hidden champion: classic German hidden champion, partly world market leader for certain special pumps with the highest engineering requirements
  • Good balance sheet: Apart from pension obligations (more later), KSB has a solid financial cushion with high net liquidity.
  • long-term stability due to families as anchor investors (at the same time contra, because corporate governance is not optimal)
  • after management change clear progress in profitability



  • Poor development: in the last ten years, sales have increased roughly in line with economic growth, but profits have declined significantly
  • Ownership structure: corporate heirs have majority of common shares, plus it is a limited partnership – minority shareholders have little influence
  • returns on capital recently too low
  • certain sub-sectors in which KSB has a strong presence are under long-term pressure, especially thermal power plants (solar and wind do not need pumps, coal and nuclear seem to be discontinued), coal mines, possibly oil / petrochemicals


What does KSB do? Founded in 1871 (i.e. before the German Empire!), KSB is a manufacturer of special pumps and other components (fittings, valves) for fluid transport. The name is derived from the three founders:

Source: presentation

However, the largest part is actually the pumps themselves

: Breakdown of business: two-thirds are new pumps

This is not about the small water pump in the garden pond, but rather industrial applications such as sewage treatment plants, mines, industrial plants, power plants and the like. These are often specially adapted or even designed for a specific application. Sometimes the pump systems also have to be certified by the authorities (for example, for a nuclear power plant, which understandably has special requirements and cannot simply fail). The company has over 15,000 employees worldwide, so it is by no means an obscure microcap.

End markets

KSB is active in a wide range of markets because, of course, pumps are needed for a wide range of applications. These are the key markets:

According to KSB, all of these markets are growing worldwide, but it has been evident for years that the energy transition in particular is necessary for reasons of climate protection and makes sense from an economic (now also strategic) point of view


In this respect, it must be clearly stated that coal mines, coal-fired power plants and, in the long term, the oil industry and petrochemicals are likely to shrink, while I see very good opportunities for water / wastewater, general industry, buildings, food, etc. in particular. However, one should rather not expect particular tailwind from the market environment.

Turnaround story


>In the long-term figures and the chart you can see the misery:


After the pre-tax margin was even above 10% in 2008, it has fallen to below 2% by 2018! Of course, this is unsatisfactory. If it had continued like this, KSB would definitely not be worth investing in. However, the poor results have definitely led to a reaction: New management has been on board since 2017. To be precise, it seems to have gone rather bang at that time, because the entire Supervisory Board left in several steps – quite officially because of “different opinions regarding the further direction of the company”.
In November, Mr. Timmermann, who is still in office today, became the new CEO. And a kind of “turnaround” of the company began, which actually has a lot of potential. This takes time, of course, because first the new CEO has to get to know the company, find out where the problems are and what the previous mismanagement was, develop and communicate a new strategy, implement it and so on. 3 years later, there were first reasons for hope of success, but these were essentially masked by the corona pandemic.

Core elements of the new strategy include a better internal organization with clear responsibility for end markets, a significant strengthening of the service and spare parts business (which is generally very profitable) and, in the long term, a return to the good margins of the past – at least 8% return on sales is targeted by 2025. Costs are to be reduced by 50 million (EBIT) to achieve this. Here from an investor presentation:

Source: Company presentation

How has the development been so far? From my point of view very promising.

First of all, despite Corona (and some hard lockdowns), EBIT in 2020 only fell by €43 million, although gross profit fell by a full €100 million (and over €11 million of Goddwill was written off):

this is probably already due to a falling headcount and better efficiency. Higher efficiency in inventories (falling working capital) has also improved free cash flow:


most recent business figures for 2021 were really good: With sales of €2.34 billion (2019: €2.39 billion), EBIT was probably around €140 million (“middle of the adjusted forecast). By comparison, EBIT in 2019 was €114 million, despite higher sales. In 2018 it was only €75 million. It should also be borne in mind that in 2021 energy and transport costs increased more than most expected, so this is more likely to have had a negative effect on the margin. By the way, an EBIT of €140 million results in an EBIT margin of just under 6%, so there is still further potential for improvement to reach the target of over 8%, but in principle we are already ahead of plan!

In addition, it is also clear in other respects that the improvements on the one hand make absolute sense (in particular a better organizational structure to make responsibilities clear and to be able to measure results – not sexy, but important) and on the other hand the trend of the results in the last time obviously confirms the strategy. I therefore think that reaching the set target of >8% EBIT margin is quite realistic and hope that it could even be more in the best case. If it then works well internally

the strategy also provides for targeted inorganic growth, for which the balance sheet would in any case be well equipped.

