Asmus Puhl Finance Blog

Am vergangenen Donnerstag fand der x-te EU-Gipfel zur Bewältigung der europäischen Schuldenkrise statt. Obwohl eine Reihe von recht weitreichenden Massnahmen anvisiert wurden, wurde die Grundproblematik der divergierenden Leistungsfähigkeit der Volkswirtschaften innerhalb der Euro-Währungsunion und der nicht mehr tragbaren Staatsschulden bzw. -ausgaben nicht gelöst.

Besorgniserregend ist insbesondere, dass die europäische Krise sich in einer sehr weit integrierten Weltwirtschaft abspielt – das Volumen des Welthandels hat sich seit den 90iger Jahren mehr als verdreifacht – und nicht nur Europa in eine Rezession zurückstösst, sondern eben auch in der Lage ist, grosse Teile der Weltwirtschaft mit herabzuziehen.

Was sollte nun der Investor in dieser Lage tun?

Hier kann die dringende Empfehlung nur lauten: mit einen substantiellen Teil seines Portfolios in Blue Chip Aktien investiert sein.

Diese zahlen in guten wie in schlechten Zeiten Dividenden, haben diese Fähigkeit bereits in vergangenen Krisen unter Beweis gestellt und waren meist auch in schlechter Wirtschaftslage noch fähig, die Dividenden jährlich zu erhöhen.

Wir meinen hier natürlich die global und häufig in wenig zyklischen Branchen tätigen Coca-Colas, Johnson & Johnsons und Nestlés dieser Welt. Mit einem Blick auf die Investor Relations-Websites der genannten Unternehmen und dort auf „dividend history” wird klar, wovon wir hier reden.

Auch wenn man nur schon das Alter dieser Unternehmen vergleicht mit so manchem hochverschuldeten Staat von heute, wird sofort klar, wer wohl die bessere Bonität besitzt.

Darüberhinaus lohnt sich sicher auch ein Blick zurück in die Jahre der „grossen Depression” der dreissiger Jahre des vergangenen Jahrhunderts, um zu erkennen, dass dort im Moment der grössten Krise und Verzweiflung bereits die Grundlage für den späteren Wiederaufschwung der Wirtschaft gelegt wurde, und zwar durch grundlegende Erfindungen und technische Neuerungen:

So wurde in den dreissiger Jahren in den USA die Klimaanlage entwickelt, die Firma DuPont erfand 1938 den Nylon-Stoff und die ersten Fernsehgeräte tauchten auf.

Auch jetzt wird wieder im Internet- und High Tech-Sektor, in der Telekommunikation und in der Robotertechnik die Grundlage für den nächsten Wirtschaftsaufschwung gelegt!

Dass dieser kommt ist sicher, der Zeitpunkt wann ist leider wie immer nur schwer vorherzusehen.

Colfax (NYSE: CFX) today announced that it acquired a majority stake of Lima, Peru based Soldex S.A. for $ 325 million.

After the big acquisition of Charter plc Colfax doesn’t stand still and continues to acquire!

Even if Soldex is a somewhat smaller expenditure for them, the commercial logic is clearly visible: This acquisition rounds up their new cutting and welding ESAB division and strenghtens their position in the growing South American market.

Now we also understand better why the former CEO Kiefhaber became CEO of the ESAB division: the division’s importance within the group just keeps growing and growing!

… and insiders continue to buy shares … watch out!

Markel Corp. (NYSE: MKL), the so called „Mini Berkshire” released its Q1 2012 results.

The transcript of the Conference Call you’ll find here on Seeking Alpha.

Markel in 2012 is „off to a good start” as CFO Anne Waleski puts it!

Total operating revenues grew 18% to $733 million in 2012, up from $622 million in 2011. The increase is due to a 15% increase in revenues from insurance operations and a 43% increase in revenues from Markel Ventures, their non-insurance operations.

The combined ratio was 100% for 2012, compared to 112% in 2011, a significant improvement even if influenced positively by an GAAP accounting standard change.

The interesting news is certainly that the condition of the insurance market is finally improving. Markel ‘s premium volume is up and there is less aggressive pricing by other insurers.

Markel’s book value/share increased 6% to $ 373.

On the investment side Markel is „balance sheet oriented” as President Thomas Gayner points out: „We continue to believe that interest rates are unnaturally low and given that belief we continue to choose to protect the balance sheet by maintaining our bond portfolio at a lower duration than what we would naturally like.”

