Asmus Puhl Finance Blog

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?

Only some days left to Christmas and a lot of stock investors will be happy:

this horrible year comes to an end, a year of crisis, uncertainty, warnings and downgrades.

But not everything went south!

Take Colfax (NYSE: CFX) the fluid handling specialist this blog follows on a regular basis.

Colfax had a busy year preparing for its biggest acquisition, the Charter Group plc., and at the same time did very well to develop its other businesses.

The share price this year went from $ 18.41 at year end 2010 to above $30 today, that’s up 63%!

Wow, what a performance compared to the overall market!

What do we learn from this? Buy quality and stay the course!

….. Merry Christmas and a happy new year 2012 to all our readers!

Die Krise der Europäischen Staatsschulden und der Euro-Währungsunion zieht sich quälend hin.

Auf einen europäischen „Rettungsgipfel” folgt der nächste. Die dort getroffenen Beschlüsse haben sicherlich einige positive Elemente aufzuweisen, aber eines gelingt ihnen nicht:

Das Vertrauen der Finanzmärkte wiederherzustellen, und zwar kurzfristig!

Stattdessen drückt die Austeritätspolitik Europa immer tiefer in die Rezession.

Eigentlich ist mittlerweile auch alles gesagt oder geschrieben worden, um die Gefahren der augenblicklichen Entwicklung für die europäischen Volkswirtschaften zu verstehen, und um daraus Konsequenzen für das eigene Verhalten abzuleiten.

Was also sollte man als Aktieninvestor in Europa in dieser Situation und so kurz vor Weihnachten tun?

Noch ein paar Aktien kaufen? Und wenn ja, welche?

Die Aktienbörsen haben dieses Jahr trotz der kürzlichen Erholung kräftig nachgegeben, so dass sie wohl durchweg günstig sind.

Dies gilt selbstverständlich nicht für europäische Banken und Versicherungen, deren Zahlen kaum zu trauen ist.

Wer Sicherheit und Rendite sucht, sollte einen Blick auf den Medizin- und Gesundheitsgiganten Johnson & Johnson (NYSE: JNJ) werfen oder auf die Konsumgiganten Procter & Gamble (NYSE: PG) oder Pepsico (NYSE. PEP).

Allen dreien ist gemeinsam, dass sie seit Jahrzehnten und durch jede Krise hindurch die Dividende jährlich erhöhen und zur Zeit eine Dividendenrendite von klar über 3% aufweisen. Wohl ein klares Zeichen von günstiger Bewertung.

Und allen dreien ist auch gemeinsam, dass ihr „European Exposure”, also ihr europäischer Anteil am Umsatz nur etwa zwischen 16 – 25% liegt.

Dies ist absolut „manageable”: Umsatz und Wachstum in den Schwellenländern bieten ein immer stärkeres Gegengewicht.

Wer also meint, es wird so langsam Zeit für den „finanziellen Rettungsgipfel in eigener Sache” hat bei diesen Aktien sicherlich einen guten Ausgangspunkt!

Markel Corporation (NYSE: MKL), a high quality insurance company many people compare to Berkshire Hathaway, released its Q3 and 9 months 2011 earnings these days.

They reported net earnings of $ 5.48 /share, lower than the $ 6.48 they earned same quarter last year.

The combined ratio jumped to 100% from 93% in Q3 2010 due to higher losses related to natural catastrophes and due to 2 programs „now in run-off that were exposed to losses associated with the adverse conditions in the residential mortgage market”

Book value per outstanding common share increased only 2% from $ 326.36 to $ 333.11 this year.

But gross written premium volume was just under $ 1.8 billion, up 16% for the 9 months compared to last year.

The Earnings Call Transcript you can find here on Seeking Alpha.

Their investment results were impacted by the market conditions we all know but they managed to reach an overall investment return of their portfolio of 2.8 % so far this year.

As Markel becomes more and more a diversified holding company and is build for long term return we have to keep an eye not only on their public investment portfolio but also on „Markel Ventures”, where they acquire control interest in non-publically traded companies:

Through the first nine-months, other revenues at Markel, which are largely those of the Markel venture company, were $260 million versus 125 million in the prior year, an increase of more than 100% as Chief Investment Officer Tom Gayner explained on the Earnings Call.

Markel’s stock yesterday closed at $ 389.85

It trades at a book value / share of just 1.2 which historically is a very low valuation for this top quality company.

So why not grab some shares ?

Let’s not make a mistake!

A lot of concerns of the financial markets are very legitimate and it seems that this „prolonged European Halloween” which we can watch these days will not end anytime soon.