Balance sheet and valuation

Let’s move on to the somewhat technical part, which is quite tricky here. A short version for all those who are bored by such things: KSB has a fat pension obligation, i.e. high very long-term (and cheap) debt. If you factor these out and look at the short-term financial situation, you see a very thick financial cushion here and a comfortable net cash position. (The valuation is further complicated by the fact that there are significant minority interests, which actually have to be excluded from the valuation and which accounted for profits of about €15 million per year in recent years. )

My basic assumption is that the plan can significantly increase profitability as planned: KSB could soon reach an EBIT of € 200 million per year if the targets are met. The stock market value is roughly € 700 million. However, for an enterprise value or EV/EBIT we have to make some additional adjustments:

Non-controlling interests

The non-controlling interests are on the one hand subsidiaries in China and India, and on the other “PAB Pumpen-und Armaturen Beteiligungsgesellschaft” with subsidiaries in the USA.

The non-controlling interests account for approximately one quarter of equity. Due to the quite good profitability and the positioning in growing markets (India / China) one could even assume a higher share of the company valuation here, I prefer to keep it simple and assume that these shares reduce the actual market value of the company by a quarter. In other words: if you calculate with the consolidated figures, you should multiply the market value by 4/3 to form the valuation basis. Assuming full consolidation of the subsidiaries (i.e. if the consolidated figures are used), we should therefore assume a market value of 1 billion.


The stock market value of KSB shares is around € 700 million, as I said with minorities (I am calculating here with EBIT at consolidated level) rather 1 billion. The net financial position without pension obligations is over € 300 million, while the pension liabilities are just under € 670 million. If we ignore the pension obligations for the time being, we arrive at an enterprise value of €700 million, compared with current EBIT of €140 million.

Pension obligations
YES, I know that the pension obligations have to be serviced continuously and are real liabilities, but in principle they are constantly renewed debts that never fall due in one fell swoop. Effectively, therefore, they mainly increase the financial leverage: if things go well in the positive direction, if things go badly and profitability develops as in the last decade then they eat up everything. If you want to calculate an EV/EBIT, the problem is that the present value of the pension obligations depends on the interest rate. If interest rates rise by 1%, which is quite possible, pension obligations would fall by €100 million. The current service cost is already reported under labor costs, i.e. above EBIT, but the calculated interest is only reported below EBIT. What to do?

1) One could reduce the current service cost for ne

If you deduct pension entitlements (€12 million per year) from personnel costs and declare them as borrowing, the EBIT part of EV/EBIT would be cleaner.

This would result in an

EBIT of rather €152 million, but an EV of 1.4 billion (EV/EBIT ~ 9)


2.) One could take the actual payments of approx. €25 million per year and add them completely to personnel expenses (i.e. +13 million personnel expenses, correspondingly low EBIT), ignoring the pension obligations. This would then rather result in an EBIT of €125-130 million at an EV of 700 million (EV/EBIT ~ 5.5).

To be honest, I think the second calculation makes more sense, as it does not have to make any assumptions about interest rates (which are unnaturally low in our case). Thus it is much more stable over time. My medium-term assumption is that the plan of more than 8% return on sales will work out. Then EBIT would be more like €200 million, so let’s say 185 for case 2, which would then drop the valuation to EV/EBIT below 4. This is definitely too little for a strong company (hidden champion in the German midmarket) with a very strong return, especially as KSB is not a particularly strong cyclical company. If, on the other hand, “only” the current level is maintained, then the share seems rather fairly valued.

Alternatively, one can approach the valuation quite classically via the earnings per share. This is not so easy to derive from the preliminary figures because of the minority interests, but it should actually be in the range of €40-45 per share. If EBIT of €200 million is achieved, it should be closer to €75 per share. Given the current share price of €360 for the preference shares (€440 for the ordinary shares), this even looks very favorable – but as I said, the distribution of profits with the minority interests and also in which area one could expect the greatest progress in the future is still unclear.


For me, KSB is a company with presumably good technological competence and the principle potential to generate sustainable double-digit returns – however, not a particularly great company, rather a medium good solid business. However, the turnaround seems quite likely to me and in this case the stock would currently be very cheap. In fact, I already bought some shares last year at around €240 and bought them again at a higher price at the beginning of this year. The dependence on Russia, which has completely isolated itself internationally with its brutal war in Ukraine, seems low (the whole region to which Russia is assigned accounts for only 6%). I would take a discount for corporate governance, as one is completely at the mercy of the major shareholders (and there have been “problems” there in the past as well).

The risk here is clear: a failure in terms of operational improvement, and in the long term certainly the question of certain end markets that are structurally more likely to shrink. Nevertheless, I hope that the immediate undervaluation creates a sufficiently large safety cushion here.