On the equity side, they earned a total return of 11.5% for the quarter and they continue to steadily increase their equity investment commitment which now stands at 59% of shareholders equity, up from 54% at year-end 2011.

Markel’s stock normally trades at 1.5 – 2 times book value/share as company executives pointed out at their traditional investor’s brunch just before the Berkshire Hathaway Annual Meeting in Omaha, Nebraska.

Today at $ 442 it trades at only 1.2 book value/share and the insurance market is finally improving!  Think twice about this discount!

Colfax (NYSE: CFX) one of the stocks this blog follows on a regular basis reported its 1^st quarter 2012 earnings.

The results lagged expectations but the company managed to beat the non GAAP EPS estimates by 2 cents. Margins shrank across the board.

But is this really so important at this stage of Colfax’ development?

Colfax is well funded and has one big task to accomplish: the integration of the much bigger Charter International. They need to realize synergies and to get the operating margins up to Colfax’ level.

For the quarter they reported revenues more than 5 times higher than in the same quarter of last year. This explains the mere size of that task!

But they are 100% determined to do that: Just look at the rather unusual CEO change mentioned in my last post. And they already talk about possibilities of other acquisitions in the future!

Analysts expect EPS of $ 1.55 in FY 2012 on a revenue basis of $ bil 4 . That puts the p/e at about 20.

That doesn’t seam cheap as the market expects they will get things done.

But insiders appear to think the contrary as their buying in recent months suggests.

… you problably should believe them and position yourself accordingly!

What is this?

The President and CEO of Colfax (NYSE: CFX) Clay Kiefaber steps down just to become CEO of one division of the group?

If you think this is a degradation think twice!

The division we are talking about is not just any division: It’s the ESAB division Colfax needs to integrate following the Charter International acquisition.

With this acquisition, the biggest in Colfax history so far, total revenue increased six fold from $700 million to $4 billion.

The ESAB division alone, now their biggest division, means $2 billion revenues and is much bigger than the whole Colfax has been before the acquisition.

Board member Steve Simms becomes the new CEO of the group.

This change underlines just how serious they are integrating Charter International, to realize synergies rapidly and to improve margins.

Will they be able to do that? Well, a first indication we’ll get when they release Q1 2012 results the 8^th May.

But don’t forget: If any industrial company needs an experienced board and the right management team in place, Colfax already has it!

Is Colfax share price expensive right now? Difficult to say, it depends on the progress of the Charter integration. But look what insiders are doing: They are all buying shares!

Bond Yields sind seit den 80-iger Jahren praktisch ständig gefallen und haben einen ungewöhnlich langen Bull Market für Bonds geschaffen. Im Zuge der Finanzkrise und der jetzigen Staatsschuldenkrise der westlichen Industrieländer und insbesondere Europas haben die Notenbanken die Zinsen praktisch auf null gesetzt. Doch diese Politik scheint sich nun dem Ende zuzuneigen.

Die Federal Reserve hat ein Ende ihrer „Quantitive Easing” Programme signalisiert, denn die amerikanische Wirtschaft zeigt eindeutige, wenn auch langsame Erholungstendenzen.

Die EZB hat zwar am vergangenen Mittwoch bekanntgegeben, dass sie die Krisenpolitik noch nicht beenden will, aber gewisse akkomodierende Massnahmen wie das EZB-Pfandbriefprogramm wurden bereits stark gebremst.

Was bedeutet dies nun für Investoren?

Nun, für den langfristigen Investor zunächst nicht viel, denn er sollte ja eh übergewichtig in Aktien investiert sein.

Aber auch für alle diejenigen, die diesem Rat bislang nicht gefolgt sind, heisst dies sicherlich ab jetzt Aktien kaufen, und warum nicht sogar 100-prozentig in Aktien investiert zu sein?!

Wenn die Zinsen wieder steigen, werden Bondpreise sinken und was noch viel schlimmer ist, das Default-Risiko u.a. von europäischen Staatsanleihen wird weiter steigen.

Das vergangene Jahrzehnt wird für Aktien gern als ein „verlorenes Jahrzehnt” bezeichnet, obwohl einzelne Titel alles andere als Verlierer waren. Für die breiten Indices hingegen stimmt diese Bezeichnung schon.

