US Jobs market report and Greek crisis

June 30th, 2015 No comments

Everyone in these days is talking and discussing about the Greek crisis.

But another danger is already looming on the horizon: At the end of this week the US jobs report June 2015 will be released. If it comes out strong (which can be expected) this could mean that the Federal Reserve can no longer withhold rising interest rates!

This would mean that finally after years the change of the interest environment has arrived and interest rates at least in the US $ would start to rise again. Some days ago the yield of the 10 y – US treasury bond has already been near 2.5%.

So if rising interest rates would spread to the Euro what would be the effect on highly indebted European countries beyond Greece?

Which interest rate will investors ask for in order to be compensated for the risk to finance p.e. Portugal or Italy  in an environment of rising interest rates backed by a strong US economy?

This crisis story seems to have more chapters than only the Greek one!



Colfax acquires Roots Blowers & Compressors

May 20th, 2015 Comments off

Colfax (NYSE: CFX) announced that it acquired the Roots(TM) blowers and compressors business unit (“Roots”), also known as Industrial Air & Gas Technologies , from GE Oil & Gas for a cash consideration of $185 million.

This business serves customers in the water treatment, chemical production, and power generation markets and will strengthen the Howden Business.

The stock price remained rather unimpressed as this is a rather small acquisition for Colfax. But investors should wait for more to come within the next months!



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Markel’s stock jumped 4% after releasing Q1 2015 results!

May 9th, 2015 Comments off

Markel’s stock (NYSE: MKL) jumped more than 4% after releasing Q1 2015 results, which is very unusual for this company. What happened?

„The company is off to a fantastic start in 2015 with our investing, underwriting and Markel Ventures operations all contributing to our success“ CFO Anne Waleski pointed out on the conference call (as usual the transcript has been published by Seeking Alpha).

Gross written premiums were $1.3 billion for the first quarter of 2015, compared to $1.4 billion from 2014. They were down because of the conservative underwriting politics of Markel within a still very competitive market.

Very impressive indeed the decline of the consolidated combined ratio, down from 95% in Q1 2014 to 83% this quarter, due to improvements in prior accident year’s and current accident year’s loss ratio and due to a 2% improvement of the expense ratio this year.

But finally after several difficult quarters the best news came from „Markel Ventures“:
Revenues jumped 43% from $ 171 million to $ 245 million this year. Net income to shareholders improved from approximately $ 1 million in Q1 2014 to $ 11 million this quarter. This impressive increase is primarely due to the acquisition of Cottrell and to improved results within other manufacturing operations!

General investment income increased to $93 million for the first quarter of 2015, compared to $87 million last year amidst the repositioning of the investment portfolio acquired through the Alterra transaction.

Book value per share, the most important ratio of the insurance industry was $564 at the end of March 2015, an increase of 4% since the end of 2014.

At Friday’s closing price of $780.43 the market values Markel at 1.4 price / book value per share.

Not cheap but not too expensive either: Markel remains a buy!

The results are improving rapidly after the Alterra integration and we can now see were Markel Ventures could be headed within a couple of years.

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2015 is off to a strong start for Markel!

May 7th, 2015 Comments off
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Colfax Q1 2015 – Still waiting for news from the acquisition pipeline

April 28th, 2015 Comments off

“Colfax (NYSE: CFX) adjusted EPS for the 2015 first quarter was $0.36 which represents a 16% decline versus the $0.43 per share reported last year, driven by foreign exchange translation and the timing of project orders, especially in gas and fluid handling.

Net sales were $911 million for the first quarter, a decrease of 14% over the same period last year. This consists of 10% growth from acquisitions offset by a negative 11% impact from foreign exchange, and a 12% organic volume decline.”

With these numbers Colfax’ CEO Steve Simms opened the conference call after the release of the Q1 2015 results. And arguably this is all the information you need to know about the quarter!

The economic environment remained difficutl and in addition there was the impact of the strenghtening US-Dollar:Foreign currency declines across the Board, but most significantly in Europe, Russia, and Brazil were an 11% drag on our reported revenue performance“ as CFO Scott Brannan explained.

So what is Colfax doing in this situation? “Strong operational execution and aggressive cost control“ as Steve Simms pointed out. They are getting there internal structure as lean and as efficient as possible.

For segment information have a look at the conference call transcript which was published as usual by Seeking Alpha!

Perhaps the most interesting was the short remark by Steve Simms at the end of the conference call:

We are also committed to our strategy of bolt-on acquisitions, and remain confident in the strength of our acquisition pipeline. I previously discussed a number of attractive opportunities that could be announced in the second quarter or early third quarter of 2015, and these opportunities remain active.“

Not very precise indeed. There must be due diligence problems with the acquisition candidates.

