BT Group plc – british Telco at a discount?

What makes more sense than writing about a business under investigations after writing a post about management qualities? Maybe the market has overreacted here?

British Telco BT Group had a … lets say issue with accounting in Italy.

The good progress we’re making across most of the business has unfortunately been overshadowed by the results of our investigation into our Italian operations and our outlook. We’ve undertaken extensive investigations into our Italian business, including an independent review by KPMG, and I am deeply disappointed with the unacceptable practices by some that we’ve found.

The stock price have dropped from 380 GB pence to around 300 GB pence, destroying around GBP 7 bn in shareholder value.

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How to spot a honest and competent management?

“Somebody once said that in looking for people to hire, you look for three qualities: integrity, intelligence, and energy. And if you don’t have the first, the other two will kill you. You think about it; it’s true. If you hire somebody without [integrity], you really want them to be dumb and lazy.” -Warren Buffett

The part about “honest and competent” management of Warren Buffetts criteria is something that is often missed in a stock-analysis, often followed by this Quote: “I try to buy stock in businesses that are so wonderful that an idiot can run them because sooner or later, one will.” from Warren. Analysts are more numbers-peoples who avoid to looking at soft-skills. I think this is a mistake and I will try to look more at characteristics of the management of companies in the future – I want to get better at analysing them.
Vernon Silver and Elisa Martinuzzi wrote this very interesting and eye-opening article about how “How Deutsche Bank Made a $462 Million Loss Disappear” at Banca Monte dei Paschi in 2008. I recommend it highly. bloomberg- how-deutsche-bank-made-367-million-disappear

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Bringing together Essilor and Luxottica: EssilorLuxottica

With this agreement my dream to create a major global player in the eyewear industry, fully integrated and excellent in all its parts, comes finally true. – Leonardo Del Vecchio, Chairman of Delfin and Executive Chairman of Luxottica Group

French EuroSTOXX50 Lens company Essilor and Italian company Luxottica (RayBan, Oakley) are planing to merger.  The news from the source (Essilor)

Together, Luxottica and Essilor would have, based on the companies’ 2015 results, the posted combined net revenues of more than €15 billion and combined net EBITDA of approximately €3.5 billion. Based on a preliminary analysis, the combined group is expected to progressively generate revenue and cost synergies ranging from €400 million to €600 million in the medium term and accelerating over the long term.

Luxottica’s Executive Chairman, Leonardo Del Vecchio, would serve as Executive Chairman and CEO of EssilorLuxottica. Delfin – the Luxembourg based holding company of the Del Vecchio Family – would own between 31% and 38% of the shares of EssilorLuxottica so they cleary have “skin in the game”.

Closing expected in H2 2017. The new company name will be EssilorLuxottica.


Quick and dirty valuation of EssilorLuxottica

Both companies look high quality to me so lets look what both of them could look like


I assumed growth rates like in 2016 and cost synergies in the lower range.

Essilor has a market cap. of 24.7 bn €
Luxottia have a market cap. of 26.1 bn €
That would be 50.8 bn € combined (if it would be that easy)
With an assumed Net Income of 2.1 bn in 2017 that would be a PE-ratio of ~24 not that cheap.


The transaction looks quite complicated:

The transaction would entail a strategic combination of Essilor’s and Luxottica’s businesses consisting of (i) Delfin contributing its entire stake in Luxottica (approx. 62%) to Essilor in return for newly-issued Essilor shares to be approved by the Essilor shareholders meeting, on the basis of the Exchange Ratio of 0.461 Essilor shares for 1 Luxottica share, and (ii) Essilor subsequently making a mandatory public exchange offer, in accordance with the provisions of Italian Law, to acquire all of the remaining issued and outstanding shares of Luxottica pursuant to the same Exchange Ratio and with a view to delist Luxottica’s shares.

I will look at it tomorow again, maybe there is some trick in it?





Luxottia multi year numbers


Essilor Invetors page

Essilor 2015 Results

Bolloré – a special french conglomerate

Mr. Bolloré is an outstanding capital allocator, and has grown the share price and book value of BOL over the past 20 years, respectively, by 1,213% and 1,953%.
– MuddyWatersResearch

Let’s start with the first valuation of my 2017 To-Do list: French conglomerate Bolloré


As ebdem wrote in the comments, Bolloré is maybe a good choice. MuddyWaters valued it at 8.5€ in February 2015 … the stock is now around 3.50€. One point MuddyWatres made are the cross holdings which virtually reduce the shares outstanding.