Statische Daten über die letzten 100 Jahre belegen aber eindeutig, dass es niemals 2 verlorene Jahrzehnte in Folge gegeben hat. Für die Zeit bis 2020 kann man also getrost „grünes Licht” für Aktien geben!

Besonderes Augenmerk sollte man aber einerseits auf die Dividendenrenditen von Large Caps werfen und vor allem auf die Tatsache, dass die wirtschaftliche Entwicklung der nächsten Jahre sich wohl kaum in Europa abspielen wird.

Colfax share price went down after the release of FY 2011 results but suprisingly only for one single day. Then a lot of buying interest pushed the stock price up to $ 35 these days.

So is Colfax stock cheap or expensive? …difficult to answer!

The Charter acquisition is the biggest step ahead in the history of Colfax:

Revenue will jump from $ 693 mil in FY 2011 to about $ 4 bil in FY 2012!

The company’s guidance for the coming year is EPS of $ 0.41 – 0.57 or EPS of $ 1.45 – 1.65 adjusted by most expenses, also the acquistion related ones.

If we assume the company only reaches the lower end of adjusted EPS guidance the stock trades at a p/e of 24 which is not exactly cheap.

The one and only question certainly is: will they be able to restructure Charter successfully in 2012 and beyond? Will they be able to implement the Colfax Business System to their biggest acquistion so far?

They already proved several times with smaller acquistions that they are perfectly capable of doing that, but again, Charter is the biggest nut to crack.

So at this point you need some help to decide?

Insiders are buying the stock in these days. And among them are the Rales brothers, founders of Colfax and of Danaher group, the company from which Colfax got their „Colfax Business System”!

Colfax (NYSE: CFX) the „fluid handling company” got a lot bigger!
Colfax on January 13th 2012 completed the acquisition of Charter plc.

To remember: This is the biggest acqisition for the still relatively young Colfax Corp. The price for this acquisition was $2.4 bil and was financed as a debt/equity deal.

This acquisition ads 2 totally new business lines to Colfax:
– ESAB cutting and welding and
– Howden which furnishes precision air and gas handling equipment

So no wonder that this topic dominated the FY 2011 Earnings Conference Call. The replay you can find on the company’s Investor Relations website.

Colfax already charged acquisition costs of more than $25 mil in Q4 2011 and therefore swung to a loss.

But the existing business performed rather well in this difficult economic environment:
operating margin was up 1,6 % in FY 2011 reflecting productivity improvements. Bookings were up 28% or 12% organically.

Don’t forget that Colfax thanks to its „Colfax Business System” is in a sort of permanent resstructuring mode.

In the 2 acquired new business lines they are already at work cutting costs. They want to cut them by at least $ 100 mil over the next 3 – 5 years in order to reach a double digit ROIC within this time frame and an improvement of the operating margin every year!

Colfax Corporation (NYSE: CFX) the industrial conglomerate this blog follows regularly released its FY and Q4 2011 earnings this week.

You’ll find it here at their investor relation site!

The results were heavily influenced by the Charter International plc acquisition and therefore missed analysts expectations.

The stock price declined immediately after the results came out but then recovered.

We will have a look at the numbers!

Markel Corporation (NYSE: MKL), one of the 2 companies this blog follows closely reported FY and Q4 2011 Earnings:

The press release can be found on Markel’s Investor Information Site.

A transcript of their Earnings Conference Call can be found on „Seeking Alpha”.

Book value per common share outstanding, the most important metric to value an insurance company increased 8% to $ 352.10 at december 31, 2011 from $ 326.36 at december 31, 2010.

The combined ratio of the insurance business unfortunately rose from 97% on year ago to 102% in 2011 mainly due to natural catastrophies like the Thai floods and hurricane Irene.

Revenues from Markel Ventures, that’s where they invest money in privatly held companies in the Berkshire Hathaway style, jumped from $ 166 millions to $ 317 millions in 2011 mainly due to one big acquisition.

Markel’s investments in the fixed income sector are very cautious as they are traditionally „balance sheet oriented”.

They forego current investment income as they maintain shorter than usual durations in the bond portfolio.

By doing this they avoid heavy losses on their portfolio once this zero interest environment comes to an end.

And that will exactly be the moment when Markel’s stock will return to market’s favor. So be prepared!

Markel’s stock at a price of $ 405 trades at just 1.2 book value /share: …rather cheep isn’t it … why not pick up some shares?