Colfax stock is trading at around $48 – $49. The market decided to wait and see and we all should do the same holding our positions!

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Colfax releases Q1 Earnings

April 23rd, 2015 Comments off

Colfax Corp. (NYSE: CFX) released the Q1 2015 Earnings.

Earnings per share were $ 0.03 ahead of expectations but revenue came in a bit lower than expected!

Colfax will release the Q1 results on April 23rd!

April 16th, 2015 Comments off

Colfax Corp. (NYSE: CFX) will release the Q1 results on April 23rd!

Investors certainly are waiting for news from the acquisition front!

Remember that CEO Steve Simms on the Q1 conference call announced that several projects are late because of the due diligence process!



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Markel FY 2014 numbers are excellent!

February 19th, 2015 Comments off

Markel Corp. (NYSE: MKL) released excellent FY 2014 numbers!
(The transcript of the conference call as always has been published by Seeking Alpa)

What was arguably the most important information of this earnings release?
The integration of the acquired Alterra group has been successfully completed!

This reflects in certain key numbers:
Total operating revenues grew 19%, surpassing the $5 billion threshold for the first time.
„The most significant drivers of this increase continue to be the inclusion of a full-year of underwriting revenues from legacy Alterra product offerings in 2014, higher revenue from the Hagerty business, and higher investment income due to our larger investment portfolio“ as CFO Anne Waleski explained on the call.

Net written premiums for 2014 were approximately $3.9 billion, up 21% from the prior year.
Markel’s consolidated combined ratio improved to 95% compared to 97% in 2013.
Book value per share, the most important metric in the insurance industry rose 14% to $543.96 at December 31, 2014.

Excellent results, aren’t they? … but wait, have a look at the investment results:

„In our equity portfolio we earned 18.1% in 2014 compared to the 13.7% return on the S&P 500.
In our fixed income operations, we earned 6.5% and fulfilled our goals from fixed income investment of earning a positive spread on the insurance funds we hold and protecting the balance sheet against credit losses, as well as the possibility of rising interest rates“ CIO Thomas Gayner explained. „More important in the returns of anyone here though is the fact that over the last 25 years we’ve earned over 200 basis points more than the S&P 500“.

The only still difficult beast is Markel Ventures, their rather new private equity unit.
Total revenue from the division climbed 22% to $838 million, while EBITDA hit $95 million
The profitability could be higher but perhaps we just have to give them more time to develop this division.

Until today Markel’ share price rose more than 6% to $ 749.
This translates into a price/FY 2014 book ratio of 1.4 which is slightly over the long term price range of Markel.
Patient investors could wait for a correction in order to buy a part of this high quality insurance company!

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Markel reports very good Q4 and FY 2014 results

February 12th, 2015 Comments off

Markel Corp. (NYSE: MKL) reports Q 4 and FY 2014 results. Have a look!

Book value per common share outstanding improves 14% from $477.16 at December 31, 2013 to $543.96 at December 31, 2014!

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Colfax Q4 2014 – Good execution in a still sluggish environment

February 6th, 2015 Comments off

Colfax Corp. (NYSE: CFX) reported Q4 2014 net sales of just over $1.2 billion, an increase of 3% over the same period last year.

13% growth came from acquisitions offset by a negative 7% impact from foreign exchange and a 3% organic decline in revenues.

Adjusted EPS for the 2014 fourth quarter was $0.72 per share which represents an 18% increase versus the $0.61 per share reported last year.

The Conference Call Transcript as always is provided by Seeking Alpha.

There were positive news as p.e. the improved operating margin of 13.7% in the gas and fluid handling segment, but at the same time in their largest gas and fluid handling end market, power generation, revenues for the quarter decreased by 10% organically, while orders were off by 16% organically.

Better news came from the general industrial end market, where sales increased 7% organically and orders increased by 4% organically.

As CEO Steve Simms pointed out: „while the fourth quarter results included excellent execution and working capital management and strong margins in gas and fluid handling, we were again hampered by a sluggish demand environment resulting in an organic revenue decline for the full-year of 2014.“

And they „expect 2015 to be another year without revenue growth, but with continued margin improvement.

But the most interesting point came at the end of the prepared remarks: Steve Simms gave a clear hint that Colfax is already examining acquisition candidates. Only the due diligence process takes more time than anticipated: „we expect to announce a number of strategically compelling and financially attractive situations in the late second quarter or early third quarter of 2015.“

That’s Colfax!

Don’t forget that part of their business model is to grow by the successful integration of acquired companies.

So let’s hope that this will not be in the heavy industries segment where they always will depend of a few large orders.

Colfax stock at this price level remains a buy!

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