If the stock really was that undervalued a share buyback (maybe in the form of more cross holdings) would definitely make sense. I will look out for that – of course there is a good chance that Mr. Bolloré knows better how to allocate capital than me 😉
Vincent Bolloré was is often named The Carl Icahn of France because of his active investment approach. Looking at the capital structure with a lot of listed subsidiaries reminds me a bit of John Malone/Liberty.

The operating business, which is very Africa, Logistics and Energy focused, did not have a good year in 2016 (3Q numbers are out). Turnover was down 10%.

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Creating a ToDo/watchlist for 2017

In this post I want to present a list of interesting stocks which I want to look at in the near future. I want to note the name and the reason why I think the stock is worth a look.

In my last post I mentioned Eddy Elfenbein and his new “Buy List Stocks”. I would put all of them on my To-Do list. I also will watch through the indices and look at the “losers” – maybe some of them are worth a look (a bad performance alone is no reason to buy a stock). The selection I did here is intuitively (no Solar, no Roll-Ups, reputation).


This are MMI’s 27 Investments for 2017. A lot of them are “reasonably priced” – he plans to increase his Admiral Group plc holding.

The biggest Index losers – screenshots

Some Screenshots from – this are the stocks of the SP500, Dow, HDAX and FTSE that have performed worst in 2016.



The List:

(Far away from perfect, to long and still in process)


Danaher / Eddy Elfenbein / frequently named quality stock

Bolloré / Ebdem, Muddy Waters*

Nike / Dow Loser

TripAdvisor / SP500 Loser (maybe just spin-off)

Regus plc / Ebdem, ProfitlichSchmidlin

CBS / 6 top ten shows

Coty / SP500 Loser / Reimann family

easyJet plc / FTSE Loser (BRK bought Airlines)

HugoBoss / DAX Loser / contra: fashion

Dt pbb / DAX loser / Valueandopportunity

Cinemark Holdings / Eddy Elfenbein

Pitney Bowes / SP500 loser / owned company previously

Moody’s / Eddy Elfenbein / owned company previously

Philip Morris Int. / poor 2016 performance


Muddy Waters:

*We value BOL shares at €8.50, which is 94.6% higher than its current price.

Extended List:

Axalta Coating Systems / Eddy Elfenbein / BRK?

Continental Building Products / Eddy Elfenbein

Ingredion / Eddy Elfenbein

Intercontinental Exchange / Eddy Elfenbein

RPM International / Eddy Elfenbein

Sherwin-Williams / Eddy Elfenbein / theconservativeincomeinvestor

JM Smucker / Eddy Elfenbein

Comfort Systems USA

Lately Eddy from CWS-Blog mentioned Comfort Systems USA as an interesting company (link) The company describes itself as “a leading provider of commercial, industrial and institutional heating, ventilation and air conditioning (“HVAC”) services.” Let’s find out if that company is an interesting investment!

Some sources:

IR Page

Latest Presentation (pdf)

Latest Quarterly report (pdf) , Comfort Systems USA Reports Second Quarter 2016 Results

First Look:

Comfort Systems USA is a nationwide company that provides commercial HVAC*, mechanical and electrical contracting to customers ranging from small businesses to Fortune 500 companies.  Headquartered in Houston, TX.


When looking at the pictures on their Homepage, I have to think of Precision Castparts or Rolls Royce and their Aftermarket-Revenue. I will find out if Service represents a big part of their revenue.

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RealPage is a leading provider of on-demand software solutions for the rental housing industry. RealPage was founded in 1998 with the acquisition of Rent Roll, Inc. Steve Winn is Chairman of the Board & Chief Executive Officer of RealPage Inc – he owns approximately 32,1% of the shares (looks like he is selling shares (link).

RealPage’s customers include Real Estate Investment Trusts (REITS), leading property management companies, fee managers, regionally based owner operators and service providers. Their customers currently include nine of the ten largest multi-family property management companies in the United States. Principally, all of their revenue is earned in the United States so the company has a dependence on US-housing market.

The Stock is now selling for 21,96 USD (Nasdaq)

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