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Changing tides of world history – Mr-Market markets, stock exchange, trading, economy

All eyes are on the war in Ukraine, and that is both understandable and necessary. But when we look at the details, when we hope and fear, we tend to overlook the fundamental trends in world history that are only manifested in such events.

For everything needs its time, and historical events are usually embedded in a context that made them possible in the first place.

The events of the 20th century were also only made possible by previous events, from which they then grew. Without the Congress of Vienna, for example, there would certainly not have been the founding of Bismarck’s empire with the -> small German solution. Without the industrialization there would not have been the 1st World War, without Versailles not the corporal from Braunau and without the Russian revolution no Stalin and iron curtain.

This does not mean that the alternative time lines would have been necessarily better, but in any case different, that can be stated with certainty.

This is also true today, because I see behind the events of the last years a fundamental change of times, a great, last pause of globalization and a relapse into spatially delimited zones of influence, which has the potential to last for decades. And the conflict over Russia and Ukraine is just another building block in this development.

If we are attentive, we can observe this everywhere at the moment. Local warehousing is regaining importance because the illusion of a permanently flat world has been shattered. Important industries are once again being selectively located in one’s own sphere of influence, the ability to supply one’s own population with agricultural goods is once again becoming an issue, the IT world is being mutually sealed off in blocks, and even the era of the Internet as a globally “flat” information medium is over – China has already gone down this path.

This development is also important for us as investors to understand because it changes some basic assumptions about how companies should be positioned to be particularly resilient and therefore suitable for long-term investment.

But if you now believe that this is new knowledge here at Mr. Market, you are fundamentally wrong. Yes even here in the free area I have shared such thoughts with you already in 2019, look at -> World historical tidal change .

At that time, the article has hardly received attention, too abstract seemed to many, today they will rather notice that there was a lot of foresight in it.

Because that is so, I have incorporated this article here again and only changed the wording here and there a little to make it a good 2 years later part of this new article. Because the already then recognized developments, are today even more highly topical.

For we are probably moving towards a world of mutually variously demarcated blocs, ultimately the “Congress of Vienna 1815” transferred from Europe to the whole world. And this phase, too, will probably end with a serious world crisis at some point in the coming decades.

With a little luck, however, this will be the last upsurge of imperialist thought structures in the world and we as mankind will then finally be able to stick out our tongue at the “great filter” of the -> Fermi paradox and overcome it.nden. I hope for that for my son, who is now 14 years old, I probably won’t live to see it.

In order to understand this turn of the tide, we have to remember that in recent decades, actually since the fall of the Iron Curtain a good 30 years ago, the world has only known one direction: growing together. This has been particularly noticeable in trade, where new sales markets have been opened up, and companies have been able to tap into large, new sales potentials. And China’s rise would have been inconceivable without free trade, because only in this way was China able to become the world’s workbench and then to acquire specific technologies that would otherwise have taken decades to develop.

World trade was therefore a win-win situation for everyone, and it was China that benefited most from it, because it was able to simply leapfrog decades of technological catch-up and the West, in a mixture of benevolence and naivety, laid out the red carpet for it.

I already suspected in 2019 that after almost 30 years we were just witnessing the end of this phase of world history and entering a new phase. And the trade conflict going on at the time of Trump, was just a symptom of a far more general development, the pendulum was swinging back, so to speak, even then.

The reason is that the coalescence of the world has gone too far, too fast, and the countermovement has already begun.

On the social or political level, we are experiencing this with the rise of identity-forming movements in all political camps, which are obviously reaching people’s hearts.

On the “right” side, these call themselves “identitarians” and represent an “ethnopluralism” that replaces the old concept of race with a cultural identity, but, as with the old concept of race, also wants to protect it against “alienation” and clearly demarcate it from other cultures. It is this similarity of demarcation to others that earns the school of thought the accusation of “racism.”

If you will, “ethnopluralism” is the political equivalent of the generally accepted image of a multipolar world made up of a few powerful blocs. And these blocs have a high cultural identity, such as “the West” vis-à-vis China and its satellites. Recognizing this, however, does not mean to seal off cultures against others, so there are many facets to this school of thought, some of which are harmless and some of which are close to old racial logic.

On the “left” side, a delimited world in the sense of “nobody is illegal anywhere” is represented in extreme form, but at the same time the left also unfolds massive identity-creating activities, which show themselves in ever more finely chiseled minorities, to which one can feel a sense of belonging and quite aggressively differentiate oneself from others.