But don’t let you scare away from the stock market!

Globalization is for real: Among the companies listed on major stock exchanges there is no more such a thing like a pure US or a pure European company.

That means that companies today are much more diversified and independent of single markets or regions like the Eurozone region than they were years ago.

But institutional investors still buy or sell whole regions or even continents….buy Europe…sell Europe….start again…

The individual investor who does not behave like lemmings has a clear edge here:

Try to profit from low prices in depressed markets and try to identify good companies, if possible the no. 1 or no. 2 in there markets with strong balance sheets and capable management.

But avoid European financial companies like banks and insurances at any cost! They are „toxic waste”.

Who knows exactly how much European public debt and which one they will have to write down?

Rather take Colfax stock (NYSE: CFX) as an example, a clear winner and successful integrater in its field of industrial pumps and fluid handling. This blog follows Colfax now for 2 ½ years and it absolutely crushed the S&P 500!

At this time of writing the stock seems a little expensive after it released its excellent Q3 2011 results but why not wait for dips when „financial Halloween” seems to come back to the markets?

Colfax (NYSE:CFX) the global fluid handling company today released its Q3 2011 earnings and managed to beat analysts expectations once again:

Q3 EPS came in at $ 0.37 on an adjusted basis, 71.6% better than Q3 last year and revenue was $ 170.3 mil, 28.6% higher than same quarter last year.

Order backlog was $ 373.4 mil. The 10Q report is already published on their website.

Colfax Group will entirely modify its structure in the near future because of the acquistion of Charter International plc!

This is their biggest step in the still rather young history as a public company.

As President and CEO Kiefhaber explains, this acquisition will lead to revenues approximately evenly distributed between fore- and aftermarket, emerging and developed economies, and short- and long-cycle businesses.

And furthermore they begin to realize the cost savings from their strategic priority projects in FY 2012!

No wonder that the stock market liked these results and pushed the stock about 10% higher today!

It’s now official: Colfax (NYSE: CFX) will acquire Charter International for $ bil 2.4 in cash and stock.

As the tournaround specialist Melrose withdraw its competing offer the way for Colfax is now clear!

Colfax makes one of its biggest steps forward as part of its acquistion and consolidation strategy.

Charter International has 2 divisions of international engineering. The Howden air and gas handling division and the ESAB welding, cutting and automation service.

Especially the ESAB division operates in a still very fragmented industry which Colfax considers ripe for consolidation. This will also be a completely new business sector and growth platform for Colfax.

Colfax estimates this deal to be accretive to earnings within 3 – 5 years and to deliver double digit return on invested capital.

So it can very well be that it will reduce earnings in the short term. Therefore the stock tanked when the first rumour of this deal appeared.

But consider this acquisition a bold move forward and don’t forget: Colfax has acquisition and integration experience as part of their business model.

… this blog follows Colfax since May 2009 when the share price stood at $ 7.27 .

Until today it performed 200 %!

Colfax (NYSE: CFX) is one of the stocks this blog follows on a regular basis.

Friday the company reported Q2 2011 results and wow …. they were much better than expected!

Adjusted net income came in at $ 0.32 ,$ 0.06 better than forecasted and sales grew an astonishing 52% to $ mil 186.7

In addition the company increased its 2011 earnings guidance from previously $1.12 – $1.22 to $1.20 – $1.26 .

As we already explained here this company is build applying the „Danaher Business Model” which means to buy smaller companies and to integrate them effectively into the group realizing synergies.

The more experience Colfax gets doing this the better it will work increasing shareholder value.

The stock is not exactly cheap at 22 times this year’s earnings, so wait for dips to buy!

This blog follows Colfax since May 2009 when the share price stood at $ 7.27 .

Until today it performed 272 %!

Cheers!

Colfax Corporation (NYSE: CFX) today raised its guidance for FY 2011!

Organic growth will be between 6%  – 8% thanks to the Rosscor Holding B.V. acquisition and they now expect to earn $ 1.12 to $ 1.22 non GAAP adjusted earnings instead of $ 1.00 to $ 1.10

This translates into a p/e of 19 to 20 for FY 2011 based on a share price of $ 22.50 .

This doesn’t seem cheap and I think this price would only be justified if Colfax can grow faster than 20% fueled by acqisitions.

As their business model is to do exactly that and we all expect more positive acquisitons it would certainly be a safer bet to buy Colfax shares when the general market dips next time:

Don’t forget your “margin of safety”!

By the way: this blog follows Colfax since May 2009 when the share price stood at $ 7.27 .

Until today it performed 209%!

Cheers!