If you will, this is a contradiction in terms, because in a de-bordered, “flat” world, the emphasis on “otherness” should no longer be necessary at all. But this does not warm the hearts of people who, as social beings, want to feel they belong to a (ideally singled-out) group, which is why the “minorities” sprout on the left, to which everyone somehow feels they belong.

This unreal image of man, was already one of the contradictions of the Socialism. However, people do not want to be “the same” at all, but attach great importance to being “special” and “different”. They just don’t want others to be better off than they are. In a moderate form, this is a positive motivation to get involved; in an exaggerated form, it is also called envy.

Both schools of thought, the identitarians as well as the identity currents, are based on a basic need of people, the feeling of belonging to a halfway homogeneous group. It is precisely in the differentiation from others that we social beings define our selves, because who we are is also defined by the group to which we belong.

By the way, I think that the new rise of religious thinking is also a consequence of this search for identity, because religions create social cohesion and allow us to distinguish ourselves from “the others” and to “rise”.

In this respect, the political rise of these schools of thought on both sides is an expression of a world that has gone too far and too fast in recent decades, for which “global capitalism” is blamed on the left and the “ideology of the dissolution of boundaries” on the right.

I think both sides are not entirely wrong, the world has simply moved too fast towards each other and since we as humans do not yet have a global identity – that would probably need the challenge or danger from the outside, the “aliens” so to speak – human primal needs of belonging are currently not sufficiently satisfied and are breaking through. The different political labels, however, are only manifestations of the same basic problem, even if both sides will vehemently deny this.

An established, saturated citizen in a homogeneous cultural environment does not need these schools of thought on either side, because he feels comfortable embedded in an identity-forming culture that surrounds him. He can therefore be open-minded and interested in strangers and does not need to define himself in terms of small groups or membership of a constructed minority.

That was, for example, the world of the Federal Republic before the fall of the Iron Curtain, which also had something stuffy about it, but there was enough bourgeois stability around you that it was not affiliation and demarcation, but curiosity and the personal conquest of the world, that seemed desirable.

Even on the left, this identity politics didn’t exist as strongly back then, yet specific groups such as LGBT, for example, were under far more pressure back then than they are today and were still really socially ostracized back then.

If you will, the extent of the loudly declaimed identity increases with the decreasing discrimination of these groups. A contradiction in itself, which can be explained just as above as the satisfaction of a human basic need.

For in a flat world it would be enough for everyone to have enough tolerance to let everyone have his preferences and not to discriminate against anyone because of it. The modern obsession to define oneself by smaller and smaller special groups, which we also find in the meanwhile up to 60 phantasized “genders”, is for me only to be explained against the background of the desire for one’s own identity, the differentiation from others that is.

ToTo sum up, in my eyes one can say that many people feel the “dissolution of boundaries” of the world of the last decades as an unpleasant stress factor. Some are looking for cultural identity, others for belonging to a subgroup (minority), but both, in my impression, are trying to resolve an unconscious unease that has afflicted almost all of us, because it is human. Someone who is calm and self-confident in himself does not have to be afraid of strangers quickly, nor does he have to define his identity by belonging to ever smaller minorities.

This parallelism of a search for identity in both political camps would, of course, be vehemently denied, because in each case only the others can be “crazy”. That is also identity, as with hostile football clubs. But I am sure, if you think about it in an unbiased way, you will find similar, highly human instincts behind these mechanisms.

The effects of these needs can be found everywhere in the global political scene. Trump, too, was of course a product of this development; he was a reaction to dissolution of boundaries and lack of support. And Putin’s historically cobbled-together return to the imperial tradition of tsarist Russia is also nothing else, identity and support for a country that has never known any other support.

Incidentally, the aggressiveness of the “Snowflakes” against everything that could question their own world view is also a symptom of this lack of support and search for identity. For one can only encounter other worlds of thought openly and with an open mind if one stands on stable, psychological ground oneself.

The connection between this zeitgeist festering beneath the surface and the actions of the powerful cannot be seen so directly, but it is there, because the zeitgeist brings certain majorities and with them also a typology of politicians who, on the one hand, propagate a return to the manageable conditions of the “nation” and, on the other, create identity for themselves through moral exaltation and demarcation.

At the same time as these developments, however, the advantage of unbounded world trade has now passed its zenith. If you like, world trade has brought down the easy fruits from the tree, now it is increasingly also about conflicts. With China, an adversary of the “West” is now rising up, which has the size, population and cultural capacity to challenge the dominance of Western culture.

China is also a good example of the massive and often underestimated influence of culture, which goes far beyond what parents teach us. China’s millennia-old culture also functions as an identity bracket that promotes renewed ascendancy, while other parts of the world, such as in Africa, that lack a stable cultural identity and are still stuck in tribal thinking, are doomed to fall further and further behind China.

With the rise of China, the multipolar world is definitely here, the tidal shift is already in full swing. And the zeitgeist of identity needs, will continue to drive this demarcation, because it promotes political majorities that symbolize this demarcation.

So, according to my impression, culturally similar “blocs” will emerge from the old nations, not the unity of the world without borders – it is still too early for that.

When you see how China’s Xi is taking the “long march” domestically….

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The robo-advisor market is coming of age — first signs of consolidation?

Acquisitions, new launches and business tasks keep the market for robo-advisors in suspense. Is this already the great market consolidation? Do the signs point more to decline or does the extensive movement in robo-advisors show more the way to a golden future? If you want to know more, you should not miss this look into the crystal ball of digital asset management.

A pioneer becomes British — Moneyfarm swallows vaamo

Connoisseurs of the robo-advisor market will rub their eyes in surprise, but it’s true: vaamo was recently taken over by the British digital asset manager Moneyfarm, according to a report by roboadvisor-portal. A pioneer of the German robo-advisor scene will thus be British in the future.

Growth targets missed — was it ultimately too little for vaamo?

Vaamo is considered a robo-advisor of the first hour and was founded about 5 years ago by Dr. Thomas Bloch, among others. The company had ambitious goals from the beginning and was able to raise up to 3 million euros in capital from investors in the first two years.

Unfortunately, the goals for 2018 were not even close to being reached:

  • 5000 customers
  • 1.5 billion euros in assets under management.

Ultimately, vaamo was not even among the top ten digital asset managers in Germany in 2017 in terms of assets under management (AUM), as a listing by Techfluence impressively shows.

A new giant is born — will Moneyfarm be the new big player in Germany�s robo advisor scene?

Moneyfarm was already one of the largest digital asset managers in Europe before the acquisition of vaamo. Now the company has bought vaamo, a local player with a well-known brand. The following figures are interesting in this regard:

Robo-Advisor AUM 2017
Scalable Capital 600 million euros
LIQID (Quandt) 175 million euros
Moneyfarm (before acquisition of vaamo) 441 million euros (400 million pounds)

Table 1: AUM of the largest German robo-advisors compared to Moneyfarm

The assets under management alone catapults Moneyfarm into the top group in terms of size. Together with vaamo, Moneyfarm now has the best prerequisites to really take off on the German market.

All expectations exceeded — Robo-Advisors on the rise?

Even if some media already dismiss the Robo-Advisors as short-term hype, experts have a completely different picture in mind. The digital asset managers have exceeded all expectations. The following figures are worth noting:

The difference between predicted and actual volume in digital asset management 2017, image source:

The forecast was exceeded by more than three times with 1.2 billion euros!

This surprising result shows very clearly where the journey is heading: Robo-Advisors will have a firm place in asset management in the future.

Looking into a golden future — forecasts for robo-advisors are promising.

But what will happen to the digitalHow exactly will asset management continue? According to the forecasts, primarily in one direction: upward! It is assumed that in 2022, an investment volume of 1.22 trillion euros will be invested in robo-advisors.

Starting from today’s level, this would correspond to a growth of 38% per year!

In addition, according to forecasts, around 122 million users worldwide will leave their money to digital asset managers in 2022. The market therefore has excellent growth conditions.

The provider merry-go-round is spinning — from goodbyes and new players.

Even though the acquisition of vaamo by Moneyfarm is certainly one of the biggest market upheavals in the field of digital asset managers, there has been much more happening in the market recently:

  1. TARGOBANK joins — own robo-advisor PIXIT launched.

Banks seem to be discovering the robo-advisor market more and more. Now, according to a report in the Handelsblatt, TARGOBANK has launched its own robo-advisor, PIXIT.

However, the technology of PIXIT is not a proprietary development of TARGOBANK, but has been purchased from the German industry leader Scalable Capital. In terms of strategy, the bank relies on exchange-traded index funds (ETFs) and also dispenses with active management. Instead, a monthly review of the individual ETFs is planned, which will be readjusted if necessary (deviation of more than one percent).

However, the entry of renowned banks shows one thing above all: The market for robo-advisors is really growing up!

  1. Werthstein closes down — a well-known robo-advisor disappears from the market

The Werthstein robo-advisor is unfortunately history. Despite many positive customer feedbacks and actually fruitful cooperations like the one with Wikifolio, the managing directors unfortunately could not find a commercially robust solution.

This clearly shows how difficult it is to establish oneself in the market without a large investor or an already existing customer base. In the end, banks have clear advantages here, as they often have sufficient financial resources to bridge liquidity gaps in addition to many potential customers.

  1. Algorithms and personal support — Hauck & Aufhäuser Privatbankiers AG launches robo-advisor ZeedIn

Hauck & Aufhäuser Privatbankiers AG is a prototype of the long-established private bank with a long tradition. With ZeedIn, the bank has now launched its own robo-advisor.

What is particularly interesting about this service is that it combines digital asset management with personal support. Customers can choose from three different approaches:

  • Fund-based asset management (ETFs, actively managed funds as well as gold and certificates).
  • Classic asset management (individual stocks and bonds, certificates, gold and individual investment funds)
  • Ethical asset management (individual stocks and bonds as well as funds with ethical-sustainable criteria)

The Robo-Advisor of Hauck & Aufhäuser Privatbankiers AG, with this quite interesting approach with many additional services, is primarily aimed atn Private customers with corresponding assets. With a minimum investment of 50,000 euros, many small investors are left out.

But here, too, it’s clear that even more conservative players in the financial sector are discovering robo-advisors for themselves.

Bye bye, emotions — what robo-advisors can do for investors

Robo-advisors are thus playing an increasingly important role in asset management. But why should investors invest their money there? What are the particular advantages?

The biggest advantages of robo-advisors. Image source:

Winners in the war of nerves — human errors are excluded

Investors who rely on mathematical algorithms can exclude human errors in return. Human errors in trading include:

  • Psychological pitfalls: A machine can withstand higher losses without giving in to pressure and simply selling.
  • Misinterpretations: Humans can sometimes interpret certain market signals differently. An algorithm acts according to fixed patterns and is analytically correct.

Cheap and uncomplicated — Robo-advisors are also suitable for investors without great expertise.

Not every investor has the desire or time to dig deep into the subject matter of finance. Robo-advisors are a good option, because the financial knowledge is already in the algorithm. Since many robo-advisors are passively managed, the fees are often only about 1% per year.

With 1 Euro you are in — low minimum deposits are interesting for small investors.

In the savings plan variant, some robo-advisors already offer offers with an investment amount of one euro per month. More common are 5-25 euros per month, but even this amount can be easily managed. Alternatively, one-time investments are also possible, which also vary greatly depending on the provider.

What does not fit, is made to fit — the right strategy for every investor.

Anyone who wants to use a robo-advisor is first extensively asked about his investment wishes and his personal ideas. Based on the answers, the program offers a suitable strategy at the end. From conservative to risky, everything is covered.

Robo-advisors are establishing themselves in the financial world

While robo-advisors were dismissed as hype for technology-loving freaks just a few years ago, it is now becoming clear that digital asset management is to be taken more than seriously. The number of providers and the amount of assets under management is growing steadily, and forecasts indicate that the sector is more than certain to grow rapidly over the next few years.

However, the acquisition of vaamo by Moneyfarm also shows that the market is slowly growing up. Smaller providers without much financial strength or their own customer base are finding it increasingly difficult to establish themselves. On the other hand, more and more well-known banks are taking an interest in the sector and are providing their customers with their own digital asset management services.

It remains to be seen how the market will develop over the next few years. What is certain, however, is that the steadily growing demand will bring more and more large providers onto the market.

market and the small robo-advisors could have a hard time without forward-looking and economically viable concepts.

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Kissig’s Stock Report: Russian Oil Boycott Crashes Uniper, Pushes Deutsche Rohstoff

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. 79 as of 03/11/2022

Russian oil boycott crashes Uniper, pushes Deutsche Rohstoff

The Corona slump of the economy was a very special event, because it was “home-made”. Although the trigger was the global pandemic with high fatality rates, the lockdown imposed by politicians was a conscious decision. The crash of the economy and the stock markets was “merely” collateral damage that was accepted with approval.

With the withdrawal of the measures and after companies had adapted to the new situation, the economy recovered and returned to pre-pandemic levels within a few months. Not in all sectors, of course; some industries boomed, others are still down.

Now we face a similar situation. Russia’s war of aggression against Ukraine has triggered sanctions by the West against Russia that are unprecedented. Russia’s annexation of Crimea a few years ago had also triggered sanctions, but that was just a tempest in a teapot compared to today. And this laxity on the part of the West was probably, unfortunately, one of the reasons why Putin has now taken the really big plunge.

Russia’s war of aggression is a disaster for Ukraine. Death, destruction and millions of refugees are the result and there is only hope for a quick end of the war measures and a negotiated solution.

But the sanctions imposed by the West and the Russian backlash will last for a long time and have repercussions for years and perhaps decades. And here we are at the point that has great parallels to the Corona pandemic: the sanctions are a deliberate choice and they are strangling the economy.

My point is not to question them, but simply to describe the foreseeable consequences. The sanctions are harsh and effective and the lesser of two evils compared to a NATO military intervention. Because then everything would be possible, including the unthinkable.

(Too) great dependence on Russia

But back to the economic consequences. The world is dependent on Russian energy supplies. Russia is the second largest oil supplier to the U.S., which has now imposed an embargo on Russian oil and gas. The U.S. can also afford it because, thanks to the fracking boom, it is now the world’s largest oil producer and does not depend on Russian oil.

Europe is much more dependent on Russia, with Germany at the forefront. We get 40% of our natural gas from Russia and gas is the backbone of the energy transition. Gas is the most widely used form of energy to heat our homes and is expected to be the bridging technology for the transition to carbon-free energy supply in the next 20 to 30 years. At least, that was the plan of the traffic light government until the Russians attacked Ukraine. Now those plans are wastepaper. Rus

sland is no longer just a fickle and inconvenient energy supplier, Russia is the new pariah, the leper. Germany no longer wants oil and gas from Putin. Period. But we cannot afford an import stop for gas. And this is not just a question of money, but our dependence is too great. Alternative suppliers are the Arab states, Canada and above all the USA. Venezuela rather not, even though it has the largest oil reserves in the world.

Germany’s energy transition boils down to electrification. Oil, gas, diesel, coal, and nuclear power will be banned and switched to renewable energies across the board. To electricity from water, wind and solar power. But this will take time, the necessary infrastructure will take years and decades to build, and there is immense resistance to the expansion at the local level. That, too, must be overcome.

Oh yes, temporarily relying on coal-fired power plants for longer is of course possible. However, this is hardly likely to achieve climate targets and reduce CO2 emissions. And Germany’s biggest supplier of coal is now… Russia. So much for that.

Profiteer China

China also depends on Russian oil and gas. China is staying out of the Ukraine war and the clash between the US, EU and Russia. As a “laughing third”, China can even profit from the others’ dispute. Because if the West buys less or no more oil and gas from Russia, China can buy it cheaper. The pipelines already exist.

And China can become a big winner in other ways, too. More and more Western energy companies are ending their collaborations with Russian energy companies, shutting down joint ventures and selling their Russian holdings or writing them off completely. Thanks to Western sanctions that have cut Russia off from the SWIFT system, frozen its currency reserves and cut off access to dollars and euros, Russia now has a foreign exchange problem. So Chinese money is highly welcome.

Maximum Uncertainty

Thus, the mixed situation is confusing to the maximum. The sanctions and many steps taken will have an effect only gradually and will also lead to major upheavals here at home. Ukraine is an important factor in European supply chains and these are now under additional pressure. Ukraine is also one of the world’s largest wheat and corn producers and its ports are blocked and the harvest season is likely to result in a far below average outcome this year due to the war. A food problem especially for the African countries and thus indirectly again for the West.

These upheavals not only have an abstract impact, but also a very concrete effect on people and companies. In terms of energy prices, we are already seeing the effects in the form of skyrocketing electricity prices, heating costs and, of course, at the gas station. A liter of gasoline costs just under a euro more than it did a year and a half ago. This not only empties the wallet, but also fuels the inflation rate.

But energy companies are also facing major challenges. Just because energy prices are rising enormously doesn’t mean they’re all making a killing now. On the contrary, there are big winners and big losers.

r. And let’s take a look at that with regard to Uniper and Deutsche Rohstoff AG.

Big Loser: Un

iper The name Uniper is a made-up word from ‘unique’ and ‘performance’. Uniper SE was created by spinning off conventional power generation from coal and gas and global energy trading from E.ON. However, Uniper did not take over the German nuclear power activities. The IPO took place in 2016 and since March 2020 Uniper has been majority-owned by the Finnish energy group Fortum. Uniper has stakes in three nuclear power plants in Finland and Sweden. Uniper employs nearly 12,000 people in more than 40 countries, about a third of them in Germany.

With 34 GW of generation capacity and €1.6 billion in EBITDA, Uniper is one of Europe’s largest power producers. In addition to Germany, its core markets are the United Kingdom, Sweden and the Benelux countries. These locations are supplemented by a gas-fired power plant in Hungary. In Russia, five Uniper power plants are located in the industrial regions of Central Russia, Ural and Western Siberia. These cover 5% of the country’s electricity requirements. And are now worthless. Just like Uniper’s stake in the new Nord Stream 2 gas pipeline between Germany and Russia, which has been completed but not yet commissioned and has now been put on ice for good.

Fiasco 1: Nord Stream 2

Uniper writes off its loan to the Nord Stream 2 operating company in full, including accrued interest in the amount of €987 million. In addition to this one-off loss, Uniper also loses interest income of €100 million per year. This corresponds to around 10% of adjusted Group EBIT.

Fiasco 2: Unipro

In Russia itself, Uniper has a stake of just under 84% in the listed power utility Unipro, which operates a fleet of power plants with a generation capacity of 11 gigawatts. Uniper had already planned to sell the stake at the end of 2021. With a stock market value of around 200 billion rubles at the time, the Uniper stake was worth around €2 billion.

But Unipro’s value had plummeted to 100 billion rubles – even before stock market trading was suspended in Moscow. And the ruble has also plummeted dramatically against the dollar and the euro, so that Uniper’s stake would currently be worth at most 500 to 600 million euros. That is, if a sale were possible at all and Uniper could then transfer the proceeds from the sale from Russia to Germany. Both of which seem to have little chance of happening at the moment.

So there is at least a threat of a write-down from €2 billion to €600 million, perhaps even a total write-down.

In addition to these one-time charges, there will be permanent ones. Unipro generated around 20% of Uniper’s Group EBIT in 2021. In theory, Uniper is still entitled to this money, since it is still the majority shareholder. But whether it has or will get access to it? And it would hardly be possible to get a possible dividend out of Russia. In this respect, Uniper must assume that it will not see any more money here for the time being.

In return, however, Uniper will not transfer any more money to Unipro until further notice.

Fiasco 3: Opal pipeline

Uniper had initiated a further sale of its 20 percent share in the Opal gas pipeline, a kind of connecting pipeline from Nord Stream 1 to the Czech Republic. Here one was and was expecting proceeds of 300 million euros. For the time being, this has also come to nothing.

Fiasco 4: Gas trading

Uniper is one of Germany’s major energy traders and has tens of thousands of private and corporate customers under contract. But it is also a supplier to many smaller energy companies, including numerous municipal utilities. Uniper not only sells them electricity and natural gas it produces itself, but also buys large quantities of it for its own account and earns money from the trading margin. A lucrative business. Only… Uniper gets about 55% of its natural gas from Russia!

To put the dimension into perspective: Uniper has a portfolio of long-term gas supply contracts with a volume of 370 terawatt hours (TWh). Of these, 200 TWh come from Russia.

Now Uniper has announced that it will not renew these contracts at the end of the year and is looking for alternative suppliers. But in the meantime, it is dependent on the supplies. If Germany were now to impose an import ban on Russian natural gas or Russia were to turn off Germany’s gas tap, Uniper would be left without pants. And with it all its municipal utility customers. The fact that the Federal Network Agency would take over Uniper’s business in such a dramatic case would then be the least of the problems.

Initially, there are no immediate consequences from this threatening scenario. But the risk stands in the middle of the room as a “white elephant” and causes great uncertainty on the stock market and thus price markdowns.

Problem zone: coal-fired power plants

Uniper’s coal-fired power plants are currently the cash cows. Their demise is politically desired and foreseeable, and investments in modernization and maintenance are being held back. Most of them have already been written off. And yet they are still running and in some cases represent a strategic reserve. Unfortunately, Uniper obtains a not entirely small portion of its coal from Russia. These supply contracts will also not be renewed after the end of the year and the company will then rely on other suppliers. However, this will require the power plant units to be retrofitted so that they can handle the “foreign” coal. Initially, this will mean additional investment costs without generating any additional revenue later on.

Uniper hopes that its coal-fired power plants will fall into the strategic reserve in the future and thus receive a minimum government tariff. This would allow them to run longer than originally planned. The background to this is the danger that in the event of a gas freeze for Russian natural gas, the gas-fired power plants would also have to be shut down due to a lack of natural gas.

But there’s a flip side to this coin, too: Uniper operates a number of large gas-fired power plants, and these would become penny dreadfuls in the event of a gas boycott.

Problem zone: ammonia Ammonia

is needed to operate coal-fired power plants. Uniper wanted to satisfy its demand at Novatek and import it via the port of Wilhelmshaven. But, as you might have guessed, Novatek is a Russian company, so these plans are all smoke and mirrors… Is the share

price halving just the beginning?

Uniper’s share price has behaved accordingly, collapsing from 40 to 20 euros within two weeks. Currently, there is a delicate recovery movement, but this may just be the breath for another slide.

The major one-off burdens are spoiling the 2022e

r balance sheet, that is certain. However, the problems also result in permanent charges and reduced earnings, which will continue to burden the income statement in subsequent years. This reduces the recovery potential of the share price.

At the same time, it is not yet clear whether and, if so, which catastrophes Uniper will still have to face from its “Russia connection”….

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